ILTA White Papers

Knowledge Management

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arrangements or alternative billing arrangements) dramatically increase law firms’ incentives to perform legal work more efficiently and at lower cost. Approaches to delivery of legal services, such as knowledge management, that reduce the cost and increase the productivity of knowledge workers, while maintaining quality, are all the more justifiable when cost savings translate clearly into a better bottom line. Knowledge management has a varied tool kit, and knowledge management activities can be broad or specific in scope. Some are targeted at a particular type of work; others are large-scale, the knowledge equivalent of phone service or IT infrastructure. All are focused on making attorneys more efficient in the work they do. Different activities managed or created by management solutions may themselves deliver legal services under a wholly different economic approach.” knowledge management programs at law firms support AFAs. Targeted KM can support specific sets of alternative financial arrangement matters, and broader, large-scale KM activities can enhance efficiency and effectiveness throughout a firm. Cutting-edge knowledge management solutions may themselves deliver legal services under a wholly different economic approach. On the following pages, we’ll explore various AFAs along with examples of how targeted KM and large-scale KM can both assist and support such arrangements in law firms. “Cutting-edge knowledge ALTERNATIVE FINANCIAL ARRANGEMENTS Different billing models vary in their fit with types of legal work. Under the billable hour model, a law firm bills out attorneys and staff, such as paralegals, at a set hourly rate. This model works very well in those situations where the client needs to ensure the full attention and availability of as many highly qualified professionals as it takes to do the job. A white collar crime defendant would not ask his attorney for a fixed fee — he doesn’t want the most efficient and cheapest attorney, he wants the best, now, for as long as possible. The specific type of value that clients seek on a type or piece of legal work will vary, and may not be obvious, even to them. The value and the fee arrangement need to be assessed and negotiated in a mutual and ongoing conversation. Different billing arrangements, such as success or “busted deal” fee arrangements, fixed fees, project or piece-work, “risk collars,” or contingency fees, all have the effect of altering 1) who bears the risk of various outcomes of the case or deal, 2) the consistency of the amount billed, 3) the payment timing, or some combination of the three changes. Billing arrangements may also be influenced by clients looking to reduce their overall legal spend. Knowledge Management 33

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