Strategic knowledge: How KM can give clients more value

Law firms increasingly sell themselves on the strength of their teams' commercial and business understanding and their ability to deliver practical yet innovative solutions to clients. Despite this, general counsel continue to complain that law firms fail to grasp the commercial realities of their business.
While commercially-focused promises appeal to clients, unless they are reflected in the service which is delivered (and it
is provided consistently and at the right price), clients will react to them sceptically.

Ensuring everyone in the firm meets these promises is not entirely straightforward. Although most firms are reasonably good at collecting and disseminating legal and technical information, they are less effective at gathering and sharing expertise about clients and their relationships with the firm. Few firms take a truly holistic approach to managing the multiple sources of potentially-valuable information, both internally and externally, which can enrich and improve client relationships.

The origins of traditional law firm knowledge management are partly to blame for the absence of this broader approach to client service. The members of the firm with explicit responsibility for KM - the information teams and professional support lawyers (PSLs) - typically focus almost exclusively on legal and technical information and standard materials. Client-related knowledge is largely outside their remit.

The KM team's engagement with client relationships is almost invariably limited to 'knowledge-based' business development (producing updates and bulletins and running client seminars or, in the case of information staff, circulating news and press releases relating to individual clients and sectors to lawyers who have expressed an interest). It rarely extends to more general client relationship information.

This lack of PSL and information team engagement with client data is important
for two reasons. First, it means that the
KM techniques in which they are expert
- around the collection, categorisation
and retrieval of information - are not generally applied to client information
and are excluded from the firm's
knowledge systems.

Second, this information is not included in the range of skills and expertise which PSLs see as critical to building effective lawyers in the firm. This second point is particularly important if the firm's lawyers are to have the commercial and business understanding they need to deliver on its service promises.

A number of increasingly sophisticated technology-based tools are now available to help firms to surface and manipulate knowledge, and some firms are using these very imaginatively. For example, in the UK insurance sector, DWF and Weightmans are doings some very interesting work with data analytics to streamline services and present large amounts of information to clients in more manageable ways.

For those less willing or able to invest heavily, significant improvements can be achieved by explicitly acknowledging the value of expertise in managing client relationships and encouraging PSLs to:

1. work closely with other teams in the firm in order to identify where relevant information is held; and

2. recognise this as something which should be shared between fee earners as a matter of course, in the same way that they share the legal, technical and practical lessons which have been learned on individual matters.

None of this, of course, is intended to imply that it is no longer important for PSLs to be involved in developing and supporting technical expertise in the firm. Rather, by adding client and relationship information and expertise to an excellent technical foundation, they can significantly enhance the quality of the service that your lawyers provide clients.

Practical ways to help make this a reality include:

• setting explicit goals for both the KM and BD teams on gathering information about client relationships and transactions in relation, specifically, to commercial drivers and business needs;

• ensuring the KM and BD functions
  work closely together to ensure information gathered regarding current and prospective clients is shared;

• engaging the most experienced partners with the importance of accelerating on-the-job learning through effective off-the-job training in relation to client management, as well as legal and technical skills;

• encouraging PSLs to develop programmes which enable senior partners to share the benefit of the experience with more junior lawyers,
  for example through case study
  based workshops;

• asking PSLs to provide more opportunities for all fee earners to share their insights into building client relationships as a matter of course
  (for example, through know-how
  sharing sessions); and

• engaging PSLs with business.

Engaging KM

A key first step to ensuring that client relationship data is gathered and shared - and that its significance in developing genuinely client-centric lawyers is recognised - is to engage your KM team with your business (see box: 'Engaging PSLs with your business strategy').

 

---

ENGAGING PSLS WITH YOUR BUSINESS STRATEGY

• Ensure the practice/sector group and firmwide business strategy is shared with your PSLs so that they can identify/comment on likely knowledge needs

• Involve PSLs in discussions at partner level in their practice/sector so that they can match efforts to the division’s priorities

• Share financial and other data about matters and clients with PSLs so that they can see where focused intervention (for example, increasing efficiency by providing practical tools to lawyers in areas under fee pressure) is most needed

• Share information on current pitches and new business with PSLs so that they can assess likely current and future needs for KM support

PSLs should be involved in the business planning process so that they have an insight into the firm’s objectives in terms of clients and areas of work. They should also have a clear understanding of the mix of transactions and advisory work and the areas in which the lawyers with whom they work spend most of their time.

While many PSLs have a good overview of the work being done by lawyers in their practice area at any given time, they are much less likely to have a feeling for the volumes of particular types of work over time or their contributions to revenue and profit. And, while they may be able to identify the main clients in their practice area (and, in some cases, target and potential clients), they are unlikely to know volumes and profitability of work for those clients.

With this information, PSLs are significantly better placed both to make judgments about where they should focus their efforts and to identify the mix of legal, practical and, critically, client management skills that the firm's lawyers need.

Firms which want to derive maximum benefit from their PSL investment both engage their PSL team in business planning and ensure that PSLs draw up KM-focused plans designed to deliver the objectives in the business plan.

KM driving BD

All law firms use developments in law and practice as a basis for making contact with clients. Different firms approach this aspect of their business differently, with some using PSLs extensively in knowledge-based business development and others relying largely on fee earners.

Many firms go to considerable lengths to use their internal expertise as a basis for client engagement. A few are very sophisticated in the analysis they offer: for example, using big data techniques to deliver additional value to clients in specific practice areas. For example, by interrogating high volumes of data about previous insurance claims, they are able to predict likely outcomes in new claims.

Others offer one-off reports and insight pieces, going to significant lengths to produce sophisticated industry analysis reports. Almost all firms produce legal bulletins and updates for email distribution and publication on their website.

It is becoming increasingly difficult for firms to differentiate themselves through their knowledge-based offerings. Although individual clients vary widely in their perceptions, surveys over the years have indicated that much 'value add' in fact adds only a limited amount to relationships. In light of these findings and the level of investment required, firms which choose to go down this route need to ensure their offering stands out.

Effective use of knowledge not only helps lawyers to keep up to date, but also enables the firm to maximise returns by ensuring knowledge-based BD materials are appropriately targeted and quality is maintained.

Considerable improvements can be achieved by adopting some quite simple measures. In particular, where the firm's KM team has a good understanding of the firm's business objectives and its client relationships, it will be significantly better placed to identify and explain the likely implications of legal and market developments for clients and to help fee earners to decide how best to bring these to clients' attention. Team members will also have the confidence to share their insights and to suggest ways in which work they are already doing internally can be leveraged externally, with clients.

A final issue is to measure return on value added. Some firms are becoming more businesslike in their approach to when and how they offer additional services and have policies in place governing the circumstances under which the services should be made available. These should require regular review - for example, through client feedback and, ideally, some quantitative as well as a qualitative analysis (such as monitoring usage of PSL and other helplines, rates of access to online documentation and email opening and
click-through statistics).

Work delivery support

Using KM to support work delivery has, of course, been a central aim since the professional support role was first introduced. However, as firms have come to terms with the reality of working in a fee-constrained and increasingly competitive environment, their approach to legal and technical knowledge management has become more client focused.

Rather than considering how KM can make life easier for the firm's lawyers, some KM teams are focusing on how KM can be used to deliver work in a way which suits each client. Firms which have introduced innovative ways of working with clients in which effective KM plays a major part include Pinsent Masons (in its deals with Balfour Beatty and E.ON) and BLP (in its managed legal service arrangements with Thames Water).

KM can help to ensure the work that is delivered meets the clients' expectations on speed and cost, without compromising on quality. A number of new techniques and approaches to traditional KM tasks are particularly important to getting this right.

Traditionally, the approach to information storage and retrieval has relied on assumptions about the information lawyers need and the sources which should be available. KM can help by undertaking a more detailed information-mapping exercise to analyse the tasks lawyers undertake and the information they need to complete them effectively. KM has expertise in looking beyond traditional technical (legal and regulatory) information and knowing how to locate market and practice-based knowledge.

PSLs should also be encouraged to make use of financial and other client relationship data to prioritise the development of tools (including both standard materials and standardised documented processes) which enable lawyers to deliver a polished finished product efficiently to clients. Firms focused on high volume, relatively low margin work have for many years understood the value of streamlining processes and commoditising work as far as possible so that it can be managed by junior staff.

Historically, firms in high value, bespoke practice areas have been slow to recognise that they too could take a similar approach, at least to some aspects of the work they do. While almost all have adopted a process-driven approach to discovery and, increasingly, due diligence, a smaller number of firms are looking at process mapping across a much broader range of work.

Berwin Leighton Paisner, for example, has established a small central team of lawyers and technologists which focuses almost exclusively on this work. Transactions are broken down into a series of steps or phases through a process which, put simply, enables the firm to identify where systematisation is possible and to establish 'best practice' in the approach to each aspect of the matter. Each step or phase is then documented and underpinned with standard materials or 'toolkits' which give lawyers a step-by-step guide through the relevant processes, tying each stage
to budget.

Although a small number of firms are undertaking this work on a large scale
and using project management techniques to improve the delivery of key matters (such as Pinsent Masons and Addleshaw Goddard), for most this will be too big
a task to tackle in one hit. For these firms, the key will be to prioritise appropriately. Typically, firms will start with transaction types which are relevant to the largest number of people (ideally, where lawyers from a range of specialisms need to work efficiently together) or with areas of work under particular fee pressure.

Alongside these more innovative tools and approaches, it is important to ensure that KM is also continuing to support quality by cascading knowledge and experience down from the most senior
to the most junior lawyers. Developing
and introducing processes and tools
which enable matters to be delegated to less-qualified staff works only where they have been appropriately trained on how
to use the tools intelligently and have access to information and data which
will enable them to fill in the gaps in
their own experience.

 

---

CASE STUDY: INSTITUTIONALISING KEY CLIENT RELATIONSHIPS

Firm A was aware of a number of issues facing its charities practice. The team was led by an experienced partner who had built most of the key client relationships, but who was planning to retire at the end of the year. The remaining lawyers in the team included one other partner and two experienced associates who relied heavily on the head of the group for his expertise, not only on relevant law and practice but also on the preferences and backgrounds of key clients. The firm needed to be able to sustain this practice and enable it to grow after he retired.

In consultation with its PSLs and information team (and alongside discussionswith individual clients about the formal handover of each of the retiring partner’s clientrelationships), the firm took the following steps to mitigate the risks associated with theretirement and to ensure that the implicit knowledge and expertise the partner had built up was retained in the firm and would continue to inform its relationships with his clients.

• A PSL arranged for a trainee to conduct a series of interviews with the retiring partner, each covering a key aspect of charities law and practice, during which the partner ‘downloaded’ his thoughts on the main issues – legal and regulatory but also, crucially, the soft issues which informed the way he dealt with different types of charitable clients, his relationships with key regulators and the commercial and practical context of work in the charities sphere. These interviews were written up into a series of short ‘how to’ briefs, with legal, technical and practical/contextual sections giving simple guidance. This information was then stored in a digital handbook which was accessible across the department.

• The trainee spent time with the partner identifying good examples, from the many matters on which the partner had worked, of core documents which were then collected together, indexed and made available internally.

• A series of workshops were arranged at which the partner led discussions on different aspects of charities work at which, while key areas of law and regulation were identified, the main focus was on their practical impact and the commercial context in which they operated.

• A member of the business development team interviewed the partner about his key clients, ensuring that critical information about his relationships with them was captured. This information was recorded appropriately on the client database and then shared with the remaining lawyers in the team.

---

CASE STUDY: CREATING THOUGHT-LEADERSHIP CONTENT

Firm B was looking at ways to maintain the pre-eminence of its banking practice. It decided to engage consultants to help it to deliver a high-quality thought leadership campaign which would appeal to its banking clients and reinforce their existing perceptions of the quality and commerciality of its lawyers.

It began by asking its banking PSL – in consultation with banking partners – to draw up a list of the most significant issues or developments facing its banking clients. A series of workshops were then held with partners at which these ideas were discussed and a short list of topics, prioritised in order of perceived importance, was drawn up.

This list was then tested with a number of existing and potential clients of the firm. The final choice of topic for the campaign was made based on these discussions, which also helped to shape the scope and focus of the campaign.

In discussion with the banking PSL and the firm’s business development team, severalkey aspects were identified on which quantitative research was required, which wasconducted by their team of business information analysts. The results of this research were analysed and presented in the report which formed the core of the campaign.

The combined team then identified those clients most likely to be affected by the issues covered in the campaign and therefore most likely to be interested and to respond positively. These clients were the core targets of the campaign.

A report was produced which drew on expertise from across the firm by practice and sector as well as geographic location, in order to showcase the firm’s capability to the thinking, all who contributed to it were asked to identify at least one practical impact on which action was likely to be required to highlight to clients.

The report was launched at a presentation to the core target list of clients and released to the press. Detailed roundtable follow-up sessions were offered to these clients. A series of more general client seminars were also held, based on the report, and workshops and presentations were organised internally.

 

Holistic approach

While there is no suggestion that traditional management of legal and technical expertise should be abandoned, some law firms, such as Withers and Taylor Wessing, are beginning to take a broader view of the knowledge they need to gather, analyse and share and are adopting powerful new information processing and artificial intelligence technologies to search across
a wide range of data sources.

This more holistic approach to knowledge within the firm, which recognises not just the value of sharing legal and technical expertise but also of leveraging a wider range of client-related knowledge, promotes the development of lawyers who are not only technically excellent but also truly client focused.

Harriet Creamer has more than 25 years' experience in the legal services sector, both as a client lawyer and in management (www.gullandpadfield.com)