High Quality
Open the downloaded document, and select print from the file menu (PDF reader required).
ILTA White Paper
J 2010
KM Brings Value to AFAs
Working Smart Is Cheaper and More Proftable
david hobbieGoodwin Procter LLP
KMaam
Bii Pp, Ifmai a P
This article was frst published in ILTA’s June 2010 white paper titled
“Knowledge Management: Bridging People, Information and Processes”
and isreprinted here with permission. For more inormation about ILTA, visit their website at www.iltanet.org.
T
he recent economic downturn has broughtabout a signicant change in the businesso law and in the proportion o legal workthat is perormed outside o the billablehour model. For instance, in the summer o 2009, in
“
Billable Hour Under Attack,
”
The Wall Street Journal
reported a survey that suggested an increaseo more than 50 percent in the amount o work done inthe previous year under arrangements other than thebillable hour. Indeed, many leading corporations suchas Cisco and FMC Technologies, Inc. have made theintroduction o xed-cost arrangements an entry-levelrequirement or the bulk o their work.Under any billing model, clients expect eicientwork and hire irms or their speciic expertise andability to leverage it. Knowledge management (KM)unctions enhance each o these qualities. There isno question, however, that most alternative inancialarrangements (AFAs) (also known as alternative eearrangements or alternative billing arrangements)dramatically increase law irms
’
incentives to perormlegal work more eiciently and at lower cost.Approaches to delivery o legal services, such asknowledge management, that reduce the cost andincrease the productivity o knowledge workers, whilemaintaining quality, are all the more justiiable when costsavings translate clearly into a better bottom line.Knowledge management has a varied tool kit, andknowledge management activities can be broad or specic inscope. Some are targeted at a particular type o work; othersare large-scale, the knowledge equivalent o phone serviceor IT inrastructure. All are ocused on making attorneys moreecient in the work they do.Dierent activities managed or created by knowledgemanagement programs at law rms support AFAs. TargetedKM can support specic sets o alternative nancialarrangement matters, and broader, large-scale KM activitiescan enhance eciency and eectiveness throughout arm. Cutting-edge knowledge management solutions maythemselves deliver legal services under a wholly dierenteconomic approach.On the ollowing pages, we
’
ll explore various AFAs alongwith examples o how targeted KM and large-scale KM canboth assist and support such arrangements in law rms.
AlternAtIve FInAncIAl ArrAngeMents
Dierent billing models vary in their t with types o legal work.Under the billable hour model, a law rm bills out attorneys andsta, such as paralegals, at a set hourly rate. This model worksvery well in those situations where the client needs to ensure
This article was frst published in ILTA’s June 2010 white paper titled
“Knowledge Management: Bridging People, Information and Processes”
and isreprinted here with permission. For more inormation about ILTA, visit their website at www.iltanet.org.
the ull attention and availability o as many highlyqualied proessionals as it takes to do the job.A white collar crime deendant would not ask hisattorney or a ixed ee — he doesn
’
t want the mosteicient and cheapest attorney, he wants the best,now, or as long as possible. The speciic type o valuethat clients seek on a type or piece o legal work willvary, and may not be obvious, even to them. The valueand the ee arrangement need to be assessed andnegotiated in a mutual and ongoing conversation.Dierent billing arrangements, such as success or
“
busted deal
”
ee arrangements, xed ees, project orpiece-work,
“
risk collars,
”
or contingency ees, all havethe eect o altering 1) who bears the risk o variousoutcomes o the case or deal, 2) the consistency o the amount billed, 3) the payment timing, or somecombination o the three changes. Billing arrangementsmay also be infuenced by clients looking to reduce theiroverall legal spend.In a xed ee matter, the client pays a set amountor a matter, regardless o the amount o time or eortthe law rm expends. Project work is a variation o thatapproach, but encompasses only part o a larger matter.A rm might charge a set amount or a set number o depositions, or or drating a particular document or seto documents in a deal, and handle other aspects o thework under the billable model or perhaps under anothertype o ee arrangement.Under many AFAs, such as risk collars, projectwork and especially ixed ee work, a law irm bearssome or all o the risk o going over budget, but theirm can also beneit rom these arrangements. Ona ixed ee matter, or instance, cost decreases godirectly to the bottom line (translating to increasedproit or, at worst, a reduced loss). With signiicantlylower costs o producing the legal work, a irm canalso charge less even under traditional approachesand still make a proit. Knowledge management maybe most valuable or those matters that are mostsimilar to ixed ees.
tArgeted KM
Knowledge management tools ocused on a particulartype o work can bring great rewards but alsosignicant costs and risks. Such targeted eorts shouldbe made strategically, supporting the engagementsand the discrete components o engagements whereincreased eciency will bring the greatest rewards.It may be that a rm will have a rmwide strategy oraddressing AFAs. Targeted knowledge managementeorts should align with those strategies as they dowith other rmwide strategies.
Knowledge collectIons
One core knowledge management unction has been to developsets o checklists, orms, models, exemplars, samples and links tokey external resources that relate to a particular legal topic. Suchknowledge collections are more useul i they are detailed andgranular, but more detail adds to the creation and maintenancechallenges. Knowledge management workers can assist withsuch collections directly (the
“
practice support lawyer
”
model).Knowledge management workers also can serve as
“
gate-keepers
”
to proposed additions to the knowledge collections. Athird role is creating and maintaining the structures and businessprocesses or other lawyers to contribute to the same.Knowledge collections enable attorneys to work asterand more eciently by showing how others have previouslydone similar work and by creating a standard approach orapproaches to particular challenges. Forms and checklists,properly used, also serve as a quality control, ensuring that atleast the common challenges or a particular type o agreementor civil procedure are addressed regardless o the level o experience o the person using that tool.I suciently detailed and thoughtul, knowledgecollections enable rms to push the work down to a more junior, and hence lower-cost, provider, while maintainingthe low risk and high quality o a more senior attorney. Theprevious work o the more senior attorneys can be leveragedmultiple times.Risks o such collections include: not obtaining andmaintaining consistent contributions; not ensuring that theresource is actually used when called or; and not tying theevaluation or compensation o the attorneys to their eorts increating the valuable resource.
docuMent AsseMBly
Document assembly is another tool that can let more juniorattorneys leverage the know-how o more senior attorneys.Document assembly applications allow attorneys and otherknowledge workers to create a wizard that asks questions ina logical sequence, perhaps beginning with basic questionsabout parties and attorneys and then moving to questionsthat determine what documents are produced with whatclauses. At the end, a document (or multiple documents) withthe appropriate structure is produced. As with knowledgecollections, knowledge managers can serve as primarygenerators o such tools, or they can acilitate their use.Any number o users can answer the questions and generatedocuments such as mortgage agreements, wills or trusts, or morecomplex agreements. In this way, some o the legal work becomesautomated. While it may be possible to generate a near-naldrat o a simple document, document assembly may also savetime and eort simply by creating the shells o a large number o more complex documents, with the correct names o agreements,attorneys and parties already in place.
This article was frst published in ILTA’s June 2010 white paper titled
“Knowledge Management: Bridging People, Information and Processes”
and isreprinted here with permission. For more inormation about ILTA, visit their website at www.iltanet.org.
Document assembly assists particular ee arrangementsby automating part o the work and by allowing lower-costproviders to carry it out. Some rms (such as Bryan Cave) haveeven charged clients direct access to document assemblysystems, a wholly dierent economic model akin to sotwaredevelopment where the lawyer
’
s up-ront eort may besubstantial but the marginal cost o additional clients is low. Inthe article
“
”
published in
Legal Technology Journal
(2006), Richard Susskind reerred to this as
“
making money while you sleep.
”
Document assembly is very resource-intensive. While theinterace or the ultimate user can be straightorward, settingup a wizard tends to be quite complicated, even or technicallysophisticated users. Wizard creators must understand the manydierent substantive options embedded in the documents,must be able to break out a logical question structure, and thenunderstand how each answer will change the document(s). It’smaster-level legal chess.Lawyers who possess some degree o technicalsophistication combined with substantive legal knowledgein the relevant area will be best able to leverage documentassembly. I such a person lays out the logical structure,consultants and others can assist with the programming.Because they have a similar substantive bent, documentassembly eorts run the same risk o becoming outdated asknowledge collections.
lArge-scAle KM And AFAs
Many knowledge management activities are less targeted atparticular types o work. Just as a
“
rising tide lits all boats,
”
theseeorts make all attorneys (or large groups o them such as arm
’
s litigators) more ecient and eective. Leveraging dynamicinormation — a rm
’
s entire document management systemor billing system, or example — has the twin advantages o always including the most up-to-date inormation and allowingattorneys to contribute work product and other content in theregular fow o work.
enterPrIse And worK Product seArch
A sophisticated panel o technologists at ILTA
’
s 2009 conerencein Washington, DC identied enterprise search as the singlemost eective knowledge management tool or reducing costs.Enterprise search impresses inormation proessionals because itlinks and interrelates dierent sets o inormation rom dierentrm systems, typically pivoting on such common links as authors(users/timekeepers), matter numbers and rm taxonomies orindustry and type o legal work. It allows attorneys to searchacross collections o inormation ranging rom documentmanagement systems to portals and perhaps also time andbilling systems.Enterprise search is valuable or attorneys doing alternativeee work in several ways. It helps attorneys quickly locateprecedent across document management systems,intranets and knowledge collections, saving time onresearch and drating tasks.Relating time entries and billing experience todocument authorship and ocial attorney biographiesalso allows or better expertise search than any othersystem identied to date. Expertise search is one wayto nd the right attorney to do a piece o work, animportant aspect o managing costs.Knowledge workers assist with enterprise search bystructuring it to leverage the most important metadataand delving into the most important inormationcollections. They also employ taxonomy skills in settingup rm-imposed metadata such as legal service anddocument category.Enterprise search is most eective i rms alreadyhave well-thought-out and consistently appliedtaxonomies. Risks arise i matter numbers overlap, or i legal service codes or other key taxonomies are appliedhaphazardly and inconsistently.Work product search such as West km and LexisSearch Advantage also enables attorneys to nd andleverage previous work. One advantage o these twotools is that they link into the massive online databaseso these providers, allowing attorneys to see whilereviewing samples i the cases and statutes in the workproduct are still valid and saving time by reducing cite-checking and case law dead ends. Attorneys can easilynd other work product citing to particular cases orstatutes and see how other attorneys have researchedand treated that topic. The biggest challenge associatedwith work product search is obtaining adoption.
PortAls
Knowledge management departments are otenresponsible or matter inormation systems and otheraspects o intranets or portals. Sophisticated portalsprovide quick browsing access to timely inormationrom multiple rm systems. The better law rm portalspresent inormation specic to the user. For example,a portal might show an attorney a list o matters she
’
sbilled to in the last ew months, and provide easyaccess to nancial and billing inormation along withdocuments, pleadings, closing binders and so orth.Portals support AFAs indirectly and, in somerms, more directly. Indirectly, portals, such as the onedescribed above, were not created with alternative eearrangements in mind, but they do increase matterteam members
’
speed and eciency by providing quickaccess to key inormation.The Australian rm Mallesons Stephen Jaques
’
“
Mallesons Connect
”
portal system is a leading example
Add a Comment