When KM meets AI: An interview with Fireman & Co senior consultant Sally Gonzalez

Sally Gonzales joined Fireman & Company in May as the Toronto-headquartered legal management consultant’s newest senior consultant. Recognised as an authority in knowledge management and strategic technology planning, here Gonzales, who has held senior IT and KM roles at firms including Dentons, Norton Rose Fulbright, Akin Gump and Jones Day, tells us what led to her move to Fireman; how KM has evolved in the legal space; the major KM trends ahead; and discusses some of the biggest questions around AI. “I think we are on the cusp of KM 4.0,” she says.

What led you on this path to Fireman & Company?

I’ve been fortunate to have a long and stimulating career in KM and IT management, with about 15 years spent in-house in top IT leadership positions at several global law firms, most recently Dentons, and about 18 years consulting to law firms and law departments in the US, Canada, and the UK.   I recently returned to the US after two years in London working for Norton Rose Fulbright as KM Program Manager for their global enterprise search implementation.

After a brief sabbatical, I knew I wanted to continue consulting and I wanted to find the right team to partner with to focus in on the two areas about which I am most passionate:  KM and AI.  I have known and respected Fireman & Company’s founder, Joshua Fireman, and his partners Ron Friedmann and Tom Baldwin for many.years, and I was delighted to have the opportunity to join forces with them to help meet the growing market demand for KM, AI, and related services.  While AI crosses all of Fireman & Company’s practices and services, my primary role will be to provide a focal point for AI to keep abreast of the market and to ensure that we are positioned to work with our clients to identify and implement practical AI solutions that help them deliver legal services effectively and efficiently.

Looking back, how has KM evolved in the legal space?

Over the past 30+ years, I have seen KM evolve from the early hype in the 90’s, when every vendor tacked “KM” onto their marketing for every offering, to an established and respected field within legal.  Looking at the big picture, I see three major evolutionary stages in the past.

– KM 1.0 emerged in the 90’s and focused on supporting lawyers in the delivery of client services and helping young lawyers become effective more quickly while maintaining quality and managing risk. The typical KM programs focused on what the UK calls “Know-How” and “Current Awareness,” as well as establishing tight linkages with Professional Development to help grow the capabilities of young lawyers as quickly as possible.

– KM 2.0 emerged around the new millennium as law firms increasingly focused on marketing and business development in order to grow their revenue streams. KM expanded to encompass helping firms know their clients, know their clients’ businesses, and know their own experience.  For firms with established KM departments, the alignment with BD departments became more important.  For firms just beginning in KM, many focused on this area first.  One of the great tragedies of the early days of this period was to observe firms struggling to implement Client Relationship Management systems without recognizing them as fundamentally KM initiatives requiring all of KM’s change management, content management, and process improvement competencies in order to succeed. Thankfully, in recent years we have seen the emergence of experience management systems capable of capturing, categorizing, and sharing information about matters and experience by mining existing information stores and greatly reducing the amount of lawyer and staff effort required.  These new tools are now at the leading edge of ongoing KM 2.0 efforts.

– KM 3.0 appeared soon after the 2008 economic crisis, as law departments increased the pressure on law firms to deliver services more cost effectively and at more predictable costs. Law firms responded by increasing their interest in legal project management, legal process improvement, and pricing.  Once again, KM professionals had the blend of skills necessary to provide significant contributions to these initiatives, and the KM fundamentals established in KM 1.0 were key building blocks to optimize legal service delivery.  The tragedy this time around was to observe firms that did not have established KM 1.0 competencies and processes try to build them in parallel with the challenges KM 3.0 presented.   Firms that had established KM 1.0 programs were far better positioned to move quickly into the KM 3.0 world.

Looking ahead, what major KM trends and directions do you foresee?

One of the joys of my career has been that KM never dies or becomes stagnant; it is so fundamental to professional services that it simply continues to evolve.  I think we are on the cusp of KM 4.0, which will arise from the current interest in “AI.”   Fortunately, KM professionals are once again well positioned to become key players helping their firms through this next transition.  The fact is KM that has long been involved in AI to the extent that technology platforms were available and cost effective (e.g., document automation, contract analysis, and expert systems).  They understand that the path to successful AI implementations will follow the path of all successful KM solutions—blending people, process, and technology into self-sustaining initiatives and driving change to promote adoption.

Is the legal sector ready for AI?

AI is here across all industries and in many forms.  The pace of improvement has accelerated dramatically over the past few years due to ever-reducing costs for the enormous computing power behind AI, the exponential growth of available big data from which AI tools can learn, and the rapidly growing universe of products tailored to specific business cases. Within legal, I see a perfect storm arising from the convergence of interest in big data, data analytics, and AI.  The three will feed off each other and the legal-specific service offerings will expand dramatically.  And law firms and law departments may well make investments in AI platforms and develop bespoke solutions that transform their service delivery to differentiate them in the marketplace and help them operate the business more effectively.

What do you think the major challenges to AI will be?

Given all the hype around AI currently, one of the most immediate challenges is to manage the expectations of law firm leaders in light of the significant gap between AI hype and reality.  AI is not ready to take over the world and replace lawyers.  But is is ready, and will increasingly be ready, to augment lawyers by taking on more and more of legal “drudgery” and freeing lawyers for higher-value, more interesting work.

Cultural barriers have always been a key challenge for KM, and AI is no exception.  Monetizing AI to achieve ROI and profitability will require new ways of thinking about fee structures, always challenging for traditional law firms.  And once again, fear is a player at the table, giving rise to resistance and denial about AI.  Listening to the hype, many traditional lawyers fear the rise of “lawyer-bots” capable of providing substantive legal advice  While this may be a long way off for the kind of complex legal advice delivered by law firms today, it is increasingly within reach for the simpler legal problems people experience in their daily lives (e.g., “Siri, can you help me create a simple will?” or “Alexa, should I go to court to fight this parking ticket?”).

What do you think the real future for AI is?

There is a lot of talk today about AI actually replacing lawyers.  I think that a more realistic view of the potential impact of AI over the next 10 years is that it will not replace lawyers entirely, but that it will augment them by performing up to 25% of the work that lawyers currently perform. Document review, contract analysis, and due diligence have been amongst the first to fall to this transition, but many more areas will certainly follow as AI becomes more powerful and capable.

AI almost certainly will impact the law firm’s business model and organizational structure.  AI tools will become an extension of the practicing lawyer’s toolkit and AI “machines” will become members of the new multi-disciplinary legal team.  This raises two significant challenges.   First, law firms will need to redesign their talent development programs so as to grow the partners of the future even while AI reduces the number of associates that can be sustained in the talent pool. They will also need to consider creating new positions to attract and retain those professionals that will drive their AI efforts: data scientists, data analysts, and AI programmers.  Second, law firms will need to once again transform their fee structures to profitably generate the revenue to fund the machines in light of current and future pricing pressures.

I also think that AI carries the potential to create a new business model for young lawyers emerging from school today, many of whom could be capable of and interested in crafting AI-based services or products.  In their hands, AI could open up new markets by bringing affordable legal services to more of the 80% of the population currently under-served today.  And, who knows, even Big Law might expand their service offerings to include niche, AI-driven products and decide that these new entrepreneurs were good “Partners.”

Finally, the implications for law departments are perhaps even more interesting to consider.  Most law departments do not operate on the basis of the “billable time” of their lawyers.  Their challenge is to deliver quality legal services within the limitations of their in-house lawyers’ time and skills.  In this situation, the integration of AI tools could, in fact, increase their “service capacity” by 25% or more, translating into a real ROI justifying the investments required.

Looking at all of the above, KM 4.0 promises to be perhaps the most interesting KM transformation yet!