KM rises to the ‘more for less’ challenge at the VQ Knowledge Management and Strategy Forum in Stockholm

17
Oct
2011

Joanna Goodman

VQ Knowledge Management and Strategy forum in Stockholm was organised by VQAB’s Ann Björk and Helena Hallgarn, former knowledge managers at Vinge, Sweden's second largest law firm. It was an interesting and useful event with thought-provoking presentations and excellent hospitality and networking at The Grand Hotel. Over 130 delegates attended. It was good to meet leading lights in Swedish law firms and catch up with legal IT providers including Autonomy (now part of HP), Recommind, OpenText and BusinessIntegrity and hear presentations from Rob Ameerun of Legal IT Professionals and Chris Bull of Edge International, among others.

The keynote speaker was Professor Richard Susskind, whose presentation was based on the concepts in his bestselling book ‘The End of Lawyers?’ Susskind repeatedly describes his book as, “The End of Lawyers – Question Mark”, presumably to clarify that the title indicates a question for discussion rather than what would be a rather alarming statement at a law firm conference!

UK law firms are increasingly recognising Susskind's contention that they will have to change the way they work radically by becoming more business-like and leveraging new and emerging technology. Drivers for change include increased pressure on fees, the consumerisation of workplace technology and, in the UK, liberalisation in the form of the Legal Services Act which allows different business models to operate in the legal sector. The VQ Forum focused on KM as a way of delivering the changes and innovation that will help firms to survive and thrive in today’s dynamic and uncertain business and professional landscape. Some of the main themes in Susskind’s keynote were raised – and in some cases challenged – in subsequent sessions.

What do clients want?
Law firms – and legal technology products – regularly highlight client centricity as a differentiating factor. Susskind, who advises in-house counsel as well as law firms, looked at what clients want from law firms. They want a fence at the top of the cliff rather than an ambulance at the bottom – i.e. risk management to help them avoid legal problems – and solutions to problems when they do arise. It is important to identify what clients really want. Do Black & Decker customers want a power drill? No, they want to make a hole in the wall. All businesses need to identify their metaphorical hole in the wall as this defines their mission statement.

For law firms, it is knowledge.

Clients are under pressure to reduce internal headcount and external spend, but they also require more legal and compliance work involving greater risk. Susskind believes that this challenge – to deliver more for less – will define the next decade for legal services.

Martin Salomon of research and strategy company Regi presented Swedish research about what clients are looking for from their legal advisors and whether law firms’ were meeting their needs. They found clients most valued proactivity in terms of keeping clients informed, alternative fee arrangements – clients were generally dissatisfied with current pricing models – and most significantly follow ups with only 37% of firms performing regular follow-ups. Innovation is critical to client retention.

The ‘more for less’ challenge
Susskind offers two strategies for rising to the challenge:  efficiency – through commoditisation and collaboration – through technology and strategic alliances.

Commoditisation involves what Susskind describes as the decomposition of legal services – separating core and support services and automating, outsourcing or delegating non-core business to one or more third parties or internal business support professionals, leaving lawyers to concentrate on the specialist advice and expertise that differentiates them in the market.

The ‘more for less’ challenge drives and requires innovation. Mikael Arborelius, engagement manager at Acando focused on the quest for innovation in the face of conservatism, compliance and commoditisation. He associates innovation with implementation – working differently. Law firms don’t just need to change: they need to innovate to compete in new markets.

Arborelius identifies knowledge as an important aspect of enabling innovation along with visualisation and agility. As well as capturing data and information from daily operations for later retrieval, he suggests two useful tactics:

Keep your ideas and make them reusable. Use existing technologies like SharePoint, Trac, OneNote, Wiki to store and label information for later retrieval.

Use light-weight tools for fast communication, but make sure that they enable storage and retrieval – ways of revisiting the information; to treat and use it as knowledge. He offers Yammer as an example.

Similarly, Björn Immerstrand of Milnet BI explained the value of leveraging real-time data to find efficiencies and drive change by informing strategic decisions.

Disruptive technologies
The pace of change – or innovation – in technology is another key factor. Susskind referred to the present as the knee of an exponential curve in emerging technology and highlighted some examples of disruptive technologies driving change in the legal sector

• online communities, wikis and social networking
• closed client communities – e.g. Sermo, developed by the US medical profession
• online dispute resolution – as used by Ebay
• electronic legal marketplace
• automated and online drafting and project management technology – ContractExpress, Affinitext
• Apps for general counsels
• High-definition video conferencing and holographic telepresence

KM and competitive advantage
Chris Bull of Edge International discussed KM's pivotal role in new structures within the UK legal sector and lawyers’ ability to compete in an expanding legal services marketplace. As a Swedish lawyer explained to me later, although Swedish firms operate in a strong domestic market, larger, more internationally focused Swedish law firms are facing more competition than ever before from international and foreign firms, particularly for big-ticket corporate transactions.

Liberalisation has produced a plethora of B2C business models: branded chains like Quality Solicitors, comparison websites ‘freemium’ legal services Legal Zoom and Rocket Lawyer. Well-established retail brands the Co-op and WH Smith now offer standard legal services. Bull pointed out that consumers are likely to turn to familiar retail brands rather than search for a law firm to deliver standard services.

Technology has enabled innovation in the form of new services. Susskind used ATMs as an example. ATMs gave banks’ customers 24-hour access to their accounts – and their money. Before ATMs, you could not get money from a bank outside opening hours. Whereas digital photography is a new way of delivering an existing process, ATMs are an original technology-driven service.

Some of the latest business models represent the legal sector equivalent of ATMs. Both Susskind and Bull highlighted BLP’s home sourcing – taking on the role of in-house counsel to Thames Water and developing its innovative Lawyers on Demand agency lawyer service, which has since been emulated by other firms. BLP is becoming an outsourcing provider as well as a law firm. As Susskind put it, if there's going to be cannibalisation, surely it's better to be first at the feast.

Five KM priorities for competitive advantage
Bull offered five KM priorities for competitive advantage

1. Analyse and document workflow and process – this enables you to forecast fees and find efficiencies
2. Convert know-how into products – by delivering value-added services; providing out of hours services, attracting more online traffic
3. Develop true thought leadership – create differentiation through specialist expertise, key recruitment
4. Leverage client knowledge – focus on branding, and most importantly, make CRM work! CRM needs to be a way of leveraging client data and converting it into new business, rather than a simple contact database
5. Seamless collaboration – deliver a consistent service from third-party providers, alliances and networks.

Susskind’s four models for legal practice
Susskind urged firms to embrace evolving technology and move from pricing differently to working differently. He presented four progressive models which can be found in detail in ‘The End of Lawyers?’ and his presentation slides:  the target, the doughnut, the glazed doughnut and the cog. The target is a graphical depiction of the traditional law firm model, comprising expert advisers, trusted practitioners and routine workers; the doughnut has two sections – the trusted advisor and the enhanced practitioner – routine work is outsourced; the glazed doughnut adds a layer of analysts and project managers to manage the decomposition and distribution of different functions; and the cog – a glazed doughnut surrounded by cogs – depicts a model where only certain elements are outsourced to third parties and the rest is retained in-house.

One concern that was raised in the questions that followed Susskind’s keynote was that this approach was not reflected in legal education. Are law schools failing their students by neglecting to prepare them for the future of legal services?

Changing culture: an uphill struggle
The panel discussion that followed the keynote included a heated discussion between Susskind and Anne Ramberg, the formidable Secretary General of the Swedish Bar Association, who strongly defended a more traditional approach. Her contention was that a lawyer’s role should be focused on gaining and retaining the trust of clients and of society rather than concentrating on money and profitability and that outsourcing to third parties could compromise a firm’s position as trusted advisor. Susskind’s retort that this was an outdated protectionist approach was not well received. Ramberg commented that if firms lost sight of their values, they would not retain the top talent and many younger lawyers in particular were leaving the largest law firms because they did not like working there. Although some delegates had anticipated an altercation between the two panellists, who, fortuitously (from the point of view of an observer) were standing side-by-side, it was reported in the Swedish media. Moderator Christer Danielsson regained control of the discussion, quickly drawing a graph with a steep angle to illustrate that changing the status quo was likely to be an uphill struggle.

The future is social?
In a lively presentation on social media, and the only presentation to use multimedia, Rob Ameerun, business consultant at I.R.I.S. Netherlands and owner of Legal IT Professionals used video to highlight its power as a real-time communications channel. He showed us one of the famous YouTube social media revolution videos and then used Dave Carroll’s viral United Breaks Guitars video to highlight the power of social media.

Carroll highlights the fact that customers long for connections and good experiences. Ameerun’s contention is that even the conservative legal sector cannot ignore social media as a critical business tool. This continued the theme of change, of not being left behind as the world moves on. He offered clear, practical guidance on how law firms can utilise social media’s ‘Big Four’, namely blogs, LinkedIn, Facebook and Twitter to communicate with stakeholders, support business development and recruitment and reinforce their brand. One firm even has a YouTube channel.

The successful use of social media tools depends on culture and acceptance. Although firms do not necessarily need to embrace all forms of social media, they need to be aware of them as mainstream communications and media channels and develop clear policies and guidelines for their use. Ameerun observed that many firms fail to see the benefits of social media, because these are difficult to measure: social media is not billable and you cannot precisely measure its return on investment (ROI).

To illustrate the potential business value of social media tools and the benefits  they can bring to a firm, provided that the culture is right, Ameerun presented a detailed case study, featuring Dutch firm Dirkzwager's award winning – and cutting edge – social media KM system, which uses internal blogs to create and collate relevant knowledge and information which is then disseminated to all the firm's stakeholders including its clients.

Although most law firms are still behind the curve when it comes to social media, this case study, the preponderance of iPads in the audience, a lively Twitter feed and the fact that the forum has been mentioned in several blogs, including this one, demonstrate that things are changing.

Finally VQ presented their outsourced KM offering, the digital associate, which puts the Susskind model into practice by analysing which roles or functions could be replaced or improved by smarter technology and processes – such as the VQ Legal intelligent legal document solution – and creating non-lawyer KM roles.