Kingsley Martin: Calculating KM ROI in Law Firms

Kingsley Martin, formerly CIO at Kirkland & Ellis, is a sharp guy when it comes to KM. He’s a lawyer (with law degrees from both Oxford and Harvard) who has been focused on KM-related issues for over 15 years. He was one of my co-panelists at last week’s Executive Director Forum, and I was excited to see this article by Kingsley published last week at (Thanks to Joy London for the pointer.)

Some key ideas put forth in Kingsley’s article:

  • Records Management Quarterly reported that 80 percent of the electronic data on a typical network has not been retrieved or used in 30 days; more than 50 percent has not been accessed in several months; and only 20 percent of network storage is active data, while the remaining 80 percent is inactive1.
  • Tony McKinley, in an article titled “Managing All Information Assets,2“ claims that 85 percent of documents filed are never retrieved, while 50 percent or more are duplicates.
  • A study by the multinational firm BAE Systems discovered that 80 percent of employees waste an average of 30 minutes per day retrieving information, while 60 percent are spending an hour or more duplicating the work of others.

His key argument is here:

The transfer of knowledge is, in fact, the essence of knowledge management. While many commentators have touted the productivity goals of KM, the true value of knowledge sharing will likely be found in its ability to leverage knowledge and enhance the value of professional services. Using knowledge management technologies to capture prior work product, exemplars and other materials developed by senior and skilled practitioners, law firm associates, legal assistants and non-attorneys can perform valuable client work and charge a rate commensurate with their enhanced performance. Accordingly, the application of leverage is simply recognition of the fact that billing rates increase with experience, and such experience can be gained through hands-on practice, training and the use of technology. As a result, computer systems are being enlisted as part of professional development to supplement mentoring programs and provide training opportunities for attorneys. In addition to such broad-based skill development, KM initiatives can focus knowledge transfer on specific practice areas, developing the skills of associates, legal assistants and non-lawyers to perform higher-level work through the development of forms, practice guides and document assembly.

Though I’m less interested in the mathematical formulas Kingsley puts forward (not because they’re not valuable, but because in my experience firms don’t trust them – there’s a reason these guys went to law school and not business school), it’s worth exploring the ways in which he attempts to quantify the ROI of a KM initiative.

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