Stuart Kay, the Knowledge Manager of Sydney-based Gilbert & Tobin has written a very good and thorough analysis of knowledge management called Cost, Value and ROI for Knowledge Management in Law Firms, which appears in the August 31st edition of LLRX.

Kay starts out by saying that “in a knowledge intensive industry like law, knowledge management is simply a critical component and an overhead cost of doing business.” But he then acknowledges that many law firm managers and partners will want “hard” metrics to support a KM program. After summarizing Kingsley Martin’s “Show Me the Money” – Measuring the Return on Knowledge Management in 15 Oct 02 LLRX, Kay sets out his own analysis of how best to measure the cost and value of KM. His analysis, particularly the cost and value financial models, are important reading for anyone interested in KM. He acknowledges that the assumptions driving his models can be tweaked to yield different outcomes, but the models present a very useful way to think about returns.

Consistent with his introduction, after laying out a detailed approach to analyzing the value of KM, including many impossible to quanityf benefits, Kay concludes that “it is important not to get lost in the minutiae of internal measures of cost… It is valuable for all the intangible benefits previously listed. The bottom line is that knowledge management enables us to be better, more effective, more productive lawyers, and to give better service to our clients.”