Tuesday, June 12, 2007

Knowledge Management for Inside Counsel

The latest issue of Inside Counsel magazine contains a primer on knowledge management Article(pdf).

They interviewed the right people by including Jack Vinson, Dennis Kennedy, and Sally Gonzalez.

The article laid out a seven step guide to knowledge management:
  1. Create an objective.
  2. Sell it.
  3. Appoint a leader.
  4. Get buy-in
  5. Leverage existing technology
  6. Consider other stakeholders
  7. Maintain it
One big difference between an in-house legal KM system and law firm's KM system is the objective. In-house, the KM system should be designed to save the enterprise money. The in-house lawyers should be (a) more efficient, (b) able to provide better advice, (c) better able to leverage and manage outside counsel, and (d) able to reduce the liability and risk exposure to the enterprise.

Those same four objectives apply to a KM system for a law firm. But the cost savings get passed on to the client, not as more revenue to the law firm. That is what makes it hard to determine the value of knowledge management to a law firm and hard to determine what the return on investment may be. The goal is to convert those cost savings and better work product into more business and higher realization on the payment of the bills.

The one situation where it is possible to work knowledge management into the law firm financial equation is for fixed-fee representations. If knowledge management can help the attorneys produce better work product, quicker and more efficiently, then the law firm can increase the time value of the representation. If the client agrees pay $X for each matter which equate to Z hours of attorney time at their billing rate, then the goal is to complete the matter with less than Z hours worth of work.

That is where knowledge management (and legal technology) can help. I would propose using document automation to produce the documents more quickly. I would also institute a post-closing review of the comments to the documents to see which ones should be incorporated going forward to reduce negotiation time. You can see how layering in KM around the practice and the client would make a quantifiable difference.

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