Feature

posted 9 Mar 2004 in Volume 6 Issue 9

The right culture for KM

Knowledge management is commonly seen as a vital investment for law firms, although many still fail to see how it fits into the wider picture of people, processes and, fundamentally, the core culture of the business. Gretta Rusanow, a lawyer, management consultant and KM author, tackles the cultural barriers to successful KM, explaining how to identify and address the inherent obstacles to firm-wide knowledge sharing.

Firms adopting knowledge-management (KM) initiatives face significant cultural barriers to successful implementation. Acknowledging the existence of these barriers is the first step to overcoming the obstacles. Having a clear picture of your target culture will then help you to move away from the problems. Through the use of your law firm’s business processes, there is no reason why you cannot address cultural barriers and build the right KM environment for the future growth of your firm.

There are many cultural barriers to successful KM. Some of these are broader than KM and go to the heart of how a law firm operates. Nor do they just hamper KM – they limit your law firm’s ability to achieve its business objectives. Consider which of the following barriers exist at your firm:

The time-based billing model

Under a time-based billing model, lawyers argue that if KM makes them work more efficiently, there will be decreased revenue. This is not true. In fact, there are a number of flaws with this model, including it:

Assumes that clients will continue to pay for inefficient work practices;
Means that your firm’s revenue will always be limited by the number of fee-earning staff you employ;
Leaves no room for investment in the future growth of the firm;
Creates an unsatisfying work environment for your staff.

Partner compensation models that reward the individual, not the firm

A law firm’s partner compensation model strongly influences the culture of a firm. In a revenue-based compensation model, a partner’s compensation is almost solely determined by the amount of revenue generated by the partner. Under this model, the partners are almost solely focused on growing the profits of their own practices, rather than growing the profits of the entire firm. Practice groups tend to operate as separate business units, which happen to share the cost of a common infrastructure.

Usually, there is no incentive to invest in non-billable activities or to find more efficient ways to work. There is also no incentive to share, since there is usually no reward for referring work to colleagues. This is particularly incongruous to a multi-disciplinary law firm, which markets itself to clients as a provider of services across a range of practice areas.

The revenue-based compensation model may breed entrepreneurs but why be part of a larger firm if you’re not going to use it to your advantage?

Overlap in areas of practice between lawyers in different practice groups This is often the result of the limited interaction between practice groups.

When different practice groups are handling similar matters, they may be competing with each other in the market. This means that the groups are even more unwilling to share their knowledge.

Knowledge is power

There is a high degree of competitiveness among individuals and practice groups at many law firms. Lawyers perceive that to become partners, they must amass a unique knowledge base. To keep this knowledge unique, they must not share it with others. In a ‘knowledge is power’ culture, lawyers think KM means losing one’s unique knowledge base and, therefore, one’s power base.

‘Our work is unique and of no value to others’

This is a variation on knowledge is power. Lawyers believe that each piece of work is so uniquely crafted for each client that it could not possibly have any future application to other clients or circumstances. This is a fallacy. All legal work involves a certain degree of repetition, no matter how unique.

Fear of peer judgement

Lawyers confidently draft work product for clients, but are often reticent about sharing their work product with peers. They fear that their peers will judge their work as inferior. This fear factor may hamper a lawyer’s willingness to share work product with others in the firm.

A decentralised culture

A firm with multiple offices may have a decentralised culture, where it is difficult to implement a firm-wide approach to KM. Consequently, KM initiatives only succeed in small pockets, with the firm as a whole never gaining the full benefits. Other cultural barriers to KM include:

Lack of senior-management support;
KM being perceived as the work of an isolated group;
KM being perceived as an IT initiative;
Staff not being rewarded or acknowledged for their KM efforts.

These cultural barriers to KM limit the growth and profitability of your law firm. Overcoming them is fundamental to your firm’s future success.

Why law-firm culture is conducive to KM

Given this long list of cultural barriers, you may be wondering whether it is really worth tackling KM in your firm. There are, however, elements of the law-firm culture that are actually conducive to KM:

The legal-services market is a knowledge-based market. Lawyers sell their knowledge. This is their only product. KM is about leveraging that product so that the firm can derive as much value from that product as possible;
A law firm is a learning organisation. Lawyers are intelligent, academically minded people who crave the acquisition of new skills and expertise throughout their careers. Leading law firms encourage their lawyers to learn new skills to become the market-leading experts in their practice area, investing significantly in lawyer training and mentoring programmes. KM relies on the willingness of staff to acquire and leverage knowledge across an organisation;
The law is constantly evolving. With frequent legislative changes across practice areas, lawyers must find an effective way to regularly acquire the necessary information to maintain their practices. KM enables lawyers to manage the process of acquiring the barrage of new knowledge they face every day of their practicing life.

The target KM culture

You should aim to create a culture in which lawyers share their knowledge across the firm, look for opportunities to refer work to others, collaborate on projects, and think like a firm, not like a practice group. In other words, they think of your law firm as a business, and seek out ways to use their knowledge to grow that business.

Initially, you should reward staff for their KM contributions. Ultimately, however, there should be no need to reward people for their KM efforts. Instead, their contribution should be expected.

Addressing cultural barriers

To address cultural barriers to KM, you must first identify what those barriers are. This sounds so obvious, yet many law firms do not take the time during the KM planning stage to consider the scope of cultural barriers the firm faces. Consequently, firms are placed in a reactive position, left to address problems as they appear. Typically, the cultural barrier is also clouded in high emotion, where addressing it can seem insurmountable. Dwarfed by the challenges, staff members may begin to feel frustrated, disenchanted and, in the end, defeated.

By being clear at the outset on the range of cultural barriers to KM, you can plan how best to tackle them.

Management must play an active role

A manager must abide to four elements in building the target KM culture:

Lead and support cultural change;
Tell the firm that KM is a business imperative;
Make KM a priority and commit substantial financial investment to it;
Adopt specific initiatives to overcome cultural barriers.

Problems can be addressed by adopting a barrier/message/action methodology:

The firm identifies the cultural barrier;
Management sends a clear message about the cultural behaviour it expects;
Management supports its message through the adoption of specific initiatives to overcome problems and reach the target culture.

Use your firm’s business processes

Many of management’s substantive actions involve building KM into the firm’s business processes. This means building KM into your firm’s:

Compensation system;
Budgeting system;
Billing system;
Career progression;
Business plans;
Management reporting.

Illustrating how to address cultural problems

The points below demonstrate the simplicity of the barrier/message/action methodology for addressing cultural barriers to KM:

Barrier: Partner compensation models focus on the individual, not the firm;
Message: The firm is committed to building a knowledge-sharing environment and nurturing the multi-disciplinary nature of the firm;
Action: Make knowledge sharing within and across practice groups an important factor in the measurement of partner compensation. Reward partners for referring work to others. Provide billing relief to partners for partners to pursue specific KM initiatives that add value to your firm. (Treat KM initiatives as though they are client matters.)

KM must reflect the culture of your firm

While it is critical that you identify and address these barriers, you should not ignore the fundamental culture of your law firm. There will clearly be elements of your firm’s culture that make it a successful firm.

Making cultural change is not about dumbing down your culture – or compromising how you do things. In essence, you should maintain those elements of your culture that are your firm’s strengths, while encouraging change that addresses your firm’s weaknesses and supports the growth of your firm.

Gretta Rusanow is a lawyer, management consultant and author of Knowledge Management and the Smarter Lawyer (ALM Publishing), available at www.thesmarterlawyer.com. She is also head of Curve Consulting and can be contacted at: grettarusanow@curveconsulting.com.