Toward a Model of Growth Stages for Knowledge Management Technology in Law Firms

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Introduction

Knowledge management has long been considered an important approach for law firms in gaining competitive advantage. The role of information technology in knowledge management is increasing, and law firms are applying different kinds of technology to support knowledge management. This article proposes a model of growth stages for knowledge management technology in law firms. The model is useful to understand the current stage in a specific law firm, and it is useful to develop strategies for future use of information technology in a law firm.

The article is organized as follows. First, law firms are defined in terms of knowledge organizations. Then, knowledge management is presented in terms of the knowledge-based view of the firm. In the third section, knowledge categories in law firms are presented. The role of IT is then discussed before stages of growth models are presented. Finally, the proposed knowledge management technology (KMT) stage model is presented and applied to law firms. Law Firms

A law firm can be understood as a social community specializing in the speed and efficiency in the creation and transfer of legal knowledge (Nahapiet and Ghoshal, 1998). Many law firms represent large corporate enterprises, organizations, or entrepreneurs with a need for continuous and specialized legal services that can only be supplied by a team of lawyers. The client is a customer of the firm, rather than just the customer of a particular lawyer. According to Galanter and Palay (1991), relationships with clients tend to be enduring. Such repeat clients are able to gain benefits from the continuity and economies of scale and scope enjoyed by the firm.

Lawyers can be defined as knowledge workers. They are professionals who have gained knowledge through formal education (explicit) and through learning on the job (tacit). Often there is some variation in the quality of their education and learning. The value of professionals' education tends to hold throughout their careers. For example, lawyers in Norway are asked whether they got the good grade of 'laud' (now A), even 30 years after graduation. Professionals' prestige (which is based partly on the institutions from which they obtained their education) is a valuable organizational resource because of the elite social network that provides access to valuable external resources for the firm (Hitt et al., 2001).

After completing their advanced educational requirements, most professionals enter their careers as associates in law. In this role, they continue to learn and thus, they gain significant tacit knowledge through learning-by-doing. Therefore, they largely bring explicit knowledge derived from formal education into their firms and build tacit knowledge through experience (Hitt et al., 2001).

Most professional service firms use a partnership form of organization. In such a framework, those who are highly effective in using and applying knowledge are eventually rewarded with partner status, and thus own stakes in a firm. On their road to partnership, these professionals acquire considerable knowledge, much of which is tacit. Thus, by the time professionals achieve partnership, they have built human capital in the form of individual skills (Hitt et al., 2001).

Lawyers work in law firms, and law firms belong to the legal industry. According to Becker et al. (2001), the legal industry will change rapidly because of three important trends. First, global companies increasingly seek out law firms that can provide consistent support at all business locations and integrated cross-border assistance for significant mergers and acquisitions, as well as capital-market transactions. Second, client loyalty is decreasing as companies increasingly base purchases of legal services on a more objective assessment of their value, defined as benefits net of price. Finally, new competitors have entered the market, such as accounting firms and Internet-based legal services firms. …