Friday, October 23, 2009

Client-Facing Knowledge Management

I'm continuing in a KM peer group meeting in a discussion on client-facing knowledge management. There was a good presentation about client facing KM including a very impressive instance of law department and law firm collaboration in KM, training, and beyond.

How can client-facing KM add value and get clients to work more closely with the firm?

KM is perceived as delivering value to internal clients. It can also be structured to deliver value directly to clients.

Our natural tendency may be to focus on the internal clients but there are opportunities with external clients.

It is hard to identify value--"one man's meat [tofu] is another man's poison." Qualitative measurements of value are more appropriate but entail repeated conversations. Ask if particular KM initiatives are delivering value.

What will value look like in the future? Is the recession a temporary dip or a transformational event?

Clients' demands have clearly changed as a result of the recession.

There are three tiers of client-facing opportunities. Every client expects firms to have models, samples, and extranets as commodity services. Above that some KM initiative have brand distinguishing initiatives (e.g., "Blue Flag"). Above that are "bespoke" KM tools such as expert systems that can identify answers or advice to clients through a dialogue (as those discussed at ILTA). Bespoke systems are the most challenging and the most rewarding.

You can't charge for commodity level of services.

Quoting the ACC Value Challenge, "corporate clients want and need value driven, high quality legal services that deliver solutions for a reasonable cost and develop lawyers as counselors (not just content-providers), advocates (not just process-doers) and professional partners." "The problem is not cost per se, but the fact that cost is disconnected from value."

GCs historically have not had good answers when asked for a definite number for annual legal spend. It is not always the lowest cost that a GC looks for, as a predictable cost is of high value to them as well.

What can KM do?

A specific client will have a specific view of what KM can do for them. One classic challenge is resistance from the relationship partner in getting information about what the client needs. Can you proactively get information about KM needs of client? KM managers would have to pitch the internal client. You need to be persistent. It's acceptable to start with small initiatives and build from there.

Case Study

A large company had a GC who had come from a large firm with a strong KM program. He wanted to build a stronger legal department that would allow the in-house team to do more of the legal work themselves. They developed a KM strategy for five business units in six weeks.

Initiatives included a portal, knowledge bank, matter management, expertise management, and enterprise search. They needed some place where the hundreds of in-house lawyers could share knowledge. They created a global knowledge management officer. The GKMO built a global network of "knowledge champions" in different business units. The law department had set of objectives that, after the GKMO came in, included concrete KM goals. KM was seen as a way to link outside counsel and the law department. They have built out four of the five systems (leaving matter management for future development). The company now has sophisticated internal knowledge management.

Their goal was to integrate law department and law firm systems seamlessly through a personalized portal. It's hard for clients to have a view of the law firm's work if they have to visit multiple portals each with their own passwords. They want to be able to search their internal and law-firm created content in their own portal. They also wanted a comprehensive training portfolio.

The value they were seeking was in making their lawyers more effective and efficient; managing their legal spend; improving their lawyers' skill levels; and expanding their knowledge repositories.

One law firm that had a large client team for that company was asked to provide a training program. The discussion started with substantive KM (forms, models and samples) but expanded into communication models, e-billing, and more.

After some development the two had a day-long summit with extensive participation by senior leaders on both sides. The goals for the summit was to deepen the relationship, find some mutually beneficial outcomes, and become a higher performing virtual team. The firm developed bios for the law department staff. The conversation was very valuable. The summit gave each side a better understanding of the drivers in each enterprise. There are now formal client team coordinators for other clients.

The law firm's KM team had been formulating its strategy for providing KM support. The big connection was on the training front. KM had involved training, both substantively and in terms of training processes. KM participated in trainings by including model documents in them and by quarterbacking the communications (with the marketing department). The firm has also proposed managing CLE credits for the law department. They also found third-party trainings that law department staff might be interested in and also found and listed law department staff's speaking engagements. Increasing awareness of the law department staff's activities led to more potential contact points.

Future challenges include a client request for concise regular updates on matter status and very targeted, edited current awareness information, based on what client's issues are.

The partnership is a success because both knowledge initiatives were trying to be stronger. The training program has met the law department's needs for developing their own skills (a corporate initiative that has fed into the legal department's initiative). They have complex multifaceted training goals. And the law firm lawyers have been showcasing their expertise in the trainings and through the forms and samples, as well as keeping the firm on the increasingly shorter list of outside counsel.

Success factors were:
  • Client's specific need
  • Firm skills and resources that met the need
  • In the law firm, lawyers, IT, KM, Business Development, and Professional Development worked in partnership
  • Client perception of value added

Usability and Usability Professionals

The next presentation at this KM peer group meeting was on web design and usability. I've found myself doing a fair amount of work that implicates usability, as one of my firm's main methods of providing information is through its intranet and KM has a role to play in some aspects of that intranet.

People who are involved with usability might be called visual designers, interaction designers, information architects, or user experience researchers. The real value is in combining these roles.

Identifying pain points becomes more anthropological.

People who are good at usability need to:
  • Not mind asking dumb questions
  • Be fascinated with human behavior
  • Focus on task, try to keep people who aren't actually end-users from interfering
  • Customer service oriented
  • Eye for detail
  • Enjoy complex problem-solving
If 80% of your audience is satisfied with what you build, you can withstand the 20% with gripes.

Design mistakes:
  • Filling all white space
  • When in doubt add News
  • "Useful Links" or even "Very Useful Links"
  • Equating "easy to build" with "easy to use"; usability must be balanced with ease of design
  • Equating you with your audience; avoid by getting proximity and facetime with users

Good design approaches:

  • Research first
  • Build prototypes through web applications such as AXURE--more than wireframes; can make entirely clickable sites
  • NPS score-a subjective means of providing quantitative information. Ask likelihood that someone will recommend that site. Do before and after measurements.
  • Personas
  • Card-sorting-- put names of pages on index cards and ask users how pages should be organized (or use Optimal Sorting)
  • User testing

KM and ROI

I'm at an international knowledge management peer group meeting today, under the terms of which speakers and affiliations are not identified.

My subject line acronyms, standing of course for "knowledge management" and "return on investment," all too rarely appear together either in discussions or strategy. This was in some ways an introduction to ROI at a fairly basic level, but given the relatively woeful state of business analytics at most law firms, investigating ROI may be a real opportunity for KM programs.

People want to believe there is a way to comprehend any puzzling or momentous force. Convince them you are the key to comprehending it and you will gain great status.

Having a basic grasp of finance can give you a leg up in law firms over most people at the firm except perhaps the CFO or COO.

ROI was a misunderstood term of art. KM people took it mean "show us what you are likely to do and how it will help."

We are starting to see a trend of relating KM to profitability or even revenue generation.

As firms have begun to embrace professional managers, it's become much more important for KM managers to establish ROI.

ROI, defined as earnings per dollar of investment, compares solution cost to monetary benefits. Measuring ROI varies between industries. There will always be some black magic behind it. It does not take into account work-life balance. An ROI of 25% means that investment cost plus an additional 25% of the investment is returned.

ROI is calculated first by identifying the solution benefits, less the total costs (not just cash investments), x100 expressed as a percentage.

Utilization rate is the actual hours billed divided by target. So an associate who bills 900 hours with an 1800 hour target has 50% utilization rate.

Realization is collections divided by billings. So a matter in which $200,000 was billed but $100,000 collected would have 50% realization rate.

As KM managers are integrated more and more into the business discussions we need to have a better understanding of the language of business.

Process improvement helps cost savings when a better-articulated, well-documented, more accessible, and standardized best practices reduces the time required for a person to accomplish a goal or complete an activity.

For example, ask attorneys how much time they spend sorting / dealing with email.

It is not as simple as saying that an hour saved is an hour that would have been billed. Tie rather to a firm initiative such as business development investment time. Look for firm initiatives that set goals for new business acquisition, client outreach, cross-selling, and so forth.

Sales metrics; one large legal market vendor tracks sales activity down to the level of clicks in a demonstration. This is not inappropriate but rather is the type of business process necessary to survive in a global economy.

At one firm, five of six projects needed no ROI. On the sixth, the KM manager identified hours that could be used for something else with the new project and used that to successfully sell the project. Another firm will be requiring ROI analysis but has not identified how to do that.

Few firms have assessed ROI on business development.

Value can be defined in a lot of different ways.

The discipline that the "ROI game" imposes helps us better find the business objectives, articulate the goals and objectives of KM work, and communicate better to lawyers about it.

KM taking over the risk management at one firm led to cost savings in not hiring a general counsel. If practice area is servicing more clients in the same amount of time, then you've helped the business of the firm because the firm didn't have to hire more people.

"You will spend less time searching" or "you will spend less time doing X" gives the direction and lawyers intuitively understand that working more efficiently means more time for managing the business or delegating more. Firm leaders may not have spent the time identifying how people should be spending their time.

It drives smart people crazy when business processes are handled poorly. Setting a good example of doing something better proves your value.

One way to get some return on invesment is to do a survey about people's pain points and degree of contentment.

Another way to tie to think about ROI is saving moeny for the client.

One firm has a "precedents" library with metrics about popular precedents, popular users, and unpopular precedents. The parallel "research" library doesn't have comparable metrics. The KM manager's CIO from an accounting firm is asking for an ROI, although the project is required to be in place before metrics measurement can really be done (chicken-egg).

The "wild card" KM managers can play in ROI discussions is risk.

One financial measurement is risk and cost of being sued. Making substantive legal mistakes due to poor precedent or absence of search is a risk and potential cost of having a poor research collection.

KM managers can trace ROI by looking at usage of precedents, derivative works, number of searches, etc.

We can estimate software cost by figuring implementation and consulting may take about 1/3 of the annual cost. Focus on three year period as implementation costs drop off quickly.

Doing calculations can help you identify if your assumptions are incorrect. You won't actually get an ROI of 71% from implementing metrics assessment.

ROI analysis ties well into matter management and alternative fee arrangements.

A major benefit of ROI analysis is a more rigorous business approach.

One commentator said that our firms do not apply rigorous analysis to major business decisions. Most don't even do profitability analysis.