Digital White Papers

I L T A W H I T E P A P E R | K N O W L E D G E M A N A G E M E N T & M A R K E T I N G T E C H N O L O G Y 22 many legal technologies in the market today are designed specifically to reduce the time spent to produce legal work or limit the need to involve outside counsel. As such, and very generally speaking, the pricing headache has two strands: 1) legal technology projects focused on efficiency gains within the practice and 2) on-demand solutions built for clients. Projects focused on efficiency gains cannot be reconciled with traditional law firm economics; the project planning should address this at the outset. Efficiency gains mean a corresponding reduction in time spent producing the work, which has two effects for practising lawyers who are the technology's target users: a reduction in billable hours and in revenue. Typically, law firms will set performance targets for their lawyers based on the amount of billable hours those lawyers produce, and meeting or exceeding those targets generally leads to annual bonuses. Any efficiency gained through the use of legal technology will have a corresponding negative impact on the billable hours of the lawyers using the technology; address this early or you will lose users. Similarly, can the practice afford the drop in revenue? How will it adequately replace it? The implications for the practice should be carefully considered as part of the project planning, and solutions addressed with the practice. Some solutions include matter-mapping and legal project management, together with fixed fees and alternative compensation models (topics worthy of discussion, but beyond the scope of this article). On-demand solutions using legal technology platforms are difficult to price, and several factors must be considered. Licensing and maintenance fees are one factor, and providers will differ in how these fees are calculated. However, whatever the provider's approach, this amount must be included in the proposed price presented to a client. The tricky part to pricing is the value placed on the firm's IP. The IP, and the volume of it the client may consume, the maintenance and upkeep of the IP, and the risk involved in the client using it without direct supervision, all should be factored into the price. Also consider the time spent on training and drafting training materials for the client, along with ongoing support. Finally, regarding the revenue the solution will generate, carefully consider which practice groups and business units to credit with that revenue, and how that credit will be proportionately distributed. While the IP, revenue and client, all belong to the firm, individual practice groups and partners have a legitimate proprietary interest in the IP and client. So, ensuring they share in the revenue is crucial. Communication Regardless of whether a project focuses on internal efficiency or delivers a client-facing solution, take time to carefully craft a communications plan. An obvious part of the plan will be all the bells and whistles coming with the new technology, and the natural inclination will be to focus solely on those. Resist that temptation. No legal technology is a "silver bullet"; all come with some limitations or drawbacks. Investigate these limitations and drawbacks thoroughly, and appropriately incorporate them into your communications plan. The goal should be a communications plan which, with a considered amount of fanfare, explains the benefits of implementing the technology and how those benefits outweigh any limitation or drawback, but which is also up front and honest about them. It sounds obvious, but do not over promise on what is achievable through the new legal technology. This happens far too often, and is generally as a result of a cursory knowledge of the functional

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