Global firms can run analytics to compare KPIs (such as partner billings and recoveries) across divisions and countries, including cross-referencing by GDP and currency to compare ‘apples with apples’. Firms can also find out how they benchmark against their peers and hone in on areas for improvement.
Is the next generation of big law, big data?
What data law firms should be analysing and how often they can use it to drive their own disruption agenda
Every day, the data assets available to law firms become larger and more complex. Yet many firms are barely scratching the surface when it comes to utilising this information effectively. What data should law firms be analysing and how can they use it to get on the front foot and drive their own disruption agenda?
Internal data: unlock value, unlock profit
Law firms create and store massive amounts of information in the form of client files, corporate networks, archives and timesheets and billing systems. This data can be mined to improve efficiency, allowing firms to focus on the true costs of engagements and enhance gross margin and overall profitability.
Four ways you can unlock your internal data assets:
Data can be mined to help identify claims leakage, understand the true cost of sales, find overhead under-recoveries and flag unbilled expenses. Text analytics can also help make sense of verbose timesheet comments in order to better analyse which activities are eating up time for lawyers and paralegals.
Analysing a company’s entire transactional payroll data using tailored employment taxes tests can reveal any anomalies in transactional payroll, general ledger and accounts payable data. Data mining can also identify under and over payment of superannuation guarantees, termination payments, payroll tax and other employment tax risk areas. Complemented with employment data, forensic tests can also help identify fraud, duplicate payments and other unusual transactions.
Examining historical billing information via price elasticity modelling can help determine which clients are more price-sensitive. Using this information, firms can become far more granular in how they price their work – rather than simply putting charge out rates up by 5% each year. This will help keep clients happy while still allowing the firm to charge as much as the market will stand.
External data ecosystems: unlock insights, unlock connections
Whatever the area of law, analytics can help legal professionals draw insights and make connections. As the volume and complexity of judgements increase, rulings, precedents and interpretations of legislature all create more data that can be mined for hidden facts and insights to help win legal arguments.
It is now possible to search every ruling made by a particular judge to identify what influences their decisions – and the probability of particular settlement times. Overlay witness statements with social media posts and media reports and inconsistencies emerge.
At the same time, technology-assisted reviews are revolutionising discovery, reducing the cost of litigation. Analysis of social networks can find connections and identify who’s emailing or talking to who. This allows lawyers to focus in on the most central people in the network and even identify people who are passing information outside the organisation.
Assumption-reduced financial modelling also brings in data from client systems to help calculate the reality of attributes. In court, this means less of the model can be argued against, as much of it will be based on factual data, not assumptions.
Blockchain changes the game
"Not only is big data changing the way law firms operate, one of its associated technologies has the potential to alter the law itself."
Blockchain maintains a growing list of data records that are hardened against tampering and revision because a whole network of computers must agree a transaction has taken place before it is recorded. Because blockchain can facilitate multi-person interactions without the need for any third party intermediary, banks are now racing to harness its power. Experts believe it could cut up to $20bn off transaction and infrastructure costs and transform the way the industry works by overhauling existing banking infrastructure, speeding settlements and streamlining stock exchanges. Potential blockchain applications range from storing client identities to handling cross-border payments, and clearing and settling bond or equity trades.
For law firms, blockchain has direct implications on how contractual relationships are formed and enforced. Early applications may include smart, self-executing contracts. Eventually, the technology is likely to fundamentally change how people and organisations contract for goods and services.
Three things traditional law firms should be doing now:
Every professional services organisation has a wealth of data generated internally. Analysing this data will help the organisation identify areas for improvement and increase efficiency and profit.
2. Harness the power of unstructured data analytics to identify inconsistencies across disparate data
Unstructured data analytics can help identify patterns or inconsistencies across a large volume of disparate data sources, including articles, emails, witness statements and previous judgements.
New technologies are changing the way professional services organisations provide their services. Being informed and keeping up to date with changes in technology is critical to staying relevant in a world disrupted by innovation.
Recommendations are subject to privacy law, any confidentiality obligations and contractual provisions around the data in question.