A misnomer: institutional knowledge of firms is mostly individual knowledge

Although much touted, serious doubts exist in my mind about the efficacy of so-called institutional knowledge of law firms. I have no doubt that individual partners who work on a series of matters over several years with a company come to understand chunks of the company’s history, culture, senior leaders, and legal positions. Relationship partners particularly lay down relatively deep layers of knowledge (See my post of July 26, 2008: relationship partners with 8 references.). Likewise, core teams of lawyers will build up some familiarity as long as they continue to serve the client. The half-life of that knowledge is short (See my post of Aug. 8, 2006: core staff with 6 references; and July 17, 2008: core team with 11 references and citations to 7 earlier.).

These are, however, individual brains that store that experience and understanding; the law firm as an entity barely records or makes available the mostly tacit knowledge. If a handful of human beings possess the knowledge, not databases of systems in law firms or wider networks of staff, then a misleading image entrenches itself when we speak of firms’ institutional knowledge (See my post of March 15, 2006: the shibboleth; Dec. 6, 2006: retrograde effects of institutional knowledge; Feb. 1, 2007: claim of institutional knowledge at law firms, yet mobility, shift of practice, and retirement of partners; Feb. 6, 2007: RFP evaluations need to focus on actual staff, not amorphous firm knowledge; Feb. 17, 2008: loss when partners move from one firm to another; Nov. 19, 2009: transactional cost economics takes into account institutional knowledge;

In-house counsel, individually and as a department, accumulate vastly more institutional knowledge about the client than any law firm. That insight into and historical experience with the executives and historical path of the client constitutes the strongest value proposition for inside lawyers.

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