Last week at I attended LawNet, one of the leading legal technology conferences. I had a an “aha” moment about knowledge management and return on investment. 

A recurring KM question is return on investment (ROI). I have always been a fan of demonstrating the benefit of KM in quantitative terms. The “aha” moment occurred in a “peer to peer” meeting of large law firms consisting of 30+ CIOs and other senior tech managers. I posed a question to the group: how many had been asked by law firm management to justify tech investments with ROI? Not a single hand went up. Why, I thought, is it that firms invest heavily in tech without asking about the ROI yet want to prove the value of KM, even the expenditure is relatively small?

I have no answer. It reminded me that firms spend a lot on marketing, a discipline (in law firms) of roughly the same vintage as KM. I have spoken to marketing professionals at many firms and my sense is that few analyze their return on marketing dollars. In fact, I am not sure how many firms even rigorously track lead generation and new client acquisition that stem from planned marketing. One CIO with whom I spoke at LawNet told me that his firm regularly spends hundreds of thousands of dollars on marketing events and no one ever asks what the return is. Separately, my sense is that many firms open new offices with nary a thought about ROI.

In a prior post (Applying Solid Business Metrics to KM and Other Decisions) I argued that firms should be consistent in their decision making process. My experience at LawNet only emphasizes this. A firm that quantifies all its decision should apply the same standard to KM. But a firm that does not – and I suspect this includes most – should not apply one standard to KM while it applies a different one to all other investments.

For firms that do not measure ROI for other investments, I think they need to decide whether they want to do KM or not. It’s that simple. Yes it will cost money. Yes there will be benefits. Yes quantifying the benefit is hard. But that is true for most decisions. The lawyer-decision-makers at large firms need to decide how they want to practice and what will keep them competitive.

I happen to think KM makes practice better (for lawyers and their clients) and makes a firm more competitive. But if law firm managers do not believe this, they should just say so rather than couch the discussion in terms of ROI.