Whenever we try to be MULTITASK, we lose FOCUS!

In this present discussion, I want to make an approach of a paradox that our society is experiencing in this early century and which impacts our lives and our companies.

As I belong to the “baby boomer” generation, I consider that I had and, still have, the privilege to have seen and, in some situations, actively participated in the deep social, behavioral and, lately, in the technological changes of the latest 50 years.

It is of common knowledge how fast everything is happening in the world and a good portion of this is due to the technological progress. Until a short time ago, we had specific times for each one of our daily tasks and there was a clear separation between our professional and personal life! I can clearly remember that when I was a kid /a teenager (in the 60’s), the TV had  only a few channels and it had an specific time to begin broadcasting and an specific time to end it. That world no longer exists!

I do not want to seem nostalgic, even because I am and I have always been fanatic for the future, for new technologies and the novelties that come with them! The fact is that everything has changed and the point I want to highlight with this sentimental wording is that, nowadays, we are bombarded by two forces that are fully antagonistic, which puzzle us and which force us to be extremely agile and adaptable:

The first one of them is the pressure for knowledge, efficiency, productivity, professionalism and responsiveness in order for us to become outstanding from others and to be able to reach a place in the sun.

The second one is the pressure to be able to catch up with the ‘tsunami’ of information that is laid on us daily and absorb those pieces of information which are of our interest and which may bring us benefits and makes us stand in outstanding positions.

If, on the one side, the first one demands specificity and focus more and more so that we may produce something with quality, the second one makes us feel spaced out in a brutal manner and, in order to try to conciliate those two pressures, we try to be (or we think we can be) “multitask”, like the current computer processors which have several “cores”, where each one is dedicated to a different task with the same attention.

There are several scientific clinical studies that prove that our brain, in spite of being the best computer in the world, uses some tricks to deal with that, so that the repetitive tasks that it can already do will get engaged in an automation process, but our attention is always turned towards the main task to which we are dedicated. The graph below shows a study prepared by the BBC about this issue!

In my humble opinion, the only possible way for us to be able to live and survive (professionally speaking) is to have much discipline and to control very well the selective use of our attention.

The correct choice for the best communication tools and information absorption (e-mails, whatsapp, twitter, facebook, linkedin, etc); the correct time management with the prioritization of its activities, separating the urgent from the important and the effective controlof the interruptions which knocks on our door will improve our level of attention to the tasks that we are developing. Additionally, the planning in advance ofour obligations and commitments and, finally, the most important thing, the allocation of a time that is only ours and dedicated to the THINKING, will let us feel a little less stressed out and will make us more efficient!

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

TIMESHEET, Oh! TIMESHEET !

The most spoken word, desired (by few people), hated (by the most) and that should be loved and worshiped by everyone!

Very few businesses can afford to have such few and important management indicators and tools as Law has in Timesheet. Other companies must be managed with production reports (PCPs), stocks (ABC curves), optimization of strategic resources, logistic of production and distribution , representatives, besides, obviously, all others economic and financial reports, etc, etc.

Law, mainly in corporate firms, has in Timesheet a single and complete management tool (except the exclusively financial ones) and its correct use may provide the most extensive vision of the business. It is a pity that not all office leaders give the proper value to this small procedure that is very simple to install and even easier to do.

Timesheet is basically a working agenda (Outlook -style) prepared by a professional that has some specific characteristics in order to appropriate the time devoted to each task, that is, time that was spent, task that was performed, to which client and matter (or contract, or process, etc), the job was dedicated.

Having in mind these basic pieces of information plus some more supplementary ones, which are the collection fee of each professional and his cost/hour, the sector or area of work to which this professional belongs to, the classification or seniority of each professional, the unit, branch or center he belongs to, and the kind of job the professional performed (this is a novelty introduced by the international systems of electronic billing where each task receives a specific code called code “LEDES”), the timesheet turns itself into the following tools to the manager:

1-) As the management tool of the team may (and should) estimate:

– The performance/efficiency by comparing the time spent in each task and the expected or normal time for each one per type of professional.

– The devotion to compare the downbeats versus the established goals.

– The consistency between the type of work and the experience (seniority) of the professional.

– The distribution of the tasks depending on seniority

– A better distribution of the staff in order to minimize downtimes.

2-) As the management tool of the client’s matters may (and should) estimate:

– which work is being elaborated to each matter or client.

-which professionals are involved.

– how the development of the work is going.

– what the estimates for the conclusion or steps are.

3-) Cost planning and control tool, estimating:

– the amounts spent in terms of the costs of the working hours of the professional versus charged amounts ( mainly in case of fixed charges.)

– What the best distribution of the team in the matters would be, allocating professionals that are coherent with the complexity and charged amounts.

4-) As budged support tool is able to:

– collect and estimate previous cases, observing the charged amounts, generated costs, teams engaged and mainly the results that were obtained.

5-) Estimating tool of:

Performance/efficiency per team, sector, area, cost centers or branch.

– profitability when associated to the financial controls and allocating of costs.

As it has already been mentioned, the simple exact making of the works executed by all professionals in a single system generates a very powerful tool in the management of any law firm.

If it is so simple and highly powerful and efficient, then why does not everybody adopt it? The answer is not so simple and goes through several interpretations and the first and most obvious one, as it is a repetitive task, it is very “boring” to be done. As it is boring, the professional tends to procrastinate its execution and this behavior ends up becoming one of the worst problems because, when not doing it immediately at the end of the work, they forget about the correct detailing and also forget about any other small works that were executed.

In addition to being boring for the ones that should do it, the task of review and checking by the team coordinators needs a very hard work, but its correct execution and checking provides a highly detailed report of the work done to the client, being an important factor for the client’s satisfaction or dissatisfaction.

Another issue is the false sensation of the lack of need, mainly in the case of fixed charges, by steps and with professionals with fixed salaries. As opposed to what may seem, it is exactly in those cases where the figure of the timesheet may clearly determinate where the positive and negative results are, preventing the blind management of a “cake” (mess?) that may be potentially fatal for the business.

The support by an outsourced consultancy firm that is experienced and exempt from internal interactions and relationship may indeed help solving this challenge,  as well as defining a specific model to each office/ company.

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

KM – CROSS-FUNCTIONAL PROCESS

I always like to mention the pragmatic approach quoted by Patrick DiDomenico in his book KM for Layers: “Knowledge Management is related to deliver the correct information to the right professional in the shortest period of time.”

Likewise, I always restate and reinforce the pragmatic objectives of that matter , which are the productivity and efficiency increase in all productive processes, with the consequent increase in competitiveness and profitability (in addition to the traditional collection, maintenance and sharing  of the entrepreneurial knowledge).

In the law business, the so-called “expertise” (which is nothing else, but knowledge) clearly defines the capacity of charging fees and also the degree of the acknowledgment by partners and the market, enabling some specialized attorneys to charge GBP 1.500,00 per hour in London and R$ 9.000,00 per hour here in Brazil!

Well, so how to achieve higher degrees of knowledge, productivity and profitability, making all this to become accessible?  In theory, it may be simple, that is, all we need to do is to implement the cycle below:

In practice, as usual, it is not as simple as this, because, in order to obtain this cycle, two fundamental things are necessary: – (i). the company (or the firm) needs to have or to implement the so-called “learning organization” culture, where all the members have in mind that they are under constant learning and that each new knowledge, process or good idea that is inserted, adds a competitive advantage to the company and – (ii) practically all the sectors (or departments) of the company need to participate in order to make it effective.

The cross-functional team that will lead and coordinate the entire implementation and maintenance process of the Knowledge Management in the company (or in the office) “philosophy” will be made up by:

1 – The fundamental piece for the KM implementation process is “sponsoring” and the active participation of the company’s senior management (referred to as C-Suite) in the process. As any change or innovation involves the changing of behavior and habits of the people, it is this piece that will provide the motivation and incentive so that the organization will embrace the process.

You should have noticed that I used the word “process” and not “project” twice and that is so because KM is not a project that has a beginning, a middle and an end, but indeed a lasting process to be incorporated to the organization, improving itself as time goes by, but never coming to an end.

2 – And, as we are discussing about motivation and engagement, the participation of the People’s Management sector is highly important (each company has its own name) which, as it knows the company very well, it will be the multiplier and the facilitator of this behavioral change.

3 – Obviously, the participation of the company’s productive sector will be necessary (in Law Firms, the attorneys of each oneof the engaged areas) so that they can effectively define which data, information and knowledge must be catalogued, indexed and made available, which processes, practices and procedures must be addressed and which professionals and tacit knowledge must be explained.

4 – The sectors that coordinate and keep registries, libraries, files, norms, manuals and the profiles of each professional are also an important partof this team, as they will be the ones that will have the task of updating and keeping integrity of all those pieces of information.

5 – Last, but not least, the members of the IT team will have the hard task of creating and implementing operational tools so that all this can be done. It is important to highlight the importance of this sub-team,  which will be practically responsible for the success or failure  of the entire effort, as the functioning of all the necessary tools for the process, and also involving the disclosure and research actions of the Board, as well as training forms and infrastructure,  information capturing and digitalizing systems (documents, photos, videos, audios, etc.), organization, cataloging and indexation systems of the entire process and, mainly,  research intelligent systems and the use of the stored knowledge.

In my humble opinion, I would dare to predict that in the near future, those cross- functional teams will become one of the main departments of companies, being in charge of, in addition to the repertoire, being the supplier of all vital information to all other departments, such as the operations, marketing, finance and strategy.

The support by an outsourced consultancy firm that is experienced and exempt from internal interactions and relationship may help a lot on the guidance and the training of the leaders and the team to implement this philosophy in the company.

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

The next Successful Law Firm (a very near future!)

In this discussion, I want to provoke a reflection about the speeding up of changes in all fields of the routine life and disruptions in our professional life caused by the technological evolution that the world has been experiencing, whose effects we are already feeling and will be stronger in a near future. The impact on people and professionals forces a deep and radical adaptation to this new reality and all people and companies are inserted in this context (again the Law Offices are not an exception)!

Our current economy is already forcing all leaders or managers to fully rethink their businesses in order to adapt themselves to a condition that will last for some years! The most common and immediate adaptations go through space optimization, search for productive efficiency and maximization of the sales efforts, cost and staff decrease (not obligatorily in this order and it is neither the topic of this discussion now).

Let us now practice some projections based on the strong trends that already exist in our current reality, keeping the focus on Law Offices:

Spherical communication.

The term very well expresses our current reality four communication with the world in search for information. The current existing tools on the Internet enable us to connect with everything and with everyone in a fraction of a second (and simultaneously) and we are already used to doing it. And what is most incredible is that we can no longer imagine us living without them! This trend will force the services providers to create new forms of exposure and, mainly, new forms of sales and rendering of services.

Detachment from the facilities and from the external signs of power.

More and more the aesthetics, the organization, the content (with the breakdown of your accomplishments) and the user friendly browsing on a company’s site is becoming more important for us in this company than the physical address or the look of its facilities.

This is slowly making us abandon the habit of observation and subliminal evaluation that we make about the financial healthand the “muscles” when observing the facilities of a supplier that we are about to contract.

This trend causes strong impact, particularly to the Offices which are still too much stuck to the demonstration of their vigor based on the magnificence of their facilities. It is important to remember that the contracting companies want good law services and not luxury in the facilities!

The Work Flexibility.

This is nothing new that for several fields of activity, but it is a significant paradigm shift in the legal world that due to the remarks the previous item; the concern (almost unwholesome) with information secrecy; the need for the referring to millions of physical documents (books, procedural files, files, etc.); and lastly, the need for personal contact with their clients still fighting to adopt. The following technological trends demystify this pseudo imposition of a fixed work in one single space.

Technical improvements in the communications

It is undeniable that the speed (theone measured in Mb/sec) is growing in an astounding way and with increasing competitive costs.

The internet2 with theoretical speed of 10Gbps (this means that a DVD with a 4,7Gb capacity may be transferred in 3.5 seconds!); the “IPv6” address protocol will allow 79 octillion times the current capacity of IPv4 protocol addressing; and, lastly, the 5G technology estimated to land in Brazil in 2018, has 10 times the speed of the 4G, only to mention a few examples. It is important to remember that those technologies already exist and it is not futurology or scientific fiction.

These changes will provide several things that today, although they already exist, still have insufficient performance. As an example, the instantaneous access to gigantic databases and the performance of video conference with telepresence by means of the holography (with the feeling of the real “face to face” presence”).

Cloud system and totally digital documentation

This trend that is already ongoing enables the companies to distance from the physical needs (backups, redundancies, special air conditioning, surveillance, security), from specialized staff (increasingly difficult and costly) and from f big volumes of investments in order to have a robust and current platform for their systems. Currently, the traditional model, in several cases the IT physical structure of the company is, by itself,an anchor that hinders or prevents the address change.

With this physical detachment, the offices will be able to concentrate more in their “core business” and to have the support of professionals who are more specialized in the maintenance of their equipment, in the development of their systems and in the physical and digital security of their information. The may also occupy smaller spaces, with no need for spaces (internal or external) for the physical filing of tons of paper.

Specifically referring to the security item, the structure offered by the current data centers and services providers in the cloud is infinitely bigger than the false security that exists in the rooms, office drawers and their internal servers.

BI, Knowledge Management, Big Data and productivity.

The effective extraction of relevant information for the business in the big databases (internal and external) with intelligent search systems (searchengines) and, ultimately, artificial intelligence systems, robotization and Cognitive Intelligence (Watson – IBM) will represent, in the near future, the difference between being or not being in the market!

The knowledge management with the effective and pragmatic use of its information (documental, registry and financial) enables a brutal increase in productivity, in operational and strategic management and it is the key to the present-future, mainly for companies that sell intellectual services.

By placing all those considerations in the universe of the companies that render law services (“aka” Law Offices) we can have an idea of the “gap” that still separates them from the trends (which, again, I restate, are real and not science fiction). In addition to adapting themselves to the impositions mentioned above, they will have to radically be transformedin order to survive in this brave new world (stealing the title from Aldous Huxley’s book)!

I envision for the future (again, not very distant): “offices fully integrated to the digital life (with state-of-the- art and 100% interactive systems with their clients); smaller than the current “big-law” ones; with fewer clients and better support; with Spartan physical structures (less noble locations than the current ones) and telepresence rooms; with areas for shared use; and much more efficient than the current ones”!

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.

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%

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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.