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

Without data, you are just another person with an opinion ! (W. Edwards Deming)

“Without data you´re just another person with an opinion”  (W.Edwards Deming*)

This quote is perfectly fitted to the need of a numerical and objective base in decision making (be it strategic or operational) by the companies’ managers and mainly by the partners who perform the role of managers in law firms.

As an engineer, I feel impelled to use the metaphor of a building and its foundations, much used in several areas, including the religious one, where one makes a reference about the stability of a building in relation to the quality of its foundations (a house and a building raised on a fragile support structure are destined to become deformed, cracked or may even collapse).

The decision made by the managers of any company are made up by two very important elements to achieve success: firstly, in objective information contained in all existing material reports and by the knowledge transformed into accumulated experience; secondly, in a given higher or lower dose of the manager’s feeling, which involves an entrepreneurial and market strategy views and in its affinity or dislike to risks (a specific subject that we will not develop in this present discussion).

And now bringing the discussion to the universe of the corporative firms, I can state, with no mistake, (due to almost 30 years of experience I have had) that there are in those offices some factors that traditionally hinder this decision making process and which I will only stick to two of them, which I consider to be the most relevant ones:

The first and most representative one is the concept that almost all partners of offices have in their minds, that is: “a law office is not a company”! If we follow this reasoning and focus on a medium-size corporate office (of about 20 to 30 professionals) and we ask ourselves the following questions: what is, after all, a company that has 50 people working in it (including the staff) that has a client portfolio of around there-digit number and which has revenues of amounts that reach six/seven digits a year? The answer, in my humble opinion, is: Yes, it is a company and it is bigger than the vast majority of the Brazilian small and medium-size companies and also with all the problems and challenge of those!

The second is the intrinsic characteristic related to the attorney’s profession, in which all of them are trained for the “clash”, with strong focus on the skill to argue (verbal and writing) and in the capacity to search and find details on which they can base their arguments or weaken the arguments of their opponents. Again, in my opinion, the company’s decision which are of interest by the institution cannot be addressed this way and shall transcend the personal behaviors and can neither be based on opinions that may be in the deviations that are “out of the statistical curve” of the management data.

And, again, going back to the discussion of the elements of the decision making and concentrating ourselves in the first of them, that is, on the groundings, it is fundamental for the companies (and again the law firms) to have correct, reliable, relevant, information and obtained in a quick manner so that the uncertainty that follows all and any decision is limited only to the “feeling” that was mentioned before and not due to errors in the compiled data and information.

In order to obtain the robust, relevant and reliable management reports, it is necessary that the foundation of this building (the decision) is correctly dimensioned and built and this can be achieved with:

– a client record file with correct and relevant information for the business (not only names, addresses and contact persons).

– a record file of topics (cases, contracts, etc) with the description and characteristics defined in details, the engaged areas and professionals, etc.

– a correct record file of all the professionals, their seniority, their experiences, the charging fees and remuneration (form and amount).

– elaborated detailed budgets and the respective proposals generated (with mode of charging).

– a correct timesheet and timely filled out by all professionals and again with the relevant information of each work.

– a control and identification of all documents elaborated and involved in each work.

–  detailed information contained in the issued invoices (amounts, professionals, hours charged (or not), granted discounts, terms and payments dates, etc.

The analysis and the intelligence matching of those pieces of information may (and should) produce reports that show the scenario of the business, said scenario generated by magnetic resonance (making an analogy to the best quality of this exam in the medical diagnosis and treatment, as compared to a simple X-ray that is much less detailed and precise).

The support by an outsourced consulting firm, that is experienced and exempt from internal interactions and relationships, may really help in the generation of those pieces of information and reports and in a more effective and professional management of the companies (mainly in challenging times like the one we are living.)

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.  Member of ILTA since 1998 (International Legal Technology Association) and ALA (Assosiation of Legal Administrators), managing Law Firms for more than 27 years in Brazil – www.graciotti.com.br.

Legal Marketing: Law Firms Need UPDATING

I have already written (https://br.linkedin.com/in/josepaulograciotti) about the resistance that some Law Firm leaders have in order to recognize the true economical identity of their business and that the formerly called “Law Offices” are, in fact, companies that provide legal services.

In my humble opinion, it is also outdated the traditional account that law is not a trading activity and now I run a great risk to be criticized by the legal experts, but anyway, under a totally pragmatic point of view, I ask:

How do we classify the activity of an entity(taking as an example a small/medium-size corporate office) that has about 50 people working in it (including the staff), that has a client portfolio of around two or three digit number and which has revenues of amounts that reach six/seven digits annually?

The answer (repeating, in my humble opinion) is: Yes, it is a company, and bigger than the great majority of the small and medium- size companies in Brazil!

In addition to what was mentioned above, I dare to write about this matter because these reflections are being elaborated by four hands, with the participation of Priscilla Adaime, a professional specialized in communication and legal marketing.

All right. Now, having presented the first considerations, let us go to the matter itself!

Due to my more intense participation in the social networks, I saw in practice what I already felt due to my experience in those institutions, that is, most of the “posts”in the networks (small number of participants in the digital world) still follow the traditional modelof showing up in the media, presenting a certain pattern and with one or several of the characteristics listed below:

– Introduction to the market, with a “standard” photo, of the newly hired partner.

– Characteristic institutional photo with the main partners posted in an imposing manner and sometimes with the deans sitting in the center and the newer ones around them.

– Articles with deep legal discussions about the amendments to the laws, decrees, etc., published in newspapers and in legal portals.

– Newsletters sent to clients/mailing list about legal news.

– Photos of internal events about, again, legal discussions of a given subject.

– Notices relative to commemoratives dates (the Lawyers’ Day, the Secretary’s Day, etc.).

– Participation as speakers or sponsors of external events to clients and perspectives.

– Logos of received awards and acknowledgments.

– Production of “folders” printed with photos of their facilities spending fortunes with printing that often goes to the garbage.

This digital content, in addition to being difficult to be digested, due to the hermetic language  is randomly replicated on the Internet (website and social networks) ignoring the characteristics and peculiarities presented by the online tools available for disclosure of the  activitiesof the offices. Only a few worry about creating strategies for action for each of the networks and about measuring the achieved results.

In the real world where efficacy, pragmatism, fastness and spherical communication prevail (where everyone is connected), this type of exposure is practically innocuous without reaching the target public, which is the business community!

The offices need updating and need to come closer to their target public, they should use direct and objectivecommunication and use the new tools that are coherent with the real situation of the company that renders legal services:

– Adopt a posture of valuing the institution, its characteristic and its accomplishments.

– Always remember that the target is the client and not the competition!

– Abandon the worship to personality and individuality.

– use current tools, that is, all the social networks and all possible digital means. Whilst in Brazil the offices are ‘crawling’to produce content, in the USA most offices have blogs where the lawyers publish,on a weekly basis, articles about the novelties in the areas of performance. They invest time to create relevant content, as they know that this is fundamental to gain new clients.

The local offices are now beginningto perform the production of epodcasts videos for their target public while, out there, the lawyers use other means, such as : the Periscope (theapp used to make live broadcast via Wi-Fi and 3G and share experiences with their followers); Livestream (to disclose participations in live events). These are only some examples to illustrate the gap experienced by the Brazilian offices, which are little innovative and which are unaware of the new possibilities that should help them in the broadcast of their activities.

The support by an outsourced and experienced consultancy firm which is also exempt from any internal political interactions may help a lot in the image management, in the valuing policy of its accomplishments and in the exposure in the specialized and entrepreneurial  media (mainly in challenging times as the current one).

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

Inovação e Gestão do conhecimento

PALESTRA REALIZADA PARA o GIDJ – GRUPO de INFORMAÇÃO e DESENVOLVIMENTO JURÍDICO em 19/11/2015

1 – Definições
2 – Conceito / filosofia e Objetivo
3 – Evolução
Antes “Minutário”, agora “Ferramenta de Estratégia”
4 – Contextualização / momento
Novo ambiente – modelo esférico,Crise, Competição, Comoditizaçao dos serviços
5 – Inovação
Mudança
6 – Pré-requisitos
“Learning Organization”,Trabalho colaborativo, Infraestrutura tecnológica mínima
7 – Dificuldades
Falsas expectativas de sócios (costume), Inserir o “novo”. Convencimento – marketing interno, “Desindividualização”, Vender e implementar o intangível
8 – O Processo
Ciclo virtuoso, Planejamento, “Sponsorização”, Usuários vencedores
9 – Estrutura interna / Funções
Captura, “Expertise finding”, Arquitetura, Colaboração, Facilitação, Treinamento e aprendizado
10 – Tecnologia / Integração com outros sistemas
ERP´s, GED/DMS, Buscadores Corporativos (corporate search engines), Cadastros cliente / assunto, etc., BI
11 – KM e Gestão da pratica jurídica
Captação Novos clientes / novos assuntos (precificação), Produtividade e rentabilidade, Conflito de interesses
12 – KM e Estratégia
Marketing, Planejamento, Investimentos (monetários ou não), Inovação – Novos “produtos”