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The Billable Hour The most significant reason is the billable hourly model, which acts as a major disincentive to “sharing” behavior. Most law firms suffer from a “productivity paradox,” where the more efficient you are, the less money you make. Additionally, those who are most able to assist with any given KM initiative — the lawyers themselves — are not directly motivated to do so, nor are they usually incentivized to share their knowledge. Artificial incentives to encourage knowledge-sharing (such as Starbucks gift cards or iPods, etc.) generally do not work in the long term and encourage participants to “game” the system. Added to this, law firms in the United States have a partnership compensation model known as “eat what you kill,” which rewards partners for winning new work but also doing that work as opposed to sharing it. Conversely, firms in the United Kingdom have historically used a lockstep model, where compensation is based on seniority. U.S. partnership compensation models appear to be a factor in encouraging knowledge-hoarding behaviors. In KM terms, the U.K. firms are way ahead of their U.S. counterparts. In an environment where the only real metric used as a basis for compensation is a lawyer’s time, the business case for KM is particularly unappealing. Our sales pitch can be characterized as follows: “Please join us and spend extensive amounts of non-billable time, for which you will not be rewarded, working on initiatives that: • May make both you and the firm more efficient • May increase quality and reduce risk • Will be detrimental to your immediate short-term goal of the accumulation of more billable hours.” “Those who are most able to assist with any given KM initiative — the lawyers themselves — are not directly motivated to do so” There is an economic disconnect at the heart of law firm KM and until compensation models are adjusted to also measure quality and efficiency, no amount of KM rebranding will help. The People Component Many law firm KM initiatives have started with the assumption that useful knowledge must be gathered in one place. A precedent library might seem like an obvious starting point for KM in a law firm. Firms attempt to gather together useful sample documents, ideally in a separate document collection. Then, if human resources allow, these samples might provide a basis for the creation of model documents together with a line-by-line commentary on when to use a particular clause. This would create a comprehensive precedent bank. While this sounds like “KM nirvana,” such initiatives require many skilled people and www.iltanet.org Knowledge Management 47

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