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Knowledge management — the process of identifying, capturing, disseminating and using the knowledge created by a law firm — should be key to a law firm’s business. However, a recent study of 16 leading U.S., U.K. and Australian law firms found that among U.S. law firms, knowledge management, or KM, largely remains a narrow theoretical concept, without full management support. Consequently most firms have not made an adequate investment in KM. Even among U.S. law firms that have made the investment, many have not focused on tying KM initiatives to the firm’s business objectives. In late 2001 Curve Consulting, a consulting firm focusing on KM in the legal industry, interviewed eight U.S., three U.K., and five Australian firms about their approach to KM. The firms were multioffice, multipractice operations, with an average size of 1,000 lawyers. The firms were selected on the basis of their commitment to KM. As the head of Curve Consulting, I conducted comprehensive interviews with the head of KM or a representative at each firm. I interviewed participants on a broad range of topics, including KM strategy, objectives, organization, culture, technology, client service and metrics. The 2001-02 Global Law Firm Knowledge Management Survey Report contains the results of those interviews. Everyone I interviewed said that KM was a key business driver, yet it was evident that their firms don’t focus sufficiently on KM. I have identified three primary shortcomings. Firms define the scope of KM too narrowly. Their KM organizations are too small and not properly positioned. Finally, few firms have introduced formal processes to measure the value of KM and cannot demonstrate how KM helps achieve the firm’s business objectives. Let’s look at these shortcomings separately. TOO NARROW KM involves both technology and nontechnology elements. U.S. firms emphasize the technology element. Of the four U.S. survey participants with a KM strategy, three focus heavily on content delivery via technology tools. That is necessary, but not sufficient. Building a culture that encourages knowledge sharing is critical to the success of KM in a firm. So is creating a dedicated KM team to support the identification, capture, dissemination and use of knowledge. U.K. and Australian firms have taken a broader approach, which emphasizes the nontechnology aspects of KM such as culture and organization. Knowledge can be both explicit and tacit. Explicit knowledge is what is “between the bookends”; tacit knowledge is what is between a lawyer’s ears. While they say that they recognize the importance of tacit knowledge, U.S. firms do not adequately focus on how to identify, capture and share it. They are content capturing explicit knowledge, such as best practice documents and research materials. U.K. firms have focused on tacit knowledge and nontechnology processes. For example, U.K. firms routinely conduct postmatter debriefing sessions between KM staff and lawyers to capture tacit knowledge acquired during a matter. This knowledge may then be converted into multiple forms of explicit knowledge, such as methodologies, precedent documents or a record of newly acquired skills and expertise. U.S. firms approach knowledge management too narrowly in another key respect. They concentrate on legal knowledge and know-how at the expense of critical nonlegal categories, such as knowledge about the firm and its clients. Staff members must know about their clients and the industries in which they operate in order to give commercially sound legal advice. Even so, three of the eight U.S. participants did not consider client information a category of knowledge they should manage. The same number of U.S. firms do not consider firm and practice area information, or the skills and expertise of staff, as categories of knowledge to be managed. TOO SMALL AND ISOLATED Too often at U.S. firms KM stops at the top. Five of the eight U.S. participants have appointed a director of KM, but those directors tend not to be in charge of robust KM organizations. The typical U.S. firm has proportionately less than half the KM staff of U.K. and Australian firms. The Australian and U.K. firms have one KM staff member for every 20 lawyers. Only one U.S. participant has this ratio. Two U.S. participants have one KM staff member for every 21-30 lawyers. Three of the U.S. firms have a ratio of one KM staff member to 31-40 lawyers, while two U.S. firms spread each of their KM staff members across 100 or more lawyers. U.K. and Australian firms recognize that KM involves many different skills. At those firms, for example, the roles of knowledge manager, professional support lawyer and information officer are well established. The professional support lawyer is responsible for creating content. The information officer is responsible for delivering content. The knowledge manager has one of two roles. At firms with professional support lawyers and information officers, the knowledge manager typically has a central management role, responsible for managing professional support lawyers and the implementation of firmwide KM initiatives. At other firms, the knowledge manager has a practice group role, responsible for meeting the KM needs of the group — a hybrid of the professional support lawyer and information officer. The size of the KM organization and the specialization of personnel have enabled U.K. and Australian firms to develop sophisticated KM systems and processes. Precedent libraries and best practice work product repositories are standard features at those firms. By contrast, U.S. firms are only beginning to focus on such systems. U.S. firms are limited in their ability to build those systems, because of their small KM teams. U.K. and Australian firms also understand the need to involve practicing lawyers in KM. Some firms have introduced incentives for lawyers to contribute to KM. Sometimes KM is part of the performance review process. U.K. firms in particular regard contribution to KM as a job requirement. Mindful of the cost of having partners and associates involved, those firms involve lawyers only in value-added tasks — such as identifying valuable knowledge and presenting training sessions. U.S. firms have not yet taken those steps. The KM organization must be visible to succeed. Unlike administrative functions, KM requires the involvement of every practice and function within a firm. It often requires drawing together knowledge that has been traditionally housed in different areas of the firm. To implement KM initiatives, the KM organization must be able to work across all areas of the firm. However, there are some startling gaps in the positioning of KM in firms, especially with respect to KM’s relationships with the finance and human resources departments. Critical elements of knowledge such as client, matter and practice area information typically reside in systems managed by the finance department. However, seven out of the eight U.S. firms reported either no relationship between KM and finance or a reliance on informal collaboration between the two functions. There is a similar disconnect at U.S. firms between KM and human resources activities. Again, seven of the eight U.S. firms reported either no formal relationship between KM and human resources or a reliance on informal collaboration between those two functions. It’s no wonder that U.S. firms are having trouble with the cultural barriers to KM, such as lack of reward and recognition. Knowledge is not the same as information, but at U.S firms, it’s hard to tell the difference. At three of the five U.S. firms with a director of KM, that role is combined with the role of chief information officer. Those dual roles perpetuate the view that KM is strictly a technology initiative and hamper a firm’s ability to develop a broader understanding of KM. Finally, many U.S. firms have not implemented an appropriate reporting structure for the KM organization. At one-half of the U.S. firms in the study, the head of KM reports directly to the executive director. This suggests that KM is viewed as an isolated administrative function. This reporting structure limits the ability of the head of KM to influence cultural change or gain management support for long-term investment. At the eight U.K. and Australian firms, only one reports to the executive director; the rest report to the firm’s top lawyer or to a committee of lawyers. TOO LOOSE Success is admittedly hard to measure in KM, though firms around the world don’t seem to be trying hard. Few firms have introduced formal measurement processes. Thirteen of the survey participants do not measure the return on investment in KM initiatives. Few firms know how to assess whether a KM initiative meets a defined business need. Seven participants do not record KM staff time, making it a challenge to measure the investment in KM. Without measuring the success of KM, the KM organization cannot demonstrate its value. Successful KM takes several years and requires significant investment in infrastructure and staff time. Yet six of the eight U.S. firms say that management does not regard KM as critical to the firm’s success. In order for KM to be more than just a buzz phrase, U.S. firms need to figure out what they want to achieve, how they plan to achieve it, and how they plan on measuring it. Know-how is a firm’s primary asset. It’s a valuable asset to waste. Gretta Rusanow is chief executive of Curve Consulting, with offices in Sydney and New York. E-mail: [email protected].

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