Why the concept of knowledge management needs to be repositioned

Why the concept of knowledge management needs to be repositioned

Knowledge ManagementEffective strategy making and knowledge management are intimately interwoven in the modern law firm. Indeed, when boiled down to its base elements, what else does a law firm do but leverage knowledge and leverage relationships. It converts knowledge to revenue through its relationships with its clients and its people.

If we step back from the strait-jacket of historic convention it is clear that every aspect of a firm’s interaction with its clients involves leveraging knowledge in some way; whether it is legal knowledge, relationship knowledge, process knowledge, systems knowledge or organisational knowledge. Defined in this way, being significantly better at managing knowledge will clearly create opportunities. How we interact with our clients and the way in which we provide services to them are, both intellectually and practically, knowledge management opportunities and challenges!

So what are the barriers to a more holistic and strategic approach to knowledge?  To an extent, the problem lies, as with so many other aspects of management within the legal environment, in the language that we use and how it is interpreted by those who hear it. For many lawyers, the term "knowledge management" has become synonymous with "legal technical know-how".

The concept of knowledge management needs to be repositioned. In the minds of many it is inexorably intertwined with legal technical knowledge at best and the management of voluminous information systems at worst. It is perceived as a world occupied by pedants rather than at the core of the business proposition; as a means by which a firm can create unique value for its clients and a strong brand position.

Whilst excellent legal knowledge is undoubtedly a business critical capability it is only rarely a source of sustainable competitive advantage. In reality it is often the "table stakes" needed to play the game within the increasingly competitive environment faced by corporate and commercial law firms. It is necessary but not sufficient.

The explanation as to why this is this case is both rational and pragmatic. Legal technical knowledge is inevitably shared either explicitly or implicitly within the legal community – it is either proprietary, being sourced from one of the well-established providers of precedents and legal know-how, or gathered from competitors in the normal course of business. Over time legal know-how is shared within the legal community by the brigades of professional support lawyers employed by leading law firms. There are few secrets, and innovations soon become common practice. Among the leading firms, the spread between best-practice and average-practice is not great.

However, non-legal knowledge is quite another matter. This sort of knowledge is holistic and encompasses operational, process, behavioural, cultural and relationship factors.  Some is explicit, trapped in the systems of the business, but far more is implicit, held in the brains of those in the firm.

Real competitive advantage can be gained from understanding, managing and leveraging these pools of knowledge better and as part of a wider strategic agenda.

What this means in practice is that firms need to engender a much closer link between those tasked with strategy making and their knowledge communities in the broadest sense.  Such collaboration will enable new ways of enhancing the client experience through a more integrated view of how the firm’s strategy, core markets and service proposition can be developed.

From a client perspective, knowledge value is most likely to be added in one of three ways.

  1. Managing existing knowledge assets better

Typically, this will mean improving both the efficiency and efficacy of the firm’s current intellectual and process capital, such as the development of systems to share and leverage knowledge more effectively.

It will also require firms to recognise those aspects of their knowledge systems which are either already commodity areas or will inevitably become so and to treat them as such. What this means in practice is ensuring that these can either be delivered at the lowest possible cost or accepting that they should no longer be part of the firm’s service mix.

At the same time, there must be active investment in those unique knowledge assets, which:

  1. clients value most highly;
  2. are challenging for competitors to replicate; and
  3. enable the firm to command a price premium.

2. Creating new knowledge assets

Knowledge innovation also has a central role to play in the development of effective strategy. It is likely that new vistas will be opened by those able to adapt the principles of leading edge knowledge management to new scenarios.

This may be by applying these techniques in areas which the firm does not currently frame in this way or by creating new applications that deliver enhanced client value. Advances in technology will allow innovative firms to push the envelope of what is possible at an ever increasing pace.

  1. Combining existing knowledge assets in new ways

A scenario that firms should also consider is whether existing knowledge assets can be used in new ways. This may involve, for example, combining previously discreet elements to create a new approach or by opening areas that were previously internally ring-fenced to client interaction.

Knowledge management has been long recognised as crucial to the success of the firm from an efficiency and risk management perspective.  The more astute leadership teams are now awake to the potential for advantage to be gained from better use of their firm’s knowledge assets.

The same thinking also leads inexorably to a realisation that a holistic view of the ways in which knowledge – legal, process, system, client and relationship – can be better leveraged is at the core of strategic thinking, rather than a peripheral activity which has only a tangential impact.

So how should the knowledge management community rise to this repositioning challenge? Better engagement and collaboration across their firm’s management teams will enable them to demonstrate the value that they are able to bring by providing a wider perspective on the firm’s strategy, its sources of competitive advantage and its operational efficiency. Building a wider skill set will also be important as will be the ability to communicate clearly and concisely their key arguments and the benefits that they bring.

In many firms, such a role is strikingly different to that which many knowledge professionals currently fulfil. For some it will be seen as a great opportunity, while for others it will not be a career route they wish to follow. This first group may be small in number but will be significant in the impact they are able to make on their firm’s strategy and future success.


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About the author:

Andrew Hedley advises law firm leaders on issues of vision, strategy and change.  Alongside project engagements, he is a sought after strategy group guide, partner retreat speaker, workshop facilitator and coach.

He is the author of Developing Strategic Client Relationships (2008) and Client Strategy in a Changing Legal Market (2011).  Andrew has been admitted as a Fellow of the Institute of Directors, the Strategic Planning Society, the Chartered Management Institute, Cambridge Marketing College and the Royal Society of Art.

Hedley Consulting is recognised as a leading boutique strategy consultancy within the legal sector.