Ark Conference Followup–How Legal KM Supports Budgeting and Pricing Work

12 Nov

Post By David Hobbie, Litigation Knowledge Manager at Goodwin Procter

In preparation for the panel I spoke on in late October at the Ark Conference (ably live-blogged by Mary Abraham), moderator Joshua Fireman developed but did not get a chance to ask me a question that I have been wrestling with for several years now.

“How can KM help with budgeting, pricing, and alternative fee arrangements?”

Legal KM doesn’t have to own pricing in order to add tremendous value to the pricing and fee arrangement (“AFA”) work at your firm.  Legal KM can be a valued counselor, consultant, and partner with the people doing pricing and budgeting work.  The exact role does not matter, but the extent of your contribution does matter, to the perception of KM as a strategically focused department in your organization and possibly to your own career. It’s important for the profession that step up, not just because it will be good for us personally and collectively, but also because such efforts are or should be a priority for the industry, and there is great demand for assistance in this area at law firms (and law departments for that matter).

The legal KM community can bring to bear our skills in managing information, including matter information; our database and search, and taxonomy skills; our ability to comfortably talk to lawyers about the business and practice of law; change management skills; and also a substantive understanding of the underlying work.

We can put these skills to good use within the firm by focusing them on information and processes that are really important for budgeting.  I believe that this is an area of significant and perhaps even crucial opportunity for legal knowledge management.

Specific KM-Related Tasks

My experience suggests that there are a number of other areas where knowledge management departments and staff can assist and support pricing and budgeting work.  Examples of specific tasks or developments within this include:

  • Budget database development, structure, and integration with existing firm systems (such as portals).
  • Budget collection (KM professionals are quite familiar with attempts to get lawyers to contribute to a centralized firm database, and also in many cases understand more automated or established processes for such collection).
  • Collecting, organizing, presenting, and sharing matter information related to budgeting, such as deal size & complexity, opposing counsel, forum, and disposition.

As I mentioned at the conference, your firm may already be collecting matter experience information for marketing or substantive KM purposes that is potentially or actually already useful for pricing analysis. At my firm we have had a KM program that has spent significant effort over the last five years (at least) collecting, organizing, and developing systems to leverage firm matter experience, some of which (such as litigation disposition information) has already proved its worth when leveraged for pricing and budgeting needs.

  • Identify which information is critical to budgeting in addition to that required for other matter management and collect that too. Are there external factors beyond the firm’s control (but capable of inclusion in budget scope?) Do we need to know how many times the securities plaintiff firm amended the complaint to understand the cost of the motion to dismiss? Are there internal factors that drive cost that can be controlled by the firm?
  • Develop your firm’s code sets that timekeepers use to bucket time into major areas of effort (unless you decide to stick with the ABA’s code set). These are commonly known as “phase-task codes.” This work leverages KM professionals’ taxonomy skills and their experience with fighting lawyers’ ingrained tendency to create many small useless buckets.
  • Aid communication, training, and awareness efforts of budgeting/pricing teams.
  • Assist with selection and development around budgeting software.
  • Assist with quantitative display of visual information (leveraging portal / internet skills).

I hope that breaking down and highlighting some of the opportunities for legal KM to add value will encourage those of you who have remained on the sidelines to date.


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