Gestão do Conhecimento em trêspalavras: Conectar Colaborar e Coletar !

Tenho escrito e compartilhado regularmente discussões sobre a necessidade de se adotar, em escritórios de advocacia especialmente, o conceito de Gestão do Conhecimento  (KM em inglês) como uma das armas (se não a mais importante) para ser utilizada na gestão estratégica, de marketing e operacional, melhorando sensivelmente o preparo do escritório no enfrentamento da atual concorrência e a adaptação ao futuro tecnológico que se aproxima a passos largos.

KM não é um software que se instala e simplesmente se coloca para funcionar. É um conceito ou uma filosofia de se tratar todo o conhecimento adquirido pela empresa e também de todo o conhecimento externo agregado relativo à atividade daquela empresa que :

(i) envolve todos os processos da empresa (desde pesquisas de mercado, passando por compras, materiais utilizados, processos construtivos, armazenagem, distribuição até marketing e vendas);

(ii) envolve principalmente pessoas e seu treinamento;

(iii) sua utilização afeta os resultados da empresa como um todo; e

(iv) é uma filosofia de trabalho e por isso deve ser incorporada com o modo de pensamento e atitude de todos as pessoas da empresa e, por fim, a decisão de investimento nela se mescla com decisão de investimento em outros ativos.

Essa filosofia, para ser incorporada à empresa, precisa ter como base alguns outros conceitos existentes ou implantados previamente para que seja efetivamente eficaz:

– conceito de “learning organization” no qual todos os integrantes tem em mente que o continuo aprendizado representa um fator preponderante para o desenvolvimento.

– conceito de “ambiente colaborativo” no qual os integrantes compartilham suas experiências e seus conhecimentos.

– conceito de “empresa inovadora” no qual a empresa incentiva a pesquisa e o desenvolvimento de novos produtos, processos e procedimentos para aumentar sua eficiência e vantagem competitiva.

As palavras “conectar” e “colaborar” simbolizam todo o processo de democratização do conhecimento tácito existente de modo a torná-lo conhecido por todos os integrantes da organização.

Por sua vez, a palavra “coletar” representa todo o aparato tecnológico envolvido nos processos de explicitação do conhecimento tácito, sua organização e o oferecimento a todos por meios simples e intuitivos de pesquisa e utilização.

Resumindo:

GESTÃO DO CONHECIMENTO TEM A VER COM: CONECTAR PESSOAS ENTRE SI, ÀS INFORMAÇÕES, AO CONHECIMENTO E AOS PROCEDIMENTOS, TODOS COLETADOS, ORGANIZADOS E INDEXADOS COM A TECNOLOGIA  NECESSÁRIA PARA ESSAS CONEXÕES.

A ajuda de consultoria externa, experiente e isenta das interações e relacionamentos internos pode ajudar e muito na resolução desse desafio, bem como na definição do modelo especifico para cada escritório

Lawyers evaluation – still very few KPIs used

Before we get into this discussion about the evaluation itself, we have to do an analysis of this specific professional and also contextualize him/her in the kind of company where he/she develops his/her job. Besides it, let us focus this discussion on the lawyer (partner or associate) of the so-called (here in Brazil) corporate offices that have their structure focused on the attendance of companies and in several areas of law.

As any and all “knowledge worker” (as Peter Druker says) his/her evaluation consists of several factors ranging from the strictly objective to the subjective ones and the definition of this mixing up is closely linked to the business philosophy adopted by the office where he/she is inserted.

As already mentioned in other previous discussions, a lawyer is a professional who has got a peculiar behavioral psychology and we have to understand it in order to analyze and understand the way he/she behaves.

Now, let us list a lawyer’s main psychological features: i– a very low tolerance to failures; ii-  a high level of skepticism, iii–  a great autonomy, iv – a high reasoning ability, v-a high abstract thinking, vi-a high sense of urgency, vii– a very low resilience and viii a low socialization ability. (by Caliper Human Strategies (UK) LTD).

With regard to the evaluator, there is a difficulty that usually emerges, which is the mixing up that some of them present between the subjective indicators and the qualification or the background of the professional. Factors such as the technical / academic background, previous professional experience, specializations, languages, etc., are factors of qualification and that should be taken into consideration at the time of the inclusion of this professional in the remuneration grid and in the career plan and should not be used in the periodic performance evaluation.

Another difficulty, this one in relation to the office and, which I consider to be the most important one, is the lack of more elaborate objective indicators (obtained in management reports that should exist to help in the economic-financial management of each office). As the majority of the small and mid-size offices still perform their management, which is insufficiently professional and computerized, the objective evaluation of their lawyers usually present a few indicators, such as appointments and invoiced hours.

The Performance indicators (KPIs) should be much more encompassing and only consider its variation during the analyzed period. This also becomes a barrier to be overcome, as, when it is implemented, the evaluation policy, ends up showing eventful previous distortions originated in the past of the professional, such as: i.-wrong insertion in the career plan and remuneration grid by the time of the contracting; ii.- insufficiently professional previous evaluations and iii.- lack of a well defined career plan. The same way we may not use pliers to fix a nail, but a hammer, one must not use the performance evaluation to correct those distortions.

Let us mention now some performance indicators that the lawyers should/ could be evaluated:

Productivity indicators:

billed hours / worked hours
billed hours/ target of the hours defined by the office
billed hours/ partners billed hours
billed hours in area matters / billed hours in other areas matters
billed hours in his/her matter / total hours billed in that matter (KPI for partners)
corrected or cut hours

Financial Indicators

net individual contribution (invoiced – salary)
worked gross amount / billed amount
billed amount / collect /received amount
% participation in profitable matters or not
growth in the period
profitability of the closed / concluded matters  (for partners)

Client acquisition Indicators / crossselling

client fee received in the period
new matters opened by indication
billed hours / amounts generated to other areas

Institutional Indicators

hours intended for speeches and organization of marketing events.
hours intended for articles and publications
hours dedicated to the performance of internal training sessions
hours dedicated to pro-bono
dedicated hours for office managing issues

Subjective indicators

technical evolution in the period
managerial evolution in the period (team)
evolution in the client’s management / matter (autonomy)
client’s degree of satisfaction (whenever there is this type of research)

In addition to those ones, we could list several other ones, but all of them will depend on the existing managerial reports, as well as on the definition of their mix of values and weights, on the work philosophy and market ranking of each office.

The support by an outsourced and experienced consultancy firm which is also exempt from internal political interactions may indeed help to find the solution of this challenge, as well as to define the specific model to the evaluation of these professionals.

José Paulo Graciotti, is consultant and founding Partner of GRACIOTTI ASSESSORIA EMPRESARIAL, engeneer by Escola Politécnica Universidade de São Paulo, with Financial MBA at FGV and specialized in Knowledge Mnagement by FGV. ILTA Member since 1998 (International Legal Technology Association) and ALA (Association of Legal Administrators), with more than 27 years managing Law Firms in Brazil – www.graciotti.com.br

Strategics and Knowledge Management

There is one thing we are already sure about: Recession has come!

The first question that comes to our minds is: What should we do to face it?

The answer involves some changes that we will have to adopt as well as several  attitudes that we can and must take in our companies (I dare to say they are several ones and they will be addressed in my future discussions), but now I will limit myself to explore some of the ways the Knowledge Management can and should be used in the adjustments of the existing strategies and also in the definition of the new strategies that a modern law office should adopt and follow in the these next “rough times”!

In order to better understand the correlation between the two areas, which is the theme of this article, we should address the concept of Knowledge Management [KM]. And for us to have an idea about the range of the topic,  there are several definitions of “KM” and all of them are very good.

Just for illustration purposes, I mention the definition of Melisse Clemmons Rumizen, as “the systematic process that creates, captures, shares and leverages the knowledge that is necessary for the success of a company”. The other definition I refer to is by Carla O`Dell and Cindy Hubert who state that it is the “systematic effort that allows the information and knowledge to grow, to flow and to create value for the company”.

And being more objective and pragmatic, I prefer the very well adapted and stated concept by the author Patrick DiDomenico, in his book Knowledge Management for Lawyers, where he summarizes the concept of knowledge management:  “to deliver the right information to the right person and at the right time”!

By adopting and applying this concept in the analysis of all the explicit and tacit data and information that exist in all the department scopes of one company, we can surely consider that all this “mass of information” forms the main base for addressing by the Knowledge Management. In the (virtuous) cycle of the “KM”, the information are addressed, organized, indexed, distributed in order to allow their use and, in the end , they are kept and updated to feedback the cycle,  serving to provide grounds and to leverage the critical decisions of acompany. In other words, the “KM” goes much beyond the drafts and the creation of the storage areas of standardized models that some law offices have been using on their intranets.  Those are pieces of information that were usually regarded as being solely and exclusively under the responsibility of the Financial, Invoicing/ Accounts Receivables, Human Resources departments.

1- As a first example, we can mention the treatment of the lifecycle of a client’s subject (“matterlifecycle”).

Traditionally the subjects are recorded in the internal systems aiming at the correct issuance of the invoices, their financial and timesheet control and, in some cases, the team dimensioning and management (still  little frequent).

In addition to previously mentioned basic information (subject name and code, type of collection, invoicing address, contact person at the client and attorney in charge), other several pieces of information must be included, in the several phases of the subject life, so that the KM may address them and use them in the future in a more comprehensive andeffective manner in the strategic and in the marketing strategies, such as:

In the subject creation phase: the correct identification of the performance area and activity fields to which the client is inserted, the detailed description of the addressed topic and all those people engaged (internally and externally), the internal concept of the type of work performed (type of procedural suite, audit, acquisition, merger, etc.), the person in charge of the generation, etc.

In the life phase of the subject: the maintenance and timely updating of all the changes incorporated during the entire process such as, developments, attorneys and consultants engaged, new requests by the client, etc.

In the subject final or closing phase: the inclusion of the information that effectively occurred in the subject, that is, final amounts received and spent, terms effectively fulfilled and relevant documents that were partof the work (final contracts, relevant opinions, legal theses, etc. which are much more important than background drafts).

2 – A second example is the correct generation of a proposal and its budget follow-up.

I dare to say that a small quantity of offices have accurate systems of budget and proposal generation, which in their vast majority, are performed based on remembering the similar cases and in the personal experience of the more experienced partners. The complexity of the recent subjects, the volume of the current and past information and the pressure relative to deadlines and prices make this method a little reliable and, what is worse, with little information that can be used in the future.

The proposals generated by the offices should be based on detailed budgets (in the same way the industries do), and considering the complexity, the team (all the ones engaged and their estimated quantities of hours to be dedicated), the indirect costs and other estimated expenses.

In those two examples (there are others), there are pieces of information contained in the traditional records are neglected and which, when compiled and organized may generate very important statistics in relation to the past, its evolution and the current status related to:

1. What is (are) the main market(s) where the office or the law office has bigger performance or specialization. Currently there is a big variety of law services that are specialized and connected to economic activities, such as “lifesciences”, telecommunications, (satellites, etc.), security on the internet, compliance, in addition to the traditional ones (tax, litigation, labor, etc).
2. Where and how the office is using its resources and, most importantly, where it is being more or less efficient in its results. What are or were the more profitable subject, what were the specialties or the more efficient teams.
3. What types of works performed and their accomplished results.

Additionally, and most importantly,  those statistics can and should guide the marketing and strategy efforts, that is,  which markets and types of companies the office should concentrate its efforts on; what are the stronger and more efficient internal areas, what are the internal weaknesses that need attention and investment, what fields of activity the office has more domain in the subject and that can be expanded by cross-selling efforts,  in addition to helping make decisions concerning team dimensioning and formation, contracting and investment in HR  (courses and training).

The two referred examples were and are being used as important tools to help the Managing Committee of KLA – Koury Lopes Advogados, in the strategic definitions of growth and as guidelines of their marketing actions.

Knowledge Management is a very important tool to be used in the strategic definitions and it must be seen this way by the office managers in the current and future management of their businesses.

The support by an outsourced and experienced consultancy firm, which is also exempt from internal political interactions, may indeed speed up the adaptation process to the new reality !

The Challenges in Law Firm´s Governance

In this present discussion, I am going to talk about corporate law offices (with dozens or sometimes hundreds of lawyers and partners), designed to serve medium and large companies with all their universe of legal challenges in an increasingly regulated and complicated world.

Before discussing the topic itself, let us contextualize a little better this entity called “law office”, in the subjective and objective fields.

In the first one, the subjective, we have the following:

Traditionally, these offices are formed by a group of lawyers who have certain features in common as: technical quality in specific areas of law, entrepreneurial spirit and good relationship, who decide to get together due to the mutual use of each one of their skills. They may have grouped themselves in two completely different times of their lives, that is, in the very beginning of their individual careers, or as a “split” of a bigger office, but the reasons remain the same.

Under the rational point of view, this amalgamation makes all sense once the technical complementarities create a more comprehensive capacity. Nevertheless, these members who are already partners are human beings and as such, they must have something bigger than a simple technical-commercial interest to keep them together as time goes by.

In addition to the technical affinities, other ones (not less important) of a purely emotional-psychological  nature should also be part of the choice of this partnership, that is, companionship, trust, common goals of long run and, the most important of all, personal and ethical affinities!

As already mentioned in another past discussion, it is necessary to understand how the lawyer thinks, how he behaves, and which kind of educational training he had in the past. This professional has a very low tolerance to failures, a high degree of skepticism, a great autonomy and low resilience and at last, little or no academic training in management. (see Professional Help in Law Firms Management).

Another point to be considered is the outdated concept that the great majority of office leaders have that “a law office is not a company”, compounded  by other concept existing in the status of the class that says that law has no trading objective.

In the second field, the objective, we have the following:

Again I go back to the origin, in the incorporation and evolution of those offices, which most of the times, start as small offices with scarce or almost no administrative structure. The problem is not related to starting up with a poor administrative structure, but, on the contrary, to consider that this structure is a necessary evil and a minor component in the organization.

This concept ends up, along the way, creating a deficient administrative structure, and also poorly remunerated (where the cheapest professional ever is hired), and, as a consequence, poorly prepared and with a low intellectual capacity, generating a gap among the three structures (administrative, productive and managerial), and mainly unable to supply the management with information and high quality reports and in due time.

The governance, in order to exist and to be effective, must be supported by a tripod formed by an active leadership of good quality, a motivated team that is aware of the values and objectives of the institution and a technical-administrative infrastructure that is able to provide support for decision making. In the offices, it is essential to assume that these entities are companies that aim at getting profits, and need to be treated accordingly.

Leadership is an innate feature (there are several books that even classify its styles) that not all people have naturally in their personalities, but in its absence, may be learned and trained!

One of the major roles of a leader is to establish (and clearly communicate at all levels) the values and targets of all organization in a clear way so that each person can be completely engaged when performing his/her job, taking decisions or having any other professional attitude involving the institution and himself/herself.

Team motivation is probably the most difficult part to be achieved as it involves human relationship and the way how the managers deal with their subordinates. In law offices, companies that are solely and exclusively formed by people, there is one more complicating factor as the leadership is not exercised due to a chart with strict departments and job posts, but, in fact, almost exclusively by the professional respect (technical know-how) that each attorney has towards  his/her most experienced  mate. And your “boss” does not always fit in this situation!

In those less strict structures, the existence of a structure of attraction and maintenance of talents made up by a clear career plan with the well defined attributes that the institution expects from its stakeholder at all levels and a judicious assessment method and reward and the offer of professional challenges at the same level of each stage of the career are determining factors for the creation and maintenance of a motivated and productive team.

Last, but not least, the technical-administrative structure represents, in my opinion, the Achilles’ heel in most offices because, as we have already said, it is considered to be a necessary evil and receives less attention and investments.

For the achievement of an administrative structure that is coherent with the productive structure we need to invest in order to hire qualified staff, to do a lot of training and to invest heavily in applied technology.

The creation and standardization of procedures, the pro-active maintenance of all registers and, mainly, the determination of which information must belong to those registers, form the frame work for the creation of a robust and reliable database in which the reports used in the decision making actions are reliable. Good quality systems (specified for the sector) and a robust IT structure are fundamental, but alone, without the previous part of this paragraph, do not solve the problem.

The metaphorical comparison I always make with the computers, the data they are based on and the reports they create is that they are mere “fans”. If you open a bottle of perfume behind it, this fan will spread the pleasant scent of that perfume across the environment, but, if in the other hand, you open a container with shit, the fan will spread this unpleasant stench across the room!

External and experienced support, exempt from interactions and internal relationships can help a lot in the guidance and training of leaders and in a more effective and professional management of their businesses.

Partners Compensation in Law Firms: the several solutions for the equation

There are dozens of books about this subject, but anyway I am going to dare to write down some very simple and objective topics (remember that I am an engineer) so that everyone can think about  them  in a fast and pragmatic way.

Structurally, there are two basic forms to remunerate the partners of an office: the most traditional one is the appropriation of the net income and its distribution to the partners depending on the effective participation of each one in the company and, the second one, a more aggressive one, is the remuneration based on the performance criteria. That is when the problems show up!

In the first form, the difficulty is found in defining what exactly the participation of each partner is, as the law offices are not equity companies. What I have been usually stating is that the equity or asset (using accounting terms) of an office goes down the elevator every day and goes home, that is, if no lawyer returns in the following day, the value of that office is zero (what is worth only is the value obtained from the sale of existing physical assets which is very low). The real value of an office is in its accumulated experience and in the people who hold it!
The exact definition of the share interest of each partner is really complicated as there is one relativization aspect between each one due to the experience, partnership time, clientele, etc. (we will elaborate this topic later on) and highly volatile, being frequently changed due to personal and market factors.

The second form also presents difficulties to be implemented due to three factors: i.-Consensus among the partners for the definition of which will be the performance indicators and their weights;
ii.-The lack, and almost always, of numbers and reports with a certain degree of reliability and finally and;
iii.-Which internal department or person will make the evaluation (objective as well as subjective) of the engaged partners !

Now, having posed the difficulties, let us now go to the attempt for the equation solving! For the solution of any equation, we need to contextualize and define their assumptions, variables and factors (no variable elements).

The assumptions in this equation (that are applicable for the two forms referred above) are the following:

1 – Maturing and institutionalization of the company, i.e., all the operational and strategic decisions  must be  organized and assumed with professionalism, aiming  the best alternative for the good  and the perpetuity of the institution and shall be fully exempt from egos and personal interests. As I see it, this assumption is more difficult and a few offices are managed this way.

2 –Affinity in terms of the philosophical thinking of the company (what type of offices we want to be) and alignments of objectives in the short, mid and long term.

3 – Firmness in the relations among partners, moral, ethical and personality affinities and mainly professional and personal respect (the “amalgamation” that unites the partners).

The “factors” of this equation of several variables (which are exactly the shareholding interests) are the elements that are inserted in the equation that define how the partners will be “relativized” among themselves at every period (usually 1 to 2 years). For illustration purposes, I refer to some of them below and that shall not be regarded as the only ones, as each office may choose and define others depending on the focus that it wants to imprint to the company. Two types of factors are shown, the objectives obtained from managerial and accounting reports and the subjective ones obtained from evaluations (to be defined how) of each partner.

It is always good to remember that for each cause there is a consequence  and the definition of the mix of factors will determine, in the mid and long run, how the partners and the entire team  will behave.

1 – Capturing – This is probably the most famous one and more easily obtained in any office, representing the quantity (in amounts) of clients obtained by a given partner in a given period.

2 – Portfolio – What percentage each partner holds from the total client portfolio of the office. To obtain it, it is necessary to have a correct and updated record file of each partner and his/her client.

3 – Production – What is the value generated by the partners and/or by his/her team in relation to the total generation of the office.

4 – Maintenance: This is probably the least used one and more difficult to obtain. It represents how much of the clientele was kept in the office (taking the increase, decrease or loss of revenues into consideration).

5 – Strategic Vision – What is the capacity of each partner to interfere and add positive insights in the office strategy.

6 – Financial – Economic Vision – It is the capacity of each partner to analyze and understand the entire financial functioning of the office.

7 – Team Management – It is the affinity of each partner to manage and motivate his/her team and the people in the company.

8 – Technological Updating – More and more this attention to the novelties and the technological trends becomes important and essential when one thinks about the life of an institution in a horizon of 5 to 10 years.

9 – External Recognition – represented by the participation in associations, entities, intellectual and academic production in order to project and to consolidate the name of the institution in certain areas.

10 – Dedication Time –it represents the time each partner has dedicated in his/her life towards the institution.

Finally, the variables (to be found) are the participations of each partner and the equation then assembled would be like this:

(n1* f1 + n1*f2+…n1*f10) + (n2* f1 + n2*f2+…n2*f10) …… +(nn* f1 + nn*f2+…nn*f10) =100%

_________________    __________________          __________________

f1+f2+f3+f4+……+f10     f1+f2+f3+f4+……+f10                     f1+f2+f3+f4+……+f10

where:

“f” is each one of the defined factors

“n” is the evaluation of each partner in each factor.

As already mentioned, in any form of profit distribution or remuneration for partners, be it traditional or aggressive, the definition of the factors to be used and their relative weights   among themselves will determine the result of the equation, which, in the end, will determine how the institution will behave internally and externally.

Finally, every company is a living entity that evolves and is molded according to the internal interactions and the market influences. I reiterate that the offices are not different and are also changeable along the time and this ends up inserting another factor in our equation: the time itself.
One shall always have in mind that the solution of the equation is not eternal and unchangeable because, as the office grows and adapts to new conditions, some of its factors may and must be reassessed.

Which is the ideal solution? What should the reassessment time be?

In my opinion, there are not ready answers for these questions. Each Law Office must find theirs!

The support by an outsourced and experienced consultancy firm which is also exempt from internal political interactions may indeed help in the working out of this challenge as well as in the definition  of the management model and the future strategy.

Law Firms must heavily invest in Intellectual Capital, Knowledge Management and Technology

There is no doubt about the growth of the service sector in the economy all around the world. If this fact is known and universally accepted, so why are the services providers companies (in which the Law Firms are perfectly fitted), so reluctant to adopt a pro-active attitude towards the topic and mainly in relation to their customers?

To answer this question, you can ask yourself a very simple question and stop a bit to think about the answer.

Why do some companies have the image of excellence associated to their brand label?

In order to answer it, let us first make an analogy asking another question:

What makes you return to a restaurant after the first visit?

The first component would be an excellent cuisine, with creative and delicious dishes; the second one is represented by a good attendance including a quick service, a nice environment, a good maître d’, good waiters, a good sommelier, a good valet parking, etc, etc, etc, and at last (but not the least), the third component, that is the final price (which should be coherent to everything that was offered and mainly, competitive!) This equation has dozens of solutions, but only one that balances all components and ensures the success of the restaurant as well as its longevity.

Bringing the example to the field of the services providers, the equation above must contain the three following components blended in a perfect way:

• High quality and innovative products or services
• Excellence in services and assistance (includes attendance, efficiency and responsiveness).
• Coherent and competitive prices.

Simple to answer, very complicated to achieve!

And how should we accomplish this?

With a very heavy investment in Intellectual Capital, Knowledge Management and Technology!

For Law Firms, where the assets go down the elevator every day and go home in the evening, a clear, transparent and coherent policy of attraction and maintenance (this includes training) of talents is the key piece in order to be able to generate high quality products which, in this case, are represented by documents of very high legal sophistication and with a high dose of creativity.

Remember that more and more the entrepreneurs need quicker and daring solutions

(and obviously grounded on the law) and, for such, the attorney must be increasingly pro-active, engaged and an expert of his client’s business, so as to help him in his needs and mainly with regard to speed!

The figure of that traditional attorney, who is limited to receive consultations from his clients and answering them (in his own time) with the referral to the law and simply limiting himself by saying whether that operation is possible in his/her opinion is destined to disappear.

So, how can one form a group and keep the attorneys who have this new mindset?
With a team of talent professionals and the offer of a career plan, which is at the same time challenging and promising, associated to an aggressive policy of  remuneration with significant distribution of the added value usually accumulated by a just few (in the offices of a more traditional organization).

The second component is probably the most difficult part to implement and manage as it precisely represents the change of the mindset of a Law Firm into a Company of Sophisticated Legal Services Provider.

The clients that are in search of that new mindset for the implementation in their own organizations are also in search of services providers who are in tuned in with this philosophy. That is the reason why there is a big number of clients who are dissatisfied with their services partners.

One of the main complaints of the consumers of law services refers to: quality in the assistance, represented by the client’s difficulty to get a duly qualified and experienced professional to guide him in a quick, effective and creative way.

One other dissatisfaction has to do with the transparency represented by the detailing of the works performed and of the expenses made, which are contained in the memoranda that usually accompany the invoices of services.

Those distortions are originated out of a pyramid structure where there is a very big concentration of responsibility (and remuneration) over a few professionals, which substantially hinders the internal quality control in all respects.

And to correct that distortion, the offices must be smaller, with a more balanced relation between the quantity of professionals (with high or little experience) and that also keeps a quantity of clients that is compatible with the required levelof quality.

In order to balance this financial equation, where there is a bigger quantity of experienced professionals engaged and the market pressure for competitive prices, the advantage goes through big investment in knowledge management, training and technology.

One must well understand the concept of investment in technology, that is, not in the traditional form represented by substantial investment in equipment, expensive software and of little productivity. The investment in technology must be faced in a way that is as much pragmatic as possible, that is, in systems that really bring increase in efficiency and agility in the services provider.

In Law Firms and in other companies that sell knowledge and specific experience, the time decrease that is necessary for the search of data, information and prior knowledge (internal and external) is key for the success in the current competitive world.

In this train of thought we find the Knowledge Management systems  which includes: Document Management (DMS), Records pro-active Management, Data Mining, Business Intelligence, Content Management, Project Management, Search Engines and, Collaboration Systems (Internal and with Client), just to name the main ones.

Said systems allow generating operational, strategic and marketing information, which are absolutely essential for the effective management of any company (more intensely in challenging periods such as the current one).

Additionally, it enables a more accurate analysis for the identification of Conflict of Interests (a very serious problem in Law Firms).

The future reserves a bifurcationin the ways of all companies and notably for Law Firms:“Adapt or Decline!”

The help by an outsourced consultancy firm that is experienced and free of internal political interactions can accelerate this process of adaptation to this new reality!

José Paulo Graciotti, is consultant and founding Partner of GRACIOTTI ASSESSORIA EMPRESARIAL, engeneer by Escola Politécnica Universidade de São Paulo, with Financial MBA at FGV and specialized in Knowledge Mnagement by FGV. ILTA Member since 1998 (International Legal Technology Association) and ALA (Association of Legal Administrators), with more than 27 years managing Law Firms in Brazil – www.graciotti.com.br

Não há dúvidas quanto ao crescimento do setor de serviços na economia mundial. Se isto é de conhecimento e de aceitação universal, então porque as

The Challenges in Law Firm´s Governance

In this present discussion, I am going to talk about corporate law offices (with dozens or sometimes hundreds of lawyers and partners), designed to serve medium and large companies with all their universe of legal challenges in an increasingly regulated and complicated world.

Before discussing the topic itself, let us contextualize a little better this entity called “law office”, in the subjective and objective fields.

In the first one, the subjective, we have the following:

Traditionally, these offices are formed by a group of lawyers who have certain features in common as: technical quality in specific areas of law, entrepreneurial spirit and good relationship, who decide to get together due to the mutual use of each one of their skills. They may have grouped themselves in two completely different times of their lives, that is, in the very beginning of their individual careers, or as a “split” of a bigger office, but the reasons remain the same.

Under the rational point of view, this amalgamation makes all sense once the technical complementarities create a more comprehensive capacity. Nevertheless, these members who are already partners are human beings and as such, they must have something bigger than a simple technical-commercial interest to keep them together as time goes by.

In addition to the technical affinities, other ones (not less important) of a purely emotional-psychological  nature should also be part of the choice of this partnership, that is, companionship, trust, common goals of long run and, the most important of all, personal and ethical affinities!

As already mentioned in another past discussion, it is necessary to understand how the lawyer thinks, how he behaves, and which kind of educational training he had in the past. This professional has a very low tolerance to failures, a high degree of skepticism, a great autonomy and low resilience and at last, little or no academic training in management. (see Professional Help in Law Firms Management).

Another point to be considered is the outdated concept that the great majority of office leaders have that “a law office is not a company”, compounded  by other concept existing in the status of the class that says that law has no trading objective.

In the second field, the objective, we have the following:

Again I go back to the origin, in the incorporation and evolution of those offices, which most of the times, start as small offices with scarce or almost no administrative structure. The problem is not related to starting up with a poor administrative structure, but, on the contrary, to consider that this structure is a necessary evil and a minor component in the organization.

This concept ends up, along the way, creating a deficient administrative structure, and also poorly remunerated (where the cheapest professional ever is hired), and, as a consequence, poorly prepared and with a low intellectual capacity, generating a gap among the three structures (administrative, productive and managerial), and mainly unable to supply the management with information and high quality reports and in due time.

The governance, in order to exist and to be effective, must be supported by a tripod formed by an active leadership of good quality, a motivated team that is aware of the values and objectives of the institution and a technical-administrative infrastructure that is able to provide support for decision making. In the offices, it is essential to assume that these entities are companies that aim at getting profits, and need to be treated accordingly.

Leadership is an innate feature (there are several books that even classify its styles) that not all people have naturally in their personalities, but in its absence, may be learned and trained!

One of the major roles of a leader is to establish (and clearly communicate at all levels) the values and targets of all organization in a clear way so that each person can be completely engaged when performing his/her job, taking decisions or having any other professional attitude involving the institution and himself/herself.

Team motivation is probably the most difficult part to be achieved as it involves human relationship and the way how the managers deal with their subordinates. In law offices, companies that are solely and exclusively formed by people, there is one more complicating factor as the leadership is not exercised due to a chart with strict departments and job posts, but, in fact, almost exclusively by the professional respect (technical know-how) that each attorney has towards  his/her most experienced  mate. And your “boss” does not always fit in this situation!

In those less strict structures, the existence of a structure of attraction and maintenance of talents made up by a clear career plan with the well defined attributes that the institution expects from its stakeholder at all levels and a judicious assessment method and reward and the offer of professional challenges at the same level of each stage of the career are determining factors for the creation and maintenance of a motivated and productive team.

Last, but not least, the technical-administrative structure represents, in my opinion, the Achilles’ heel in most offices because, as we have already said, it is considered to be a necessary evil and receives less attention and investments.

For the achievement of an administrative structure that is coherent with the productive structure we need to invest in order to hire qualified staff, to do a lot of training and to invest heavily in applied technology.

The creation and standardization of procedures, the pro-active maintenance of all registers and, mainly, the determination of which information must belong to those registers, form the frame work for the creation of a robust and reliable database in which the reports used in the decision making actions are reliable. Good quality systems (specified for the sector) and a robust IT structure are fundamental, but alone, without the previous part of this paragraph, do not solve the problem.

The metaphorical comparison I always make with the computers, the data they are based on and the reports they create is that they are mere “fans”. If you open a bottle of perfume behind it, this fan will spread the pleasant scent of that perfume across the environment, but, if in the other hand, you open a container with shit, the fan will spread this unpleasant stench across the room!

External and experienced support, exempt from interactions and internal relationships can help a lot in the guidance and training of leaders and in a more effective and professional management of their businesses.

José Paulo Graciotti, is consultant and founding Partner of GRACIOTTI ASSESSORIA EMPRESARIAL, engeneer by Escola Politécnica Universidade de São Paulo, with Financial MBA at FGV and specialized in Knowledge Mnagement by FGV. ILTA Member since 1998 (International Legal Technology Association) and ALA (Association of Legal Administrators), with more than 27 years managing Law Firms in Brazil – www.graciotti.com.br

“Cyber Intelligence” and Knowledge Management

Today, reading an article published in LegalTechNews, I realized (one more time) the importance of Knowledge Management in every area and so, I am going to transcribe part of an article written by Zach Warren about the participation of Roy Zur (CEO of the Israeli company Cybint), at the ACDES 2016 E-Discovery Conference and Exhibition.

According to Zur, the problem lies in the increasing amount of information people have, but without the proper access to them. Where access means: getting to handle all the collected information (by all means) and turn them into usable knowledge and ideas.

Zur names the five main steps to get access to the collected information:

1- Data- Generally, most part of which is collected contains “white noise” that blurs or hides what really matters. An expert in the area should be able to “clean” this noise and to place the data in a structured way, also capable of indexing.

2- Information- To turn data into information, “you should be able to identify the different parts and understand what exactly they are related to.”

3- Knowledge- “The next step is, in fact, to connect the dots”, he says. Identifying and understanding the relation among the data, researches can draw solutions or come to conclusions.

4- Indicators- Experts and researches must identify the standards in order to use them in future events in this stage. Even not being able to identify those standards, the mere study of this knowledge makes the future process even faster.

5- Decision- At last, Zur says: “This is the final step of our participation as intelligence officers because, next, the result goes to the operational area”. Decision making can and takes into account other things that are not part of intelligence management.

Although this article is aimed at “cyber-security”, mainly about the prevention of acts of terrorism, it clearly shows the importance of Knowledge Management.

Bringing this present discussion to the universe of Law Offices, the adoption of a Knowledge Management culture has as its main elements:

Data capturing (represented by all financial management structure); unstructured explicit information (represented by the documents contained in GED’s, e-mails, registers and CRM’s) and at last the tacit information (captured in discussions forums, wikis, personals profiles and training) and;

The use of an intelligent search engine, user friendly and settable to the specific need of each office.

Knowledge Management represents a decisive factor for the competitive position of the offices nowadays (and in a near future) and the survival in an increasingly technological, digital and robotic future.

The support by an outsourced and experienced consultant firm, which is also exempt from internal political interactions, may indeed speed up the adoption and implementation of the “philosophy” of Knowledge Management.

The support by an outsourced and experienced consultancy firm which is also exempt from internal political interactions may indeed help in the working out of this challenge as well as in the definition  of the management model and the future strategy.

José Paulo Graciotti, is consultant and founding Partner of GRACIOTTI ASSESSORIA EMPRESARIAL, engeneer by Escola Politécnica Universidade de São Paulo, with Financial MBA at FGV and specialized in Knowledge Mnagement by FGV. ILTA Member since 1998 (International Legal Technology Association) and ALA (Association of Legal Administrators), with more than 27 years managing Law Firms in Brazil – www.graciotti.com.br