In the latest issue of KIM Legal Magazine Virtual Intelligence VQ provides views on how current trends in the legal marketplace will affect the work of the knowledge professional and what role technology has to play.
In the article Virtual Intelligence VQ discuss the following aspects:
- Trends on the legal market
- Time for change
- KM lawyers as legal knowledge engineers
- Breaking down the pyramid
There are interesting and challenging times ahead for law firms. Not only do they have to deal with the trend questioning the billable hour and arguing for fixed prices and other alternative fee arrangements, there is also a more general shift towards stronger and more demanding clients and competition from new players – such as virtual law firms and outsourcing service providers.
The question is how the new technology, competition by virtual law firms, LPO and frugal clients will affect the business models of law firms?
The traditional law firm business model is based on the hourly billing rate, with a pyramid-style structure: a large base of junior associates with a few partners on top. This makes for a very high associate-to-partner ratio. But when efficiency is key, rather than number of hours spent, the traditional business model will need re-evaluation.
The changing law firm business model with an increased focus on efficiency, processes and IT also affects the role of the KM professional. When the purpose of KM is to provide support for improved decision making and innovation throughout the organisation, there is a focus on the combination of technology with the business processes. It is therefore important for law firms to acknowledge the unique competencies required to combine legal knowledge and IT skills to build a business differentiator. A way of doing this could be to define a new profession for KM lawyers, as legal knowledge engineers.
With KM lawyers as legal knowledge engineers, driving the implementation of KM tools to support the business, many of the tasks carried out by junior associates will be replaced by standardisation of processes and new techniques. Furthermore, when other tasks performed by the junior associates are taken over by internal or external specialised professionals, the need for junior associates will inevitably decrease. Consequently, the law firm business model will change from the traditional pyramid structure towards a more rhombus-like shape with a larger number of associates with some years experience and a lessened basis of junior associates.
With this higher ratio of more expensive senior associates, it becomes increasingly important to focus on standardisation of processes, with technology as a vital support. Core services also need to be refined. To achieve success in the long run, law firms need to find new, more cost-efficive ways to deliver the same quality legal services, while maintaining profit margins and implementing the appropriate KM tools to support the business.