Legal KM: what is your impact?

Yellow Lines

I finished my blog post on the need for unavoidable irritation with a promise to look at the purpose of knowledge management in law firms. On reflection, I think impact is a better word than purpose. What difference can KM make to the performance of a firm, and what will the firm’s experience be? In other words — how irritating can legal KMers be so that they generate most value?

Pothole and yellow linesAs a reminder, the goal is to be considered indispensable by the firm, whilst still promoting goals that might be uncomfortable to individual lawyers. This might sound unnecessarily aggressive, but it actually matches the kind of work that has been done over many years in many successful firms.

Consider, for example, the use of standard documents or precedents to assist lawyers’ drafting (or their modern equivalent, the automated document). Amongst other things, these approved ways of working will force lawyers into a single, consistent contractual format or style. For some, this undermines their right to decide how best to draft or to present the document. (I have lost count of the number of times I have had to listen to lawyers grumbling about their firm’s style rules.) On the other hand, clients appreciate consistency across a firm’s documents and the efficiencies that come from part-drafted or automated standards are undeniable.

In this example, we can see the essence of the value of legal KM: it creates value for the firm by seeing better ways of using knowledge, bringing them into being, and encouraging people to use them to work differently (since legal work is knowledge work). The irritant comes in that final stage — any change to the way people work is likely to create a bit of discomfort.

The most successful people in legal knowledge management are those who bring about the most valuable change. (This group includes, in my experience, Chief Knowledge Officers, Heads of KM, PSLs, Knowledge Officers, and a host of other titles at all levels.) In order to have that impact, they have a few characteristics in common.

  • Clarity of vision/purpose: they work out at an early stage what they stand for, and why the firm should value it.
  • Connectedness: they build relationships across the firm, so that they have a better understanding of the complete range of work done, not just the area they work in.
  • Communication skills: they can present their perspective well, whatever the audience.
  • Diplomacy: they know which battles to fight, and when to back down.

These common characteristics (together with others that are more role-specific, such as the twelve listed for knowledge leaders by Arthur Shelley) allow for the greatest impact. These people can generate more value for their firms by being sufficiently irritating — they create pearls.

By contrast, some KM folk have found it easier to make themselves indispensable by producing just what their teams ask for, without questioning the underlying assumptions. By doing so, the only change they create is a culture of dependence. This is similar to the situation described (in reference to a different context) in the following video.

Demands for knowledge ‘products’ are common in law firms. Just like the managers in the video, partners feel more comfortable when their KM teams are creating tangible items. Equally, producing those items usually feels easier than trying to change the way people work. There are equivalents in other areas of business services — finance teams are sometimes asked for spreadsheets they know to be worthless and BD teams may be expected to support unwinnable pitches. The best professionals in those areas will challenge the requests and explain why there are better things for them to do. Good KM folk should do the same.

Ultimately, the test for impact is the same for knowledge management as it is for other professionals within the firm. How much difference are you making to the firm?

For HR people, the answer to that question might lie in recruiting great people or in managing career changes for those who are doing less well. IT professionals could point to improvements in client service using new technology tools.

For KM professionals, the difference should be found in changing the way people work for the better. Activities such as updating precedents and producing briefings are unlikely to be as valuable to the firm as challenging the way legal work is done and actually changing the way clients get the benefit of the firm’s legal knowledge.

Even diplomatic challenging is irritating, but it is necessary to create the pearls firms need.

Legal KM: slow burn, low impact?

2014-11-16 14.41.19Last week, I suggested that KMers in law might aim for greater impact by challenging their firms. Today, Nick Milton has published more insights from his global knowledge management survey that may support a similar conclusion.

Nick’s post provides some statistics on the penetration of KM across a number of sectors, compared with the length of time it has been a focus. Each survey respondent reported on their organisation’s maturity by choosing one of five options:

  • We are investigating KM but not yet started
  • We are in the early stages of introducing KM
  • We are well in progress with KM
  • KM is embedded in the way we work
  • We have tried KM and given up

The results highlight some striking differences between different sectors, as shown in the diagram below. The disparity between the construction/engineering sector and education/training is particularly intriguing.

In terms of KM maturity, the legal services sector is in the mid-table. Nearly 40% of firms have yet to start with KM or are only in the early stages, whilst over 20% report that KM is embedded. However, this has been a long journey. In the table showing how long KM has been part of the organisation, the legal sector is significantly ahead of the others.

As Nick points out, this makes the legal sector the “most noteworthy outlier”, especially when compared with construction and engineering, where KM has been present on average more than two years less, but has achieved a significantly more mature state in that time — nearly 40% embedded in working practices.

I suspect that there are many factors at play here — including some systemic issues such as the partnership nature of law firms, time-based billing, and the complexity of the law itself. Whatever the causes, Nick’s data suggests that there is still much for legal KMers to do to really make a difference for their firms.

Generating value through unavoidable irritation

Thames foreshore

Having worked in both, I can say that one thing that law firms and universities have in common (and there are more than you might think) is that they have a clear purpose built into their fabric. Universities are supposed to further knowledge by teaching and research. Law firms advise their clients on the law to guide their future actions. Diversification would change the organisation in unpredictable ways. (Both may have commercial interests on the side — publishers and conference businesses for universities; consulting arms or resourcing agencies for law firms — but those tend to be arms-length subsidiaries.) As a result of this clarity of purpose, there is a tendency to treat those who are not directly involved in the core activity as ‘other’: non-lawyers (or non-fee-earners) and non-academics. There are many articles and blog posts decrying this terminology, but few have found an easy way round it. This post won’t change that state of affairs — please take as read the decrying and absence of solution.

Thames foreshoreInstead, the past few months observing, and reflecting on, this state of affairs from the outside have led me to a curious conclusion. I suspect knowledge teams in law firms are not ‘other’ enough.

In a previous post, I drew attention to the respect that law firms generally have for their PSLs. This is partly a reflection of professional comity, but it has another aspect — comfort. By contrast, my observation of interactions between lawyers and their colleagues in IT, HR or Finance was that they were a lot less comfortable. The partner who wants to dismiss their PA or the associate who can’t be bothered to complete their timesheet accurately will find that their preferences conflict uncomfortably with those of the firm’s HR specialists and accountants. The outcome is tension between irritation about being unable to do something that seems reasonable and an understanding that there must be standards that apply to everyone. Successful IT, HR and Finance teams manage that tension carefully. They work out how far they can push their professional preferences for locked-down systems, carefully managed grievance processes, or perfect time recording and then they back off. In return they provide something that the lawyers cannot do for themselves: well-functioning systems, effective graduate recruitment, or efficient cashflow. In this ideal scenario, the lawyer’s casual dismissal of the IT geek, fluffy HR person or bean-counter hides a grudging respect for the value that those specialists generate for the firm. There is respect for the profession even if the individual is disrespectfully branded a ‘non-lawyer’.

I think something slightly different happens to BD/Marketing and Risk & Compliance teams. Lawyers are much more likely to consider that they are capable of doing the work done in these areas. In some cases (especially in Risk) the ‘non-lawyers’ have been practising lawyers in the past. Also, there is an expectation that lawyers engage closely with the activities that are notionally the responsibility of these teams. As a result, BD/Marketing and Risk professionals have to work much harder to generate and show the value that their functions deliver for the firm. Where they fail to do this, they are much more likely to be seen as an unnecessary irritant when times are hard.

I was thinking about an analogy for the relationship between these essential services and the firms they work in, but I could only find a cliché. They are like the grit in an oyster that is essential for the development of a pearl. By lodging themselves unavoidably within the fabric of a firm, something better is produced than would exist without their presence.

It is hard to imagine a modern business of any type, even a law firm, surviving without the services of good HR, IT, Finance or BD/Marketing folk. As a regulated business, a Risk & Compliance function is essential for firms (and would be wise even without the regulatory pressure). By contrast, many firms manage without a significant knowledge function. (This conclusion is drawn from observation and the research of the Legal Support Network.) Why is this? I think the answer is a combination of proximity to the lawyer role (even closer than BD/Marketing and Risk), not being irritating enough, and failing to demonstrate or communicate value.

Whilst lawyers love their PSL colleagues, they don’t always understand how their work is different enough from their own to generate value that can be distinguished from normal legal work. Some PSLs and knowledge teams are complicit in this because they want to be seen to be helpful, so they work to an agenda set by the practitioners they work with.

That is why knowledge teams in law firms are not ‘other’ enough. They and their work are respected because they are not irritating or threatening. That is not to say that they should be deliberately obstructive. Like their colleagues elsewhere in business services, greater clarity about the purpose of knowledge management as a professional discipline would generate sufficient unavoidable irritation to create valuable pearls that could not otherwise come into being. Firms that continue to believe that their knowledge teams merely work as extensions of ordinary lawyering will continue to undervalue what those people actually do whilst treasuring their existence — the opposite of their feelings about the rest of business services.

This conclusion demands consideration of the purpose of knowledge management in law firms. That is a topic for another day.

Improving practice: insights for lawyers from Atul Gawande’s Reith lectures

As expected, Atul Gawande’s third and fourth Reith lectures were worthy of attention by lawyers despite notionally being about the practice of medicine. It is a truism that there are many commonalities between different professions, but Gawande’s insights provide some practical pointers for professionals themselves.

Lecture 3: The Problem of Hubris

(Audio | Transcript)

Gawande’s third lecture centred on the ways in which medical professionals deal with terminal care. This is an area where technology (better drugs and other treatments) plays a significant part, the lecture was more interested in the way doctors interact with their patients. Concerned by his experiences in managing care for waging patients, Gawande had spent some time talking to people about their experiences of terminal care — as patients, relatives, and doctors. These are some things he learned.

And so when I asked folks as I interviewed them, I’d say “So what would be on the checklist you would give me to use in my next office visit when I come to a critical decision point with a patient about whether we should do an operation or not or other kinds of considerations?” And one of the items that people said I ought to have on my list is that in that conversation I should be talking less than 50 per cent of the time while we’re in that room. And so I paid attention to what I was doing in those conversations and to my horror I found I was talking 90 per cent of the time. I had lots of facts and figures and pros and cons and risks and benefits, so now what do you want to do? And I’d see this bewildered person across from me.

They also said you know if you are going to talk less than 50 per cent of the time, the key thing is you have to be able to ask questions. And there are certain questions that I saw people ask that were really great at eliciting what people’s real understanding and their priorities were. The first question was to ask, “What is your understanding of where you are with your condition or your illness at this time?” Another is, “What are your fears and worries for the future?” “What are your goals if time is short?” “What outcomes would be unacceptable to you?” And with that, they’ve told you their priorities and what they care about and then that tells you both where the bright lines are that you do not cross and what you might actually be aiming for.

Now not everyone can answer such questions and their answers can change over time, so you have to ask it, you know, as things go along.

Drawing some wider conclusions, the following seem to me to be critical points.

  • Listen more — talk less than 50% of the time
  • Ask some key questions. For doctors these are:
    • What is your understanding of your current situation and its likely outcome?
    • What are your fears and worries about the future?
    • What outcomes would be unacceptable to you?

The need to listen more to patients or clients comes up repeatedly. It is interesting that Gawande actually actually tested himself and found himself wanting. Perhaps more professionals should do the same.

I find the key questions more interesting. It is clear from Gawande’s responses to the audience following the lecture that the first and last of the questions are the most significant. Eliciting what people really think about their (possibly irretrievable) situation, and what they would find unacceptable feel like truly important factors in deciding on the right treatment or advice. As Gawande puts it, the answers help doctors finding people’s priorities and bright lines. It is also important that the responses might change over time, so the questions need to be repeated as things progress.

One of the points drawn out by Gawande is that better personal care, in which patients have more autonomy about what happens to them, can actually result in better outcomes (in terms of survival time) than practitioner-led treatments involving surgery or drugs. After the lecture, there was a question from Pat Kane’s about the role of technology in prolonging life. Gawande’s response recognised the important part played by new treatments in extending lifespans, but also pointed out that what happens towards the end of life is crucial, by reference to a study of patients with incurable lung cancer:

Half of the patients got usual oncology care and the other half got usual oncology care plus saw a palliative care physician who would discuss with them what their priorities and goals might be for the end of life. Now the group who had that discussion ended up choosing to stop chemotherapy sooner. They were much less likely to go onto the fourth round of chemotherapy, in fact had one third less chemotherapy costs. They had one third fewer days in the hospital. They were much less likely to die in the hospital or in the intensive care unit. They started hospice earlier. They had less suffering at the end of life. And the kicker was they lived 25 per cent longer. If this were a drug, it would be a multi-billion dollar drug and we wouldn’t be asking oh could we afford it, how is this going to be possible? But you know in truth it isn’t even a matter of affording. These are basic skills around having conversations that enabled a win-win situation.

I think there is a deeper issue, in that the motivation to focus on technology in medical care (and possibly in other professions too) is a set of assumptions about ‘value’ which may not be the right ones. In medical terms, prolonging life may be an obvious choice if we think about humanity as a whole. But if we ask individuals who are actually mortally ill, their choices may well be different (as Gawande’s lecture makes clear). There is a similar issue in law. Legal technology is often rooted in a set of assumptions about efficient legal practice which are almost undeniable from the perspective of legal business. From a client perspective, those assumptions may not deliver the best outcome. Instead, an apparently more inefficient client-led process (with less technology) might be better for the client and produce different savings for the firm.

Lecture 4: The Idea of Wellbeing

(Audio | Transcript)

Gawande’s final lecture differed from the others slightly in that it didn’t have a single narrative at its heart. It depended more on an account of research into childbirth care and the way professional conduct themselves during childbirth.

In one health centre, staff may not wash hands because they don’t know it’s important; in another, because they don’t have sinks or running water in the delivery rooms; and in another, because they simply have not made it their habit and no one cares.

That last phrase I think is the critical one: if no one cares when someone takes the trouble to do things right, nothing changes. And the overwhelming message to the people who work at the frontlines of care around the world is that no one notices excellence and no one cares. That is the biggest source of burnout and discouragement for health care workers everywhere.

For me, this was the most important point made in any of the lectures. It is one thing to ask people to care — in almost all cases they will aim to do that. (In my experience this is as true of lawyers as it is of medical professionals.) However, that intention to care is often undermined by a wider failure to value excellence and caring, rather than some other factor (often management metrics). If people who are inclined to care about doing a good job are not supported in doing so, they will tend to stop caring as much over time.

A member of the audience made a point about this. “If nobody cares about delivering a good burger king hamburger, that would seem normal; but when it comes to medicine, you wonder why nobody cares.” Gawande developed his analysis in response:

I think this is really important because I think that feeling of being at the very frontline is that nurse responsible for you know a thousand deliveries in a year and that no one cares if you’re doing a great job or you’re doing a poor job; that you’re only going to get your hand slapped if you have some trouble along the way – you shouldn’t ask questions, etcetera. That is common. Overcoming it is what we’re finding can happen by bringing someone from the outside who says let’s look and see do you want to be washing your hands better, do you believe in what’s on this checklist, how can we begin to achieve making it work? And the fascinating thing is that the process of having the nurse speak to the sweeper to say can you bring a basin of water and soap every time you clean that room, it was creating communications and interlinking, it was creating a system that had literally not been there before.

Organisations of all types work very hard at reducing the risks of bad outcomes. Sadly, this work often finds expression in the kind of hand-slaps that Gawande mentions. Rarely does it result in recognition for a caring job well done. Sometimes that is because it is often harder to see caring happen. Sometimes it is more serious — the organisation has forgotten to value the good things about the way their people take responsibility for caring. Hospitals, clinics, law firms — all can suffer from the same failings.

Care: the future of practice?

These two lectures are a really good expression of the way that patient care needs to develop: better listening and question-asking by physicians and other health professionals; combined with institutional recognition of caring by all those participating in care.

The same can be applied to legal practice. Clients get a better service if they are listened to properly. That listening process requires a good understanding of the client’s own perception of the situation as well as what they are not prepared to accept or risk. Lawyers and those working alongside them need to care about doing things well (which most of them tend to do anyway) and — crucially — the firm needs to see and value the fact that people are doing good things.

People, technology, location: where should law firms’ money go?

Experimental archaeology is a favourite way for TV documentaries to bring the past to life for the casual viewer. The BBC is currently showing a new series looking at the construction of a 13th century castle, together with various other related mediaeval activities. In last night’s episode, the team made a crossbow and its bolt using only techniques and materials available in the 1200s. In the commentary, they kept returning to the fact that a crossbow allowed armies to be effective with much less training (one presenter gleefully told how Richard I had been killed in 1199 by a crossbow fired by a mere boy).

Horse and cattle trough in SmithfieldBy concentrating on the saving on training that the crossbow brought, above the longbow, the programme missed an opportunity to make a wider point about the impact of technology on warfare — it changes the way money is spent.

If your army depends on archers wielding longbows, you need to invest heavily in training (and in the peripheral expenses to maintain archers in training). However, a longbow was probably slightly cheaper to produce than a crossbow, which needed components wrought from iron (not a cheap resource by comparison with wood at the time). So, as crossbows become more widely used, it is likely that the budget for archers would shift from supporting training to the new technology.

This is part of a pattern over hundreds of years. The wars of the twentieth century were probably the last in which the size of an army or navy played a part in determining the outcome (directly or indirectly). Modern warfare is waged with small numbers of people and huge amounts of costly technology. (Sadly, the impact on humanity is just as devastating — possibly more so, as civilians become harder to distinguish from combatants.)

Longbows and crossbows are still capable of causing death and serious injury. Nothing has made them less deadly, but their power is meaningless in the context of modern warfare.

Law firms are in a similar position today.

For the past few centuries, the primary cost for a firm has been lawyers and their training and upkeep. In more recent times, larger firms have also spent large sums on acquiring and maintaining high-quality offices in expensive business locations. As salaries and rents increase, clients have ultimately had to bear the cost in higher fees.

Technologies that are now readily available (or in development) are starting to eat away at the traditional model. They cost more than the basic IT tools already in use (typically email and document processing and management). It is a reasonable assumption that a firm of the future will spend a much higher proportion of its budget on technology than it did in the past, and a lower proportion on people (some of their functions being done automatically) and offices (as people work much more flexibly, using mobile devices and in non-firm locations).

So it is interesting to read in the Legal Support Network’s Legal IT Landscapes 2015 report that the top 100 UK firms are not investing hugely on their IT:

Our results show that top 100 firms spend on average 4.1% of revenue on IT (there were some that spent 8-10%, so you can imagine the other numbers). Though this metric isn’t one I’d use alone, and it puts law firms squarely alongside other professional services businesses (according to Gartner), many would say that legal businesses should be spending more, to innovate and build competitiveness. Let me put that 4.1% figure in context, too: education, media and entertainment, and banking and financial services all spend more – banking’s spend on IT as a percentage of revenue is 6.3%.

The top 100 firms are facing competition from a range of new entrants. Some are offering technology directly to legal consumers. Some have created businesses based on a different model — different in terms of office use, people employed, and technology developed. They are almost certainly all spending significantly more than 4.1% of revenue on technology — some may surpass 10%.

The future of law will involve more technology. There is no doubt about that. Some artisan law firms will continue to exist, but the bulk of legal work will be done in businesses founded on technology platforms that go beyond word processing and email. Interestingly, many firms are working alongside the new entrants in the development of new ways of working. As Simon Wardley points out in a post describing the commoditisation of part of the entertainment media, doing so betrays a completely inadequate strategy.

Such a deliberate move by a commissioning company – the chess equivalent of Fool’s mate – should never work but it does, in industry after industry. Yes, I am saying that companies often support the commoditisation of an underlying component or constraint without realising this will reduce barriers of entry into their field and ultimately commoditise them. Companies seem to act thinking of the short term with no understanding of the impacts to themselves.

Most of the problem appears to be that companies cannot see the environment (i.e. they have no map) and aren’t used to any actual form of strategic play. To be honest, this is like stealing candy from a baby except the candy is worth millions or billions. What is really frightening, is it takes a couple of hours to map out and work out such a play. There is no way on earth you should be able to get away with this and I’m afraid it gets worse.

So, incumbent law firms should be investing more in technology, but they should also do so more strategically — armed with a really good understanding of the terrain they are fighting on. If they don’t, they become as useful as the water-trough pictured at the top of this post — fit only for decoration.

Presentation: evaluating knowledge activities

Yesterday I attended and spoke at the London Law Expo. It was a very good event — I will be touching on some of the other presentations in future blog posts.

My presentation provided a very quick overview of issues for law firms to consider when assessing the value of their knowledge management activities. The slide deck is embedded below.

I will flesh out the content in a series of blog posts over the next couple of weeks, and link to them in this post.

In praise of Professional Support Lawyers

Holborn Bars

Yesterday I attended Ark Group’s Professional Support Lawyer (PSL) conference, along with nearly 50 PSLs from over 35 firms. The presentations and audience contributions reminded me that PSLs are the hidden gems of legal business.

Holborn BarsWhen firms first realised that they could improve the quality of their lawyers’ work, PSLs were expected to focus on technical excellence — creating and maintaining key documents, and ensuring that developments in the law were addressed through training or current awareness briefings. Like other aspects of legal practice, this focus has shifted over the past 20 or more years. Now firms can expect their PSLs to be an essential part of their strategic armoury. This can be seen in a variety of ways, but just two highlight particularly well how PSLs make a real difference: innovation and culture.

Innovation

Coincidentally, today sees the publication of the FT’s annual Innovative Lawyers report. Looking at the list of standout, highly commended and commended initiatives by law firms, I see many that will have involved PSLs at some stage in their development. Some of the client service innovations depend for their success on materials created specifically by PSLs. Some of the innovations in legal expertise draw on insights made possible by the broader overview that PSLs can have over the legal landscape, unencumbered as they are by client demands.

In my own experience working alongside talented lawyers, I have seen a higher rate of products and services created or delivered by PSLs than by partners. And crucially, PSLs tend to be much better at seeing a product development cycle all the way through to the end — partly because they may have fewer distractions, but mainly because they know that this is a significant part of their role and they take it seriously.

Innovation is a tricky concept, much misunderstood and misused, but David Hepworth’s observations last week about ‘improvements’ read just as well when applied to ‘innovations’:

This is a classic case of Hepworth’s Law Of Improvement, which I developed over years of watching people trying to improve magazines. There’s improvement, then there’s the kind of improvement which is recognised by the user and finally there’s the kind of improvement which is both recognised and valued by the user.

Only the third sort is worth the trouble.

PSLs are often the most capable people in a firm to assess dispassionately what putative innovations would be recognised and valued by clients (and potential clients).

Innovation can clearly happen without PSLs, and some PSLs may not be in a position focus on new products and services for good reasons. But if your law firm is struggling with making innovation stick, try involving some PSLs — you may be surprised by the results.

Culture

Like many commercial organisations, law firms often struggle with culture. Sometimes this can result from the multiple role that partners have as owners and managers of the business as well as workers in it. A junior lawyer working alongside a partner is unlikely to see them as a co-worker, so will hold some things back that they might share with a peer. Partners therefore can only have a distorted view of their team. (Just as the Queen only ever sees perfectly clean, freshly-painted offices and hospitals.) PSLs, on the other hand, see lawyers at all levels in all types of situations. They help juniors with their panics over misfiled forms. They work as peers with all areas of business services (especially BD, HR, Risk and IT). They may be used as confidantes for aspiring partners.

At the same time as having strong relationships with a wider range of people working across the firm, PSLs are often regarded as peers by partners. Many of them will have experience in their area of expertise far in excess of some of the partners they work with. They may also have seen partners in other areas of the firm grow up from innocent trainees to practice-hardened lawyers. As a consequence their dealings with partners are different from any other group in the firm. PSLs often have the trust and confidence of partners across the firm.

This privileged position means that PSLs understand what is really going on (a shorthand for culture) much better than most other groups in the firm. Firms can use this insight intelligently in all sorts of ways. For example, mergers are one area where a number of firms have experienced the benefit of drawing on PSLs for more than their legal expertise. In the phase before a merger takes effect, PSLs from the two merging firms start work on the knowledge infrastructure for each new team. As the merger beds in, PSLs build new relationships with new colleagues — binding the team together better than partners can manage alone.

Why hidden gems?

Even if PSLs only do the core function of maintaining technical excellence, they generate more value for the firm than fee-earning lawyers. An hour of fee-earning will translate directly to income generated at the appropriate rate. There may be some intangible value in a deeper client relationship, but that is not guaranteed. By contrast, a well-focused hour of a PSL’s time spent drafting a standard document or a guidance note, or in providing training on a difficult new legal issue, should translate into many hours additional value by allowing fee-earners to work better. Over time, that single hour could multiply to 50 times as much value for the firm.

When PSLs go beyond the traditional core, they add even more value in all sorts of ways (not just innovation and cultural support). Not all firms see that yet. They forget to value the PSLs in return, or they suppress opportunities for PSLs to demonstrate their full potential (often by allowing them to be distracted by less significant chores). Firms that allow their jewels to shine see real returns on their investment.

If your firm is interested in working better with your PSLs — perhaps finding new ways of supporting their work; encouraging new ways of engaging with them as a group; or allowing them to lead more than they have so far — drop me a line: I would love to help you and your PSLs become more successful.

Strategy step 0: understanding where you are

One of the areas where knowledge is undervalued in law firms (and probably in other organisations as well) is the creation of strategic plans. This has always seemed odd to me, but I suspect that the pressure to respond to changing markets in the same way as other firms is a very strong one. (Especially as it sometimes appears that there is little differentiation between firms — something that I believe less and less the more firms I see at work.)

Map of the Siege of Toulon, led by Napoleon Bonaparte

Why is knowledge important for strategy? A number of reasons. I found these particularly well explained by William Duggan in his book Strategic Intuition. He described Napoleon Bonaparte’s success (the first in his military career) in the siege of Toulon as resulting from a combination of factors: tools and resources, knowledge of previous actions, openness to different solutions; and insight.

In 1793, the port of Toulon was held by the British navy in the name of the French royalist forces. Napoleon was an artillery captain in the revolutionary army. He formulated a plan to put pressure on the British forces by attacking forts on either side of the harbour. The first attempt at executing the plan failed due to the poor leadership of the general in charge. A later, better coordinated, attempt was successful. The British withdrew their forces in fear of being cut off from the rest of the navy.

The tools and resources Napoleon used were available to all — light cannon and contour maps. What he brought was an understanding of historic battles — the sieges of Boston and Yorktown in the American Revolutionary War, and the siege of Orléans in 1429. At both Boston and Yorktown, British forces on land were threatened with being cut off from their navies at sea and gave up the fight or surrendered. At Orléans, Joan of Arc’s forces routed the English army by attacking smaller forts rather than the large well-defended town itself. Napoleon’s insight was to see that rather than attacking Toulon (the obvious target, but a recipe only for a prolonged siege of attrition), his forces could use the high ground (discovered with contour maps, and accessible to light cannon) to take two key forts protecting the harbour. This strategy combined elements of all three historic actions in a way that was unique to the situation at Toulon.

Duggan is interested in the intuitive leap that Napoleon makes — he calls it strategic intuition. Successful strategic intuition depends on drawing together previously uncombined elements. Duggan recommends a similar approach to business strategy. In reality, what I see of many strategic efforts appears to depend more heavily on mere intuition — gut feel — without a real understanding of key factors affecting the organisation.

Firms often focus very closely on their own capacity and capability — what can we do now, and what could we do in the future — without thinking deeply about territory and logistics — external forces that need to be understood or managed. Ultimately, of course, Napoleon’s failure to consider logistics properly led to his greatest strategic failure — the march on Moscow in 1812. The  most fundamental failure, though, is not getting to grips with the territory.

My earlier posts in the legal ecosystem series were aimed at helping law firms get to groups with what is happening around them — helping them ask (and work towards answering) the right questions. Richard Susskind’s work has a similar aim — especially his characterisation of legal services transitioning from bespoke to standardised to systematised to packaged to commoditised.

I recently came across a more thorough way of mapping activities to help organisations understand how the land lies before making their strategic choices. The value chain mapping model was created by Simon Wardley, whilst working in the technology sector. Most of his examples arise out of this sector, but there is no reason why the mapping technique should not work elsewhere. He explains it well in this video of a conference presentation.

There is also a site that brings together many of Wardley’s writings on maps, including guidance on how to create maps for your own organisation.

I am still getting to grips with how the mapping might best be used for law firms, but the basic concept is fairly easily understood. It comprises three main activities.

The first thing is to describe the value chain, starting with user needs (client needs in law firm terms) and then identifying every subsequent need. Wardley uses a cup of tea value chain as an easily-understood example. (The diagrams that follow are taken from and link back to Simon Wardley’s blog.)

NeedThis simple diagram shows how a person’s need for a cup of tea depends on a chain of other needs, some more readily acquired than others.

However, even a complex set of such diagrams, describing a host of business needs, is incomplete because it is fixed at a moment in time. In reality, things change. Making a cup of tea in a domestic kitchen now is a much easier task than it might have been 200 years ago because of the reliable ubiquity of electricity, piped fresh water, supermarkets selling vast arrays of different types of tea and so on. Without those things, making tea was a more labour-intensive process.

So what Wardley does is to align each of those needs against an axis marking the typical evolution of products or services (similar to Susskind’s model): from genesis to custom-built to product to commodity to ubiquity.

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The different components of the value chain can then be placed at the right (current) point of their evolution. That then allows the organisation to look at how each of those components may develop and plan accordingly.

Screen Shot 2014-09-07 at 10.08.36The end result may look a bit like this map which describes a major infrastructure project. The location of each of the components allows the project owner to decide how best to acquire or develop that component. The most evolved can be bought off the shelf, and those that are novel can be developed internally.

This kind of unbundling or componentisation is something that a number of law firms are doing for client work, although rarely to this level of abstraction. I am still reflecting on how well it might adapt to other aspects of a firm’s activities (I have a lingering uncertainty about the placement of risk factors and regulated activities, for example), but my current thinking is that this would be a very powerful tool to help firms with the very first step of developing any aspect of their strategies — working out the lie of the land.

Triangulating knowledge: value and purpose

In an earlier post, I mentioned Nick Milton’s useful model for positioning KM. However, I did note that I had reservations as to his assessment of where law firms might sit in the model. This post expands on that thought.

As a reminder, Nick suggests that the primary focus of an organisation should dictate the type of knowledge management that is used — process-based, product-based or customer-based. His view was that law firms would tend towards being product-based, as this diagram indicates.

Locating KM — diagram by Nick Milton

I think this is a really useful way of thinking about knowledge activities at a range of levels. It might apply across the whole organisation, or within specific parts. The key then, is to start with a basic understanding of what the relevant people should be achieving and then match the knowledge activities to achieve the desired outcome.

I have slightly revised the triangle in my diagram below.

Photo 12-09-2014 10 46 52

For me, the points of the triangle are characterised by three questions. What do we do, how do we do it, and why do we do it? These questions may contain a number of additional questions too — knowing why something is done will encompass a need to know for whom it is being done, for example. At each extreme, there will be a very different focus. A law firm that is most interested in providing legal solutions (which I think is the example that Nick Milton has in mind) will need to be completely on top of all the changes in the law that affect the creation of those solutions (know-what). On the other hand, a firm that is looking hard at improving the way advice is provided will need to concentrate on know-how — ‘how we do things here’. Firms with a strong client focus will be interested in developing deep understanding of the businesses and people they work with — the legal solution will be presented more as a business solution tailored for that client.

Many law firms struggle with anything other than managing legal knowledge (know-what). I think this is a real challenge for the sector as a whole. Unlike many other professionals, lawyers need to work with a constantly changing stream of legal change — new cases, statutes, regulations, court and administrative practices and so on. New law doesn’t just change the range of possible solutions that could be offered, but it can also render previously good advice dangerously bad. Naturally, all law firms take their obligations to stay up to date with the law very seriously. But this is costly. Maintaining access to all the relevant sources of information about and commentary on the law is a significant financial burden. In addition, individuals (whether practising lawyers themselves or the firm’s Professional Support Lawyers) need to take time to understand the impact of legal change on their own work. It is not surprising, therefore, that many firms exhaust their KM efforts at this point — keeping on top of the law is all they can manage.

Knowledge management delivers real value to organisations when it enables people to draw on the knowledge of those around them so that they can improve their own work. By contrast, facilitating the flow of information and analysis from outside the organisation can only prevent failure. Because all similar organisations have access to the same external material, and the same imperative to make use of it, being good at understanding this material cannot be a differentiating factor (apart from improving speed to market). This means that if legal KM continues to focus on legal knowledge alone, it will become increasingly irrelevant to firms that want to improve their market position. The real differentiators are in the other points of the triangle.

In order to get the best value from its knowledge activities, a firm needs to know with confidence exactly where its sweet spot is. This is not an easy task, and it is important in doing so to avoid entrained patterns of thought and behaviour. I intend to write more about this in a later blog post.

Once the sweet spot is known, then the right activities can be developed, to combine different components to produce interesting alternatives:

  • coupling know-what with know-how to enable
    • more efficient and consistent advice for all types of work and any client
    • a basis for clear pricing models
    • allocation of tasks to the right level
    • improvements in quality control
  • combining know-what and know-why to improve
    • bespoke advice to match client needs
    • strategic legal advice promoting client business goals
  • linking know-how and know-why to allow
    • collaboration involving a range of providers alongside the client to produce better value
    • reciprocal improvements in working practices between the firm, the client and other professionals

And there are probably many more possibilities — these are just off the top of my head. I am developing these ideas for use with clients. If your firm is interested, please get in touch. I will also be talking about these issues at the London Law Expo next month — come and say hello.

Partnership and client service

There is an interesting article on the Lawyer website today. It draws on interviews with a number of senior lawyers about the past and future of legal practice. The whole thing is worth reading, but I want to comment here on some of the remarks about partnership as the organisational norm for law firms.

2014-07-25 20.16.21-2When asked “Is partnership the right model for a 21st century legal services provider?”, most (but not all) of the panel responded positively. It was clear that for them, the mode of ownership was causally linked to quality of client service.

Here are some examples.

Chris Saul, senior partner, Slaughter and May:

I do think that the partnership model is the right model for a 21st century legal services provider.

It brings with it the essential coincidence between ownership and management. That means that all of the owners (the partners) are driven to manage the business and the practice in a responsible, thoughtful, progressive and creative way. Once you divorce ownership from management, problems can arise.

I think that clients very much appreciate the partnership approach. They like the fact that each partner is an owner and is thus naturally motivated to provide the best possible service to the client but in a way that means the full resources of the firm are used in support of the service.

Tim Eyles, managing partner, Taylor Wessing:

I actually like the partnership model. It creates a sense of ownership. That in turn creates glue internally and externally; it engages a team spirit in delivering what’s still a very personal service. We should hesitate before dismissing the partnership model, given the nature of the services that we provide.

If it’s accepted that clients want their lawyers to be in effect their business partners and business advisers, the partnership model is flexible and it engages people, which is hard to replicate in a corporate structure where it’s more pyramidic.

John Schorah, managing partner, Weightmans:

[I]t would be misguided to think the partnership model has no role in the 21 century legal services provider. Partnership can be a really empowering tool and if every partner in a legal services provider did his or her job well, and that empowerment is a big part of that, you will have a really successful legal services provider.

Simon Davies, managing partner, Linklaters:

A hypothetical ‘blank sheet of paper/perfect model’ law firm today comes with no guarantee of long-term success tomorrow. Every operating model needs adapting sooner or later and that’s where the real challenge lies.

Such a law firm might do worse than to build an operation that keeps this need for flexibility front of mind and choose an organisational model that is equipped to respond quickly.

I firmly believe that lockstep firms have a real advantage when it comes to implementing lasting change, largely because of the shared ‘team’ objectives that are inherent to that model.

David Patient, managing partner elect, Travers Smith:

For the time being, yes, I think so, although I am sure we will see different types of legal services providers in the future. I am not convinced, however, that in the short term they will compete for the type of work we do at Travers Smith. A law firm partnership should be built on trust, respect and friendship – ours is, and it’s a key component of our culture and our ability to provide the highest quality service to clients.

Later in the article, the panel is very supportive of the work done by their business services people, which started me wondering why partnership is seen as necessary for lawyers to provide good client service, but (in most firms) not so for their colleagues in other areas. Richard Masters (head of client operations, Pinsent Masons) put it most clearly:

Top quality client service is at the heart of the law firm proposition. It’s not possible to deliver that without really top quality business support, be that IT, facilities or knowledge. Unless business services are respected and integrated as a key part of the overall service solution, they cannot provide the quality of support service that’s needed.

In his recent detailed analysis of the top-level firms in New York and London, Bruce MacEwen showed that those firms appeared to be converging on a partnership comprising about 20% of total lawyers. If that figure is replicated across the sector, it is inevitable that four of every five lawyers working with clients are not partners (although many of those will aspire to become partners, of course, and that may affect their outlook). In reality, the figure may be greater than this — the responsibilities of ownership and management may leave less time for partners to attend to client work than their non-partner colleagues. I’d be interested in knowing whether clients really get better service from the lawyers who don’t own the firm. And of course, virtually none of the business services professionals who contribute to client service will even be eligible for partnership.

I am also intrigued by the idea that ownership (or promise of ownership) generates a more client-focused culture. My experience of working with a range of marketing, IT, finance and other professionals has been that they can be client-focused as any partner. And I have seen partners put their perception of the firm’s interests ahead of those of their clients, to the firm’s ultimate detriment.

I think some of the comments above are actually very context-sensitive. Slaughter and May is not a typical law firm, and it is easy to imagine that its partnership motivates its lawyers to perform in a very different way from others. Just because a model works well in one place, we can’t expect it to translate well everywhere else — other factors will play a critical role.

Coincidentally, today I also read a post by Charles Green on the balance between individual and organisational responsibility for trust and integrity. He is clear that there needs to be personal responsibility as well as institutional support.

A proper view of trust and integrity in business would squarely locate accountability on individuals. The penalties for violating rules should be in the range of 3X the ill-gotten gains, not 1X or less. Auditors may or may not be considered accountable for integrity and trust, but they shouldn’t think they can address these issues solely through risk assessment, monitoring and communications – not unless they address whether or not managers are clearly accountable (cf the recent GM mess), and whether or not the sanctions imposed on them for misbehavior are absolutely clear (e.g. swift termination for ethics violations, period).

One of the problems with partnerships is that (depending on the terms of the partnership deed) it can often be hard to ensure that accountability for poor partner behaviour is as swift and public as Charles Green suggests it needs to be. The behaviour generated by a partnership culture is not necessarily all positive.

I can see why firms cleaving to the traditional partnership model need to justify that choice, but the tone of some of the views expressed in the Lawyer article concern me. They almost suggest that any client choosing to work with a firm that is not organised as a partnership will get a poorer service as a consequence. In reality, my suspicion is that service culture is independent of organisational choice. As more different types of professionals become involved in supporting clients, I hope those clients will judge the quality of that work on what actually happens, rather than the way the business is owned.