Talking Data with Melanie Farquharson (3Kites Consulting) : Iron Carrot

Season 4 Episode 6

Welcome to Season 4 of the Law Firm Data Governance podcast. I’m CJ Anderson, founder of Iron Carrot, the law firm data governance specialist. I’m thrilled to have a new season of insights about working with information and data in law firms.

Data governance is the key to unlocking your law firm’s potential. But it’s not the only area of data activity that is important for your firm’s success. That’s why, in this fourth season, I’m pleased to share some information, questions, and top tips about the other areas you might want to consider.

Episode Transcript

CJ Anderson
Welcome to Season 4 of the Law Firm Data Governance podcast. I’m CJ Anderson, Founder of Iron Carrot, the law firm data governance specialists. I’m thrilled to have a new season of insights about working with information and data in law firms. Data governance is the key to unlocking your firm’s potential. But it’s not the only area of data activity that is important for your firm’s success.

That’s why, in this fourth season, I’m delighted to share some of my recent data conversations. My guests this season are thought leaders in their own areas. Each has a unique perspective on the importance of data to law firms. Join us as we talk about capturing, finding, using and governing data in ways that can add meaningful value to the firm’s strategy, operational processes, and everything in between.

So, on this week’s episode, I’m delighted to welcome Melanie Farquharson from 3Kites consulting welcome, Melanie. 

Melanie Farquharson
Thank you. Very nice to talk to you. 

CJ Anderson
So, I’m going to start with kind of an obvious question and nice way to ease into this, I hope. Which is, what’s your current role and can you tell me a little bit about your career journey working with data and law firms and how you got to we’re having this conversation. 

Melanie Farquharson 
Sure, sure. Yeah. So currently I’m a consultant working with 3Kites Consulting as you said, working mainly with law firms but also other professional services firms in a number of areas, but mainly focused on knowledge management – that’s my thing.

My journey to that started as a trainee lawyer way, way back, worked in international law firm, became a partner there, but after a few years I actually found that the business of law and the efficiency with which legal services can be delivered was much more interesting to me than the law itself, to be honest, may be a bit heretical, but I had the opportunity to move into a sort of central role as a director of what was then called professional support, so knowledge management would be the term these days, and alongside the KM stuff, I was on the firms Exec Committee and ended up as the sort of business sponsor for various projects, so found out about a lot of the business challenges, including the sort of data challenges associated with implementing finance systems and CRM and Client Matter intake and all those good things.

Now, after seven years of that, I joined 3Kites when it was just getting started and in the subsequent 17 years that I’ve been a Kite, we’ve built up a team with our USP, if you like, is we are a combination of lawyers and people with tech backgrounds. So, we help other, say, professional services firms with a variety of kind of projects and strategy, technology, KM, system implementations, those kinds of things. 

CJ Anderson 
Quite an interesting journey from lawyer to the other side of the fence and then supporting both sides of the fence. You’ve said knowledge management, or KM, a few times in that story. So, in a sentence or two, can you just explain a little bit more about the definition of knowledge management if you can?

Melanie Farquharson
Yeah, it’s always a bit of a challenge to define knowledge management. Particularly, it’s quite hard to make it sound exciting, even though you know those of us who are interested in it do find it interesting and exciting. 

I always think of it in terms of avoiding people having to reinvent the wheel, basically, so you know, firms sell themselves on the basis of their experience of having done, you know, lots of a particular type of work before and KM in that context is sort of making sure that the benefit of all that past experience is brought to bear on the new job and in winning that new job.

So hopefully it also means you’re not having to write off time when you’re, you know, working on a job because the client isn’t willing for you to reinvent the wheel at their expense or you’re not overcharging the clients, which you know, though it might feel like a good thing to start with, the firm, it’s not a long term approach because you know other firms will be able to undercut you if they’re more efficient in bringing their knowledge to bear.

Yeah, that’s kind of knowledge management in a nutshell. I think it’s kind of evolved, certainly over the time that I’ve been involved in it, and people used to talk about gathering know-how, and that’s important. It used to be focused on sort of precedents and good examples of documents or good examples of advice that could be used as a starting point. 

And then it sort of developed into processes and checklists and playbooks for different types of matter. So you knew what steps you’d need to take, and so on, what the pitfalls were. But now it’s much broader because people are thinking about the sort of know-who; so, who are the experts within the firm? Who are the right people to be doing this type of job? Well, who do we know at this client who has the best relationship with them? All those kinds of questions, and also the kind of ‘know how much?’ – the ‘what will it cost?’, ‘who will have to do what?’

So, it’s expanding to cover lots of areas where the underlying data is becoming more and more important, frankly. 

CJ Anderson
It sounds like we’re overlapping in a lot of spaces because a lot of those things are where data governance it becomes quite relevant and then you know who, who owns it and who’s accountable for it. So how is how do you see data governance being relevant to knowledge management and the links between the two functions or capabilities, I guess?

Melanie Farquharson
Well, like I say, Knowledge management has kind of expanded from focusing on documents and having repositories where you classified them by, you know, jurisdiction and legal topic and all those good things because the sort of whole purview of knowledge management has expanded, and it’s about not just documents, but a broader view of the organisation and its experience and leveraging its data. 

KM tends to get involved in trying to exploit the value that can come out of the firm’s data, and quite often the knowledge people are in quite a good position to help with data projects, because they’re quite close to the lawyers, some of them will have been practising lawyers and they kind of understand what’s important, understand what some of the terms mean. So, they’re quite good at helping with the classifications and the way things are managed. I think, you know, the example I always use of how things are developing in terms of ‘have we ever done something like this before?’, is the sort of fictitious example of you know, ‘have we ever done the financing of a wind farm in Azerbaijan?’ I don’t know if they have wind farms in Azerbaijan, but, you know, as an example.  You know, people want to know. Has the firm ever done this before or who are our internal experts? What did it cost to deliver? What were the issues? Where are the documents? All those things, and they’re all reliant on the data.  When you’re in a small organisation, you can kind of get away with sending a round-robin e-mail to everyone who might be relevant and saying, ‘have we ever done this before?’ But, you know, that depends on everybody taking the time out of their day to read your round robin e-mail, but also, you know, the person who actually knows the answer being, you know, not on vacation that week and actually bothering to look or, you know, not having left the firm when your round robin e-mail comes around so it’s not sort of an efficient or reliable way of answering those questions. And, you know, that ‘have we done this before?’, is just one of many examples of how having data that’s properly linked up and governed can really help with both winning the work in the first place and then delivering it. 

CJ Anderson
Just to expand on that a little bit more, why is knowledge management important for law firms in particular?

Melanie Farquharson
Yeah, good question. I mean, there’s the basic economic point about, as I’ve said, not always being able to charge for reinventing the wheel. So, you don’t want to be wasting time doing that and the competitive issue of, you know, if your competitors are able to deliver this kind of work in a more efficient way because they are leveraging their knowledge then that you know you need to be able to do that too if you’re not going to be undercut. 

There’s also a risk issue. You know you don’t want people to be starting with a blank sheet of paper. You want people to have templates and checklists to guide them.  You don’t want them to sort of miss the point that comes back to bite them later on. So, the whole kind of risk management aspect.

There’s a bit of a client service aspect too that you know clients expect, particularly in a big firm where you might have quite large teams working for a client.  They expect everyone in that team to know, you know, what’s important to them, what they’ve told you about, how they like things done, how they run their business, and all of that, that can be quite a challenge to manage, but it’s important knowledge. 

And I think finally, there’s the kind of, the ‘talent retention’ point; lawyers get frustrated if they feel they’re having to reinvent the wheel when they know there’s going to be a more efficient way of delivering the service to their clients. So, with really good knowledge management you can delegate work to a more junior level whilst leaving those people both managed from a risk perspective because they’ve got templates and things to guide them, but also, they don’t feel kind of completely thrown to the wolves and left to their own devices. They’ve got some support to help them, and it means they’re doing more interesting work that keeps them motivated. So, I think that kind of talent retention point is becoming more and more important actually that people expect to have that kind of knowledge management support in their firm. 

CJ Anderson
What kind of knowledge management does that look like? What is the kind of KM people working on and projects with data? And what’s the current ‘flavour of the year’ project? 

Melanie Farquharson
Well, yeah, I mean there, there are a lot of flavours of it, but, you know, generally different angles of people trying to mark all the data that’s lurking in their various systems so that they can enable people to interrogate it and answer useful questions, really. Whereas in the early days of knowledge management in all firms it be a question of can you find me a template for this type of document. 

Now it’s often more about perhaps finding a specific clause and the context in which that clause has been used so you know where the firm was acting for the purchaser and it was a transaction in the pharmaceutical sector, and it was in Switzerland or whatever, so that, you know, you’re narrowing down to find something that’s really appropriate for the context in which you’re working and that relies on the data, so it’s kind of applying knowledge in a much more targeted way. 

And, you know, back in the day and probably some firms still working this way, if I wanted to find out, has my firm ever done the financing, the wind farm in Azerbaijan, there’s probably someone in a support function somewhere who could be tasked with going away and pulling together a report which, you know, might involve a lot of manipulation and checking of data and probably would take a few days, and then, you know, when the report came back, I might think I wish I’d asked a slightly different question or I’ve got a few follow up questions that I want to ask. But you know, by that time, life moves too quickly. It’s probably too late, whereas now what people are aiming to do is to have that information in a form where people can interrogate it for themselves.

Maybe it’s surfaced on a dashboard that you can then play around with, and obviously that throws up a lot of questions about how to make that easy and reliable the work that goes into making it reliable. It is huge. 

So, some of the specific examples might be wanting to have a view of all the matters the firm has undertaken for a particular client, with a view of, you know, the documents, the billings, the client development plan, the key contacts and so on. So, you can get a really quick overview. You know that’s bringing together a lot of data from all the different places, another one that we’ve seen quite a bit lately has been sort of expertise location particularly, so pulling together information about individual’s profiles from across systems. So, some data might sit in the HR system, there might be a bio on the website there might be a database that says who speaks what language. There might be time recording data about the types of matters that people work on and knitting all that together into sort of a system that enables you to interrogate the firm’s experience is a challenge.

And, you know, there’s projects about pricing projects, about trends and profitability and so on. All of these are relying on having the data in a format that you can pull it together and make it useful. Present it usefully.

CJ Anderson
There’s a lot of different angles that people are looking at data from, but there are a lot of challenges in these kinds of projects. What kind of challenges do you think are you are you seeing or experiencing? 

Melanie Farquharson
Well, lots. Often you know the first and biggest challenge is the data isn’t in great shape to start with. You know, I’m the first to admit that when I was a fee earner, almost every matter that I opened was work type 9401 because it was the only one, I could remember, and I never saw any information coming back that made collecting the work type data accurately worth my effort frankly.

And you know, I have seen the error of my ways in that, but it kind of creates a vicious cycle and we see this lots of times, but where people are not incentivized to provide accurate information and therefore you can’t give them back useful and accurate information, because the data is rubbish and, you know, therefore they’re even less incentivized to put in the right data. And it just goes on and on.

So, you know, one of the challenging things about these projects is breaking that vicious circle and, you know, cleaning up first, cleaning up the data. I mean, you know, a classic example is if you’ve got duplicate clients, perhaps in your finance system or your CRM system. Terrific. You know, let’s merge the data, but then you know which one of the three lead partners is actually going to be responsible for this client or will get the credit for this client and you know that conversation can be a lot more difficult than just merging the data, and you know, that’s just one small example.

You know the ‘what’s in it for me?’, you know, ‘why should I provide the right information?’, is really, really key. You know? How can you incentivize busy people to provide accurate data to the firms’ systems and then… you know this all too well. But for me, a key part is the users being able to see the data in a useful context, it doesn’t just go into a black hole, and it never reappears. So that might be just about reports, but it ideally is about giving them tools to search and interrogate the data to answer those useful questions. So, you’ve got to make the process of providing the information as easy as possible. Definitely don’t ask people for the same information more than once. You know. 

Reuse it, show them what you’ve got already and ask them to add to it if you can, and very often, you know, when it’s about matters, it’s, they’ll provided some information at initial inception, which is probably too early, and they didn’t know all the details. If you wait until the matter ends, they probably don’t care anymore. It’s too late. They want to forget about that matter as quickly as possible. So, it’s trying to find levers to pick up and update that information along the way when they’re carrying out those matters. 

One of the good ones, you know, obviously leadership is key with these things. One of the good examples we’ve seen is that, you know, leader of a practice who was very much focused on league tables and you know how their firm was doing in their particular area of work. So, he just incentivised everybody in that group by, you know, his sheer leadership to say, we will collect the right data and we will collect the best data about what we do, so that we can ensure that we get the benefit of all of that for the regular league tables that get published. You know, it’s horses for courses. 

CJ Anderson
It does always, you know, data comes out of people in the end so many times about who’s prepared to lead and who’s prepared to provide it and play with it. And often law firm data is being managed in silos and certainly from our side in the data governance world, we see a lot of silos having to break down those silos about who owns which bit and who collects which bit. Is that also the same in the knowledge management side?

Melanie Farquharson
Oh yes. I mean, we have a motto in 3Kites which is, “It all comes down to people in the end.”  And you know, that’s true in so many different contexts. And you know, you do find that people are very protective of what they see as their data, such that anything that might involve, for example, you know, harmonising the classifications that they use with perhaps classifications used in another system, doing some kind of mapping, you know, they get very sensitive about that and, you know, heaven forfend somebody should actually want to correct the data you know that can be a real bone of contention. 

But I mean, we find particularly with lawyers, and you know, I can be a bit rude about lawyers because I am one. You know, we’re really rubbish with a blank sheet of paper. But give us something to criticise and give us a big red pen and you know, we’re great at that. So, I’m very much in favour of, you know, expose the data and give people the opportunity to correct it. Because I think people will, if they see I can obviously correct that. I know that’s wrong. Here’s my, you know, digital red pen. I can change that, or at least submit a change. Maybe for somebody else to approve.

You know, that to me is going to be one of the best ways of making sure that the data is kept up to date. You’ve got to expose it in some way. And I mean, when we come back to the challenges generally, there’s also the whole confidentiality issue, which I know is something that trips a lot of people up. 

CJ Anderson
It is a massive thing to think about of What’s firm confidential, What’s client confidential? What’s not confidential at all? But people want to keep it private anyway. How do you see firms addressing confidentiality and security and KM projects that you’re working with? 

Melanie Farquharson
Well, it’s really interesting to me, when I first started as a consultant, I thought, you know, firms are broadly the same, but they’re not. They’re really not. The different approaches to transparency generally across different firms. There’s a huge variation there.

So, you know, just in terms of the culture in some firms exposing data like, you know, what’s this month’s billing target and how close are we to it? You know, some firms will have that on the front page of their Intranet and in in other firms that would only be known to the partners or the practice heads, you know, the whole level of transparency in the firms can vary a lot. So that’s quite an interesting starting point as to, you know, what you’re going to be able to achieve with a data related project because it, you know, maybe you’ve got a long way to go. 

And of course, there are always circumstances where some information has to be kept on a restricted basis, you know conflicts, price sensitivity, those kinds of things and firms, particularly the big firms, have moved more and more towards this sort of pessimistic security model, meaning only people working on a matter are able to access the matter file, and that creates huge challenges for knowledge management. But in that context with sort of manipulating and leveraging the data, you have to think through very carefully, almost for every piece of data, every field what can be shared and with whom. So, you know, aside from the documents you know, can people see that client is a client of the firm? Can people see how many matters have been done? Can people see the work type of those matters? Can you see who the lead partner is? Because that might give things away.

So, there’s quite a lot of thinking that has to happen in that context and very often, if firms aren’t used to transparency in exposing their data, they won’t have thought through that level of detail. So, there’s quite a big bit of thought that has to go into all of that, as I’m sure you’ve come across on lots of occasions. 

You mentioned the ‘Who owns the data?’, and you know, as between the clients and the firm and I think that’s an area where some people do get a bit nervous, and I know of firms when they were moving to the cloud and perhaps some of their clients were not happy to have their stuff in the cloud. So, they had to think about, you know, is this the client stuff or is it our stuff? And again, you might have to go through some quite detailed analysis in those sorts of situations. 

And, you know, firms have to take their own view, particularly depending on what their clients specific requirements are. But you know, for me, the financial information, so the time recording the billings, the write offs, all of that, that’s got to belong to the firm. You know, it’s part of running the firm’s business. The documents on a matter are probably more towards the client side. And I think technically as a matter of, certainly, solicitor’s obligations, if you get sacked by the client, you have to be able to hand over your file, so it sort of belongs to them. 

But there’s a whole challenge there as well, of ‘where is the file?’. Does it all sit in the document management system or is it sitting somewhere else in WhatsApp or whatever? A whole load of other challenges there, but again, there’s quite a lot of thought that has to go into well, exactly what data are working with and, do we have the freedom to use that and expose it in this way? Depending on what approach the firm has taken to things like pessimistic security.

CJ Anderson
So I guess the next question for me is thinking about that pessimistic security and thinking about knowledge management and actually thinking about generative AI. 

You know, do farms still need to worry about their structured data if generative AI is going to replace the way they work currently, what’s the kind of impact on knowledge management and that kind of activity by? Or is it just, you know, an exciting flash at the moment?

Melanie Farquharson
Well, I mean, it’s moving fast, isn’t it? This year, 2023, it’s moved incredibly fast, but I think you know, we’re still a very long way from just pointing AI at all of a firm systems and being able to interrogate them in the sort of way that I’ve described, because as we’ve said, the chances are that the data probably isn’t all that great, and it’s probably not mapped across different systems, so there’ll be inconsistencies and all of those sorts of things and in the knowledge management world, much of the talk about generative AI this year has been about, you know, giving it really good content to work with. 

So, in the same way that with Chat GPT in the public version you have these real hallucination problems where it makes stuff up, and you don’t actually know where it’s getting its ideas and answers from. You know, if you’re giving it good content to start with, there’s a better chance that it will be generating good answers. So clearly, the better shape, pure underlying data is in. The easier it will be to implement generative AI tools in different contexts across the firm. So, I think, you know, we’re a long way from plug and play. I think at this point. So, there’s still a lot of hard work to do. 

CJ Anderson
It’s always good to hear there’s hard work to be done. 

This has been amazing and I’m not going to take up too much more of your time. I’m going to ask you, what’s your final thought on data and knowledge management in law firms? 

Melanie Farquharson
I think there’s still a lot of untapped benefit that can be gained from firms’ data. I mean, you know, managing your data properly is obviously a question of risk and good housekeeping and all of that sort of thing. But I think there’s a lot of plus side that can be derived from the data to make all that effort worthwhile, and certainly KM sees a lot of that potential, you know, knowledge management is still growing in scope and in importance in firms.

We have to manage people’s expectations a little bit of what they should have at their fingertips because, you know, people think about it just be like Google, and magically gives me an answer, you know in the first page of results, that’s exactly what I was looking for. Whereas you know in the internal context it tends to be slightly different sort of question that you’re asking. 

But I think, you know, dealing with those high expectations just means that, you know, we’ve got to be really, really good at managing the data and making it accessible and easy to use so that we can give people those sort of reliable, accurate answers. And that will be a real plus side, it seems to me – make all the work, worthwhile. 

CJ Anderson
That’s brilliant. That’s a really amazing positive final thought. So, thank you so much for joining me on this episode. 

Melanie Farquharson
Not at all, it’s been fun. Thanks. 

 CJ Anderson
Thank you for joining me for this law firm data governance podcast episode. I had a great time talking to Melanie, it’s interesting how knowledge management and data governance are overlapping in a lot of places. She gave me so much food for thought. I found her thoughts on causes and context in AI being a long way from plug and play and found different approaches with how transparent they are with their data to be really helpful. If you liked this episode please share, like and review it so that more law firm leaders can learn about data governance and how to manage data in law firms effectively. Don’t forget to subscribe so that you don’t miss out on any of this seasons data conversations with law firm thought leaders. Or you can head over to irconcarrot.com to get in touch with your questions and ideas for future episodes.