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How to measure a law department’s investments in knowledge

An article in the Economist, Aug. 4, 2007 at 48, discusses efforts by accountants to count the value of intangible investments in the business sector. How might law departments quantify and describe numerically their initiatives to increase the availability of knowledge?

The most obvious tally is budget and hours devoted to training and professional development (See my post of May 24, 2007 on law firms providing CLE training.).

Next, expenditures – in time and hours – on knowledge management could be added up, such as for the development of a forms library, licensure of a document management system, client training, development of standard document templates, or document assembly applications.

Law-department intranets and the volume of their content and frequency of use could provide another quantifiable aspect of knowledge management (See my posts of March 1, 2007 #3 about Honeywell’s legal intranet; and March 13, 2007 on mini-intranet sites.).

Departments might include statistics about the experience of their lawyers, reasoning that departments with wise veterans pay more for them than departments pay jejune lawyers, and that investment in savvy should pay off.

High client-satisfaction marks on “knowledge of the law” manifest a law department’s efforts to build and manage knowledge. They also contribute to a quantified picture of knowledge management.

Dollars spent on legal research companies are another component of a knowledge management index (See my posts of Sept. 27, 2005 on legal research expenditures; and Sept. 10, 2005 on indices.).

A general counsel could combine these measures, perhaps weight them according to their value and reliability, and create an index of knowledge management activities.