The Current State of the Legal Knowledge Management and the Legaltech Scene in Israel
Esther, you are a Legal Knowledge Manager at FBC & Co. What is the current state of legal knowledge management in Israeli law firms in general, and more specifically, can you tell us about your law firm and its legal knowledge management initiative?
Legal knowledge management as a concrete discipline is hardly existent in Israel. FBC & Co is one of the pioneers of Israeli law firms that emphasizes the significance of structuring the professional and organizational knowledge with the aim of promoting a culture of innovation in the organization along with embracing innovative legal technology. FBC & Co is one of Israel’s premier full service law firms, offering its clients professional excellence across the spectrum of multidisciplinary business legal services, spanning multiple practice areas, with main areas of expertise in real estate, litigation, commercial law and antitrust law. Our firm is involved in a wide range of representations at the forefront of Israel’s legal-economic agenda.
Since 2000, FBC & Co has been Israel’s fastest growing law firm, and is repeatedly ranked by international and domestic indices among Israel’s leading law firms. It is Israel's 4th largest law firm, with over 300 employees, including almost 190 attorneys and 40 interns, and it has been voted Israel's Employer of Choice by attorneys.
When hockey legend Wayne Gretzky was asked how he managed to be so successful in his career he replied: “I skate to where the puck is going to be, not where it has been.” This is precisely what our firm strives to achieve in the quality of the legal services provided to its clients, as well as in its knowledge management and innovation initiatives. In fact, the mere existence of a Legal Knowledge Manager's position in a major Israeli law firm, combining both legal and technological aspects, embodies innovation in and of itself in the local legal market.
I'm a lawyer. I received my Bachelor of Laws degree from the Tel Aviv University School of Law and the Master of Commercial Law degree (Magna Cum Laude) in the Executive International Masters Program of the Tel Aviv University School of Law in collaboration with University of California Berkeley Boalt School of Law. Prior to my role as a Legal Knowledge Manager at FBC & Co, I practiced securities and corporate law for seven years in two leading law firms in Israel.
My practice concentrated on representing privately-held and publicly traded companies in a broad range of industries and financial institutions in all major aspects of securities regulation, corporate law, and a wide variety of international and domestic business transactions. Within this framework, I also served as an external legal advisor to Israel's Oil Refinery corporation, as well as to an Israeli branch of a major international banking institution, and I regularly counseled one of the largest index linked note (ETN) issuers in Israel.
I started my professional career in 2008 at FBC & Co, first as a legal intern and thereafter as an associate with the firm’s corporate department, where I was also involved in knowledge management related initiatives and often served as a source of professional knowledge within the areas of my expertise, so the connection to the field of legal knowledge management was very natural for me.
Intellectual curiosity is a characteristic that accompanies me through life and I enjoy learning about new subjects of interest. A year ago I was formally introduced to the field of legal knowledge management, completed an extensive knowledge management qualification course in a leading knowledge management consultancy in Israel, and returned to FBC & Co where it all started, but this time as the firm's Legal Knowledge Manager. My extensive legal experience as a lawyer together with technological orientation and knowledge management training are without a doubt helping me in my current role as the firm's Legal Knowledge Manager.
Knowledge management is deployed by many organizations from various industries worldwide. I am sure many people know what knowledge management is about, but for those who don't, can elaborate on knowledge management and its benefits?
In an information era that we live and work in, organizational knowledge is one of the most important resources in the organization, if not the most important one. "Knowledge is power", said philosopher Francis Bacon. I would add that collective knowledge is power. Let's compare knowledge to public goods, such as the legal system and the national defense, whose use by one individual does not reduce availability to others. After all, knowledge does not deplete by the mere act of it being shared with the public, and the amount of available knowledge does not depend on the number of its potential beneficiaries.
In this context, the role of the knowledge manager is, on the one hand, to preserve collective knowledge of the organization, so that its employees would be able to know today what they knew yesterday, and on the other hand, to develop new knowledge, so that employees of the organization would be able to know tomorrow what they know today, derive insights from the past activities and originate innovative work. In general, it can be stated that the purpose of knowledge management is to cause the knowledge to be in the hands of the right people, at the right time and place, in order to allow them to conduct the highest level of work possible.
Law firms are by definition engaged in providing services the focal point of which is knowledge and professional expertise, whereas the knowledge manager serves as the "transmitting channel" of the cumulative organizational knowledge and experience, making them accessible to organization's employees. This in turn contributes to the improvement of the quality of professional outcomes and streamlines business processes, thereby allowing attorneys to provide a better service to their clients. The importance of knowledge management is further emphasized in large organizations such as big law firms structured as a so-called "one-stop shop". A law firm that is unable to efficiently transfer knowledge among employees in its various departments, may find it difficult to capitalize on economies of scale and gain optimal advantages from its size.
Here's some statistical data illustrating the increased involvement in the field of knowledge management by organizations around the world: the scope of the professional knowledge management departments in organizations employing between 10 to 300,000 employees ranges between 3 to 25 knowledge management workers, and in organizations employing 300 employees, which resemble in size most large law firms in Israel, there is one knowledge management worker per each 60 employees in the organization. In addition, the annual budgets invested by these organizations in knowledge management projects may vary from 100,000 dollars to 1.5 million dollars. It's no coincidence that Benjamin Franklin coined the expression "An investment in knowledge pays the best interest". I respectfully concur.
A knowledge manager is entrusted with setting the entire organizational apparatus in motion and the incorporation of knowledge management principles in supporting the core organizational processes. Knowledge manager's role in the organization entails building trust in knowledge collaboration, streamlining work processes, serving as the "knowledge junction" in the organization and as a professional authority responsible together with the main knowledge carriers for the quality control process of the contents included in the organizational knowledge base, driving the adoption and the subsequent implementation of new technological tools in the organization, and establishing a culture of learning and innovation.
A knowledge manager in a law firm has intersecting points with virtually all functions in the organization, including partners, lawyers, interns, administrative staff, IT, finance, marketing and business development, human resources and etc. Sometimes the process of structuring organizational knowledge entails driving enterprise-wide changes whose implementation naturally requires the involvement of all these functions in such change management processes. To give a "real life" example of inducing such an organizational change process - during the last few months I was involved in a major enterprise-wide project of implementing a new document management system in the firm that is designed to gather and concentrate the organizational knowledge upon a single common platform. Any change may naturally be accompanied by a certain degree of apprehension or even opposition, and certainly such a significant organizational change that is replacing the entire working infrastructure of the organization. A change of this magnitude needs to be managed, and a knowledge manager plays a key role in this context.
I approached this challenge in a methodological and organized manner, understanding that engaging employees throughout the entire process is a necessary condition for the success of the project. After conducting a system trial and gathering initial feedback from the firm's employees, I prepared a comprehensive series of online training tutorials on using the system, so that everyone in the firm could watch the training videos on-line and at the same time practice working with the system. This approach streamlined the launching of the new document management system in the firm. Naturally, the knowledge manager's work does not end here, and it requires ongoing implementation of the system in the organization in order to maintain its efficiency. After several months following the system launch date, I recently conducted a comprehensive survey to monitor organizational satisfaction with the new system, and conducted training sessions to dozens of employees in the firm to continue strengthening the systems' user skills within the organization. I'm currently working with the IT team to implement the feedback gathered following the survey to ensure that the system is optimally user-friendly and easy to use. As you can see, implementing an organizational change is an ongoing process, and the significance of involving the organization's employees along the various stages of the process cannot be overstated.
Knowledge management is a combination of several aspects – in order to succeed in the organization, knowledge management initiatives require an organizational culture that supports knowledge sharing and learning, in addition to
core business processes of the organization and a supporting technological infrastructure. Together these factors constitute the basis of effective knowledge management. Technology is an integral part of knowledge management in an organization. In fact, technological solutions serve as knowledge management enablers in general, and in the context of legal knowledge management in particular, technology can allow lawyers to concentrate more on what is important to the clients and to deliver better service.
Looking at the current state of the legal knowledge management and the legaltech scene in Israel, what are the main hurdles that in your opinion are precluding Israeli law firms from involving more actively in the field of legal knowledge management and embracing innovative technology as their peers in other countries worldwide?
This is a multi-faceted issue, so I'll try to provide a comprehensive overview of the main factors affecting the local legal market. Israel is well known for its vibrant startup activity. However, currently this does not sufficiently translate into the local legal market. Despite Israel's reputation as a "Startup Nation" in fields such as cybertech, fintech and biotech, unfortunately we are still behind our peers in other countries in terms of the local legaltech market, adoption of technology in the legal practice and involvement in legal knowledge management.
Next story illustrates this well – during a local knowledge management conference that I attended recently, where the latest technological solutions in the field of knowledge management were displayed, I was presented with a questionnaire which included a question on the type of organization I represented. There was an option to choose among different areas, such as communication, banking, insurance, health, infrastructure, etc., but there was no relevant category for the legal profession. The only remaining category was "other". But if we think about it, we are not the "other", after all, who if not lawyers is engaged in provision of services the focal point of which is knowledge? Ironically, this sector that primarily deals with information, is relatively behind other industries in the ways that it handles information.
One possible explanation for this phenomenon could be the conservative nature of the legal profession that is not traditionally associated with technological innovation. In addition, one should take into account that incorporating new technology into a law firm is quite a difficult task. Not every day technological infrastructure is being replaced. This involves a long-term investment and law firms are not necessarily built for frequent investments of this type. These constraints are certainly not exclusively identified with the local legal market. Nevertheless, legal knowledge management and legaltech tools are being increasingly adopted worldwide, in particular by the large US and UK law firms. Expressions such as legal KM (knowledge management), artificial intelligence, machine learning and data analytics have already become common knowledge within the legal communities in these countries.
One of the main factors that accelerated the development of the legal knowledge management and the adoption of technology which affected the legal market worldwide was the economy. The traditional model of law firms which is based on the method of compensation against billable hours has not changed for years, until the turning point which took place in 2008, with the occurrence of the world financial crisis that had an immense negative impact on the legal markets worldwide, especially in the US and UK, which are still in a recession. In a new reality that emerged, the bargaining power has shifted to clients who were no longer willing to pay their attorneys according to the hours billed, and started demanding more legal services for less cost. As a result, law firms worldwide were faced with the necessity to explore new methods of efficient legal service delivery, including legal knowledge management and the adoption of legal technology.
In addition, the emergence of alternative legal service providers has become a significant competitive force in the global legal arena. For example, LegalZoom is a US-based online service provider that makes legal documents available to citizens and businesses who cannot afford lawyers or wish to spend less on their legal issues. LegalZoom has now served over 3.5 million customers and its brand is claimed to be better known in the US than that of any law firm. Another example is Lawyers on Demand that provides outsourcing services for some of the legal work based on tailoring the assistance to the specific needs of each client. These types of new market players are disrupting the traditional model of legal service delivery by law firms. The economic factor and the increasing competition from new legal service providers have certainly served as the driving force behind the increased involvement of the law firms worldwide in the legal knowledge management and the incorporation of technological solutions in the legal practice. In contrast, the global financial crisis of 2008 had a relatively moderate impact on the legal market in Israel, so the incentive to change and adopt more efficient methods for legal service delivery was significantly smaller in Israeli law firms than for their peers in the US or UK for example. Moreover, alternative legal service providers in Israel that offer online legal services or legal practice outsourcing have yet to take over a significant share of legal work in the local market. Therefore, it is understandable why the field of legal knowledge management and the legaltech market in Israel have not developed at the same pace as they have worldwide.
I believe that another reason that drives the legal markets worldwide towards the increased adoption of technological innovations is that the realization, that in the current reality – and certainly in the near future – being a talented and a professional lawyer will no longer suffice, and that lawyers will be required to demonstrate breadth of knowledge that also covers business and technological aspects, is slowly beginning to permeate the legal markets worldwide. Let's compare this to a traditional "I-shaped" model of a legal professional, whereby the lawyer has a deep legal expertise in the field of the law. Nonetheless, recent trends show a shift towards a "T-shaped" model borrowed from the technological sphere, whereby the vertical stroke of the T represents depth of knowledge in one main discipline, whereas the horizontal stroke of the T represents breadth of knowledge, skills and qualifications across multiple disciplines, an integral part of which is technology.
In fact, the effect of technology on the legal profession is so profound that in 2012 the American Bar Association has modified the Model Rules of Professional Conduct, stating that part of lawyer's ethical duties is to keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology when handling client matters. This rule of competency in the technological developments has already been adopted by nearly half of the US states. In addition, leading law schools worldwide are beginning to integrate technological courses in their curricula. This kind of awareness has not significantly penetrated the Israeli legal market. Additional training beyond the legal knowledge is an advantage in Israel which is a "nice to have", but still not a "must have”.
Another factor that may explain the relatively slow involvement of the Israeli legal community in the local legaltech market is the limited number of available ready-to-use local technological solutions. To give a simple example, according to recent data, there are only 10 legaltech startups in Israel with total investments of approximately 10 million dollars, in comparison to 400 legaltech startups in the UK with total investments of over 500 million dollars. This gap is understandable, since many legaltech solutions are language specific, and most legaltech products mainly support the English language, which is the international language of the business world. In contrast, Hebrew is only spoken by 9 million people around the world, a fact that can make the development of Israeli legaltech solutions less financial-worthy.
The size of the local legal market also has a restraining effect on the pace of adoption of legal technology. To illustrate, the number of lawyers in the US as of 2016 was approximately 1.3 million lawyers, while the number of lawyers in Israel was approximately 60,000 lawyers. As one of my acquaintances who is active in the legaltech scene once said: "There are more lawyers on one street in Manhattan than in all Israel". Combined with the fact that local large law firms are barely considered medium-sized firms in the US, it is not surprising that the resources the foreign firms invest in technological solutions are correspondingly higher.
At first glance, the combination of these factors may lead us to a not so encouraging conclusion regarding the future of legal knowledge management in Israel and the adoption of the legal technology by Israeli law firms. Nonetheless, I believe that precisely the opposite is true. Although the Israeli market has not been significantly affected by the global financial crisis of 2008, unlike its peer in the US and UK, Israel is also no stranger to an increasing client demand of gaining more for less, resulting in the gradual decline of the traditional compensation model against billable hours, which in turn will increase the need for more efficient methods of legal service delivery, including legal knowledge management and use of technology assistance. In addition, Israel is known for its ultra-competitive legal market. Israel is a world leader in the number of lawyers per-capita, with a total of 636.9 lawyers per 100,000 population. To compare, the average in Europe is 161.4. In England, for example, this figure amounts to 308 lawyers per 100,000 population, and in Germany – 200.5 lawyers per 100,000 population.
Moreover, Israeli big law firms are constantly growing, and in order to take advantage of their size they will need to manage their knowledge more effectively. Therefore, the growth in the number of lawyers employed by law firms, together with the increasing competition among Israeli law firms, are expected to accelerate the necessity of legal knowledge management and of the integration of technological solutions within the local legal market.
I think that the Israeli legal market is making slow but definite progress, and there's a rising awareness of the benefits of legal knowledge management and legaltech in general. I also believe it is simply a matter of time until the local legaltech market catches up. Usually, tech trends in the US take some time to arrive to Israel. As the Fairy Godmother told Cinderella: "Even miracles take a little time!"
There could also be numerous opportunities for international legaltech vendors who are interested in exploring and cooperating with the Israeli legal market in a variety of fields – from document automation, contract review and e-Discovery, advance legal research, data analytics, to project and process management.
At the end of the day, what is important in my opinion is the fact that we are beginning to discuss these questions and giving them serious consideration, which in and of itself may accelerate the development of the legal knowledge management in Israel and the adoption of legaltech solutions by the local legal market. I believe that the message that knowledge is the key to success is beginning to penetrate the legal scene in Israel as well and I envision positive prospects for the further development in this area in the future. As Robert Kennedy declared towards the launch of Apollo 11 mission after which the first human landed on the moon: "We live in interesting times!" Then we certainly have something to look forward to.
I would like to see our firm incorporating advanced technology in the structuring of organizational knowledge, in information retrieval, in the processes related to conducting legal work, in communication both internally and towards clients, and in the professional training of lawyers – the sky is the limit and that's the best part of the knowledge management profession!
I will conclude with a scene from a movie "Under the Tuscan Sun" that was ingrained in my memory and I always picture it whenever I think about the combination of the legal world with advanced technology and the countless options that the future holds in store: "Between Austria and Italy, there is a section of the Alps called the Semmering. It is an impossibly steep, very high part of the mountains. They built a train track over these Alps to connect Vienna and Venice. They built these tracks even before there was a train in existence that could make the trip. They built it because they knew some day, the train would come.” I too, as a legal knowledge manager, build the organizational knowledge infrastructure even before having at my disposal the entire ensemble of advanced technological tools that can maximize the value of knowledge for the benefit of the organization. I do this, because I know some day, my "train" will also come, and in a dynamic world we live in, this day seems closer than ever.
Ms. Esther Dediashvili is FBC’s legal knowledge manager, and her responsibilities include the firm's collective legal knowledge and professional expertise management, maintenance of the firm's practice portal and knowledge databases, assisting the firm's management and professional teams with legal project and strategy management, legal process analysis, developing professional training programs for junior associates and articled clerks, as well as editing the firm's newsletter.
She served as a legal intern at FBC and has been an associate with the firm’s Corporate Department since 2009. Her practice concentrates on securities law, capital markets, corporate law, mergers & acquisitions, structured finance & derivatives and commercial transactions.
Ms. Dediashvili has extensive experience in representing privately-held and publicly traded companies in a broad range of industries and financial institutions, including index linked note (ETN) issuers, in all major aspects of securities regulation, corporate law, and a wide variety of international and domestic business transactions.
Prior to joining FBC as the firm’s legal knowledge manager, she served as a senior associate in the capital markets department of a leading Israeli law firm (2014-2016), where she also served as an external “in-house” legal advisor on behalf of the firm to an Israeli branch of a major international banking institution and its local brokerage company.