The New Normal

Should a Firm Keep Its ‘Crown Jewels’ in the Vault, or Share Them with Clients?

Posted May 23, 2011 1:40 PM CDT
By Paul Lippe

Paul Lippe

I was in London last week for KM Legal 2011, a conference on Knowledge Management. It had been a good day, so I was walking back to my hotel with a little spring in my step. On a quiet street, a disheveled man came out of an alley and asked me for “spare change.” Since I had a bunch of U.K. coins and I didn’t want to take them back to the U.S. or even figure out what they were worth, I handed him the contents of my pocket.

Unfortunately, being a bit inebriated, he stumbled and dropped the coins near the alley. Then he crawled toward a bright streetlight in search of his new funds.

Thinking I was being helpful, I said that he had dropped the coins by the alley, not by the light, but he replied:

“Yeah, I know, but the light is better over here.”

I was reminded of this classic tale (not my actual experience) the next day when I presented, along with an in-house lawyer from British Telecom and others, on why firms were sharing more and more knowledge in order to collaborate with clients. Among the obvious reasons were demonstrating experience, getting business, training their younger folks, delivering service more efficiently, and catalyzing the firm’s own efforts to be organized.

But one audience member inevitably asked the question: “Why should we give our crown jewels to clients?”

The questioner is someone I know to be a very sophisticated fellow, and I was pretty sure he asked the question mostly as a strawman because he hears it from partners in the firm. But perhaps it is worth recounting again why firms benefit from collaborating with clients:

1) Probably, most of what firms think of as crown jewels aren’t. In a Google-y and EDGAR-y world, most legal information is somewhere in the public domain. Law is itself in the public domain. Most complex transaction materials end up on EDGAR; most complex litigation materials are in public court filings. Historically, the “technology” of walking down the wall was pretty good, so if something existed but was a little hard to find, you had a better shot of finding it in your firm. But being hard to find doesn’t make something a crown jewel, and new technologies are turning the world inside out, making it easier to find stuff via browser than shoe leather. As Peter Krakaur from Orrick, Herrington & Sutcliffe presented at the conference, new search and indexing technologies like KIIAC can allow anyone to retrieve all Cravath deals off EDGAR, and show which provisions were more common when Cravath was representing a buyer or a seller. In fact, using these approaches, someone outside a large firm in half a day can probably organize that firm’s “crown jewels” better than they are currently organized inside the firm.

2) The largest firm-client relationships are highly competitive. A major firm may have a $20 million relationship with an important client, but that client probably spends $280 million with other firms, not to mention what they spend in-house. On any given day, the client is looking for expertise than is probably not unique to your firm, but exists in at least several of the firms in their panel. The true “crown jewels” are whatever asset causes that client to pick you, not something kept locked away.

3) Sharing knowledge enables collaboration, which is only sensible when clients are highly sophisticated and seeking value. Duncan Ogilvy, a partner at U.K. firm Mills & Reeve, had a great example of how his firm was collaborating with a major client (the National Health Service) to streamline service, reduce costs, and improve client satisfaction.

Notwithstanding the “crown jewels” question, the London firms are actually way ahead of the U.S. firms in managing and sharing know-how. They have historically invested in their know-how to ensure harmonized practice. The U.K. is accelerating in legal innovation because of the Legal Services Act (which allows outside ownership of law firms and the creation of multidisciplinary firms that combine law practice with nonlegal services), and the global nature of the large firms forces them to make investments to better connect offices.

The great irony of “crown jewels” thinking is that most firms spent a lot of money and marketing and business development efforts where “the light is better.” They respond to requests for proposal, they write stuff that may never get read, they try to figure out search engine optimization on Google, and they call reporters constantly trying to get their lawyers profiled. But far more business is up for grabs within existing clients than will ever be available from new clients, and the most effective way to get that business is not to act like the firm’s expertise (usually acquired at some client’s expense) is a crown jewel to be hoarded; but rather to connect with clients and cause them to want to work more with the firm.

Paul Lippe is the founder and CEO of the Legal OnRamp, a Silicon Valley-based initiative founded in cooperation with Cisco Systems to improve legal quality and efficiency through collaboration, automation and process re-engineering. Lippe formerly was an executive at the electronic design automation company Synopsys and later was CEO of Stanford SKOLAR, a medical digital library and e-learning company sponsored by Stanford Medical School.

Editor’s note: The New Normal is an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, and Patrick Lamb, founding member of Valorem Law Group. Paul and Pat spend a lot of time thinking, writing and speaking about the changes occurring in the delivery of legal services. We hope you will join their discussions.

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