Thursday, August 30, 2012

ILTA Session: Missing The Point, And Finding It Again

The following are my notes on an excellent, and, as promised, provocative session with John Alber, drawing lessons from outside the legal industry and attempting to apply them to legal KM and IT.

John started in law business in 1979, he became a partner at Bryan Cave.  He left to run a transportation business and sold it right before the crash.

His session is intentionally provocative, intended as a "sharp stick in the eye."  He wants to challenge how we do our work and what we call it.

He took a law school class on phenomenology. The idea was to investigate a term and deconstruct it.  (They spent two weeks on the word "charm.") He's deconstructing knowledge management.

Phenomenological approach asks what the terms says about our choices. With the phrase "knowledge management," people will leave us alone, but that's OK, because we don't like to be bothered by other people about what we do.  We're very good at what we do even though it's very hard to explain.

We can manage any kind of knowledge, except maybe if it has to do with numbers, because we don't like numbers, and that might be financial management.

KM's name declares its intention.  KM and other technology functions are usually:
  • Internally focused (introverted)
  • Insulated from everyday business of the firm
  • Attenuated connection to revenue
  • Expensive in terms of capital and operations
  • No clear path to return cost of capital
  • Few if any metrics connected to the business of the firm 
What does search engine usage mean to the business of the firm?

Firms don't usually talk about IT or KM at the top level.  They do articulate its value.

What Does This Matter?

KM headcount is revenue sensitive, even more sensitive than revenue.

KM is a "felt" need rather than a profit-driven need.  Lawyers say they need to have it.

If KM drove profitability the same way R&D does.  When revenue drops, people often increase investment in R&D, as they are looking for new ways to make money.

We're not doing something right if KM headcount goes down with revenue.

Jeff Rovner referred to Jim Johnson's statement that business development investment drops off first in a downturn.  In most law firms business development does not develop business (he's not referring to his own firm's BD).

It's hard to think outside of our group, to look at what others are doing.

What We Could Call Ourselves

MYLB "Making You Look Brilliant"
MLLB "Making Lawyers Look Brilliant""

Imagine that KM doesn't just manage knowledge. Imagine KM is a business unit that increases knowledge. It helps us understand what we do best and how we can best help our clients.  It helps us make better decisions.  KM can be profoundly connected to profitability.

Recommends "Does IT Matter" by Nicholas G. Carr.  IT can only productivity when it's combined with broader changes in business practice, competition, and regulatory control.  In isolation, it is inert.


Accenture arose out the accounting practice of Arthur Andersen.  AA tried to develop computer competence in 1951.  It was asked to study GE's manual payroll process and help automate it at Appliance Park in Kentucky.  AA Consulting, the IT function of Anderson, grew to be larger than the underlying business. It split from AA in 2000.  Some of the risky behavior that the auditing partners began to do (that led to AA's downfall) was driven by the differences between profits for partners.  The original AA was liquidated in 2002 as a consequence of the Enron scandal, and AA Consulting became Accenture.  They now employ 250,000 consultants.

Accenture does what we do.  They work with very busy professionals who bill by the hour.  They deliver technology, although their first delivery of technology was directed outwards.  They train.  Accenture manages knowledge in lots of areas.

Accenture was very innovative at the core.  Legal IT/KM by contrast is risk-averse. Accenture has taken risks in order to innovate.

There's a book on training at Accenture called "Return on Learning."

Accenture claimed a 353% annual return on investment in learning.

At the time of its IPO, Accenture was spending $700 million/year on training.  They were asked to cut the budget in half, still deliver great training, and measure profitability (e.g., "run it like a business.")

They had to measure "employee value" and were asked to measure and maximize it.

They had to create a governance and sponsorship structure to let learning organization respond to the business.  They also developed relationships with key decision makers, making sure learning was on their agenda.

"Getting management buy-in"' is a shallow level of connection to the business.  The Accenture "V-Model for Learning and Knowledge Management" is a much deeper connection.  Hundreds of people throughout the organization are involved in each training.

Another recommended paper is "Six Decisions IT Should Never Make."  Ross & Weill from HBR.

Applying Accenture Lessons

Training on running on Word is different than training on running a deal.  The latter includes skills like:

--Effective collaboration on drafting
--How to organize and share your work
--How to memorialze lessons and work product

Getting the Accenture Level of Engagement

KM can be directed squarely at profitability and its results can be measured.  They had a set of best practices set up for doing matter work and could compare matters that used those with ones that didn't.  Traditionally managed AFAs did not, on average, break even, those using the best practices were quite profitable.

How can law firms help clients attack the total client legal spend.  Total spend includes risk management, fees to main firms, eDiscovery costs, transaction costs, settlement costs, etc.

Ask each quarter "what are we trying to do this quarter?" Ask if they will help KM figure out how KM can help with that, in other words, "Help us figure out how best to drive you to that goal.".  What matters is the questions you ask and of whom you ask.

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