LLP and KM

The lead article in the February Canadian Lawyer Magazine is a piece by Phillip Slayton…who, curiously, refers to himself in part as having been “a dean of a law faculty”: a bit on the generic side, I’d say, for a tiny place like Canada. The law school in question was the Faculty of Law at the University of Western Ontario., “Lawyers, Liability and the Firm.” Slayton spends a fair bit of the article discussing the impact of limited liability partnership — LLP — a fairly new form of organization available to Canadian law firms. In firms where the liability is limited in this way, the liability of one partner for misfeasance, for example, can’t jeopardize the assets of other partners and must be compensated for from insurance or, should it come to that, the assets of the firm per se, which are likely to be meagre.

At one point, Slayton has this to say:

The LLP structure, obliterating the traditional relationship between client and law firm, is also fundamentally changing the relationships between lawyers within a firm. The general partnership structure was based on trust. Only someone who was trusted was admitted to the partnership and kept there. Trust in your fellow partners, and in the quality of their work, was signalled to the world by agreeing to joint and several liability. Trust fostered a congenial work environment, and enhanced the quality of a legal practice. But the partners are no longer “all in it together.” Trust is no longer required: indeed, it is ill-advised. The savvy partner will be very careful what work he takes on, avoiding large, high-risk transactions that could destroy him financially if they go wrong (his “partners” will look on with sympathy while he is destroyed, but need not and will not put their hands in their own pockets).

Giving advice to colleagues on difficult problems arising in large transactions is something to avoid: a ten-minute chat in your office about the issues in an important legal opinion could wipe you out financially. One of the best features of traditional law firm life — the give and take on legal problems, the exchange of wisdom and experience — is severely discouraged by the LLP structure. And only someone very comfortable with personal risk would occupy a management position in an LLP — head of a practice group, for example, or member of an opinion committee — because such a position carries with it possible liability for everybody and everything.

I should imagine — but would be happy to have fellow Slawyers correct me — that this would also inhibit the institution of knowledge management schemes within a firm. As we learned from the article “Knowledge Uprising” in the February National [pdf] (featuring Slaw contributor Steven Matthews), there’s a reluctance among lawyers to become involved with the business of sharing, partly because it is, or can be, time consuming, and partly because what I know and have may benefit me more if I keep it close. To this, then, we might add the fear that sharing a work product could entail sharing any liability that was seen to be caused by that work product — where I would otherwise be immune from liability because of the limited liability nature of the partnership. As Slayton puts it above: “One of the best features of traditional law firm life — the give and take on legal problems, the exchange of wisdom and experience — is severely discouraged by the LLP structure.”

Moreover, might not the person in the firm heading up the KM aspect be especially and uniquely vulnerable?

Although technology is not the essence of knowledge management, it is an important component, one that has the promise of great benefit to lawyers and clients alike for a host of reasons, prime among which, perhaps, is its ability to enhance communication among people. How sad, then, if the fear of liability worked to isolate lawyers and made them shun this great opportunity.

Of course, as a non-practitioner I may have read this thing wrong. Have I? Slawyers let me know.


  1. Hi Simon,

    I just so happen to have read the same article last night and I had exactly the same thoughts as you, therefore I think your thoughts are bang on! Moments before reading it, I had just read the article, Knowledge Uprising” so the points you’re making in your post were also immediately obvious to me.

    I’ve been asked to undertake a knowledge management project here and, having done this before at another firm I’m quite aware of some of the very real hurdles and have been proceding with care and caution while in this “thinking things through” stage. Our firm recently “went LLP” and certain passages in this article were especially deflating. I intend to discuss this with the lawyers who will be on my as yet unformed KM committee. I had not previously been aware of the possible impact of the nature of “LLPism” and I will be giving it serious consideration. I agree, this could mean a very sad step backward for lawyers, firms and, subsequently, clients.

  2. I guess my take is a little different. If lawyers are indeed reluctant to share knowledge on ‘high risk’ transactions, it’s logical that KM efforts will be guided towards the documenting of other types of experience & expertise. And by building up resources within those areas, KM would actually be reinforcing the firm’s efforts to reduce risk. If it’s true, as Slayton suggests, that those in management positions are at a higher ‘personal risk’, then the trend will be for that same management to push the firm towards clients and work that reflect a firm-wide level of acceptable risk. KM should be supporting those efforts.

    Also, one of the biggest corporate trends today is transparency. Many law firms are also moving in that direction. With privacy legislation the way it is (which could also be seen as a negative trend towards KM, but isn’t), there is going to be a general expectancy that firms will work in a more ‘open’ fashion. There’s nothing wrong with the LLP environment or client privacy, yes they change the way we work, but they should be seen as a good thing, and neither is a KM killer.

  3. I’m glad Steven’s take on LLP and KM is positive — or at least neutral. I’m not sure I understand the transparency trend as it appliles to law firms. Does it mean that clients are demanding that the law firm’s process be visible to them?

  4. It’s not that law firms will become transparent, as say a public company. More that trends like the protection personal and private information are brought to the forefront. We can orient KM metadata, towards classifications like ‘industry expertise’, or describe scenarios of facts without client data entirely (like personal info), yet still retain the reusable knowledge aspects that would allow a lawyer to identify analogous experience or work product. Also worth noting, most law firm precedents already fit this criteria.

    The challenge, to me, would seem to be to find ways in which KM could mitigate firm risk. I don’t have all the answers, but I think it could be done.

  5. I tend to agree with Steve. I haven’t seen solid evidence of change from a move to LLP itself. I have seen more of a change from lawyers coming and going–some retiring, some going to be in-house counsel or doing alternative work. They know each other less than those who have “grown up” together through summering, articles, associateship (for lack of better word) and subsequently partnership. Perhaps some of these changes of people leaving have been affected by the move to LLP? I haven’t seen that evidenced, either, although it might be a factor. I think a lot of it depends on a firm’s culture. Every one is different, and it is possible that the changes Simon describes has existed in some.

    If the LLP has created less of a trust between lawyers, and less of an inclination to share in an informal manner, then perhaps KM has an even GREATER role making the necessary sharing a formal part of a firm’s practice.

  6. Philip has been out of Blakes for too long.
    The fact is that the important word in an LLP is the last word – partnership. That hasn’t changed.
    The fact that we arrange things about personal exposure differently won’t change anything.
    The firms we are talking about have layers of insurance generally around $100 M plus, through the CLAAS reinsurance facility.
    A firm in which liability concerns (as opposed to conflict concerns) squeeze KM has much larger concerns than Philip has addressed in his piece.
    He is linking issues that are both important but conceptually quite distinct.