In our latest guest article Shaun Locke, who recently joined Recommind as Regional Manager of Australia and New Zealand, offers some insight on recent trends across the region. This piece also sets the scene for the topics to be covered at next week’s Janders Dean KM conference in Sydney
• Mergers and acquisitions
IBISWorld estimates that the Australian legal sector will generate $20bn in revenue in 2012, up 2% on last year. They put this down to firms raising more capital and an increase in the value of merger and acquisition (M&A) activity in the market, leading to higher legal fees.
Recent M&A activity isn’t however exclusive to their corporate clients. Over the past four years Australia’s legal sector has encountered significant interest from international law firms looking to expand into, and in some cases enter, the region; including firms from the UK, US and China. Some of the more notable mergers include UK firms Herbert Smith and Norton Rose merging with Freehills and Deacons respectively as well as the Mallesons tie up with leading Chinese practice King & Wood. These mergers are primarily driven by the increasingly competitive global environment, the strong Australian economic environment and prospective business growth in the Asia Pacific region. Lawyers within these Australian firms will benefit from an increase in international work, generated by these greater international networks, as well as providing opportunities for secondments to other markets and regions.
In the medium to long term we expect to see these firms rationalise their legacy IT systems, particularly to streamline the flow of knowledge between these disparate regions. The process of merging legacy Practice Management Software and Document Management System solutions together is a lengthy one and in the interim search platforms will be used to bridge many of the gaps. Whilst IT systems must be globally accessible, in the large part they will need to be supported locally.
• All change for the CIO and CKO
Global consolidation will continue beyond the Australian market, with international firms identifying South African, Brazilian and Canadian businesses as targets for their expansion. With the rise of more and more truly global law firms, we will see an increase in high profile executive appointments, most notably the CIO role, from outside of the legal sector as firm’s transition to become more corporate by nature. We may even see, in some cases, the role of the CIO becoming a function within the realm of the Chief Knowledge Officer (CKO). Knowledge will be the bedrock of the global organisation, as law firms grow from hundreds of personnel to many thousands.
Justin North, Managing Director of Janders Dean, a knowledge management consultancy, expects to see the CKO become a global role, and suspects that Australian nationals may well lead the charge in this area: “Australian firms were some of the first to understand the value proposition of knowledge management in the legal and professional services space. It is a very innovative and progressive region – and one of the first to recognise the synergies between knowledge management, technology innovations, and the services offered across other traditional support functions.”
• Structural complexity
Continued expansion and M&A activity will lead to increased structural complexity within law firms. In order to support efficient processes and knowledge sharing throughout the expanding firm; whether it’s across a market sector, practice area or geographical regions, firms will have to invest more in their IT infrastructure.
Structural complexity however isn’t just about knowledge transfer. It’s also about information governance and security. With international mergers there is a higher probability firms will encounter client conflicts. For example, a global legal practice could end up advising both the Australian and Chinese Governments on different sides of a transaction. The challenge posed is identifying and sharing the correct knowledge within the organisation but without compromising either party.
• Big Data and information management
When you consider that, on average, the quantity of data generated is doubling every 18 months; firms need to act now to avoid drowning in the deluge. In the age of social media, smartphones and tablets it’s unsurprising that IDC states that 75% of all data is generated by human beings rather than machines. When you consider this, coupled with the fact that data is increasingly being spread across internal and cloud-based servers, the headache can quickly turn into a migraine.
For law firms, the challenge and opportunity with big data is two-fold. Not only do they need to search and analyse their own data for business development, but they equally have to be able to extract information from client data for pre-trial and evidence gathering (see below). Because of this, being able to intuitively extract and retrieve information with precision and in a timely manner, whilst keeping costs low will become a focus for the majority of firms. The process needs to be platform agnostic and to present the most relevant information, regardless of the individual data set. It also has to deal with multiple strata of data – structured, semi-structured and unstructured.
Internally the focus will be on extracting and managing information; to identify relevant and specific experience across the employee base in a timely manner. Externally the focus will be on cost and client value for money.
SharePoint, Microsoft’s collaboration and intranet platform, has been steadily gaining traction in the region and with the new version set to launch in early 2013, this trend is going to continue and gather pace. For those companies who have already deployed SharePoint, we expect to see an increase in its use across the organisation, with the SharePoint based intranet becoming a central access portal for sharing information. The biggest challenges, however, will be displaying the most appropriate and current information to the employees as they browse the SharePoint environment. This also includes providing the ability for users to run a comprehensive search that spans not only the SharePoint data but data that is stored in other repositories throughout the firm, such as the DMS.
eDiscovery in Australia has been a focus for many years, increasingly so after the Federal Court introduced its Practice Code for handling electronic data in 2007 – primarily based on balancing the principles of proportionality and reasonableness. An updated code was released in 2009 requiring all electronic documents and emails to be produced and exchanged electronically, preferably in their original formats.
Whilst a number of today’s legacy eDiscovery systems originate from Australia, the focus has shifted towards the use of advanced computer-assisted review technologies , such as Predictive Coding, emerging from the US. However, unlike the US and UK, no Australian or New Zealand judge has publically endorsed the use of Predictive Coding in the region. While Australia and New Zealand remain less litigious than their North American and British cousins, given the right case its use may not be that far off. Particularly as global firms that already possess Predictive Coding capabilities continue to expand into the region.
 IBISWorld Legal Services market tracker, May 2012: http://www.ibisworld.com.au/industry/default.aspx?indid=560