John Hokkanen consults as a Business and Technology Strategist. He has worked as a Senior VP of Business Development and Technology, Chief Knowledge Officer, Lawyer, and Software Engineer. He resides in Austin, Texas, but accepts engagements all over the United States and abroad.
Many law offices suspect that they are not getting the most out of huge technology investments, correctly realize that the next version of MSWord or a 600MHz computer is not likely to add much, and they want to take their use of technology "to the next level." Though recognizing the need to integrate technology into their practice, learning about and applying a lot of new technology appears to have a frighteningly large time cost. At the same time, lawyers are afraid of the erosion of practice areas by the big consulting firms and tech-savvy Internet entrants. This article puts forth practical approaches to addressing these concerns.
A litany of questions now confront law offices as they seek to obtain increasing returns on and better leverage their technology investments:
- How can technology tools be used to improving the thinking through of legal and factual issues of a matter?
- How can we better find/access/reuse documents and firm information across multiple offices and over time?
- How can we link the various silos of electronic information that already exist?
- How can information on the Internet enhance our internal information?
- How can we use the Internet to better serve our clients?
- Can the use of technology allow us to change the processes within our practice to better streamline the flow of information and creation of work product?
- How can technology become a facilitator of legal work for our clients?
Answering these questions is a considerably more complex task than administering a server, adding a mail account, or hiring a help desk or a training director because they are answered only by delving into the processes by which lawyers work. Because they involve allocation of resources and involve non-billable time, the answers are also political. But it has become clear that true technology integration means moving far beyond bits and bytes towards people and processes, and this requires a new breed of individuals.
Thinking about People and Processes
Modern business literature advises to understand their core value proposition and profit centers. From there, businesses can act on those processes (e.g., streamlining them, enhancing their quality control mechanisms, etc.) to add value to the profit centers.
Figure 1 places legal services that are sold to clients as the heart of the business. For the most part, the "fee earners" are attorneys, and they are certainly the highest profit-margin provider, but paraprofessionals also generate revenues. For a law firm, they are the firm's "core competence" because they are the services uniquely provided by law firms. Hence, they are also the firm's "value proposition," i.e., why the company exists in the first place.
As job descriptions move towards the innermost circle, personnel must have greater understanding of legal work, while the outmost support functions may have specialized skills while knowing little about legal work. For example, whether or not the mail staff, email administrator, or 401K plan administrator have any idea of what a lawyer does or his/her information needs is probably not very crucial to their job roles. However, it is quite valuable for (and indeed a requirement) that librarians understand what lawyers do and how they work.
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Figure 1 provides a framework for thinking about many issues that confront law offices. For example, it helps to explain the formation of service companies that allow outsourcing. IKON and Archer offer facilities services. Payroll companies, banks, accountancy firms will a variety of accounting and administration functions. Network services vendors provide technology outsourcing capabilities. The business imperative to "know your client" is another way of saying that the more one knows, the better one can move into the inner circles and offer higher-valued (and hence higher-priced) services.
Likewise, the more removed a function is, the more fungible the service is because it is more disconnected from the profit center. A law office must not necessarily outsource the outer rings, but clearly it is more sensible to start with these functions prior to the inner ones. Companies like Sun Microsystems have argued that the outer rings should be outsourced because it allows a company to focus all of its energy on its core mission and value proposition. In a sense, this is self-evident, because it is exactly the reason why traditional businesses, e.g., pharmaceutical companies, outsource their legal work to external law firms.
The inverse holds true as well. The closer one gets to core legal activities, the less the activity can be outsourced because of the knowledge and relationships involved in the task. The people in the center support rings develop unwritten knowledge over years of interaction in the particular practice areas with particular attorneys. Such experience establishes judgment about the dos and do nots of a particular role and creates deep working relationships with the lawyers. This understanding and judgment speeds the creation of work without a lot of explicit communication from or management by the lawyers; hence, work gets done efficiently. One need only consider how skilled librarians or legal assistants can work with little direction and why a loss of such a person impacts the process of getting the work done.
The Technology Rub
Figure 1 suggests that a firm's capacity to integrate technology into the core areas will arise from the specialized staff who understand the practice of law (i.e., legal technologists). In the past, lawyers often filled these roles on an ad hoc basis, but the task has become mission critical for moving technology forward firm-wide. While lawyers must be involved in the technology integration and must know how to use any system, diverting the firm's profit center away from generating profits may not be best financial tack to take. Thus, technologists who understand law but practice technology integration (not bits and bytes) appear to be the solution.
Figure 2 explains how these new people fit into the modern law office. Moving from the west side of the diagram (data) to the east (knowledge) is equivalent to moving towards the center of Figure 1. The north/south axis determines the level of exposure to the outside world (e.g., extranets). For the most part, law firm technology investment has focused on internal data management, the realm of the MIS Director charged with developing and deploying network and desktop infrastructure.
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The complex task is moving to the east side of the diagram where practice systems bring a big bang for technology investment. Leveraging knowledge across time and offices is about 10% a question of technology infrastructure, programming languages and back-end systems. Instead, the focus needs to be on the method by which attorneys deliver their products and services, the speed with which it is done and satisfaction of clients, and the new products and services that the firm has the potential to produce. Consequently, these activities are aligned with the business objectives of cross-marketing, virtual teaming, and client partnering. Those firms that start now and develop the internal expertise of the southeast quadrant build the foundation for expanding into the northeast quadrant. Those who do not will become increasingly vulnerable to those who do, including the Big 5 consultancies.
Implementing a Program
To successfully position the firm, a high-performance, attorney-oriented, multi-disciplinary knowledge services team should be developed as set forth in Figure 3. There may be natural inclination to place this department within the IT department because it uses technology. However, ideally the group should report to the same Chief Information Officer to whom the MIS/IT Director reports. Years of experience has shown that it is rare for an IT-led knowledge effort to be achieve a high level of performance because the nature of the tasks are quite different. To use Figure 2, technology-led teams usually want to stay on the west side of the line.
Implementing knowledge services is about much more than putting technology infrastructure into place or training a user. It is about the transformation of work method and work culture. Such a job requires people on the ground and years working with your lawyers to understand their particular practice needs.
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The challenge for law offices is to develop an on-line culture. The challenge of e-commerce practice means that lawyers have to understand e-commerce and its challenges in order to service their clients and to meet the challenges to their products and service offerings by the new competitors. It requires leadership in the face of ambiguity, and the ability to navigate the waters of working with clients and lawyers in stressful times. It is obvious that it is NOT about technology infrastructure, database back-ends, web browsers, or middleware environments.
Years of work in this field and the foregoing analysis have yielded a five point game plan from which any law firm can start out on this process of reinvention:
- Appoint a Knowledge Partner to think about and spearhead the firm's practice initiatives. The Knowledge Partner should not be gadget guy, i.e., someone who thinks big monitors and fast computers are "cool." Appoint someone who wants to get a monetary return for the technology investment, create better service for clients, establish metrics on the use of technology, and reinvent the firm's practice. If the Knowledge Partner continues to practice law, then consider creating a Practice Technology, Chief Knowledge Officer, or similar position. In all likelihood, this position would be part of the senior executive staff.
- Hire one or more process consultants to work with attorneys. Like the Knowledge Partner, these are not propeller heads, and are instead folks who want to understand business processes and alter them with judicious use of technology. Legal knowledge is desirable, but not necessary. Creativity and tenacity are key characteristics.
- The Knowledge Partner needs to choose key practice areas for initial work by understanding the key opportunities for practice expansion as well as the politics of the firm. Because this may be a highly political activity, involvement by the Managing Partner will prove useful. The Knowledge Partner then needs to pave the way and support the consultants interaction with these practice groups.
- Avoid predetermining the process consultants tasks. Let them do their job and interview the attorneys about their top needs and to investigate which ones might be facilitated. This expense will be a valuable investment as the consultants familiarize themselves with the firm's practice needs.
- Develop a game plan for implementation and have technology resources, internal or external, detailed to and managed by the Knowledge Partner or Chief Knowledge Officer.
The northeast corner of Figure 2 is an area of great ambiguity. It is where legal services, marketing, and technology converge in new business models. Leadership involves providing direction in the face of this kind of ambiguity and evolving a practice to meet the needs of the next generation of clients. Such evolution will involve technology, but the law/technology integration will not be a march down a known road, it will be a dance in huge ballroom.
First published in the April 2000 issue of World Law Business.
© John Hokkanen, 2000.