No matter where you work, the practice of law is not just about the law—it’s also about competing as a business—whether that’s in a corporate setting or at a law firm. To win cases, justify your department’s budget, and attract more business—lawyers must bring both legal acumen and a keen business sense to the table. If law school was about learning to ‘think like a lawyer’, now is the time to also learn to think like you have an MBA.
Using historical performance data to make decisions about individual cases or legal operations is one of the fastest ways to build a business case for a legal practice. They offer a way for lawyers in any setting to gain a competitive advantage, both legally and in terms of business development.
Analytics in any legal practice
Case strategy: Hindsight may be 20/20, but with analytics—lawyers can extrapolate the lessons of the past to more accurately see the future. Should you fight a case or settle it as quickly as possible? Don’t guess at the answer—run the numbers to see what’s happened in the last 10, 20, or 100 similar cases. Data can inform your advice to clients about choice of venue, motions practice, and the success rate of opposing counsel.
Hiring and workload decisions: How long do lawyers stay in your practice? Why do they leave—and where do they go? If most of your existing staff are approaching your standard length of tenure, it might be time to implement an employee retention campaign or start looking for new personnel. You can also use data from your e-billing system to determine how your workload is distributed and whether any practice areas need additional support.
Legal operations: By pulling data from your matter management system, you can get an instantaneous ‘at a glance’ assessment of your progress on projects, business development, and individual matters. These visual dashboards and charts allow people to see how they are performing against timelines and budgets so they can instantly know whether they’re on track or falling behind with project completion, e-disclosure spend, and billing. Where do you have bottlenecks—and what resources do you need to clear them? Don’t wait for staff to complain—proactively find inefficiencies and explore ways to solve them.
Insights from corporate legal department data
Business decisions: Businesses expect that each department—including legal—will use data to improve its performance and justify its existence, personnel, and budget. Don’t try to tell your C-suite how well things are going—show them how you are adding value to the overall company and how you’re reducing or managing risks. Analytics offer a type of virtuous cycle. Not only will visual depictions of data help you sell your department’s benefits to management—but collecting that data will also spur you to improve your performance over time. According to studies from Gartner, “legal departments that are more analytically mature exhibit higher work quality, reduced litigation costs, and lower spending”.
Outside counsel selection: Are you choosing the right outside counsel for the right types of matters? Instead of relying on memory or intuition, use data from your previous matters to assess the performance of outside counsel on different types of issues. Moreover, you can also evaluate the firm’s spend rates, compliance with outside counsel guidelines, and any history of billing irregularities.
Helpful analytics for law firms
Competition for business: From crafting your pitch to selling your expertise in a specific practice area—analytics can help you compete with other firms by compiling hard data about your success. Don’t just tell prospective clients that you are the best intellectual property firm—show them that you’ve won more IP cases in your district than any other firm. Plus, if you use e-billing data to inform costs, you can offer a more attractive fixed-fee or alternative fee arrangement without decreasing your profitability.
Spend rate and efficiencies: Whether you’re working with an alternative fee arrangement or billing time directly to clients—sticking to your budget is critical to keeping everyone happy. By routinely collecting data and generating visual reports, everyone at the firm can see your rate of spend and evaluate it in comparison with your completion rate. You can also use e-billing and matter management data to identify inefficiencies and areas ripe for improvement.
Is your legal practice taking full advantage of its data through analytics? If not, now is the time to begin. Your initial effort doesn’t have to be complicated or expensive. Perhaps it is better to start small—establish some success—and grow into more complex evaluations over time. Look at the data you’re already collecting through your e-billing and matter management systems and start asking questions. Use that data to generate a few simple reports and adjust your performance. As you evaluate the results, develop new questions, and track down the data to answer those questions—your analytics program will be off and running.