Two Partner's Perspectives On Legal KM--Speeding and Improving Client Service

I recently attended a meeting of knowledge management practitioners from law firms.  We had two law firm partner guests, who effectively spoke as the voice of the internal "KM client," albeit from a firm with a sophisticated and established KM program. I especially valued their thoughts because there was one transactional attorney and one trial lawyer.  In accordance with the expectations under which they spoke frankly to us, I do not identify them or their firm.  Any comments of mine are in brackets.

KM's Impact On Attorney Work

The transactional partner said that KM drives efficiency in his group.  It helps to mitigate demand and improve client service in his matters. Generating work product quickly is of prime importance in his group's practice. People will always use a personal connection and network to learn how to do things and to get answers.  KM can underpin that.  When people contribute consistently to KM it can really take off.

The litigation partner said that being able to leverage prior work product is a prerequisite to being able to do his work. He can tell an associate is leveraging KM when they are able find things more quickly and better. He can also infer that an associate is probably not leveraging KM when an assignment comes back incomplete and not on time.

Speed of turnaround of answers is much faster between people who use KM systems and those who don't.  It's about speed and delivery of service.

The US experience with a "heavy IT footprint" is not as advanced as that of Magic Circle firms.

Partners involved in KM need to continually remind senior leadership of the benefits of KM.

KM Advances Client Service For Transactional And Litigation Practices

Clients expect that you have good systems for leveraging previous firm work. If you are continually inventing the wheel you will appear more expensive and less effective than your peers.

Big financial services institutions expect law firms to be on top of their own business.  The speed and depth and ubiquity with which you can marshal your firm's knowledge for your clients can be a competitive advantage.

In litigation, how to keep clients informed about the progress or status on a matter without distracting the matter team may be a key area for KM.  The litigation partner has had great success with a client extranet, in particular with very large complex cases where the client needs to be aware of the case status on a daily or weekly basis. More effective information sharing with clients on litigation matters is a real opportunity, especially in firms that have invested in effective internal information management.

On the litigation side, some work product junior attorneys produce looks menial or routine.  But there are usually case-specific nuances that require an attorney's eye, so document automation may be less useful. [I believe that document automation in more sophisticated practices is not necessarily designed to produce a final draft, however, so perhaps there is a role for document automation where there is a lot of consistency between work product types, for instance, in discovery "boilerplate."]

KM Improves Marketing and Recruiting

Reliance on previous experience in a pitch (appropriately) leads to client expectation that that experience can be leveraged quickly. Experience and leveraging that experience pertains to substantive legal knowledge as well the business and industry context of the client and its problems.

Sharing relevant precedent documents can also be part of a marketing strategy. [I saw this at the International Bar Association as well--internationally, law firms are sharing "scrubbed" precedents with clients as a way to add value and attract the clients to their expertise].

KM can attract talent by creating a good environment to work and not waste time. Recruits take technology into consideration, and ask about it in interviews.

Fixed Fees and KM

The nature of how you value legal services has changed.  Alternative Fee Arrangements are highly relevant to KM. Fixed fees can be put into place for a whole year or for a particular piece of work around a particular motion. That kind of arrangement puts a huge importance in investing up front in what could make you more efficient.

Fixed fee work will continue increasing. The fee pressure is unparalleled.

KM Staff Expansion?

The Practice Support Lawyer ("PSL") role in the US is new but is gaining momentum.  PSL and client development will merge as methods of developing business.  PSLs can greatly assist a partner's focus on business development and billable work, because almost everything a PSL does in the way of client alerts, precedent development, and training, a partner would have done before.

Video training has helped people manage their time without losing content.  But there is a certain human element that we can't replace yet.

Alternative Billing: What's Working and What's Not?

These are my notes on a panel that had representatives of the three key players in alternative billing work; law firms, consultants, and law departments.

Formal Description:

There are lots of options for billing, but who is actually using an alternative billing method, and which ones really work? Find out if certain billing options can jeapordize a happy client-vendor relationship, how law departments can determine if pricing is competitive and fair, and who is using analytics to decide. Our seasoned panel of current and former law department members will share successes and failures regarding billing options and vendor management.

Speakers:

·         Lisa Girmscheid, Rockwell Automation

·         Chris Emerson, Bryan Cave

·         Donald Knight, PNC Financial Services

·         Eyal Iffergan, Hyperion Global

·         An Trotter, Viacom

See tweets at #ldpg and slides here. These are my notes from the session, forgive typos and any misattributions.

Overview

This session was standing room only, though with an odd small-table-and-banquet layout. I was impressed with the extensive and frank discussions that addressed a wide range of critical pricing issues. It's great that ILTA can provide a forum for dialogue between law firms and law departments, albeit at the staff and not business owner level.

AFA Trends

AFAs are increasing slowly in the last two years, from 16% to 19% of legal work. Chris Emerson is not seeing increases in AFAs, but he is seeing increases in requests for budgets.

A budget is a process statement, it isn't far from that to a statement of work. It's been encouraging to see evolution of pricing directors and the like.

Portfolio analysis versus Bottom-Up

Chris Emerson suggests that law firms can take an "averages" approach with portfolio work, but the best pricing comes from detailing tasks and assumptions behind the tasks. How many depositions will there need to be? Who will be leveraged to do the work?

Obstacles to AFAs

The room agrees that law firms are more comfortable with the billable hour than AFAs. This strikes Eyal Effergen as "smoke and mirrors" as there is little dialogue around value. 95% of firms are offering AFAs.

An audience member commented that law firms that have negotiated an arm's length fixed fee arrangement shouldn't have to worry about "shadow billing" (in which billable-hour and phase/task code information is provided despite a fixed fee arrangement).

An Trotter and her GC agrees with that comment. She expressed frustration around having to notify firms that they have gone over budget, even though they get the data 60 or 90 days later.

Donald Knight doesn't agree with the objection to shadow billing. He wants to know what he's getting.

Profit and Value

Clients wonder why they should help law firms continue 35%+ profit margins when they are getting by on 3-12% margins themselves.

It's not a problem that attorneys earn lots of money, but corporations are upset about the profit margins.

Corporations may be asking for this additional information because they don't understand what they get from outside counsel spend.

Another audience member asked, what if lawyers started acting as general contractors, getting autonomy to shop? Has there been mixing & matching of content and service providers? Yes, in the eDiscovery area. The market dictates that the specialized work will be able to bear the higher rates.

An audience member has seen this sort of thing happening in health care and IP practices already. It hasn't really hit the litigation groups? Reverse auctions are starting.

Litigation AFAs

Where 13% of law firms say they use AFAs for litigation, 67% of law departments use AFAs for litigation.

Software

Key areas of software used are eBilling, matter management, and accounting.

Most eBilling systems for law departments also include matter management these days. Accounting systems are only marginally useful for collecting information about law firm matters.

Share Prebill Information?

An Trotter would like to see transparency around law firm information. She'd like to see law firm pre-bill data fed into the law department data.

An audience member (Julie Richer from the American Electric Power Legal Department) indicated that the new cloud-based service Viewabill that would allow law firms to privately share prebill information with law departments.