One of my legal technology friends saw my posting What if Clients Were to Pay for Knowledge Management (23 Oct 03). In this posting, I suggested that it makes sense for general counsels to pay for law firms to perform a matter de-briefing or post-mortem for KM purposes. My friend relayed an experience in which he proposed this idea to the GC of a large company. Here is what he reports:
“My last direct encounter on this idea with the GC of a large company was so stunning that I have been somewhat at a loss ever since. His basic position (repeatedly stated) was that it is not for GCs to find ways for their vendors, including law firms, to become more efficient and effective. GCs ‘have enough other things to worry about.’ He believes market forces will achieve the desired outcome and repeatedly referenced his great faith in the market. For him, the “market” meant the cost-quality mix that directs work to increasingly lower priced vendors as the means to ensure improvement in services.’ My effort to redirect the conversation to explore the benefits that might accrue to his own staff, including career-development points (i.e. items he was then lamenting) were to no avail. This, too, he believed, would improve due to market forces. I left the encounter wondering which of us was smarter and questioning how many other major GC’s held to a position which, to me, seemed very simplistic and painfully reactive. I believe in markets, but I want to see change faster than his model would seem to allow.”
Regular readers of my blog know that I generally believe in market forces. I am not sure, however, that I accept this GCs perspective. Certainly any GC is free to direct legal work to the outside counsel he or she sees as best or most cost-effective. My question is very simple: by what metric does or any other GC measure quality and cost? I am not aware of any rigorous approach to measuring cost and quality trade-offs for law firm services. And to the extent that some law department have devised measures, my guess is that the extra cost of the KM debriefing, because it is likely to be such a small percent of the total bill, would be lost in the statistical noise of the analysis.
There is another serious weakness in this GC’s argument. He or she is not considering a kind of externality – that the market is not currently providing his or her law department with crystallized know-how that could be re-used and therefore lower future costs. If law firms are retained only once, they certainly have no incentive to invest the extra day or two to prepare a de-briefing. Only the client has the incentive aligned with this goal.
It may be that there are good reasons for GC not to pay for KM de-briefings, but the GC who put forth this argument seems, in my opinion, to be taking an ill-considered view of the question.