How Data Analytics Helps Inform Better Law Firm Decision Making
Authors: Kaizen Analytix LLC
According to the latest estimates, 328.77 million terabytes of data are produced each day. However, law firms represent a segment that hasn’t fully embraced the idea of incorporating data into the practice of law.
A recent Bloomberg Law report indicated only one-quarter of attorneys reported that their organizations currently have data-focused staff—leaving a majority of legal organizations that don’t. Unlike the rest of Corporate America, leveraging data analytics for better business decision-making is still an idea in its infancy within the legal industry. According to Bloomberg, organizations, surprisingly, don’t believe there’s a need for data expertise. This not only explains their hesitancy, but also doesn’t make sense given how data-centric society has become.
Technology—especially data analytics—can help law firms weather the new challenges they face, among them rising operational costs, maintaining profitability in a slow market, a shortage of new attorneys, and the ongoing retention of existing staff.
It has been increasingly harder for law firms to avoid technology’s advancement. In fact, Gartner expects spending on legal technology to grow threefold by 2025. In fact, The International Legal Technology Association (ILTA) is focusing its efforts to bring data to the legal industry and help organizations integrate it into the practice of law.
With an unpredictable economy for the foreseeable future, law firms will be continuing to re-evaluate their needs. However, they should be open to incorporating data analytics to give them an advantage in terms of growing and prospering in a changing marketplace.
No Data-Focused Staff. No Problem.
Law firms don’t need internal data-focused staff to obtain the metrics to make informed, data-driven decisions. Partnering with a data-analytics provider with experience in the legal industry can help firms improve visibility into the key performance metrics that matter to executive leadership, such as performance (by staff, segments/legal disciplines, partner firms, etc.); case levels; spend and budget; litigation expenses; flat-fee efficiency; and case duration—to name a few.
Everyone is getting on the digital bandwagon within the legal ecosystem, from clients to courts to expert witnesses. It’s time for law firms to get on board and learn to use that information more strategically to make better decisions—where they can make changes, boost productivity, or optimize operations in order to run more lean and mean.
There are a number of data-analytics solution providers in the marketplace today. However, the most innovative vendors with deep legal expertise are able to seamlessly pull together multiple data sources—with all different types of information—into one common view through configurable, custom-built dashboards. In many instances, the dashboards can be fully integrated with existing legal tracking systems (e.g. Legal Tracker, RISKTRAC, etc.) and/or gain access to aggregated data from other law firms worldwide to provide even deeper, more valuable and insightful analytics on a variety of legal matters
Law firms that incorporate data analytics into their operations can expect some of the following benefits:
● Faster, more informed decisions enabled by insights accessible on demand;
● Time-savings through the automation of manual processes;
● Creation of new value by freeing up team members to focus on higher priority activities;
● Easy-to-understand and up-to-date metric summaries for key stakeholders and executive leadership that are accessible in real time;
● Consistent status reports on a flexible schedule populated with current data; and
● Consolidation of data sources into one view to see the full story.
Law firms not only get valuable insight into their operations, but also the data behind it.
Data Security Is a High Priority
More and more law firms have become targets for cybercriminals this past year considering the personal and confidential client information they possess. A recent trend report shows 27 percent of law firms experienced a security breach in 2022 alone, spanning more than 100 law firms in more than 17 states.
Data security is paramount when engaging any data-analytics provider. The legal industry is very regulated, with a lot checks and balances, so security is beyond key. It’s got to be rock solid not only in terms of maintaining compliance, but also protecting law firms’ integrity and reputations.
Data-Analytics Questions Law Firms Should Ask
For some law firms, incorporating data analytics into business decision making can seem daunting—particularly for firms that are really not analytically sophisticated or technologically savvy. However, working with the right data-analytics partner can make the experience a pain-free success.
Here are the top questions law firm leaders should answer before starting their data-analytics journey:
- What decisions should we be making based on data and facts instead of relying on a “gut-feel”?
- If we had a very clear, highly accurate, and more real-time view of our operations, how much more efficient would we be (or how much faster would we be able to move)?
- How much additional profit could we drive for the firm with more data-driven insights into all aspects of our operations such as associate utilization and performance, dimensions of matters, attributes of the best cases, and forecasting of case duration and spend?
- How could we take advantage of the proven data and analytics technologies and approaches that have been successfully used by other law firms and/or pioneered in other industries?
It’s impossible to look into a crystal ball to see what the rest of the year may bring. Inflation is still not under control. Remote work continues. And, clients expect more services. Law firms cannot control any of these economic levers. However, firms can control how they plan and manage these marketplace impacts with accessible, easy-to-understand, real-time data that informs smarter business strategies and tactics.
Is your law firm using data analytics for better decision making?
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