If you’ve read Alternative Billing Alternatives and Update on Alternative Billing, you now know that the panelists on ILTA’s Using Technology to Manage Costs, Increase Profitability and Support Billable Hour Alternatives session believe that bare discounts are going to have a negative effect on a law firm’s profitability unless that firm significantly trims its costs of delivering legal services. The key to this is knowing exactly what products and services a firm offers, how it produces them and what discrete components of those products and services could be provided more cost effectively. While the panelists cautioned us that there was no single “killer technology” that could manage costs and increase profitability, there are several available tools that go a long way towards helping a firm realize that goal.
The first, and perhaps most important, category of tools will help a firm do the fundamental financial analysis that is necessary in order to understand exactly what it costs to deliver services and how to reduce those costs. Here are some financial technologies mentioned by the panelists:
- Fee estimation (Redwood Analytics, Satori)
- Helps the firm realistically estimate its costs so that it can bid responsibly.
- Profitability analysis reflecting new business model (Redwood, Satori, Elite 3e)
- Helps ensure that proposed practice area or bid is consistent with the firm’s profit goals.
- Resource Management (viEval, Redwood)
- Helps allocate work to fee earners in a manner that maximizes overall utilization, efficiency, quality, training and professional goals.
- Task-based billing (Redwood, Satori, Elite)
- Helps measure the firm’s cost of completing defined tasks, rather than entire matters. This is useful for bidding and tracking costs.
- Matter Management (Redwood)
- Helps track the firm’s actual matter costs against budget.
The panel then identified key practice and KM technologies. While all of these tools provide useful functionality, one panelist opined that if he had to choose only one technology, his choice would be enterprise search since it allows you to reduce the cost of locating precedents, drafting documents, and identifying expertise. The other high value category of tools is project management, which is critical when you’re trying to manage costs and client expectations. That said, here is the long list of tools they identified :
- Expertise System
- Recommind
- ContactNet
- BranchIT
- SharePoint Knowledge Network
- Enterprise Search
- Recommind
- Autonomy/Universal Search
- Microsoft FAST
- Desktop Search (x1, Google, etc.)
- Work Product Retrieval
- Real Practice Technologies
- WestKM
- Project Management
- Microsoft Project
- Excel
- Eclipse from Solution Q
- Basecamp from 37signals
- Practice Portal
- LawPort
- SharePoint
- Document Assembly/Drafting Tools
- HotDocs
- DealBuilder
- Exari
- DealProof
- KIIAC
- Legal MacPac 10
- Microsystems
- Collaboration
- Blogs
- Wikis
- Threaded Discussions/Discussion Boards
- RSS
- Extranets
- Webinars
- Online Training
- West Legal EdCenter
- PLI Online
So there you have it — the experts’ guide to key technologies that can help you manage costs and enhance profitability. Now, what are you going to do?
[Photo Credit: pansonaut]
Above and Beyond KM 
Perhaps we should also think about using improved process to manage costs. Managing costs of production has been the KM focus for very many industries – automotive, oil and gas, manufacturing. Methods to address these costs have not been purely technological. Simple processes such as After Action reviews, Peer Assists, Quality Circles, Lean manufacturing and the like have been very effective in reducing internal production costs. Shell's Technical Limit approach regularly reduces drilling costs by 40%, for example.Perhaps now is the time for a rethink of KM in legal firms, focusing not just on technology, but also on process, and on roles and accountabilities.
Nick:You're right to point out that a focus on technological improvement by itself is insufficient. In fact, I'd suggest that the place to start is to improve process first and then look to technology to make it even more efficient and effective. This would be preferable in all cases except where the technology truly is a game changer.- Mary
While there may not be agreement on one “killer technology”, it is clear that for law firms that do a high volume of somewhat repetitive, negotiated documents, document assembly is a technology which does significantly trim the cost of delivering legal services. It speeds the document drafing time and allows lawyers to spend their time on higher value work where they add the most value. This in tun enhances firm profitability.
Document assembly can help a great deal, provided you have a sufficient volume of repetitive drafting. If you don't, it's hard to justify the investment of time and energy required to maintain the document assembly system. – Mary
What about managing the cost of legal research through a Cost Recovery system monitoring the use of electronic resources offered through the law library?Consider the following:”…costs for electronic resources other than LexisNexis and Westlaw rose in 2008, with the average firm spending just over $1 million, compared to some $929,000 in 2007.”Source: http://tinyurl.com/y98l3lyLaw Librarians: 'No More Sacred Cows'By Alan CohenThe American LawyerSeptember 3, 2009
What about managing the cost of legal research through a Cost Recovery system monitoring the use of electronic resources offered through the law library?Consider the following:”…costs for electronic resources other than LexisNexis and Westlaw rose in 2008, with the average firm spending just over $1 million, compared to some $929,000 in 2007.”Source: http://tinyurl.com/y98l3lyLaw Librarians: 'No More Sacred Cows'By Alan CohenThe American LawyerSeptember 3, 2009