Big data, big disruption: what should law firms do with their data assets?

Every day, the data available to law firms become larger and more complex. Yet many firms are barely scratching the surface when it comes to using 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?

Three things traditional law firms should be doing now 

1. Utilise your internal data to improve efficiency and profit – 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 – 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.
3. Keeping up to date with technology– 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.

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 timesheet and billing systems. This data can be mined to improve efficiency, allowing firms to focus on the true costs of engagements and enhance profitability.

Four ways you can unlock your internal data assets:

1. Benchmarking: 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.
2. Cost recovery: 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.
3. Analysing employee data: analysing a company’s payroll data 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.
4. Revenue tracking: 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

As the volume and complexity of judgements increase, rulings and precedents 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.

Blockchain changes the game

Blockchain, with its capacity to facilitate multi-person interactions without the need for any third party intermediary, 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.

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.

*Recommendations are subject to privacy law, any confidentiality obligations and contractual provisions around the data in question.