For my role in the 2012 Ark-group KM Conference, I am talking about the economics of the practice of law to set the stage for how KM can better align itself with the bottom line. This series is from my materials for that conference. The first part describes the challenge for Legal KM and then moves to the economics – specifically talking about the meaning of profitability for law firms.

The days of just pursuing traditional Legal Knowledge Management (LKM) projects like enterprise search and CRM are numbered. Although these systems have value to a firm, they are not addressing the intense pain points law firms currently feel. Law firm leadership does not spend time debating the merits of these types of systems and rarely even gives them a thought. This is a strong message for LKM leaders. What exactly is your firm leadership focused on? Find out and shift your LKM strategy to answer those needs.

The issues keeping most law firm leaders up at night are centered on economics. It is well known that law firms are now in a highly competitive market. And this competition is driving a keen focus on profitability and a better understanding of the core economic forces in both the market and within each firm. LKM needs to establish a firm connection to this type of economics.

To better connect LKM and law firm economics we need to first have a better understanding of what makes law firms profitable. Such an understanding should light the way to helping LKM stay relevant to law firm leadership.

Beyond the immediate concerns for LKM, law firms will benefit from shifting their conversations from hours and revenue to revenue and profit. Until recently, law firm profits were built in to their pricing model. The billable hour was enough to cover cost and a rising profit margin. No longer. A new model is emerging wherein profits are derived from the margin between revenue and cost. Therefore the factors that drive that difference are now moving front-and-center on the stage of law firm leadership.

Law Firm Profitability

What makes law firms profitable? There are four primary profit drivers for law firms. These drivers apply whether a firm uses billable hours or any other type of fee arrangements. Each driver has a different level of impact on profits and some drivers are losing their influence.

Profitability?

Before we dive in to drivers, we should briefly tackle the term: Profitability. What appears to be a simple concept becomes complex. For law firms the challenge arises since partners serve as both owners and workers. Traditionally their incomes have been treated as purely profits, which tends to skew “true” profit based on the level of compensation of a partner or group of partners performing a given piece of work. Firms are now beginning to embrace new definitions of profit that enable the creation of a more classic profit margin. The basic idea is treating a portion of partner income as ‘wage’ leaving the rest as profit. Firms determine a method for separating those two segments either by setting some common standard or by establishing levels of “wage” for various levels of partners. The resulting profit margin then becomes a means of bench-marking performance over time.

Another profitability method used isolates partner compensation on work to calculate a “Profit Per Partner (PPP) number. In this model a PPP calculation for a given piece of work shows whether the matter is driving PPP up or down. The model assumes a standard level of productivity within a firm. More simply, this model states that if all work at a firm looked like a given example, then the firm’s average PPP would be that number.

As we move through the drivers of profit, we may reference one or the other methods. The two do not move in lock-step fashion since they are different mathematical approaches. However, they generally trend in the same direction when any of the drivers change.

In Part 2 of this series, we will explore the first to profit drivers: Rates and Realization. These two drivers were major forces in the past, but are losing influence in the new normal.

 Links to:
Part 1 – the challenge for Legal KM 
Part 2 – profit drivers for firms: Rates and Realization
Part 3 – profit drivers for firms: Productivity and Leverage
Part 4 – the market’s impact
Part 5 – how Legal KM can re-focus its efforts

Ah, October.  A chill is in the air (somewhere I’m sure, it’s still in the upper 80s here).  The talk turns from the beach to carving pumpkins.  In the Library (or Research Services as we call it), the Librarian’s thoughts focus on Budgets and Desk References.  Desk References are a challenging part of the Budget process.  Not only do you have to account for additions to the firm’s Professional Staff, but you have to juggle the differing demands for how you deliver the product; do you provide the books in print or ebook format or both?  Which format do you use for ebooks? And then there are the big questions:  What is a reasonable price for an electronic book?  Should it be different from a print book?  If so, should it be higher or lower?  Let’s focus on the price questions and leave the format discussion for another day.
I believe the price should be different.  Tina Brown, on MSNBC’s Morning Joe this morning, justified the decision to make Newsweek a digital-only publication by referring to cost of $43 million to print, manufacture and distribute the publication.  Now, I’m not suggesting that this is the magnitude of savings that any publisher going digital will realize but it is indicative that there are substantial savings that occur when a book is published digitally rather than physically.  And I don’t claim to be an expert on the costs inherent in producing books.  However, it seems reasonable to conclude that the result should be a decrease in the price reflecting the lower cost to produce and deliver each unit.  At worse, the price point for an ebook shouldn’t be different from the print. 
However, it appears that one legal publisher (located in Eagan, MN) has a different view of the economics involved.  I have been told by their representative to expect to pay a premium of at least of 20% above the print price to purchase an ebook edition.  I’m not sure how they can justify this kind of an adjustment, especially in light of the discussion above.  And to do this in the current economic climate doesn’t seem to be good business. 
I don’t know of many (if any) Library Managers that rubber stamp purchases without looking at the costs involved.  And we understand the economics of publishing well enough to know that prices should reflect when costs go down.  Other companies are offering ebooks for the same price as the print as well as offering bulk purchase discounts.  With this in mind, why would anyone want to raise prices?
The company referenced above may be trying to accomplish one of two things:  (1) Taking advantage of the ebook demand to increase revenue or (2) trying to chill demand for ebooks to prop up the legacy print business.  If it is (1), they are making a mistake.  Desk References are, for the most part, compilations of the code sections the attorney often refers to in his/her practice. As such, these are published by multiple vendors which means we have a choice when purchasing these.   Since price is the main driver in these types of products, this will only result in a loss of revenue (and market share).  And, as the Borg said, “Resistance is futile.”  Change will continue to occur and it will be this company that will be on the losing end.

    

One of my favorite news aggregation resources is InfoNgen (pronounced: “Info-Engine”). I’ve been using it now for almost two years, and have found it to be an extremely useful tool in tracking current news on companies, topics, industries, and more. Recently, InfoNgen added a couple of features that improve the resulting newsletters as well as making access to existing newsletters and alerts easier for the end users. I don’t want to say that I deserve all the credit for these additions, but I will say that I did suggest they add these features a while back. Regardless of who deserves the credit (me)… it really makes it a better product.

Meta-Tags In Your Newsletter

 The reason I asked that meta-tags be added to the newsletters was so that the reader could get more information about the story before he or she clicked any further. For many of the readers, it might be that they are looking for information on a specific company/client and finding that information listed as part of the synopsis of the story would influence their decision to click through and go to the actual story. The folks at InfoNgen added the feature to include selecting all or none of the meta-tags available, ranging from internal meta-tags that you’ve set up, to the basic company, industries, regions, countries, and states tags.

This is a nice feature that allows for additional information to come through the newsletters without any additional manual effort on my part, and at the same time, it doesn’t clutter up the newsletter. The end results are clean and effective.

Self Sign-Up

The next feature added to InfoNgen lately is the self sign-up option for anyone in your network to add or remove themselves from existing Alerts and Newsletters that you’ve set up to share. They call it the Self-Service Portal, or SSP. So, anyone with your company or firm’s email address can register with InfoNgen and set up an end-user account. They will then see a list of all the Newsletters and Alerts that you’ve made available (you select which ones they can see, and which ones they cannot see), and they can sign themselves up for the alert or newsletter. For the alerts, they can even set their own times for the alerts to be delivered. For the newsletter, it adds them to the regular distribution time.

This is another nice feature to add to the product for a couple of reasons. First, it gives the end-user more flexibility in what types of alerts or newsletters they are receiving. Second, it helps promote the service that the library or marketing departments are offering in setting up current information awareness resources. To further this goal, I suggest that when you notify the end users that they can sign themselves up for newsletters or alerts, also let them know that if there is a topic that they do not see on the newsletter or alerts page, that one could be set up for them.

InfoNgen is a subscription based product, and we’ve talked about them and their competitors before. Whether you call them news aggregators, discovery engines, or listening platforms, these resources are extremely helpful in pushing current awareness information in front of your end users. Many law firms are evaluating these products and finding unique ways of setting up results ranging from broad topics down to individually specialized results, librarians and marketing teams are leveraging these tools to push current, relevant information to others within their firms or companies.

Image [cc] fraggy

We live in a time where most people are not only doing their job, but they are also doing the job of someone that retired, got laid off, left and that position was never filled. Many of us talk about this as “the other hat that I wear at work.” Some would describe this as efficiency or increased worker productivity, and that’s true… to a point. In reality, what it means is that people are multitasking their work, and the typical results are that both jobs get half the attention they really need, and efficiency and productivity actually take a hit.

Training is probably one of the biggest victims in this environment. Go ahead and schedule a voluntary training session on a new resource and see who shows up, who leaves early, and who cancels at the last minute because “an emergency” project just landed on their desks. Send out an email with information on a new product that is available to your firm, and ask people to test it out and give you feedback. If you get more than the sound of crickets chirping in the background, you are doing well.

When people finally need something that you’ve been asking them to use, review, or get training on, you usually get a look from them like they’ve no idea what you’re talking about, or give you that “It’s an Emergency!!” plea, along with the “I’ll take a look at it when I have time” answer.

It’s enough to make you want to post this sign outside your door:

Of course, you can’t do that… otherwise you’ll be let go and one of your poor co-workers will have to take on the two jobs you are currently handling.

So how do you handle the issue of creating an environment where workers are better prepared, trained, and understand how to use the right resources for the project at hand? It’s a frustratingly hard question to answer. For most of us, we keep slogging through and take our victories where we can get them. We find opportunities to plant the seeds of telling people in the hallways, break rooms and elevators by saying to them, “you know, we have a resource that would make that project go a lot easier… how about I come by your office and show you.”

There is low-hanging fruit to gather in this environment, but there’s not a lot of it. At some point you have to step back and realize that you simply cannot reach everyone. It’s probably the hardest decision that many of us have to make, and that is, when do you stop? When do you tell yourself that some people simply won’t take the time to break away from their “emergency projects” to learn of a new (or existing) resource that would end up saving them time and effort? Unfortunately, we can’t keep banging our heads against the wall and expect that it will do any good. Strike a balance of gathering the low-hanging fruit, and the occasional victories of pulling in those hard to reach people. Don’t give up on trying to reach people, but don’t waste your time and efforts on those that ignore you time and time again, either.

The American Association of Law Libraries (AALL) and the International Legal Technology Association (ILTA) has collaborated to create a white paper on the set of skills needed for today’s librarian and information services professionals. Whether it is Knowledge Management, working with Practice Groups, Competitive Intelligence, Electronic Books, or the evolving trends within Legal Research or Emerging Technology, “The New Librarian,” as this white paper is entitled, discusses some of the challenges facing the law library profession and how librarians are confronting those challenges head on. There should be some familiar names listed as authors in this publication (including bloggers here at 3 Geeks) Here’s a list from the table of contents:

When I saw this tweet from Jason Wilson about the Legal Marketing Associations Technology conference hashtag #LMATech being hijacked, I had a pretty good idea who a couple of the folks were that were doing the hijacking. If any of you ever follow the discussion of Social Media, Marketing and Law Firms, there are those on the Marketing side… and there are those on the “I Call BS” side. Needless to say, they don’t get along very well.

Whenever you have a conference, and you promote a hashtag on Twitter to promote the conference, you take a risk of someone coming in and using that hashtag for unintended reasons. Usually when we talk about “hijacking” hashtags, you think about what happened to MacDonald’s earlier this year. That is a case where people put up false testimonies to embarrass the organization running the hashtag campaign. In the #LMATech situation, that’s not really what happened. Instead, you have a different type of hashtag situation that looks very similar to having a heckler (or hecklers) in the audience. Think of Micheal Richards’ meltdown during his stand-up routine back in 2006. I think that some on the Marketer side are coming close to taking the meltdown approach… one which feels good now, but when reviewed by the public will not put them in the best of light. (By the way, Michael Richards hasn’t done any live shows since his meltdown, and he talks about it with Jerry Seinfeld.)

The hashtag hecklers on the other hand, aren’t exactly coming to this with clean hands either. They are not doing anything illegal in their heckling, and in fact, they feel as though they are actually giving the LMATech conference a dissenting view from what is being tweeted from the conference. Ken, from Popehat, lays out a number of arguments about the risks that LMA takes when opening up a hashtag, and that he and others are simply dissenters voicing their honest opinion about what they think about what’s coming out of the LMATech conference. However, it is heckling, and not just dissent that is being voiced by those calling BS on the LMA. It’s pretty clear that the dissent is out to discredit the message and the messengers, and when it becomes personal like that, it takes on a mudslinging effect that suddenly gets very nasty. It gives those of us outside the argument something that amounts to entertainment, but not really anything of real value comes out of these types of arguments.

Here’s my advice to LMA on how to handle the situation. First, accept the fact that there are those out there that simply don’t believe in the message you are giving. Don’t take it personally, every organization that puts on a conference and promotes a message will have its dissenters. Second, if I wasn’t surprised that this happened, then you shouldn’t have been caught off guard either. Next time, have a better plan in place on how to address a situation like this. You’re Marketing people, after all, you handle bad press all the time, it’s just that this time, it’s directed at you and not your firm. Third, either ignore the heckling, appease the hecklers, or put the ball in the heckler’s court. Invite one or more of them to a conference to speak to the group and have them tell you, as a professional, and an adult, to lay out all the issues that they have with what you are preaching. It seems that at least one person is willing to talk to the group.

Hecklers are going to continue to be out there, telling you that you are awful. Granted, you would think that respected lawyers would find more adult ways to discuss the topic, but I don’t see that happening. The worst thing you can do is overreact. If you watch the interview with Michael Richards, he admits that he completely screwed up the situation by overreacting. Go check out the video (around the 14:00 mark) and listen to how taking something too personally has eaten away at Richards. Take his advice, acknowledge that there are those that are going to heckle you, let it roll off your back, and then go home and work on your material some more.

The week of October 22nd has a couple of excellent conference opportunities for the legal community. Both of these will have great content on adapting to change for the legal professions.

KM in the Legal Profession – Runs on the 24th and 25th in NY and is produced by the Ark-group.

Strangely, I will be leading off this program and moderating the first day. I say ‘strangely’ since I do not seem a logical choice to be talking about and promoting KM in law firms. When asked to participate, I suggested I might not be a good choice. My views on traditional law firm KM can be, at times, unpopular within the KM community. When I speak of KM, I usually preface my remarks with something like “Does enterprise search keep your Managing Partner up at night?” The obvious answer is no, suggesting KM has been playing too far from the bottom line.

As a consequence of my participation, the conference is focusing more on how KM can be tied to the bottom line – where it should be. Find out more about this conference, here.

The COLPM Futures Conference – Runs the 26th and 27th in D.C.

The College of Law Practice Management (COLPM) established this annual conference to focus on cutting edge challenges for legal professionals. As usual the program includes an impressive list of speakers (except me of course) and topics. As well the 2012 InnovAction Awards will be presented. To find out more about this conference and to register, go here.

Both of these will be excellent opportunities to learn more and get great ideas for managing the dynamic changes in the legal market. If you make either of these, make sure you say hi.

I’m going to make this post, short and sweet. If you have a social media account that represents your company’s (or law firm’s) brand… safeguard it like it is important. Because it is.

For the second time in a few days, a company’s Twitter account posted inappropriate content under the company’s brand name. The reason this happened is actually quite simple, and we’ve all seen it happen on much smaller scales. The person responsible for the “Company Twitter” account simply forgot that he or she was logged in to that account and fired off a personal message thinking that they were on their own account. The result was most likely that both of these folks no longer have to worry about the confusion, because they have lost their jobs.

There are a few simple guidelines that every company needs to put into practice to make sure this doesn’t happen:

  • The People Part: Train Your People and keep the number of employees that have access to these accounts to an absolute minimum. Set up strict rules, and make sure they understand the top two rules of social media when it comes to representing your brand:
    Rule 1: Don’t post anything stupid
    Rule 2: DON’T POST ANYTHING STUPID!!!
  • The Technology Part: If someone is going to post on behalf of your company’s brand, set up a computer that where the only thing that computer is used for is updating social media sites related to your brand. Under no circumstances, ever, should anyone log into a personal account on those computers, and if necessary, set up scripts to block employees from logging out of the company account, or set up monitoring software to alert you if they log in to any account other than the company account. Do not mix personal and company accounts (which can happen very easily if you use things like HootSuite or TweetDeck that allow for multiple log ins at the same time.)
When it comes to social media, your brand is only as valuable as the weakest link in your chain. Kitchen Aid and StubHub learned the hard way that allowing their social media representatives to mix business and personal accounts on the same computer costs them dearly, and made them scramble to shore up the damage caused. If you are in charge of your company’s social media brand, take advantage of Kitchen Aid’s and StubHub’s errors to prevent your employees from breaking any of the top two rules of social media and your brand.

So, stop me if you’ve heard this one before: Two blonde-haired sisters walk into a bar and ask people if they have legal questions in need of answering. Actually, it’s not a joke, although the resulting YouTube channel is very funny. Amy Epstein Feldman (lawyer) and her sister, Robin Epstein (comedy writer) decided to expand their influence from their 2009 book, So Sue Me, Jackass!: Avoiding Legal Pitfalls That Can Come Back to Bite You at Work, at Home, and at Play, by taking their act on the road and going into the Dorian Gray bar in New York City armed with a video camera, Amy’s legal knowledge, and Robin’s comedic charm. The resulting videos are fun to watch, and discuss life-altering legal concepts ranging from dog v mailman cases, to who’s liable if a guy dies from a heart attack during a threesome (spoiler alert: it’s not the other two women.)

“The book is a Q&A about legal issues that people deal with on a daily basis, with chapters on subjects like Employment, Health, Home, Pets, Love Life, Parents, Kids & Death,” Robin Epstein tells me in an email. The book was a great start, but it seems that the sisters wanted more, and seemed to have a similar philosophy to what we refer to around this blog as the three beer solution. (Although, it turns out that Amy’s not a big fan of beer.) Robin explains that she and her sister “are trying to find a new way to reach people, so we now regularly go to a bar in NYC and ask folks if they have legal questions in need of answering.” The results are funny and informative short videos that take a legal question, lay out the facts, sometimes getting opinions from the local members of the bar (that’s actually the drinking establishment they are taping in, not the Bar Association), and then they explain what results a jury actually decided.

There are three current categories:

  • Your Pets – for all those legal pitfalls that Fido and Ms. Kittiez can get you into…
  • Your Job – including those things you should *absolutely not* do…
  • Bar Exam – the surprising world of “just who can you really sue these days?”
If you have a question you’d like them to answer, send them an email at SoSueMeJackass@gmail.com.

Take a quick 41-second introduction from the So Sue Me, Jackass! Sisters and then go have some fun watching as the authors decide that since nobody reads anymore, they needed to go where the people are…  at the bar.


My wife works for Lighthouse International, a terrific non-profit dedicated to empowering people who are blind and visually impaired. Last week we attended an “experience” developed in partnership with the Lighthouse. Dialog in the Dark is called an exhibition, and is produced by the company that produced the Bodies Exhibition, but calling it an exhibition or a production completely misses the mark. The experience begins with a brief video explaining how to use the cane they’ve just handed you. Then you are led into a small room with light boxes along the walls, and you’re instructed to take a seat on one of the boxes. Another video plays describing the daily experience of people who are visually impaired in New York City and the light boxes begin to dim. As the screens wink out the boxes finally switch off and you are left in the dark. The organizers have taken great care to remove all light pollution so that the rest of the exhibit is entirely pitch black, which means your eyes never adjust. For the next hour you experience something like blindness.

We sat in the dark for a minute or so; my wife squeezing my hand tightly. Then we heard a door open to our left and a man’s voice said, “Hello, I’m Pedro, what are your names?” After the preliminaries, he gave us one directive, “Don’t be a one-armed zombie. Use your cane to navigate.” With that, Pedro took us on a tour of New York City as experienced by people who are blind. We went to Central Park, to Fairway Market on the Upper West Side, and we took the Subway down to Times Square. I’ve lived in New York for nearly 20 years and I have done all of these things many, many times, but this was a different world. It was an immersive experience for the senses except for, obviously, sight — and as Pedro pointed out, there was actually no tasting on this tour. But they took great care to recreate the feel and sound of the city. In the subway set, they either pumped in the smell of stale urine, or my association with the subway is so strongly correlated to that smell that I imagined it.

My wife and I stumbled through the set, bumping into trash cans and mailboxes, benches and trees, while Pedro danced around us with ease. He would come up beside me, put a hand on my shoulder and work down to my wrist, grabbing it and placing it directly on an object in front of me, or on a wall. “Ryan, do you know what this is? What do you think that is?” It was incredible. He didn’t fumble or guess. It was clear that he knew exactly where we were at all times. He would say things like, “Oops, no you’re facing the wrong way, turn around.” How did he know? His voice would suddenly come from a new direction and he would say, “OK, we’re going this way now, follow my tapping.” And he would tap his cane on the side of the wall, or a nearby pole until we felt our way over to him. Most remarkably, he would occasionally say, “No one-armed zombies.” just as I raised my left hand to feel in front of me. At one point, I was convinced that we would come to the end of the tour, turn the lights up and find out that Pedro was fully sighted and wearing infrared goggles of some kind.

At the end of the tour, there is a Q&A session and the lights slowly come up as you are talking with your guide. Pedro sat across the table from us. No IR goggles. He was definitely visually impaired. Suddenly I felt a wave of guilt for even having a fleeting thought that it wasn’t completely above board. Since my wife began working at the Lighthouse, I have met many people who are visually impaired and I have seen hundreds more leaving the Lighthouse building as I waited outside for her to come down after work. I realized I’ve never seen any of them do the one-armed zombie as they navigated the real world.

I have now spent several days reliving Dialog in the Dark. I wanted to write this post because I feel like there are many lessons to be learned from this experience. The metaphors and analogies abound; from issues of leadership and faith, to prejudice and fear, to recognizing individual capabilities rather than focusing on inabilities, to navigating the “new normal” or planning a personal career path. I could go on. But suffice it to say, that a very good piece of advice, in nearly any endeavor is “don’t be a one-armed zombie.” Take that to mean what you will.

And if you happen to be in New York City, forget the lights of Broadway, go experience the Dark.