Lawyers are conservative by nature, and it often takes them longer to adopt new technologies, but 2016 promises to be a banner year for big data and the law. The benefits of big data analytics to discovery, litigation, client relations, and legal practice are too great for law firms to ignore.
Law firms often are slow to adopt big data strategies because senior partners don’t understand the value of big data analytics. In fact, many lawyers see big data as a threat rather than a valuable tool. At a recent COO & CFO Forum on big data at the Legal Executive Institute, Oz Benamram, Chief Knowledge Officer at White & Case, said on a panel: “Lawyers see big data like they see global warming. Some say it’s not happening, and others say the consequences will only be felt after I retire.”
However, law firms continue to collect volumes of information, and about 80 percent of that data is unstructured. Progressive law firms are finding new ways to mine information with big data, using analytics to identify which lawyers are top performers and which teams work best, as well as for improving client services and supporting case work.
Impact of Big Data on the Business of Law
Legal practice is a business like any other, and big data will play a larger role in assessing the business performance of law firms. In the past, billings and billable hours were the most common metrics used in order to gauge success and productivity. With big data, new criteria are being applied (e.g. win/loss ratios, lawyer performance by jurisdiction, time files remain active, lawyer efficiency, case costs). Using these various metrics, the practice can get a better idea of productivity, weak spots and strengths.
A market analysis of billable rates also provides a competitive baseline for law firms. Many practices are moving away from billable hours to alternative billing methods, and new factors and analytics need to be applied in order to understand where the law practice falls in the competitive landscape. Big data also can be valuable in performing “what if” scenarios in order to test new billing strategies or new areas of potential profit.
As with any other business, big data provides the tools to manage the practice more efficiently, from accounting to client trends and referrals to performance benchmarking. Big data can reveal patterns that highlight areas of productivity and areas that need attention.
Impact of Big Data on the Practice of Law
Big data also is having a tremendous impact on how firms practice law. Here are just a few examples:
Judiciary Profiles – There is no reason law firms can’t apply big data to the judiciary itself. By looking for behavior patterns, they can see trends, such as how specific judges are likely to rule or how specific types of cases are reviewed. They also can reveal other patterns, such as the impact of holidays on judicial decisions, how the jury composition affects different types of rulings, and whether stricter rulings come down at certain times of day.
For example, Lex Machina is a legal analytics company that mines litigation data looking for insights about judges, lawyers, patents and other points culled from intellectual property litigation material. It can be used to predict the likely outcome of an intellectual property case. Similarly, a California law firm, Dummit, Buchholz & Trapp, has been reported to be using a technology tool that applies analytics to tell the firm in 20 minutes whether or not a case is worth taking.
e-discovery – One of the most valuable applications for big data is e-discovery. Electronically stored information has changed litigation, and now complex data-mining techniques can be applied in order to uncover evidence. Big data can reduce the time and cost of preparing a case by simplifying data gathering and analysis of diverse data sources. And using big data techniques means e-discovery can scale to any size.
Regulatory Compliance – To maintain regulatory compliance, law firms can use big data to identify areas where clients are most likely to fail, such as omission of a specific form or maintaining a common practice that violates regulations. Using big data, law firms can provide guidance as to what to look for, and when they are audited or fined, they can use big data analytics to support an appeal.
In many ways, most law firms are in the knowledge business. Knowledge is being mined either to prove a point in litigation or to identify issues before they become legal issues. Most of that data is now stored in electronic form, and with the boom in data stores, email, and shared information, sifting through it has become more complex.
For example, the regulatory repercussions resulting from General Motors product defects or Volkswagen emissions tests didn’t happen overnight. A data trail led up to the revelation of the problem, and with the right big data analytics, those issues could have been discovered before it was too late.
Having access and control over more data gives law firms more authority. They have a better understanding of their own practice strengths, including the proof points to share with clients, and they have access to more powerful data insight for use in the boardroom and the courtroom. Your job is to work with those law firms to show them where they may be overlooking potential profits from big data.