In late October, I attended the 12th Annual Knowledge Management in the Legal Profession conference. I have been attending this conference on and off since its inception, and this was absolutely the best so far. Which is really interesting: as Joshua Fireman, co-chair, noted “We still have things to talk about!”
One of those things, if not the biggest thing, is the continuing changing landscape of legal technology and how law firms can and should be using it. In particular, the emergence of “big data” remains a promise and a worry.
Big Data – Problems and Products
Intro to Legal Analytics
Mona Datt recently published a Slaw article on legal analytics, which provides great background. She emphasizes that legal analytics “gives you information about data that exists in a particular context (like the law) and that its information you can use for something.”
Put another way, it’s not the data – big or little – that’s a concern; it’s what it will show and what we can do with it.
Law Firm Systems and Big Data
Relative to, say, a government or a multinational corporation, all but the very largest law firms have only small amounts of big data. Nonetheless, the data we do have is high-value. It’s the law firms that paper massive mergers and defence class actions. The individual firm collections of contracts alone are treasure troves of brilliant legal thinking and writing. Add to that the metadata of those documents, then expand further beyond into other internal firm assets from accounting and HR, and more, and you’ve got access to historical data that reaches across clients, trends, industries, markets, and time.
There are problems, though. The main one is that our systems, typically, don’t “speak” to each other. Accounting data can only interact with document management systems through a third-party tool, for example. These structural barriers make deep internal analysis all but impossible.
Lawyers and Big Data
Beyond these structural and technological barriers is the bigger issue.
Even as clients push for more transparent views into pricing and billing, law firms are sluggish in responding, and are certainly (there are exceptions, of course) not being proactive in developing alternative fee arrangements.
I think this is because, generally, lawyers have a sense of dread when any sort of external spotlight is turned on them and their work. They do not want to expose any possible weaknesses of lack of expertise. Change- and technology-averse, lawyers are almost never willing to be on the bleeding edge.
This means any proponent of big data analytics will likely face an uphill battle.
What can convince the Law Firms?
The idea is that law firms should be able to mine and cross-reference their own data (legal and risk documents, accounting, records, library – including competitive intelligence subscriptions, operations, HR, etc.). But what do they do with it?
I believe we can use big data analytics within law firms for at least two purposes, with the overall strategy begin to increase client “stickiness,” or loyalty. We want our clients to look at our services and products and say “we can never leave you.”
Legal and Industry Trend Analysis to Produce “General” Knowledge Asset
One would be to glean general insights into legal and industry trends. This would enable our firms to be more proactive in client service. One simple productized outcome of this approach would be to produce forward-looking client and industry alerts, rather than reactive, just-in-time services. Another would be, of course, to develop better fee predictions, and mange phases of any client matter more closely and productively.
Client-Specific Knowledge Assets and Service Delivery
A second approach – and, I think, the better one – is to mine the same data for client-specific analysis. What are our clients typically asking for, and when? Are the cyclical trends? If we can identify common asks, we can prepare better for these clients, and, again, productize our knowledge assets for their specific needs.
Here’s another example – I’ve always wondered about the disconnect between law firms and clients when it comes to the clients’ risk tolerance. As lawyers, we tend to want to “cover” all the bases, providing clients with 99% accuracy on any issue. But that costs a lot. Lawyers don’t, for whatever reasons, hold regular conversations with clients on their risk appetite on particular issues, industry events, or legal trends. Could we dump all a client’s historical data into a cauldron, apply sentiment analysis, and come up with solid information on that client’s risk appetite? Then, combine that with fee tolerance data (which clients pay in full? On time? Which don’s and why?) and you’ve got an advanced, unique framework for managing both client needs and the firm’s own expectations.
The Way Forward
Lawyers aren’t going to suddenly start asking for legal analytics. But we’re going to keep hearing about big data. The first firms to create a product or deliver a service in a client-centric way based on their data analysis will have found the secret sauce to client retention.