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