Mark Collins, director of knowledge management at Penningtons Manches, describes some of the key elements required to build an effective knowledge management operation in the first in a series of articles for New Law Journal.
In the world of legal services, knowledge management (KM) is really just good business management. For knowledge management to succeed, an organisation needs:
If you are in the business of selling cakes, the way you buy your ingredients, organise the baking, and manage the decorating and packaging of your cakes is essential to your success. Likewise, if you are a lawyer selling your legal and commercial expertise, then knowledge management (KM) is key. In a knowledge economy, if you are selling knowledge, KM is really just good business sense. We need good quality raw materials (law, facts and business intelligence). We need to bake our legal advice carefully and cost efficiently. We should brand and price our product to best effect. KM can help with all of these.
And yet, for so many law firms and in-house departments, effective KM seems to be a luxury they cannot afford or a back room adjunct distant from the reality of business decisions.
KM works where a firm's leaders have a vision and a commitment to KM. It succeeds when KM has a voice at the management table. It works when the organisation commits budget and time so that KM is embedded into the organisation's business plan.
KM fails when it is a bystander to everyday business decisions. KM needs to be relevant to deliver tangible value. There is no point, for example, in spending months developing an extensive precedent bank that no one uses. There is no point rolling out a training programme where the skills taught are never applied in the workplace.
So, where to begin? How do we ensure our KM initiative is effective and valuable? Ask your lawyers to tell you what they do. Even better, ask your clients what your lawyers do. What are the lawyers' finest moments? What are their frustrations? If they could change only one thing, what would it be? Where does their legal work come from? What is the most profitable service line? What works and what does not? As a manager of the business, how might you increase revenue? Or profitability?
It's not really rocket science ... To be more profitable you can either increase the price paid by the client in relation to the cost of production or reduce the cost. The difficulty arises, however, because few legal operators know how much any specific work type costs to deliver. Pricing, budgeting and project management will be the subject of a later article in this series.
KM engages best at the junction of three elements; people, process and technology. People need to want to share and to work more efficiently. Their work processes need to be slick, efficient and easy. And the technology they use must be relevant and intuitive. When all three elements act in concert, KM works; otherwise, KM struggles. The best IT system or streamlined process will fail if its users won't use it. The most determined people will struggle if they are forced to follow a laborious and painful process. Two out of three ain't bad, but it is not enough.
The ideal recipe combines business nous, technology and process. A great example is document assembly. Our venture capital partner knew the market for start-up work was tight. He knew he needed to offer a suite of corporate documents at a fixed low price that a start-up could afford. Just as importantly, he knew his team needed to produce the work for less than this price, in order for it to be profitable. Document assembly was the answer. We created a standard suite of documents which needed minimal lawyer input. Parties' names, addresses, and other details were inputted once and fed automatically into each of the documents in the suite. This produced a standard set of documents quickly and efficiently. The client got the documents quickly at a fixed price. The lawyer produced the product with minimal intervention and made a profit. Good KM; good business.
Building a business case to invest in KM needs both creativity and structure; both imagination and rigour. Any KM investment, whether it be in an online legal information source, a piece of technology or a human being, must be founded on clear, substantive analysis which shows the investment will bear fruit and bring back a return.
Organisations should not do KM just for the sake of it, nor because everyone else is doing it nor just because it feels like a good idea. Do it for a purpose with a specific aim in mind, and then measure whether your initiative or investment delivers those specific goals. This is where your KM purpose needs to align with your business purpose. Why are you doing this? Because you want to (a) reduce production costs and increase profitability (b) increase leverage (the ratio of partners to non-partners) to delegate the task down to the most cost effective person or maybe (c) meet specific client or market demands giving access to data or documents?
In the knowledge team at Penningtons Manches, we have six knowledge lawyers (PSLs), three business improvement analysts and two information managers, plus a legal training administrator. We are trying to move our library from paper into digital. We are using a lean-style methodology to improve our administrative and legal processes. We are revamping all our core systems (Finance, CRM and DMS) into a single system. We are using technology for document assembly, extranet and house style. Our KM journey continues.