Research suggests law firm use of knowledge management can cut costs by 25%
Research conducted by management consultancy OMC Partners and commissioned by Practical Law Company has revealed that a law firm’s approach to knowledge management has a significant impact on the overall cost of matter delivery.
Thestudy, which involved over 50 hours of interviews with knowledge managers and partners from a range of practice groups in ten of the UK’s leading law firms, revealed that haphazard or complacent approaches to knowledge management were often hampering fee-earners in their day-to-day role. However those firms that had adopted a more structured approach had been able to reduce the cost of creating knowledge by up to 10%. Strikingly, some have used knowledge to enable a reduction in the overall cost of matter delivery by up to 25% consistently across all practice areas.
A report on the research The knowledge imperative has been published by Practical Law Company. It identifies current client pressures and their implications for knowledge. It then distils the best practices observed among the interviewed firms that supported the most successful knowledge approaches. It examines some of the common barriers preventing firms from implementing these. Finally, it outlines some of the improvements seen by firms who were adopting the best practices
Jack Diggle, partner at OMC Partners, said “At the outset of the research, the range of approaches to knowledge was immediately apparent. As we analysed the impact of these various approaches on client focus, risk management and cost reductions, it became clear that for the best-in-class firms knowledge is working as an effective tool leading to greater efficiency, profitability and client satisfaction. A great deal remains to be done in the knowledge arena to enable firms across the industry to realise these benefits.”
PLC director Guy Baring added “This report delivers a unique insight into the knowledge challenges faced by many law firms today. As firms increasingly look to drive cost savings in what is a challenging and competitive market, better knowledge management is emerging as one strategic and practical approach that the most enlightened firms are using to help capture ongoing and significant savings to their operations.”
To obtain a free copy of the full report visit www.practicallaw.com/about/knowledge
Six knowledge best practices
• The firm’s management structure promotes the strategic use of knowledge.
• Knowledge approaches are designed to drive the firm’s competitive advantage.
• While maximising competitive advantage, knowledge comes from the best value source.
• Knowledge strategy supports the systematic improvement of leverage and realisation rates.
• The productivity benefits of knowledge investments are calculated and fully delivered.
• An appropriate level of dedicated resource is allocated to knowledge work within practice areas.
Barriers to increased knowledge efficiency
• Decentralised knowledge functions prevent systematic implementation.
• A misconception about what clients are actually paying for.
• Cultural resistance to working with new technology or external providers.
• The decision-making process for implementing new approaches is dominated by the costs without a rational assessment of the benefits.
• Senior stakeholders in law firms are often the least open to change.
• Under-resourced implementation of knowledge initiatives.
Outcomes for those firms implementing best practices
• Greater client focus
• Improved risk management
• Cost reduction – specifically in both the creation of knowledge and in matter delivery itself.