KM and the Changing Legal Environment

June 6, 2007

In November 2006 the Government introduced the Legal Services Bill. It is anticipated that it will lead to the biggest shake-up in the legal profession in a generation, enabling non-lawyers to own and operate law firms for the first time. This new era, already dubbed ‘Tesco Law’, is likely to see very different types of organisation involved in the delivery of legal services. The legal press has picked up on the potential impact of the Clementi reforms, calling them ‘a wake-up call for the legal profession in an increasingly competitive and changing marketplace’. Fraser Whitehead, the Chairman of the Law Society’s Dispute Resolution section, likened the concept of alternative business structures to ‘an approaching tsunami’. Professor Stephen Mayson, director of the new Legal Services Policy Institute at the College of Law, has said that dispute resolution practitioners need to reform their business structures or risk losing out to high street brands moving in to the legal services market. It should be noted that this is already happening, to a limited extent, through the legal services currently provided by the AA and Halifax.


Alongside these developments, Richard Susskind made an eloquent case as to how legal services might develop over the next few years in his 2006 SCL Lecture ‘The Next Ten Years’ (an edited transcript of the lecture appears in Computers & Law April/ May 2006 Vol. 17, Issue 1). Susskind presented his view of the evolution of legal services and suggested a pull away from the delivery of bespoke services towards commoditisation, at least from the client perspective. It is his contention that law firms ‘who incline towards the right [commodisation] are going to do themselves huge favours in terms of client satisfaction and profitability’.


Can KM be a driver for change?


The changing legal landscape poses some complex challenges for law firms operating within the traditional model of time billing and the belief that the work they do is bespoke to the individual client’s needs. From a Knowledge Management perspective it raises some particularly interesting challenges. To what extent does law firm KM need to help reshape itself and help drive forward change?


Elements of bespoke work will of course remain and require legal innovation. However, innovation will also attach to the delivery of systematised legal services (use of technology to improve a process) and packaged legal services (legal knowledge, information and systems developed by law firms for use direct by clients). Surely this is where KM should start to come into its own?


The use of technology becomes paramount as legal services move towards commoditisation. Many of these technologies are already, or are becoming, familiar to those involved in KM. Document assembly; multi-media; and social software are already becoming part of the KM toolkit. Firms are beginning to re-evaluate how they put together their knowledge components (e.g. their precedents, checklists, best practice notes and matter-generated know-how) and are starting to move away from traditional approaches based on the type of know-how to bring together knowledge and information based around particular matter types. Increasingly a number of law firms are also looking at how these technologies and techniques can support existing, and help develop new, client relationships.


It is an exciting, albeit potentially frustrating, time for KM.  The tools and ideas are out there. Many firms have a wealth of IT and KM expertise to support the legal profession as it seeks to find its way. However, in many firms there seems to be a marked reluctance to start exploring how technology and knowledge can be used to deliver legal services in different ways to the traditional legal model. There still seem to be mixed views as to whether this change is really what clients want or indeed are pushing for. There is still reluctance, in some quarters, to accept that there may be commoditised or even standardised elements of work in even the most complex of transactions. This remains a hard nut to crack where time billing remains the favoured basis of charging from the law firm perspective and continues to be accepted by clients, this is particularly true of US firms who continue to report record profits.


In many respects this comes down to a fundamental challenge to the role of the lawyer. Robert Kidby, a partner at Lovells LLP, in a highly entertaining presentation to the SCL KM Special Interest group on ‘KM and Commoditisation’ in December, likened the role of the lawyer to that of a waiter in a restaurant. Provided the waiter delivers a quality product at the right time with the right level of service, does the waiter, or the restaurant for that matter, have to have prepared everything itself? It is unlikely that lawyers see themselves in the role of waiters. Many probably like to think of themselves in the role of the master chef creating highly innovative recipes for each customer that comes through the door. Lawyers generally prefer to see their work as complicated and bespoke. For many, the potential changes outlined by Richard Susskind and thrown up by the Legal Services Bill  pose a real threat to not only the way they actually deliver legal services but their perception as to how legal services should be delivered.


Changes in delivery to clients


There are already tangible examples of firms are using technology and knowledge to deliver legal services in a different way. Lovells Mexican-Wave enables the firm to maintain a key client relationship whilst effectively managing the outsourcing of legal work to third party law firms. The benefits to the client and the firm are tangible. The client pays the right price for the work but is assured of the quality of the work. The firm retains a valuable client. Document automation, document sharing and web cam conferencing are all important tools in the delivery of this service supported by standard form documentation.


Client relationships, efficiency and speed are key to the effective delivery of most, if not all, legal services. If clients do start to push law firms towards commoditisation, as Richard Susskind suggests, then the effective use of technology and knowledge becomes even more paramount and it will be the firms who respond to this challenge who will do best. But are clients really pushing for change? Whilst some might be, it is suggested that this is not universally the case. Equally, is the move towards commoditisation in the clients’ interests?


Charles Drayson, Company Secretary & General Counsel at Ceridian, speaking at the same KM and Commoditisation meeting, suggested that the move towards greater commoditisation would be in the client’s interest if it meant the work was being done more efficiently; if products developed by law firms made legal solutions more accessible; if products were packaged appropriately for users; and if the products are better (and not just cheaper) than bespoke services. However, such a move would be detrimental if law firms invest heavily in products which do not meet the real needs of clients; if products are merely there to trigger demand for traditional legal services; or if products are designed on a ‘because we can’ basis.


The challenge ahead


For the time being law firm KM seems to be deeply rooted, from a client perspective, in providing clients with general access to law firm knowledge resources; and newsletters, updates and seminars. These things are ‘nice to have’ but they do not make a material contribution to the business needs of a client.


The challenge for law firm KM is to be innovative in responding to necessary change in the developing legal environment. Technologies are already out there to support different models for delivering legal services but this is not just about the use of technology. There are often fundamental cultural issues which need to be addressed. Do firms have the imagination to create profitable new models for delivering legal services? Do they know how to sell these to clients?


Those involved in KM need to start thinking creatively as to how technology and the firm’s knowledge base can support fee-earners in developing new ways of delivering legal services to make money for the firm whilst being a cost effective way of delivering legal services from the client’s perspective. Many fee-earning lawyers are likely to be inherently sceptical about the need for change. Where they accept changes are needed, they may lack understanding as to how to respond.


KM should be ideally placed to work with fee-earners to develop new legal models and new ways of working. To be effective, KM needs to be seen as essentially client focussed and client driven. Now more than ever those involved in KM need to understand the business of law as well as the business of their clients. KM needs to be truly client facing if Tesco Law and commoditisation are around the corner.



Juliet Humphries is principal of Pierian Spring Consulting Limited and Justin Harness is an International Knowhow Manager at Lovells LLP.


With thanks to Robert Kidby and Charles Drayson and all those who attended the SCL meeting on KM and commoditisation on 5 December 2006.