Session Title and Description: The Evolution of Practice Innovation:
Are We Successfully Integrating and Embedding KM within Practice Management Systems?
Law firms continue to re-examine traditional approaches to the practice of law, and along the way many have implemented a wide range of changes that enable firms to deliver client services more efficiently. These innovations touch virtually every aspect of our practice and the way our firms are run. Clearly, KM has not been left behind or subsumed into other support functions. However KM must continue to evolve in step with demands that are reshaping the business of law and redefining service delivery models. This discussion will seek to characterize the foundation of a true practice management platform, as well as the ever- changing issues and challenges that KM is trying to navigate. Is KM the cornerstone of a “post-silo” law firm strategy? Or is practice innovation squarely focused on “Business Intelligence” and financial data points, while missing the context in which KM solutions can be deployed?
Toby Brown, Chief Practice Officer, Akin Gump Strauss Hauer & Feld LLP
Keith Lipman, President, Prosperoware
[These are my notes from the 2015 Ark Group Conference: Knowledge Management in the Legal Profession. Since I’m publishing them as soon as possible after the end of a session, they may contain the occasional typographical or grammatical error. Please excuse those. To the extent I’ve made any editorial comments, I’ve shown those in brackets.]
- What is practice management? Managing matters to achieve client satisfaction and firm profitability.
- What is the goal? Revenue and Profits!!! How do we do this? By lowering the cost of delivering services to clients. The answer is not just buying cheaper pencils. It means you need to push work down to the lowest-cost resource within the firm. You need become more efficient in the way you work.
- What’s the strategy?
- Few law firm partners are empowered to understand their own contribution to revenue and profits.
- Far too many law firm partners experience “pro forma surprise.” They do not really know what their matters have generated in terms of maximum billable suntil they see the pro forma. If their team has not billed as much as expected, then their maximum billables are down.
- You need to know your firm’s profit margin. And you need a clear methodology for achieving that profit margin. Profit measure must be clear, simple and understandably
- State of the Legal Market: Hyper-competition and flat demand. Corporate Counsel have bigger budgets, but not spending on law firms.
- Now outside counsel are just a vendor to be handled by the client’s procurement office. In Toby Brown’s words, we are just another toilet paper vendor. This leads to more RFP processes to try to standardize the process for purchasing legal services.
- Corporate legal departments are growing. They are both controlling the spend and spending differently. In fact, they are moving legal work in-house.
- How can KM Participate?
- To quote Kingsley Martin, think about every KM project and ask how far from the bottom line.
- Consider yourself the provider of “Knowledge Services” rather than a “knowledge manager.”
- Help lawyers see that increasing their own mastery of KM tools will help them become more efficient.
- An obvious place for KM concerns “the numbers.” This means providing information and context for numbers such as the cost of a matter: what goes into that cost, what are the variables, etc?
- Toby estimates that only 10% of law firms actually measure true profitability rather than some proxy for profitability. When the audience was polled, most did not know if their own firms actually measured true profitability rather than some proxy for profitability.
- Become the best friend of the pricing person in your firm. They will know where the pain points are and which partner is really in pain.
- There is a great opportunity for KM to help manage outside counsel guidelines and then track performance against those guidelines. At a minimum, read these guidelines to get an early look at emerging trends (e.g., clients are less willing to pay for online legal research).
- 2016 is going to be really hard
- The M&A cycle is coming to an end.
- There is no major litigation wave on the horizon
- The prospect of significant bankruptcy work is poor.
- KM needs to be front and center in making 2016 more tolerable (and even successful) for law firms.