Knowledge management could soon be a standard client service. But are firms ready for the technology required to make this happen? Leanne Mezrani reports.

It has been a number of years since the global financial crisis forced firms to tighten their belts. Lawyers may rarely call to mind the time when firm revenues took a substantial hit and commercial pressure prompted many to reduce their ranks and, in some cases, relocate legal services to low-cost countries.

With the GFC a fading memory, law firm budgets are loosening ever so slightly and a renewed focus is being placed on internal functions like knowledge management. It seems, however, that some clients are hanging on to penny-pinching habits they picked up at the height of the GFC.

Sarah Walters, director of legal resources at Henry Davis York, told Lawyers Weekly that clients, particularly in-house counsel, have come to expect certain efficiencies from their law firms and they are increasingly asking for knowledge management services as a “value add”.

“In-house counsel is often a cost centre ... their budgets are lean and they appreciate knowledge management services that help them do their job,” she says.

While offering this service may seem like a costly exercise, Walters encourages firms to meet this demand. She says law firms will not only strengthen client relationships but potentially gain valuable knowledge about the client.

For the client, knowledge management support can help skill up in-house lawyers. Walters explains that in-house teams may not have the budget for sophisticated learning and development functions that are common within firms, “so clients can gain access to their law firm’s knowledge”.

This mutually beneficial arrangement will, according to the HDY director of legal resources, prompt more firms to offer knowledge management as a standard client service.

Big not always best

Technological advancement has an important role to play in driving this trend.

The extent to which technology is influencing knowledge management can be seen in the program of the upcoming Lawtech Summit and Awards. Using social media to collect knowledge, protecting client confidentiality when storing data in the cloud, and data sovereignty are just a few of the topics on the agenda.

Norman Waterhouse, which picked up a Lawtech award in 2011, has introduced a number of technologies to streamline its knowledge management processes. The firm beat the likes of Minter Ellison, Clayton Utz and Norton Rose to win the award – a nod to the firm’s use of Smartphone technology.

Michael Taylor, CEO of Norman Waterhouse, claims the firm saw the commercial benefits of investing in knowledge management technology.

“[The strategy] enabled our fee-earning staff to better utilise their time to be more accessible to clients,” he says.

Norman Waterhouse is currently eyeing enterprise search as the next step in its knowledge management strategy.
Enterprise search is an important technological trend in the knowledge management space that is gaining momentum and “allowing firms to be more agile”, reveals Peter Campbell, CIO and Knowledge Director at Sparke Helmore.

Commonly marketed as e-discovery tools or content management systems, enterprise search enables large, information-intensive organisations like law firms to search, manage and retrieve information stored in internal and external data repositories.

Campbell believes that by improving productivity, the bottom line of all law firms will benefit.

His firm, Sparke Helmore, took the Best Practice in Knowledge Management Award at the 2010 Lawtech Summit for integrating its knowledge management and document management systems.

This project has brought revenue to the firm, although it can be difficult to quantify at times, he explains. “We shouldn’t be doing things if they don’t add tangible benefit to the business,” he adds.

A cautious approach

Campbell believes social media is another tool that can provide efficiencies in knowledge management. But firms are a long way from embracing this technology, he adds.

“Social networking is less applicable to law firms because our culture is a little more conservative, but it’s on the radar as something we need to watch.”

While Campbell is an advocate of these technologies, he is also cautious. He points to the security risks (eg hackers and viruses) to client information and the firm’s intellectual property, particularly when data is stored online.

More importantly, firms need to be wary of the business risks of failing to implement a technology properly, adopting technology before the business is ready or implementing too much technology that can lead to “change fatigue”, he continues. “Lawyers won’t know what to focus on next,” he explains.

Walters agrees that firms must take a cautious approach to knowledge management technology. She claims those dazzled by the latest innovations must remember that protecting client information trumps any potential efficiency gains.

Cloud technology has well documented risks – and it’s not just hackers that firms need to wary of.

Legislation like the US Patriot Act and Digital Millennium Copyright Act has meant that storing data with an offshore company may allow foreign entities to rifle through confidential client information.

Under the Patriot Act, data can be accessed without the knowledge of the host and, in some cases, providers may be prevented from telling clients of such access.

Need an incentive?

Despite these data security and sovereignty issues, Campbell believes technology is vital to the development of knowledge management within firms because it “incentivises lawyers to contribute”.

“Contributions skyrocketed when we made it easier through technology,” he says.

Sparke Helmore has also introduced other incentives such as competitions, knowledge management built into job descriptions and performance criteria, and recognition through awards.

Fee relief is the next step in encouraging lawyers to contribute to a firm’s pool of knowledge, according to Campbell.

“Lawyers face the huge conflict between desperately trying to meet billable hours, keep the client happy, keep the family happy ... and on top of that we ask them for knowledge management work.”

While he admits this tactic has only been employed occasionally by Sparke Helmore, he believes it will be necessary until all lawyers genuinely appreciate the value of knowledge management.

“Some understand benefits of investing in own practice ... but many still need encouragement,” he adds.