Most don’t have firmwide holistic knowledge about their clients and the industries in which they compete. As a result, they don’t know what opportunities they’re missing. They also either don’t capture enough data about the work they’ve done for clients that can help them win future business, or fail to unlock the true value of that data. The same kinds of knowledge gaps appear around their talent. What experiences do their lawyers have? What experiences should they have? Ditto for business processes. How do they share best practices in areas like business pitches, so they’re not constantly reinventing the wheel?
Knowledge management is hardly new, but the conditions are now optimal for its rapid ascension in strategic prioritization. Many firms have spent the last few decades pulling the major competitive levers available, whether it’s mergers, offshoring, outsourcing, new fee modeling or resource allocation. Until recently, most have ignored perhaps the most powerful key to profitability: knowledge management.
UNLOCKING THE TRUE VALUE OF KNOWLEDGE
Knowledge — information that can be captured and shared about markets, clients, business processes, previous work and talent — is the fuel for any firm. But historically, that knowledge has been hard to capture and share. It has lived in dusty file cabinets, in the heads of individuals or, more recently, in siloed technology systems. The result has been inefficient processes, frustrated lawyers and often ill-served clients.
Knowledge management can make firms efficient and smarter by putting valuable information into the hands of the right people who can better leverage it. One of the most common reasons lawyers leave their firms is the frustration that comes with inefficient processes. For firms that get knowledge management right, there is an opportunity to not just avoid alienating their talent, but to delight them.
“One of the most common reasons lawyers leave their firms is the frustration that comes with inefficient processes. For firms that get knowledge management right, there is an opportunity to not just avoid alienating their talent, but to delight them.”
It’s been over five decades since management theorist Peter Drucker popularized the phrase “knowledge economy.” But ironically, law firms, among the first organizations to sell applied knowledge and experience, have taken a long time to even consider fully exploiting the efficiencies that come with knowledge management. With the healthy profits firms have enjoyed over that time, they can be forgiven for not deeming it a priority.
But a tight knowledge strategy is more crucial in today’s hyper-competitive landscape. Other professional services firms — for example, private equity shops — have led the way. A select group of innovative law firms is not far behind. Some have board-level chief knowledge or data officers, positions that didn’t widely exist a decade ago.