Issue link: https://epubs.iltanet.org/i/30285
BRINGING IT AND KM VALUE TO AFAS will not have a high level of detail, so monitoring can be kept at a simple level. Lawyers in charge can look at the financial metrics and weigh those against their estimates to determine how far into the work they are. Budgets are monitored for two reasons: first, to maintain profitability of work and make sure AFAs are financially viable for a firm; and second, to catch any surprises and share this information with the client. Even in a purely fixed-fee deal, identifying out-of- scope events early will make adjustments to AFAs easier to accomplish. This will also help clients manage their cash flow and internal budgets against the work. A suggested best practice is to have ongoing conversations with clients about fees. Clients appreciate knowing things are on track so they don’t have to worry about surprises or problems. This is simply Client Service 101. behavior should not be expected to change “A lawyer’s suit a technology solution” dramatically to Review and Evaluate At the end of a matter, some level of review is advisable. If firms are going to secure and manage AFAs in a profitable manner, they will need to learn from them and improve their performance on them over time. Well-executed AFAs can become templates for future AFAs. THE ROLE OF IT AND KM Using Budget-Building Tools There are a number of budget-building and AFA tools on the market now. These include: Redwood Analytics Planning Application, with a Profitability Module, from LexisNexis; Thomson Reuters ENGAGE; Expert Matter Planning from Aderant; BudgetManager from Randy Steere LLC; and IntelliStat Financial Planning from DataFusion. Of course, the ever-popular Excel spreadsheet is still widely used as well. Each of these products has its strengths and weaknesses. They are all dependent on the ability of a lawyer to build a budget and the existence of budget templates. Budget templates — or even better, template building blocks — are hard to come by. This is one point where IT and KM can provide value. A firm needs the right tools and the right knowledge to put together useful templates. A word of caution, though: a lawyer’s behavior should not be expected to change dramatically to suit a technology solution. It has been my experience that the more effort required of lawyers on non-billable tasks for any project, the less success a firm will have with the project. This is important to keep in mind when evaluating systems and processes for building budgets. Most of the tools mentioned above can also assist in determining the profitability of a given AFA. This may sound like a basic and rudimentary activity, but law firms have not traditionally focused on profitability. They focus, instead, on hours and revenue. Fixed-fee deals and other AFAs do not follow the same logic. Therefore, budget-building must include www.iltanet.org Financial Management 33