Jordan Furlong has a better approach. In his post, Never mind the billables, he points out that we shouldn't be conflating the cost to the client with the cost to the firm. The client will pay what the client is willing to pay. Therefore, the best way for the firm to protect itself is to reduce its own cost. Then, as the client imposes more constraints on the amount the law firm may charge, the firm can maintain or increase its profit margin by carefully containing its own costs. This is where knowledge management can help. Here's how he describes this:
Every time you reduce your costs, you create an equivalent opportunity in your profit column, because the amount you spend to render a service to your clients has no effect on the value of that service to the client. (It never has.) Your client doesn’t care how much profit you make for yourself; the client only cares that you delivered excellent value in a cost-effective (to the client) manner. How you bill your services is between you and your client; how much it costs you to deliver those services has to be your number-one business priority.So let's take another look at knowledge management ROI in this context. Granted, for firms that can't think beyond the billable hour, this may seem premature. But for firms with foresight, separating (at least for planning purposes) client cost from firm cost should help open a competitive advantage.