ILTA White Papers

Knowledge Management

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VALUE PRICING AND AFAS In the current legal market, clients are very focused on value pricing, seeking closer alignment with law firms regarding the cost for legal services. Whether self-driven or pushed into action by clients, the ACC’s Value Challenge initiative, or the implications of the changes envisioned in Richard Susskind’s The End of Lawyers?, law firms are entering into many more alternative fee arrangements (AFAs). Law firms bill and will continue to bill certain matters on an hourly basis. The current trend toward AFAs is a change event in the legal market, offering law firms an opportunity to reconsider the way all fee arrangements work. Law firms are trying to better understand the costs associated with performing various types of legal services and are examining the different types of fee arrangements they have in place. Firms are also working with clients to manage these engagements efficiently, seeking arrangements that are successful and deliver value to the client and the firm. To support AFA strategies, a number of large firms have involved their knowledge management (KM) departments. Some firms seek to leverage more “traditional” KM offerings, such as the use of precedent collections, checklists and, perhaps, document automation, to deliver legal services more efficiently. Other law firms also involve KM to consider how firm internal human practices (business processes or workflows) and systems support their AFA strategy. WHY KM? KM helps a law firm know what it knows. Legal KM professionals analyze workflows — the way people work and exchange (or hide) data, information and knowledge. This supports the delivery of “traditional” KM resources such as precedent collections and expertise systems. While these practice-oriented resources are more widely understood, the approach behind their creation is equally relevant to help the firm manage what it knows about fee arrangements. Traditional KM KM in AFA Context Precedent Fee proposals, budget templates Classification systems Fee types, standard billing terms and phase/task codes Expert systems Timekeeper locators (finding the right person for the job) Deal/case databases Matter classification to support AFA analysis For example, precedent efforts can focus on the management of fee proposals and budget templates instead of model employment agreements. Similarly, classification efforts can structure the way a firm manages fee arrangement types instead of supporting the design of a legal expertise locator. Additionally, KM can consider how existing systems can be leveraged to support the firm’s AFA strategy. Thus, deal and case Knowledge Management 27

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