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JILT 1999 (3) - Petter Gottschalk


Contents

Abstract

1.

Introduction

2.

Research Aspects

 

2.1

Knowledge

2.2

Knowledge Management

2.3

Information Technology

2.4

Law Firms

3.

Initial Field Study

4.

Research Model

5.

Research Methodology

6.

Research Results

7.

Discussion

8.

Conclusions

References

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Use of IT for Knowledge Management in Law Firms

Petter Gottschalk
Department of Technology Management
Norwegian School of Management
petter.gottschalk@bi.no
 

Abstract

Knowledge management is an increasingly important source of competitive advantage for organizations. Knowledge embedded in the organization's business processes and the employee's skills provides the firm with unique capabilities to deliver customers with a product or service. Law firms represent an industry which seems very well suited for knowledge management investigation. Law firms are knowledge intensive, and the use of advanced technology may transform these organizations in the future. To examine knowledge management in Norwegian law firms, a study that involved two phases of data collection and analysis was designed. The first phase was a field study of the largest law firm in Norway. The semi-structured interviews conducted in the initial field study documented a strong belief in the potential benefits from knowledge management. The second phase was a survey of Norwegian law firms. Firm culture, firm knowledge and use of information technology were identified as potential predictors of information technology support for knowledge management in law firms in Norway. The extent to which law firms in Norway use information technology to support knowledge management is significantly influenced by the extent firms generally use information technology.

Keywords: law firms, information technology, knowledge management, survey, hypothesis testing, Norway.


This is a Refereed Article published on 29 October 1999.

Citation: Gottschalk P, 'Use of IT for Knowledge Management in Law Firms', 1999 (3) The Journal of Information, Law and Technology (JILT) . <http://elj.warwick.ac.uk/jilt/99-3/gottschalk.html>. New citation as at 1/1/04: <http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1999_3/gottschalk/>



1. Introduction

A new perspective on knowledge in organizations is being created. Organizations are viewed as bodies of knowledge (Blaauw and Boersma, 1999; Nahapiet and Ghoshal, 1998), and knowledge management is considered an increasingly important source of competitive advantage for organizations (Ginsburg and Kambil, 1999). The special capabilities of organizations for creating and transferring knowledge are being identified as a central element of organizational advantage (Nahapiet and Ghoshal, 1998). Knowledge embedded in the organization's business processes and the employee's skills provide the firm with unique capabilities to deliver customers with a product or service. Scholars and observers from disciplines as disparate as sociology, economics, and management science agree that a transformation has occurred - knowledge is at center stage (Davenport et al., 1998).

Law firms represent an industry which seems very well suited for knowledge management investigation (Lamb, 1999). Law firms are knowledge intensive, and the use of advanced technology may transform these organizations in the future. As an example, Hale and Dorr LLP is a general practice law firm of 312 attorneys in the US. Their Web-site clearly indicates the firm's commitment to take advantage of advanced technologies to enable the firm to streamline communication and reduce costs for their clients.

Little empirical research has been conducted on information technology (IT) support for knowledge management. Most published research develops recommendations for successful knowledge management without empirical basis (e.g., Davenport et al., 1998; Fahey and Prusak, 1998). This study complements existing research by focusing explicitly on knowledge management in the professions. The research adds to the body of empirical knowledge management research (e.g., Alavi and Leidner, 1999; Ruggles, 1998).

To examine IT support for knowledge management in Norwegian law firms, a study that involved two phases of data collection and analysis was designed. The first phase was an initial field study of the largest law firm in Norway. The second phase was a survey of Norwegian law firms. The two-phased approach was selected to improve practice relevance (Benbasat and Zmud, 1999).

The paper is organized as follows. First, literature on knowledge, knowledge management, IT and law firms is reviewed. Then, results from the initial field study are reported. A research model for the second phase of data collection and analysis is developed based on the literature review and the field study. Finally, research results are presented and discussed.

2. Research Aspects

2.1 Knowledge

Distinctions are often made between data, information, knowledge and wisdom. Knowledge is information combined with experience, context, interpretation, and reflection (Davenport et al., 1998). Knowledge is a renewable, re-usable and accumulating asset of value to firms that increases in value with employee experience and organizational life ( Ginsburg and Kambil, 1999). Knowledge is intangible, boundaryless, and dynamic, and if it is not used at a specific time in a specific place, it is of no value (Nonaka and Konno, 1998). According to Fahey and Prusak (1998, p. 267), knowledge is what a knower knows; there is no knowledge without someone knowing it:

Knowledge therefore must be viewed as originating 'between the ears' of individuals. Taken literally, the need for a knower raises profound questions as to whether and how knowledge can exist outside the heads of individuals. Although knowledge can be represented in and often embedded in organizational processes, routines, and networks, and sometimes in document repositories, it cannot truly originate outside the heads of individuals. Nor is it ever complete outside of an individual.

According to Alavi and Leidner (1999), information becomes knowledge once it is processed in the mind of an individual. This knowledge then becomes information again once it is articulated or communicated to others in the form of text, computer output, spoken, or written words or other means. For the organization, it is strategic to focus on proprietary corporate knowledge (Yap and Bjørn-Andersen, 1998). Proprietary knowledge is intrinsic to the core competence/expertise of a firm and is often protected by patents, copyrights, and non-disclosure policies.

Zack (1999) makes distinctions between core, advanced and innovative knowledge. Core knowledge is that minimum scope and level of knowledge required for daily operations, while advanced knowledge enables a firm to be competitively viable, and innovative knowledge is that knowledge that enables a firm to lead its industry and competitors.

Many authors seem to be concerned with the distinction between explicit and tacit knowledge (e.g., Alavi and Leidner, 1999; Fahey and Prusak, 1998). Explicit knowledge can be expressed in words and numbers and shared in the form of data, scientific formulae, specifications, manuals, and the like. This kind of knowledge can be readily transmitted between individuals formally and systematically. Tacit knowledge is highly personal and hard to formalize, making it difficult to communicate or share with others. Subjective insights, intuitions, and hunches fall into this category of knowledge. Tacit knowledge is deeply rooted in an individual's actions and experience as well as in the ideals, values, or emotions he or she embraces (Nonaka and Konno, 1998). Tacitness may be considered as a variable, with the degree of tacitness being a function of the extent to which the knowledge is or can be codified and abstracted (Nahapiet and Ghoshal, 1998). Knowledge may dynamically shift between tacit and explicit over time (Nonaka, 1995), although some knowledge always will remain tacit (Nahapiet and Ghoshal, 1998).

The concept of tacit knowledge corresponds closely to the concept of knowledge with a low level of codification. According to Hansen (1999), codification is the degree to which the knowledge is fully documented or expressed in writing at the time of transfer between two persons. The complexity of knowledge increases with lower levels of codification (Hansen, 1999). A similar distinction which scholars frequently make, is between practical, experience-based knowledge and the theoretical knowledge derived from reflection and abstraction from that experience (Nahapiet and Ghoshal, 1998).

Knowledge is part of an organization's capital. Nahapiet and Ghoshal (1998) refer to intellectual capital as the knowledge and knowing capability of an organization. This terminology has a clear parallel with the concept of human capital, which embraces the acquired knowledge, skills, and capabilities that enable persons to act in new ways (Nahapiet and Ghoshal, 1998 ).

Knowledge creation is a spiraling process of interactions between explicit and tacit knowledge. According to Nonaka and Konno (1998), this spiraling process consists of socialization, externalization, combination and internalization. Knowledge creation can also be viewed as two generic processes: combination and exchange (Nahapiet and Ghoshal, 1998).

2.2 Knowledge Management

Knowledge management (KM) is introduced to help companies create, share, and use knowledge effectively (Davenport et al., 1998). Effective knowledge management pays off in fewer mistakes, less redundancy, quicker problem solving, better decision making, reduced research development costs, increased worker independence, enhanced customer relations, and improved service (Becerra-Fernandez, 1999). Knowledge support functions have to be established to implement KM in an organization. CSC (1998) has suggested the role of the Chief Knowledge Officer (CKO) which is not so much to provide KM facilities and services as to enable the organization to innovate. Earl and Scott (1999) found that CKOs have to discover and develop the managing director's implicit vision of how KM would make a difference. According to a survey conducted by Harris Research Center in the UK in 1998, only 2% of the respondents considered KM to be a fad (KPMG, 1999). However, Davenport and Marchand (1999) stress that knowledge application and use is a complex issue with several different dimensions.

Lechner et al. (1999) suggest the encyclopedia concept as a knowledge medium to structure and systematize knowledge. The encyclopedic method is an encompassing management of given knowledge, founded on library and information sciences. This method deals with structuring, categorizing, filtering and organizing authentic knowledge, making it accessible for a given community by the means of an appropriate repository.

Blaauw and Boersma (1999) focus on the control of crucial knowledge in organizations. To take the decision to invest in knowledge, it is very important for an organization to know what knowledge is relevant to the organization and what knowledge adds value. Crucial knowledge includes at least the - ever changing - knowledge that is necessary to operate within the industry at an acceptable level. Crucial knowledge is often incorporated within experts in the form of tacit knowledge that manifests itself as problem-solving behavior. The crucial aspect of knowledge is therefore primarily viewed as the availability of such problem-solving behaviors in the light of the continuity of the organization (Blaauw and Boersma, 1999).

Organizational theorists have emphasized that information and knowledge acquired by one part of an organization must be communicated speedily to other parts. However, organization members collectively acquire enormous quantities of information on an ongoing basis; if all such information were to be transmitted to all parts of the organization, its members would suffer from information overload (Anand et al., 1998 ). Methods for identification of information needs may be adopted from related areas such as executive information systems (Wetherbe, 1991).

There is no single definition of KM, but in general the idea relates to unlocking and leveraging the knowledge of individuals so that this knowledge becomes available as an organizational resource which is not dependent on the particular individuals. Much of the literature on KM is driven from an information systems perspective and is based on the belief that KM systems can be used to capture and stockpile workers' knowledge and make it accessible to others via a searchable application (Newell et al., 1999).

Alavi and Leidner (1999) invited a non-random sample of 109 participants in an executive development program to define the concept of KM. Three perspectives emerged: an information-based perspective, a technology-based perspective, and a culture-based perspective. All three perspectives were confirmed in the field study of the largest Norwegian law firm TKGL which is presented later in this paper. While 'make information more available to all' is an example of the information-based perspective, 'systematic collection and storage of knowledge for reuse by others' is an example of the technology-based perspective, and 'development of new competencies' is an example of the culture-based perspective.

Gartner Group, a consulting firm, has developed a KM value framework consisting of KM business drivers, strategy choice, applications and business outcome. Enterprises are recommended to use the framework to guide: 1) an assessment of the impact of KM business drivers on their enterprise, 2) an analysis of the magnitude and components of knowledge capital in their market value, and 3) a determination whether knowledge can be reinvested to close business driver gaps. According to Harris (1999), this exercise will clarify the importance of knowledge to the enterprise and support decisions to emphasize, delay or bypass KM in strategic plans.

Although expectations are high, many KM projects will probably fail (Davenport et al., 1998). Fahey and Prusak (1998) identified the eleven deadliest sins of KM as listed in table 1.


Table 1: The Eleven Deadliest Sins of Knowledge Management (Fahey and Prusak, 1998)

Error

Description

1

Not Developing a Working Definition of Knowledge

2

Emphasizing Knowledge Stock to the Detriment of Knowledge Flow

3

Viewing Knowledge as Existing Predominantly Outside the Heads of Individuals

4

Not Understanding that a Fundamental Intermediate Purpose of Managing Knowledge Is to Create Shared Context

5

Paying Little Heed to the Role and Importance of Tacit Knowledge

6

Disentangling Knowledge from Its Uses

7

Downplaying Thinking and Reasoning

8

Focusing on the Past and the Present and Not the Future

9

Failing to Recognize the Importance of Experimentation

10

Substituting Technological Contact for Human Interface

11

Seeking to Develop Direct Measures of Knowledge


Recommendations concerning KM are often far too abstract, and too many questions remain unanswered (Garvin, 1993, p.79): 'What concrete changes in behavior are required? What policies and programs must be in place? How do you get from here to there?'. Nonaka (1994, 1995) has suggested that companies use metaphors and organizational redundancy to focus thinking, encourage dialogue, and make tacit, instinctively understood ideas explicit. This important work has earlier been criticized by Garvin (1993) for being too abstract.

Although potential benefits from KM are high, many scholars are concerned that this is just another fad (Swan et al., 1999). Based on such warnings, it is important to keep realistic expectation levels when planning and implementing KM in organizations. Furthermore, knowledge creation should not suffer from overemphasis on organizational memory, i.e. information from an organization's history that can be brought to bear on present decisions (Huang, 1999).

2.3 Information Technology

The concept of coding and transmitting knowledge in organizations is not new: training and employee development programs, organizational policies, routines, procedures, reports, and manuals have served this function for many years. What is new and exciting in the KM area is the potential of using modern information technologies (e.g., the Internet, intranets, browsers, data warehouses, data filters and software agents) to systematize, facilitate, and expedite firm-wide KM (Alavi and Leidner, 1999). As Nahapiet and Ghoshal (1998, p. 249) phrase it:

Clearly, recent developments in technology, such as Lotus Notes and the Internet, have considerably increased the opportunities for knowledge combination and exchange.

According to Crossborder Monitor (1998), growth-oriented companies seeking a competitive advantage in the 21st century call knowledge management systems the leading IT issue they face. Many organizations have initiated a range of KM projects and programs where the primary focus has been on developing new applications of IT to support the digital capture, storage, retrieval, and distribution of an organization's explicitly documented knowledge (Zack, 1999). According to a survey by Management Review (1999), more than half of the companies had initiated KM projects. Artificial intelligence systems - expert systems, neural nets, fuzzy logic and generic algorithms - capture and codify knowledge; group collaboration systems - groupware and intranets - share knowledge; office automation systems - word processing, desktop publishing, imaging, electronic calendars and desktop databases - distribute knowledge; and knowledge work systems - CAD, virtual reality and investment workstations - create knowledge (Laudon and Laudon, 1998, p. 553).

As examples of IT projects to support KM, Ruggles (1998) lists creating an intranet, data warehousing, creating knowledge repositories, implementing decision-support tools, implementing groupware to support collaboration, creating networks of knowledge workers, mapping sources of internal expertise, establishing new knowledge roles, and launching new knowledge-based products and services.

Use of IT to support KM provides organizations with new capabilities (Yap and Bjørn-Andersen, 1998). Software products have started to emerge to support KM. For example, Jasper - Joint Access to Stored Pages with Easy Retrieval - is an information filtering and sharing environment (Chen and Davies, 1999). Another example is Annotate which is a specific KM support system (KMSS) designed to support the KM of document collections in federated organizations which lack common vocabularies and central authority ( Ginsburg and Kambil, 1999). According to Microsoft (1999), Microsoft Office provides a seamless, interactive portal into all of a corporation's knowledge assets. With the capability to connect dynamically and directly to data warehouses, collaborative messaging servers, and document systems, Microsoft Office 2000 claims to provide an Internet-enabled set of tools for working with any knowledge asset. A final example of KM software is the KnowMore system based on artificial intelligence approaches (Abecker et al., 1999). However, strategic fit between KM objectives and choice of IT solution is a challenge to achieve (Yap and Bjørn-Andersen, 1998).

The knowledge-sharing capabilities of IT have been identified as having the capacity to change business processes and, possibly, fundamentally redefine the scope of a business (Kettinger and Grover, 1995, p. 18):

Information is a resource and its sensing, collection, organization, communication, and use are critical to the knowledge-based organization. Information can be a source of power, justify ideologically based decisions, as well as symbolize adherence to norms. Information is embodied in specific roles and relationships and distortion occurs in the form of power struggles and coalition bargaining. Knowledge, the combination of learning and information, applied to a context, has a dynamic quality and is defined by individuals in shared and coordinated interaction. The strength and characteristics of individual and group ties impact knowledge transmission. Knowledge-sharing capability can determine an organization's processes or structural form. The capability of an organization to share and leverage knowledge as a whole facilitates its proclivity to change.

Some organizations develop a knowledge data base. For example, the Norwegian consulting firm ISI applies a knowledge base to increase ability of organizational learning. The knowledge base contains methods, techniques, white papers, concept notes, best practice, practice presentations, components, library references, policies, quality system, process descriptions, routines, strategy documents, ISI presentations, and CVs for all consultants (Halvorsen and Nguyen, 1999).

Knowledge management systems are networked systems that share information and leverage knowledge throughout the enterprise (Crossborder Monitor, 1998).

Huang (1999) investigated effects of electronic communication on organizational memory which is an important part of KM. He found that electronic communication helps improve organizational memory. Specifically, the use of electronic communication tools significantly increases organizational members' perceived understanding of the organization and its environment, increases organizational members' perceived confidence to accept a work assignment, increases organizational members' satisfaction of available information resource, increases organizational members' satisfaction of the transition process due to an organizational change, and increases organizational members' perceived usefulness of information provided by current organizational members.

An intranet may be classified as a KM application since it is capable of distributing knowledge. While not every intranet project should be considered a knowledge management effort, intranets are often used to support knowledge access and exchange within organizations (Ruggles, 1998). According to Newell et al. (1999), intranets are often implemented with KM as the primary focus. That is, intranet systems are seen as a tool for the more efficient sharing and creation of knowledge within organizations. Lamb (1999) studied intranets in international law firms in the US. She found that only 20 percent of the law firms had intranets in 1998, but that this percentage was growing rapidly.

Information systems (IS) are an essential enabler to the new age of the knowledge-leveraged enterprise. Although IS professionals and academics have shown a growing interest in the topic of corporate KM, Mentzas (1999) finds that they tend to discuss in detail specific topics of IT-support for KM, and rather ignore the holistic requirements and constraints for successful KM support in business practice.

While having considerable potential, the availability of electronic knowledge exchange does not automatically induce a willingness to share information and build a new intellectual capital. Major changes in incentives and culture may be required to stimulate use of new electronic networks, and motivated creativity is a fundamental influence in the creation of value through leveraging intellect (Nahapiet and Ghoshal, 1998).

2.4 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). Law firms have started to present themselves on the Internet. One of the early ones in the US was Hale and Dorr LLP. On one of their web pages, they argue that the use of advanced technologies enables the firm to take advantage of the most appropriate tools to improve efficiency, increase effectiveness, streamline communication, and reduce costs for their clients. They claim that 'Knowledge is Power'. A law firm is a collection of fiefdoms - each lawyer has his or her own clients and keeps the information about them private. This, however, makes it difficult for management in a US law firm such as Primrose, Mendelson, and Hansen, a 250-person law partnership on Manhattan's West Side, to find out who is a client of the firm and who is working on a deal with whom (Laudon and Laudon, 1998, p. 412). One of the greatest objectives of KM in law firms seems to be consistency of work output in an increasingly global market. KM support systems in law firms are concerned with capturing and codifying knowledge, creating knowledge, distributing knowledge and sharing knowledge (Edwards and Mahling, 1997).

Edwards and Mahling (1997) categorized the types of information involved in the practice of law as administrative data, declarative knowledge, procedural knowledge, and analytical knowledge. Administrative data includes all of the nuts and bolts information about firm operations, such as hourly billing rates for lawyers, client names and matters, staff payroll data, and client invoice data. Declarative knowledge is knowledge of the law, the legal principles contained in statutes, court opinions and other sources of primary legal authority. Law students spend most of their law school careers acquiring this kind of knowledge. Procedural knowledge is knowledge of the mechanics of complying with the law's requirements in a particular situation: what documents are necessary to transfer an asset from Company A to Company B, or what forms must be filed to create a new corporation. Declarative knowledge is sometimes labeled know-that and know-what, while procedural knowledge is labeled know-how (Nahapiet and Ghoshal, 1998). Analytical knowledge is the conclusions reached about the course of action a particular client should follow in a particular situation. Analytical knowledge results from analyzing declarative knowledge (i.e. substantive law principles) as it applies to a particular fact setting.

When the four knowledge categories defined by Edwards and Mahling (1997) are combined with the three knowledge levels defined by Zack (1999), then a knowledge matrix emerges as shown in table 2. The table may be useful for law firms in identifying IT applications which support knowledge categories and knowledge levels. The matrix has twelve entries, and each entry can be evaluated both in terms of current IT applications and in terms of future IT applications.


Table 2: Knowledge Matrix for Information Technology Applications in Law Firms
 

Core Knowledge

Advanced Knowledge

Innovative Knowledge

Administrative Knowledge

     

Declarative Knowledge

     

Procedural Knowledge

     

Analytical Knowledge

     

However, there are significant hurdles to be overcome in order to embed successful KM in the law firm context, all of which may be categorized according to firm culture: individuality, time, success and lack of incentives (Terrett, 1998). Individuality is encouraged in most law firms; lawyers are not noted for their team-based approaches to legal work or for their willingness to share their expertise. Time is money in a law firm; any time spent sharing knowledge and experience is time not spent billing. Success can be the enemy of innovation; many larger law firms have done very well without any recourse to KM or even particularly innovative use of IT. Lack of incentives obscures the existence of a knowledge marketplace (Terrett, 1998 ). Nahapiet and Ghoshal (1998) report that the success of the American law firm Wachtell, Lipton, Rosen and Katz, is to some extent caused by the emphasis on cooperation, on open disclosure of information, and on building loyalty to the firm.

Firm culture is not only a law firm problem. In a survey of 431 US and European organizations, culture was found to be the biggest impediment to knowledge transfer (Ruggles, 1998). The second impediment was top management's failure to signal importance, and third was lack of shared understanding of the strategy of the business model.

In summary, treating law firms as KM setting seems to make sense (Lamb, 1999). Information technology used to support KM may revolutionize law firms (Whitfield-Jones, 1999). Effective IT support for KM can serve as a competitive advantage and as a professional aid to law firms. To examine IT support for KM in Norwegian law firms, a study that involved two phases of data collection and analysis was designed. The first phase was an initial field study of the largest law firm in Norway to identify issues and attitudes towards IT and KM in a law firm as a basis for the survey approach in the second phase.

3. Initial Field Study

The Norwegian law firm Thommessen Krefting Greve Lund (TKGL) dates back to 1856. The firm has offices in Oslo, Bergen, London and Brussels and provides services relating to Norwegian and EU Law, in all aspects of business and commerce. They advise a wide variety of Norwegian and international clients. The law firm consists of the following groups: Corporate and Finance Law, Intellectual Property and Media Law, Real Estate and Energy Law, European Union and Competition Law, Tax Law, Litigation, and Shipping and Offshore Law. TKGL is a member of the Scandinavian Law Alliance together with Vinge KB, Sweden and Kromann & Münter, Denmark, and also a member of Lex Mundi, an international network of leading law firms in more than 130 jurisdictions worldwide. TKGL has 145 employees, out of which 90 are attorneys as listed in table 3.


Table 3: Law Firms in Norway (DN, 1999)

Law Firm

Attorneys

Growth

Thommessen Krefting Greve Lund

90

+16%

Wikborg, Rein & Co.

81

+10%

Schjødt

79

+29%

PriceWaterhouseCoopers

78

 

Wiersholm, Mellbye & Bech

74

+11%

BAHR

74

 

Selmer

50

+29%

KPMG Law

40

+51%

Hjort

36

+12-20%

Kluge

36

+17%

Arthur Andersen

35

+57%

Deloitte & Touche

33

+35%

Stabell

32

+8%

Simonsen Musæus

28

+32%

Vislie, Ødegaard & Kolrud

25

-2%

Haavind & Haga

25

+12%


The growth figures in table 3 represents the change in revenues from 1997 to 1998. TKGL had an acceptable growth of 16 percent and is the leading law firm in Norway. However, auditing and consulting firms have started expanding into the law business, and firms like KPMG Law and Arthur Andersen had growth rates of 51 and 57 percent respectively. Although some of this growth may be explained by reorganization rather than recruitment, this expansion is nevertheless quite a challenge for the long-established law firms in Norway.

A structured interview was conducted in October 1998 with 14 employees in TKGL: 8 attorneys and 6 support staff. They were asked questions about the role of IT at the organizational level and at the individual level. They filled in a questionnaire during the interview. Their average responses to organizational level questions are listed in table 4.


Table 4: Questionnaire Responses to Organizational Level Questions

To what extent:

Score

Is IT today a competitive tool for TKGL?

3.8

Will IT in the future become a competitive tool for TKGL?

5.2

Is TKGL ahead in its use of IT?

3.9

Is TKGL ahead in its use of IT compared with other Norwegian law firms?

4.7

Does TKGL have an age problem concerning users of IT?

4.4

Should the IT function in TKGL be strengthened?

4.6

Can use of IT improve TKGL's competitive position?

5.1

Can use of IT improve TKGL's effectiveness?

5.4

Can use of IT improve TKGL's profitability?

4.7

Does use of IT represent a security risk in TKGL?

3.5

Is knowledge management important in TKGL?

5.4

Will information in TKGL become a shared resource with increased IT use?

5.0

Are offices in TKGL becoming paperfree in the future?

2.4

Is TKGL becoming an officefree law firm in the future?

1.4

Note: The Likert scale went from 1 (very little extent) to 6 (very great extent).


Table 4 shows that TKGL has a strong belief in the potential powers of IT: IT will become a competitive tool (5.2) and IT can improve effectiveness (5.4). And they have recognized the importance of KM (5.4). However, there is little recognition or acceptance of possible changes in the working environment, exemplified through paperfree offices (2.4) and no traditional offices at all (1.4).

The respondents were asked to write down their own definitions of KM to clarify their expectations. The examples below indicate that the concept of KM was well understood in TKGL:

  • Combine experience and data/information in an effective business process

  • Make information more available to all

  • Systematic collection and storage of knowledge for reuse by others

  • Make knowledge accessible

  • Organize the knowledge we already have

  • Collect and present information from various sources

  • Managing and structuring information/data so that data/info become available

  • How to manage our knowledge resource

  • Development of new competencies

  • Shared memory of the organization

  • Utilization of the tools we have.

The respondents were asked to rank KM together with twenty-three other information systems management issues. They ranked KM in fourth place. This is high compared with a national survey at the same time which ranked KM at the fourteenth place. TKGL management decided to recruit an IT director who should be a Knowledge Manager (CSC, 1998; Earl and Scott, 1999).

In conclusion, the initial field study has confirmed a strong belief in KM in law firms and a strong belief in IT as an enabler of KM. More specifically, analyses of the interviews identified three concepts of importance for the extent of IT enabled KM: law firm culture, importance of knowledge to the firm and the extent of IT use in the firm.

4. Research Model

Based on the reviewed literature and the initial field study, a research model was developed. The research model is illustrated in figure 1. The dependent construct in the research model is use of IT to support KM consisting of five major categories of knowledge-focused activities: generating knowledge, accessing knowledge, transferring knowledge, sharing knowledge and codifying knowledge (Ruggles, 1998).

There are three independent constructs in the model. First, law firm culture consists of individuality, time, success and incentives (Terrett, 1998). Second, firm knowledge consists of administrative knowledge, declarative knowledge, procedural knowledge and analytical knowledge (Edwards and Mahling, 1997). Third, IT use by respondent, colleagues, president and associates can be identified (Lamb, 1999; Yap and Bjørn-Andersen, 1998).


Figure 1: Research Model
   
  FIRM CULTURE Individuality Incentives Success Time  
     
   
    INFORMATION TECHNOLOGY SUPPORT FOR KNOWLEDGE MANAGEMENT Generating knowledge Accessing knowledge Transferring knowledge Sharing knowledge Codifying knowledge  
   
  IMPORTANCE OF FIRM KNOWLEDGE Administrative knowledge Declarative knowledge Procedural knowledge Analytical knowledge    
       
     
       
     
   
  IT USE Respondent Colleagues Chief Executive Associates    
   

Three research hypotheses can be developed based on the research model. First, a firm culture where lawyers are stimulated to cooperate with each other, where knowledge transfer between lawyers is rewarded, where success is dependent on knowledge sharing and where time is allocated to knowledge sharing, will lead to a greater extent of IT use to generate, access, transfer, share and codify knowledge (Terrett, 1998). For example, major changes in incentives may be required to stimulate use of new electronic networks (Nahapiet and Ghoshal, 1998). Dimensions of a cooperative culture include cooperation stimulation, knowledge sharing incentives, success depending on knowledge sharing, and knowledge sharing time (Ring and Van de Ven, 1994 ). Cooperative culture can be defined as horizontal and vertical connections within the firm which share compatible goals, strive for mutual benefits, and acknowledge a high level of mutual interdependence. Furthermore, joint efforts aim at results that each lawyer would find difficult to achieve by acting alone (Aadne et al., 1996).

Hypothesis 1: The greater the extent of cooperative culture in a law firm, the greater the extent of information technology use to support knowledge management.

Second, the importance of firm knowledge influences the extent of IT use for KM. It is suggested that a law firm with critical administrative, declarative, procedural and analytical knowledge will use IT to a larger extent to generate, access, transfer, share and codify knowledge (Terrett, 1998).

Hypothesis 2: The greater the importance of knowledge to a law firm, the greater the extent of information technology use to support knowledge management.

It is assumed that the respondent will be the IT responsible partner in the law firm. A partner is an owner who is eligible of a share of annual profits, for example more than 3 million dollars in Robins, Kaplan, Miller & Ciresi in 1998 (The Wall Street Journal Europe, 1999). Dimensions of IT use include the respondent's use, colleagues' use, the chief executive's use and associates' use of IT. If these users use IT to a large extent, it is suggested that the extent of IT use for KM will be greater (Lamb, 1999). Although IT use to support KM can be a component of IT use, KM is a new application area for IT in the firm, thereby making IT support for KM and IT use two different constructs.

Hypothesis 3: The greater the extent of information technology use in a law firm, the greater the extent of information technology use to support knowledge management.

5. Research Methodology

The objective of this study was to examine the use of IT to support KM in law firms. The initial field study and the reviewed literature was considered sufficient basis for conducting a survey. The sample was comprised of 256 law firms in Norway. The desired informants in this research were lawyers with special interest or responsibility for IT. Many law firms have a senior lawyer called 'IT responsible partner' (IT-ansvarlig partner) who seemed to be an ideal person for this kind of research. Out of 256 questionnaires mailed, 73 returned, providing a response rate of 28%. Titles of respondents showed some variation as listed in table 5.


Table 5: Titles of Respondents

Number

Title

65

Lawyer

8

Manager

73

TOTAL


Information was collected on the number of years the respondent had been in the current position and the number of lawyers in the firm as listed in table 6.


Table 6: Characteristics of Respondents and Organizations

Characteristic

Mean

Std.dev.

Years in current position

10

6

Number of lawyers in the firm

12

20


Respondents were asked to write their own definitions of KM. These responses were categorized according to the three perspectives suggested by Alavi and Leidner (1999). In terms of the information-based perspective, lawyers reported thinking KM to be about characteristics of information, such as readily-accessible information, real-time information, and actionable information. In terms of the technology-based perspective, the lawyers associated KM with various other systems (including data warehousing, enterprise wide systems, executive information systems, expert systems, and the intranet), as well as various tools (e.g., search engines, multimedia, and decision making tools). From the view of the culture-based perspective of KM, lawyers associated KM with learning (primarily from an organizational perspective), communication, and intellectual property cultivation. The number of each perspective is listed in table 7.


Table 7: Definitions of Knowledge Management

Percent

Definition

30

Culture-based perspective

19

Information-based perspective

10

Technology-based perspective

41

No response

100

TOTAL


6. Research Results

Four multiple item scales were used to measure the constructs (Frankfort-Nachmias and Nachmias, 1996), one for the dependent variable and three for the independent variables as listed in table 8. They all have acceptable reliability.


Table 8: Items for Measurement of Dependent and Independent Constructs

Construct

Measurement of Construct

Alpha

Information Technology Support for Knowledge Management

(Ruggles, 1998)

IT use for knowledge generation
IT use for knowledge access
IT use for knowledge transfer
IT use for knowledge sharing
IT use for knowledge coding

.92

Firm Culture

(Terrett, 1998)

Cooperation stimulation
Knowledge sharing incentives
Knowledge sharing success
Knowledge sharing time

.87

Importance of Firm Knowledge

(Edwards and Mahling, 1997)

Importance of administrative knowledge
Importance of declarative knowledge
Importance of procedural knowledge
Importance of analytical knowledge

.73

Information Technology Use

(Lamb, 1999)

IT use by respondent
IT use by colleagues
IT use by chief executive
IT use by associates

.88


The hypothesis testing was carried out using multiple regression (Hair et al., 1998). Table 9 lists the results of multiple regression analysis between the three independent variables and the dependent variable.


Table 9: Multiple Regression between Use of IT and Predictors

Predictors

Beta

t-test

Firm culture

.154

.189

Firm knowledge

-.018

-.177

IT use

.561

5.557**

Note: The statistical significance of the t-values is ** for p<.01 and * for p<.05


The full multiple regression between three independent variables explain 34,7% of the variation in use of IT to support KM, that is, the adjusted R-square is 0.347. The F-value of 13,217 is significant at p<.01, indicating that the null hypothesis is rejected and that there is a significant relationship between the set of predictors - firm culture, firm knowledge and IT use - and the extent of IT use to support KM. The only significant predictor is IT, which implies that IT is used to a greater extent to support KM in law firms in Norway when IT generally is used to a larger extent. The degree of IT use in the various firms was obtained by asking for the extent of IT use among key users in the law firm: respondent, colleagues, chief executive and associates.

To statistically control for organizational size, multiple regression was applied when the number of lawyers in the firm was included. The adjusted R-square decreased to 0.334 and the number of lawyers was not significant. Hence, no spurious relationships caused by this control variable was found (Frankfort-Nachmias and Nachmias, 1996).

7. Discussion

Three research hypotheses were developed based on the research model. First, a firm culture where lawyers are stimulated to cooperate with each other, where knowledge transfer between lawyers is rewarded, where success is dependent on knowledge sharing and where time is allocated to knowledge sharing, will lead to a greater extent of IT use to generate, access, transfer, share and codify knowledge (Terrett, 1998). H1: The greater the extent of cooperative culture in a law firm, the greater the extent of information technology use to support knowledge management. This hypothesis was not supported, which may be considered a surprising result. In contrast, Ruggles (1998) found that the current biggest impediment to knowledge transfer was culture. Practicing lawyers argue that they just don't have time for knowledge sharing. However, one explanation for the lack of support for this hypothesis might be the direct link suggested between knowledge sharing culture and IT use for KM. An alternative formulation would be a path from culture to knowledge sharing and then to IT use. This would lead to two hypotheses instead of one. Another explanation for the lack of support for the hypothesis might be firm size, although no spurious relationship was found.

Second, the importance of firm knowledge influences the extent of IT use for KM. It is suggested that a law firm with critical administrative, declarative, procedural and analytical knowledge will use IT to a larger extent to generate, access, transfer, share and codify knowledge (Terrett, 1998). H2: The greater the importance of knowledge to a law firm, the greater the extent of information technology use to support knowledge management. This hypothesis was not supported, which may be considered a surprising result. However, one explanation for the lack of support for this hypothesis might be the direct link suggested between importance of knowledge and IT use for KM. An alternative formulation would be a path from knowledge importance to KM and then to IT use for KM. This would lead to two hypotheses instead of one. Another explanation for the lack of support for this hypothesis might be the self-evaluation which took place in this survey, i.e. respondents may have been biased towards the same importance of knowledge in different law firms.

It is assumed that the respondent will be the IT responsible partner in the law firm. Dimensions of IT use include the respondent's use, colleagues' use, the chief executive's use and associates' use of IT. If these users use IT to a large extent, it is suggested that the extent of IT use for KM will be greater (Lamb, 1999). H3: The greater the extent of information technology use in a law firm, the greater the extent of information technology use to support knowledge management. This hypothesis was supported. There are lessons to be learned from this research result. IT supported KM will only take place if IT is generally used in the firm. A technical infrastructure has to be in place, including network, PC's, databases and software. An application architecture has to be in place, linking the various software applications. An information architecture has to be in place, enabling the flow of information between various systems.

It may seem that support for the third hypotheses is obvious since IT use to support KM can be a component of IT use. However, it is argued in this research that IT support for KM and IT use may be treated as different constructs since IT support for KM is a new application area for information technology. In other words, firms which have an extensive use of IT do not necessarily apply IT to KM. To test this assumed construct validity, factor analysis with the nine items (see table 8) was performed. All five IT support items loaded significantly on one factor together with IT use items for respondent and colleagues. The remaining IT use items for president and associates did not load significantly on the factor. Hence, this test did not reject discriminant validity for the two constructs.

It may be argued that the sample of law firms contains many small firms. Although the statistical control for organizational size did not provide new insights, a separate analysis of only large law firms was conducted. Out of 73 law firms, only 10 law firms had more than 25 lawyers. The adjusted R square increased to 0.750, indicating that the research model explains more variation in IT support for KM. However, only the third hypothesis was supported as for the total sample.

Law firm size is of considerable interest to practitioners. Lawyers in large law firms say that there must be differences between small and large law firms. In table 10, responses are categorized into small law firms, medium law firms and large law firms. There seems to be only marginal differences. The only pattern easily recognized is the growing use of IT to support KM which grows with law firm size.


Table 10: Responses for Different Law Firm Sizes

Construct

36 small law firms

27 medium law firms

10 large law firms

Information Technology Support for Knowledge Management

(Ruggles, 1998)

3,3

3,7

4,1

Firm Culture

(Terrett, 1998)

5,0

5,0

5,3

Importance of Firm Knowledge

(Edwards and Mahling, 1997)

4,5

4,2

4,7

Information Technology Use

(Lamb, 1999)

4,5

4,3

4,9

Note: Small law firms have less than 5 lawyers, while large law firms have more than 25 lawyers.


During the survey in April 1999 and after mailing of the survey report in June 1999, many law firms contacted the author. They expressed both interest in the research and concern about certain concepts in the research. One such concept was the categorization of knowledge into administrative, declarative, procedural and analytical knowledge which was based on work by Edwards and Mahling (1997) in the USA. Many respondents found this categorization hard to follow. Some translated declarative knowledge into knowledge about current laws. Some were unable to make a distinction between declarative and analytical knowledge. Both declarative and analytical knowledge have components of both legal binding circumstances and interpretations. The procedural lawyer establishes working knowledge of the facts, whereupon the lawyer searches for relevant laws which fit the facts. The business lawyer, however, first develops agreements and documents between the parties which are signed. Later, the business lawyer may be called upon to solve disagreements by interpreting the original agreements and documents. In this situation, an unseparable mixture of declarative and analytical knowledge is applied. Generally, one lawyer commented, are the research results influenced by many lawyers' unclear perceptions of the constructs and terms used in the research.

Some lawyers commented on the lack of support of two hypotheses and support of one hypothesis. One lawyer made the comment that the first hypothesis about firm culture was not supported because the lawyers' daily routines and the time and costs involved in training and administration of a knowledge support system are influencing factors. The second hypothesis was not supported because no cases are alike; knowledge from one case can only serve as general knowledge for another case. The third hypothesis was supported because general IT use is a form of knowledge management. This hypothesis was also supported because firms with low IT use have no practical ability to implement knowledge management using advanced technologies.

Another comment was concerned with lip-service. One of the key obstacles to KM in law firms can be that firms pay lip-service to its importance, but then are not seen to value it. For example, they will tell fee-earners that time spent in generating and storing knowledge is important, but when it leads to a reduction in chargeable time billed, they will complain. It would be interesting to know whether any of the firms in the study had instituted reward mechanisms for KM contribution.

It would be desirable to discuss the findings in this study in light of other empirical studies. However, this field of research has only recently emerged, making the current availability of empirical studies limited. One recently published empirical study by Management Review (1999) lists obstacles of effective knowledge management. 'Keeping relevant technology up-to-date' was ranked as obstacle number seven. Obstacle number one was 'getting people to seek best practices'. Hopefully, future research will produce more empirical studies.

The extent to which law firms in Norway use IT to support KM is significantly influenced by the extent firms generally use IT. Specifically, as listed in table 8, the greater the extent of IT use by the respondent, colleagues, the chief executive and associates, the greater the extent of IT use to support KM in law firms.

8. Conclusions

The initial field study documents a strong belief in the potential benefits from knowledge management as suggested in the research literature. The current use of IT in law firms does not seem to be extensive, but combined with a knowledge management perspective, law firms have substantial expectations.

The extent to which law firms in Norway use IT to support knowledge management is significantly influenced by the extent firms generally use IT. Only those law firms which already use IT will use IT to support knowledge management in their firms. Law firms which has a limited use of IT will continue to stay away from the technology.

Future research may concentrate on the dynamic processes which are going on within and outside the law firm: between lawyers and clients, between lawyers and other parties' lawyers, between lawyers and other parties, between lawyers and judges, between lawyers and assistants, and between lawyers in the same law firm.

Practitioners have been discussing whether IT-supported knowledge management will revolutionize law firms: 'Business as usual or the end of life as we know it?' (Whitfield-Jones, 1999, p. 3). It will not, 'business will continue much as usual' (Whitfield-Jones, 1999, p. 10).

Law firm size was not found to be a significant influence on IT-supported knowledge management. However, practitioners continue to question the validity of results based on law firms ranging from one to ninety-five lawyers. Future research should look into this more carefully, including the fees charged by large versus small law firms.

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