Leading up to this final installment in our series – we have defined profitability for firms, described the four profit drivers and looked at how the market is pushing on all of this. In this post we take on how Legal KM can re-focus its efforts to help firms respond to all of this pressure.

The Hill Looks Steep

Significant challenges present significant opportunities. Yes – law firms are facing intense market pressures. No – law firms have not yet truly faced the challenge.

This presents a tremendous opportunity for Legal KM (LKM). Perhaps the biggest challenge here is the lack of understanding by law firm partners and leaders as to the underlying issues. Shockingly (or not), most partners have little understanding of what makes legal work profitable. They hold fast to the old model that hours and realization lead to more income for them. Although in some practices and markets a variation of this reality still holds true, for the most part it does not. Clients increasingly are holding the line on rates driving down realization. And clients are no longer willing to pay for however many hours a law firm bills on a task or matter.

Opportunity #1

Historically LKM has had minimal participation on the financial side of law firms. Many times client and matter billings are presented with portals or on dashboards, however these are usually relatively simple metrics. These tools do not typically show profitability or help partners appreciate the impact of our four drivers on their wallets. Firms will struggle greatly with change if they do not even know where to start. It is the old and familiar tale of “follow the money.”

Capturing, understanding and delivering this financial knowledge will have high value for firms. Better and easier to understand profit metrics will lead to improved decision making by firm leadership. These same metrics will also be used by the frontline lawyers enabling better resource management decisions.

Currently many law firm financial departments are being pushed to the limits just trying to stay up on traditional reporting requests, as more firm partners are demanding timely financial information. Run – don’t walk, to your financial department and offer to help them find some breathing room.

Opportunity #2

Another opportunity presented by this situation is what might be called “re-engineering the practice.” Without going into a lot of detail, it is obvious that firms will need to change the ways in which they deliver their services to drive profitability. The profit driver Leverage can be a powerful tool. But pushing work down only works when a firm has the right systems in place to support that shift. Legal Project Management (LPM) a current hot topic cannot function without supportive LKM systems in place. This does not mean LKM should necessarily try to co-opt LPM, but instead find ways to drive the success of LPM efforts. If a firm does not have any process improvement or LPM, then LKM can help initiate those efforts. If LPM is being utilized, LKM can supplement and enhance those efforts. Firms need this help. LKM is just the type of resource to step-up and make it happen.

Other Opportunities

Hopefully these two opportunities help illuminate the path forward for LKM. Find the pain in your firm and address it. Focus on the greatest level of pain. One might argue that “search” is a pain for law firms, and they would be right. But this type of pain is not touching the decision makers of law firms in meaningful ways. Instead, what most firms are concerned about right now is flat revenue, rising costs and the possibility of reductions in partner incomes. LKM will do well if it focuses on addressing those pain points.

I had the honor and pleasure of sitting between Mary Abraham and John Gillies at the ARK KM Conference in New York City over the last two days.  Mary and John are two of the most prolific and talented live tweeters on the planet. They attend conferences and tweet nearly every word coming from the speaker micro-seconds after they have been spoken.  In the last few years, I have gotten an education in KM through twitter by following the tweets of Mary and John and countless others.  I have been able to attend many conferences across the planet that I could never have afforded to attend in person, by simply following the Twitter hashtag associated with the conference.  It was a real treat to see Mary and John in action.  Although, having participated remotely so often, I discovered I have developed a kind of Twitter myopia. I sat in the room and listened to some really terrific presentations, but I didn’t believe a word they said until I read it in a tweet.

On the first day of the conference, I was seated at a table with Mary on my left, John on my right, and David Hobbie (a prolific tweeter in his own right) on the other side of John.  I tweeted the following and David and Mary responded.


Let this be a lesson to lazy kids everywhere:  If you’re going to mooch off the hard work of others, never ever brag about it!

A few notes about this Tweet Stream:

I have edited the stream quite a bit.  I flipped it, it is now in chronological order from top to bottom. I removed a lot of redundancies.  I removed all straight retweets that added nothing to the original or simply said “Agreed” or “Interesting”. Where I kept a retweet, I removed the original quoted text and indented the retweet beneath the tweet it was referring to.  I removed the conference hashtag, except where it was used in reference to the conference itself, or if the hashtag was being commented upon.  I kept the back and forth peripheral conversations only when, in my opinion, it added something to the content being presented.  Needless to say, I cut a lot and I was probably inconsistent throughout, so don’t hold me to anything I just said.  I think what remains is a pretty good set of notes from a terrific group of note takers and some really wonderful presentations. 

I have copied the Title, Description, and Presenters from the Agenda and entered them into the Tweet Stream in the appropriate places.

Our own Toby Brown gave the Keynote on Wednesday, but this stream picks up after his keynote with the first Client Panel.  Toby’s ongoing series of blog posts “The Economics of Law and the Future of Legal KM” is a distillation of the Keynote he gave on day one. 

The conference began with a mutiny of sorts.  After Toby’s keynote the official hashtag of the conference was announced as #ARKKM2012.  We pick up our stream, already in progress…

UPDATE: David reminds me in the comments that he and Mary were live blogging summaries of many of the ARK KM presentations on their respective blogs:   

Having defined profitability and categorized the four drivers of profit for firms, in Part 4, we now turn to the market’s impact. 

Why Does This All Matter?

Over the past five to ten years, there has been a significant shift in the economics of the legal market. Previously law firms were able to raise rates to increase profit, typically 8-10 percent each year, with costs growing at only 4-5%. These rate increases resulted in increased profit. About 10 years ago, things began to change. The market finally became saturated with a sufficient number of lawyers (a.k.a. supply) so economic forces took over and started to impact prices. At first, firms felt this in realization. Clients began asking for discounts. However, at the same time, firms continued their price increases, so profits were only marginally impacted.

Two other forces came to bear in the market. The first was technology. Accelerated changes in technology enabled new competitors and encroachers. However, this change has been on a slow burn. The other force was The Recession, beginning in 2008. This forced in-house counsel to increase rate pressure on firms. Leadership in client companies no longer accepted “I can’t” as an answer from the General Counsel (GC) when asked to lower legal costs. Previously the GCs would say they couldn’t predict litigation or deals and therefore could not control costs. The CEOs finally said “enough.” The amount of legal work was not the question. The cost of it was. So clients really turned up the pressure on firms on price, to the point of demanding rate freezes. The days of significant rate increases and high realization were over.

Firm were pushed from a “cost-plus” business model, where profit was built in to the price (hourly rates) to a profit margin model. Now the game is managing costs of delivery such that a reasonable margin is made.

If you consider the four drivers of profit, the first three are clearly under intense pressure from market forces. Rate increases for firms have dropped from 8-10% per year to about 3-4%. Realization has also been dropping, currently at about 86% of standard rates. Finally with over-capacity in the lawyer ranks at most firms, productivity is dropping as well, driving up cost rates. This leaves firms with leverage as the only real alternative for counter-acting the other market forces. You might think this would give a clear direction for firms to respond to market pressures.

However, in this new economic world we have a significant challenge: Firms have not recognized the change. The vast majority of partners and firm leaders still focus on hours billed and realization to maintain profitability. Most firms did implement efforts to try to control costs. However, these controls were not focused on lowering the cost of delivery, but instead were just administrative overhead cost reductions. These overhead reductions have helped stem the tide, and allowed holding ground on profits. This approach will not sustain as no business can cut its way to growth. Instead, investment in new methods and technologies is needed if firms expect to grow their markets and enhance their profitability.

In Part 2 of this series we explored the impact of Rates and Realization on law firm profits. In Part 3 we look at the other two drivers: Productivity and Leverage.

The Profit Drivers:

Productivity (a.k.a. Utilization)

Productivity is the number of billed hours per timekeeper  Most firms will have a benchmark productivity of 1800 or 1900 billable hours per year, driving an expectation of a certain baseline level of productivity. For profitability, this comes into play on cost rates.

Each time keeper has a cost per year. There are two components: Compensation and Overhead. These are commonly referred to as Direct (compensation) and Indirect (overhead) costs. The indirect costs are usually a hot-button issue for firms as everyone wants to argue about where various administrative costs should be applied. Side-stepping that issue, firms decide on reasonable numbers based on the level of the time keepers. Partners, for instance, may have higher overhead costs allocations as they use more resources within a firm. Once a firm agrees on these costs, then you divide the overall cost number by the benchmark number of hours to get a cost rate per hour.

The punch line on productivity: When productivity goes down, cost rates go up. If you have a lawyer who costs $500,000 per year working 1900 hours, her cost is $263 per hour. If her productivity drops to 1700 hours, her cost rates increases to $294 per hour.

The impact of cost rate changes on profit is typically half that of realization. Of course that depends on the differential between the cost rate and the realized rate. The closer they are, the bigger the impact and it becomes just like the point-of-no-return seen in realization.

Caveat: Lawyers tend to manage profit by focusing on costs. This is the least effective way to enhance profitability. Most costs are relatively fixed on an annual basis. Salaries, rent, insurance, technology and the like are consistent costs year-to-year. Firms wanting to enhance profitability should focus their energies on the revenue side of the equation.

Tangent: We’ll take a small detour here to differentiate between profitability on the client and matter level versus profitability on the practice group or firm level. For example, when looking at the profitability of a matter, productivity should be neutralized. If a firm has under-utilized lawyers, it should not count that factor when evaluating the profits for a matter or a client. Under-utilization or low productivity could be used to show increased cost rates on the client level. The real problem with low productivity though is not in how a specific matter is being staffed, but instead is a firm management problem. Under-utilized lawyers are a symptom of over-capacity (i.e. a firm has more lawyers than work). At the client and matter level, the issue is using the proper level of staffing. If you factor in higher cost rates for underutilized lawyers, you are motivating partners to use busy associates instead of those with capacity. This is not a behavior you want to encourage.

Leverage – The Great Equalizer

The last driver of profit is leverage. This is the amount of non-partner work versus partner work performed. Or from another angle, the percentage of partner time worked per matter or per client.

We took that tangent for an important reason. Leverage is the highest impact profit driver. And firms looking to enhance their profitability will want to encourage the best use of leverage and not let low productivity encourage counter-productive behavior.

The basic economic concept of leverage is that the more workers work, the more owners (partners) benefit. Workers generate the profits that pay partners. Therefore, the more work is push downed to them, the better leverage you have and the more profit is generated.

Of course caveats apply. Partner level work should be done by a partner. The mantra here is: push work down to its lowest cost, appropriate labor source. This sounds obvious and reasonable; however, until recently, firms have profited from pushing work up to the highest rate source, which was a great idea when competition was low.

Further, and taken to a logical extreme, you could make the argument that partners should do no work to maximize profits. Technically you would be correct. If partners spent all of their time getting business in the door and workers provided all the effort, you would maximize profit. However, as mentioned above, partners are also workers. Clients expect the high-expertise of partners on their work and in fact make many purchasing decisions with this in mind.

Another point to consider, partner work also generates revenue. In a situation where 25% of the work is performed by partners, about a third of the revenue comes from their time. The bottom-line is that work should be allocated to the right resources. Firms should make every effort to move the work down and ensure the timekeepers involved are constantly improving their skills so they can continually take on higher levels of work.

And a final important point on leverage: When it improves, the fee to clients goes down. As work is pushed to lower cost resources, the overall fee for a given piece of work should go down. I say “should” since this is dependent on the work being performed at competent lawyer levels. If work is pushed down to timekeepers who take too much time to complete the tasks, the reasonable leverage line has been crossed. Staying on the right side of that line essentially means higher profits for firms and lower fees for clients. Truly the win-win result the market is begging for.

In Part 4 we tie the four drivers into a single picture and talk about the effect of market forces on the group of drivers.

In Part 1 of this series, we introduced the concept of tying Legal KM (LKM) closer to a law firm’s bottom line  We also introduced the concept of law firm profitability  In Part 2 we explore the first 2 (of 4) profit drivers for firms: Rates and Realization

The Profit Drivers:

Rates

Although obvious, the point needs to be made. Billing Rates are the core pricing structure used in the industry and the level of a firm’s rates are key in determining its level of profitability. As a rule-of-thumb, a 1 point increase in rates leads to 2 points increase in profit. The reverse applies as well. In my experience, there might be a range of 1% to 3% increase in profit for each point of rate change. The range exists since it depends on the specific time keepers involved and the relationship between the billing rates and the time keepers’ cost rates (more on that later).

Realization

Realization is the percentage of money collected versus the standard rate. Once you have a standard rate there are three basic ‘events’ that drive down the actual dollars collected against that rate.

#1) Discounts

Discounts are the market (via specific clients) telling a firm their prices are too high for a piece of work. One might think firms should lower their prices in response to his information, however, that could be a mistake. Sometimes clients shop price by the level of discounts. They are not concerned with the actual price but instead focused on the amount of discount they are extracting. Whether this is rational behavior in an economic sense is not relevant. Firms need to adjust their pricing and pricing strategies in response to the market, but need to do so in smart ways.

#2) Write-Downs

These are reductions from a bill before it goes to the client. This reduction signals the firm / partner deciding certain effort had no value. This becomes important as firms look for ways to lower the cost of delivery of a service. By identifying recurring types of write-downs and eliminating the effort before it is done, a firm will lower the costs of the service.

#3) Write-offs

These are reductions requested by the client after they have seen the bill. This client signal says they did not see value in some effort. This may occur because a firm did not communicate the value of the effort properly or it may just be that work should not have been done. It should be noted that in some cases, write-offs are just good ole fashion flakey clients who don’t pay their bills. For this discussion, we will treat that as a cost of doing business.

Adding these three elements, gives you total realization. The final number is important, but the three components are instructive as to what is driving a level of realization.

The impact of realization is much the same as that of rates. A 1% drop in realization will, on average, result in a 2% drop in profitability. Well, at least it does when you are relatively close to 100% realization. As that realization number drops, the impact magnifies. As you approach 60-70% realization, it becomes infinite. This is the case since you are approaching the cost rate levels of most time keepers. This means you are reaching the point where your margin goes to zero and when you pass that point it goes to negative. At a general level, this point-of-no-return is about 67% percent. However, it can vary based on the mix of timekeepers involved in a given piece of work. Some time keepers cost rates can be 50% of billing rates, whereas others may be closer to 80%.


In Part 3, we will take on the other two profit drivers: Productivity (a.k.a. utilization) and Leverage.

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

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:

We’re all cruising through the ILTA Conference session titles now in the final stages of making our maps through the Gaylord’s throng of session rooms. One session title that jumped out was John Alber’s Thursday afternoon session: “Five Reasons Why Terms Like “Practice Support,” “Knowledge Management” and “Financial Services” Miss the Point.” That session looked like it might be a good candidate for the last afternoon of the conference—maybe not the same-old same-old. So I decided to ask Alber to elaborate on the session and give us some more insight into his choice of topic.

Alber is the Strategic Technology Partner at Bryan Cave and he leads three groups there that are at the center of Bryan Cave’s push for innovation. Bryan Cave has been widely recognized for its innovation, including being named at last year’s conference as the Innovative Firm of the Year. The three groups he leads are the Client Technology Group, the Practice Economics Group and the Accelerated Review Team. The name Knowledge Management is conspicuously absent from those groups, even though Alber admits that what they do is straight-ahead KM.

The session is not really about naming, Alber says. The session title was intended to be a bit provocative. “A sharp stick in the eye” is how he describes it. Alber says that the real thrust of the session is to examine the intention that underlies traditional KM and other technology-linked disciplines. He describes a traditional KM function as an “introverted” entity—something that is internally focused rather than tied to the core of the underlying business. As a consequence, he says, KM, Practice Support, LPM and other similarly introverted functions have barely any impact on profitability.

That doesn’t have to be. He points outside the legal sector at other very robust technology functions that are at the heart of their businesses  Some, in fact, have not only produced more revenue than their underlying businesses, but have outlived them and become the businesses. He will explore the characteristics of those highly connected and relevant functions with the aim of bringing some lessons back into the legal sector.

I highly recommend you check out his session.

If you have a service that gets 20 million unique users a month, and you have personal information on those users, what could you do with it? For the staffers at music streaming site, Grooveshark, the answer was to build a free tool that shows the demographics, culture and lifestyles, habits, and product preferences of those users that listen to particular artist. This morning, Grooveshark launched a data analytics resource called Beluga. This resource allows you to type in the name of a musical artist and find out information about the fans that listen to their music. The press release that Grooveshark wrote this morning says that the information is designed to help artist better position themselves to their fanbase (it could also be related to the fact that all four major record labels are suing Grooveshark… but, we’ll stick to what Beluga does for this post.)

Grooveshark’s co-founder, Josh Greenberg believes that by exposing these analytics, artists can “learn about their fans, route their tours, sell merchandise, work on building a following, and take their careers to the next level.” He thinks there is also value from the sales and marketing aspects of the record label as well since they can position themselves “to partner with artists who connect with their target audience, presenting endless opportunities.”

If you’ve used Grooveshark in the past, you know that from time to time they ask you to fill out a quick survey. It seems that we are seeing the first of the results of those surveys, and it makes for some interesting information when looking at musical groups. Here’s a sample of results I got when I searched on Eric Clapton:

  • 55+year old females are moderately over-represented (and yes, they look Wonderful Tonight)…
  • Fans of Clapton seemed to have retired in the past year (remembering Days of Old)…
  • Israelis seem to love themselves some slow-hand
  • Clapton users seem to show some Old Love and rent their movies from Blockbuster online…
  • Poor people don’t really like to listen to Clapton (no Hard Times for Clapton fans)…
  • Clapton listeners tend to bank at Citibank (cause, Nobody Knows You When You’re Down and Out)…
  • Apparently, Clapton sounds best when you’re driving and Traveling Alone.
What is the accuracy of these survey results?? I’m not sure. I guess the case could be made for not giving too much faith in the results you get from a voluntary web survey. However, I did look at the survey results for some smaller named bands that I like, and the surveys seemed to fall about where I’d expect for these bands, although the geography preferences tended to trend outside the US (maybe because Americans are less likely to fill out the survey??) 
Regardless of whether or not you trust the results, if you love to see examples of what can be done with large amounts of data, then you’ll find yourself having some fun looking at Beluga

I had the honor of presenting to at the Texas Library Association Conference here in Houston today. The topic was on Library and Knowledge Management’s collaborative roles within a firm, and how they can work together to bring in better processes, automate certain manual procedures, and add analyze data in a way that makes it (and as a result, KM and Library) more valuable.

Below are the thoughts I wrote down to discuss six questions. These questions were raised at the ARK KM meeting earlier this year and, although the audience was substantially different, I thought it would be a good reference point to cover what is expected of us, and how we can contribute to the operations of the firm in unexpected ways. Thanks to Sean Luman for stepping in and co-presenting with me after Toby suddenly had a conflict.

[Note: Click here to see the Prezi that went along with the presentation.]

How Do We Assist the Firm In Using the Knowledge Base?
Law firms collect enormous amounts of information every day. Much of this information sits in databases, shared drives, email, Document Management Systems (DMS), Client Relationship Management Tools (CRM), and other repositories. Some of it is valuable, but much of it is not. So when we ask about the Knowledge Base, we really need to ask ourselves:
1. How do we make it easy to put good data in?
2. How do we make it easy to pull good data out?

How Do We Assist Our Attorneys in Doing the Same Work More Efficiently?
If you ask most lawyers how they work, they will talk about how they are the expert in “X” field and that nearly everything they do is original or “customized” work. That the client’s needs are so unique, that it takes their expertise to understand it and make it happen. On the other hand, if you ask the client what their lawyers do (and remember, many of them worked at law firms before going in-house), they would say that a lawyer pulls out an old document, or a standard form and changes the name of the old client and inserts theirs. Then bills them for four hours of work at $800.00 an hour. Although there is some cases where the work is truly unique and customized, most work in law firms is repetitive legal work. Although clients have let firms slide for years on the “customized” vs. “commoditized” work, many clients are now pushing back on their lawyers and demanding that they work more efficiently, and if they don’t, the client demands for the lawyers to “write-off” the portion of the bills that they think comes from inefficient processes.

This is a golden opportunity for KM and Library to step up and help. It’s not a new concept. Libraries and KM have been attempting to bring efficiencies into law firms for 20+ years. However, the billable hour model did not support the concepts of streamlining processes, creating clause libraries and Best Practices Documents, or creating checklists to make the work go faster and smoother. Most lawyers (although they would not publicly admit to it) would think that thinking of their work as commoditized work was beneath them, and that all the work they did was customized, therefore, streamlining wasn’t an option. Richard Susskind has a book on this topic and has spent the last four years traveling around the world talking about how lawyers that continue to think this way will soon find themselves without clients.

How Does KM/Library Drive the Strategy for Legal Project Management?
Project Management is the big buzz word in law firms these days. Although many discuss it in different ways, it really boils down to the idea that all of the work performed is done so by the appropriate people and or technology. Work should be pushed down to the most effective/efficient level. KM and Library have a role to play in Project Management because there are many jobs that the firm has to do that the library could take on, or that KM could automate. Whether it is called Six Sigma or Lean Sigma, Legal Process Management, or Alternative Fee Arrangements, all of these ideas mean that all work performed on a matter is performed at the appropriate level (no Partners doing Associate work, etc.) and that the work is performed at the right time, and in the right order. Librarians and KM workers that understand and step up to take a seat in this process will find themselves to be a very valuable piece of the overall project.

How Do We Provide the Best Information for Business Development & Legal Practice?
Since 2008, the push in law firms has been to cut overhead. Although firms are still watching the bottom line in 2012, there is a new focus on how to develop new business and start increasing revenues. KM and Library is strategically position to assist business development projects because these groups sit right in the middle of a wealth of internal and external information. Biz Dev looks for opportunities in Lateral hiring, Cross-Selling to Existing Clients, Attracting Clients Away From Other Firms, and Being Ready for Alternative Fee Deals when they come around. Library/KM helps strategically position the firm for these opportunities by finding methods of identifying prospects and working on processes that push the key information into the right hands at the right time. The two pieces that KM/Library can be most effective is in the areas of Automation and Analysis.

How Do We Partner With Other Departments to Provide Insight regarding Our Clients and Potential Business Opportunities?
The “Administrative” side of the law firm (Marketing, IT, Biz Dev, Practice Development, Professional Development, etc.) has a very important role to play in the new environment of the law firm. Not only do they need to make sure that the law firm runs smoothly, but they also need to look at ways of increasing potential opportunities.

Marketing, for example, is constantly needing information about what our clients are doing, down to the individuals within our clients’ companies. They are also charged with keeping our attorneys well prepared, usually at a moment’s notice to discuss what is going on with the client, and any potential risks the client may currently be facing. Again, a perfect Library/KM opportunity to have a strategy that focuses on identifying external resources and internal knowledge in a way that creates an end product that can be assembled quickly and allows for quick analysis as the need arises. Portals and Enterprise Search tools are one of the biggest areas that Library and KM can offer to support these needs.

How Do We Do It All With Fewer Resources?
Library and KM (as well as any department in a law firm) is still feeling the pains of the recession. Less staff… less budget… fewer resources… all the “new normal” of law firm administration. Unfortunately, we can’t sit back and say “sorry, we can’t support that because you cut our budget.” It means that you have to think creatively about what it is that you are doing. It means getting rid of old projects and processes that either aren’t working, or aren’t worth the amount of effort that your having to put in. Again, think of the “push processes down to the lowest appropriate level” of work and determine if automation can be brought in for processes that are now manual processes. Can existing software do more than you are making it do? Can we remove duplicate work? Can we set up self-help systems that allow those seeking the information to go directly to that information? If you think that everything you do has to be customized, then just like the attorney, you will soon find yourself without clients, and without a job.