Skilful analysis of big data not only informs law firms’ decision-making, but can also add value for clients
In the legal profession, data used to mean – if the word was recognised at all – piles of paper client files stacked in cardboard boxes in dark, dank basements.
Now commercial law firms are increasingly grasping the concept of big data, not least as an opportunity to add value to clients in an evermore competitive legal services environment. But data experts warn they must be careful not to jump on to the bandwagon without first working out a strategy.
A 2014 report by Birmingham-based technology specialists C24 sounds a clear caution: “All too often legal firms enter into business intelligence projects because of the hype surrounding big data, rather than as a result of a true data requirement that has emerged within the organisation.”
The first step for law firms entering the data jungle, according to resource planning experts, is to collate the various sources and methods of collection across a practice. Those main routes include client communications, such as e-mails, telephone conversations, even social media interaction.
Other channels involve various technology applications, such as practice management systems. Assessing the wider market is also crucial, analysing trends with an eye trained on peaks and troughs in business activity and sector performance.
Law firms at the forefront of organising and analysing client data to enhance their services are those already handling highly commoditised areas of work. Practice areas around the public sectors and insurance companies are especially ripe for exploitation.
Indeed, one law firm targeting big-data use is national practice Weightmans, which specialises in both those fields. “We are increasingly looking at the data we hold to try to help clients understand things about their business they might not already be aware of,” says Stuart Whittle, the firm’s information systems and operations director.
A qualified solicitor, who has moved to focus exclusively on Weightmans’ IT efforts while remaining an equity partner, Mr Whittle highlights defendant personal injury actions, road traffic accident cases and employer liability claims as being ripe for data exploitation.
Practice areas around the public sectors and insurance companies are especially ripe for exploitation
“We assess trends over time by analysing the data,” he says. “We give insurance clients an indication of what is happening; what the trends are at the claims level. Where we have a large number of claims in relation to a specific client, we can say certain things appear to be happening.”
Providing visual representations of data is especially helpful. “For institutional clients with employment issues, we can show them where the hotspot trends are – in which areas they are being hit with claims in a higher volume than they might expect,” he says.
Likewise, web-based visual illustrations of data analysis can be used to demonstrate to property clients how long leases in a large portfolio have to run, as well as detailing renewal terms and break clauses.
“The clients may hold that data,” Mr Whittle says, “but this is an added-value way of playing it back to them in an easily understandable format. We are doing the work for them.”
Lawyers are quick to point out that clients’ needs vary and there can be no uniform approach to enhancing data. However, a growing theme from corporate clients is a desire to see greater predictability from their law firms around cost and outcomes.
“Law firms can look at their historic data on deal types for trends to establish that it should cost X pounds to deliver a certain type of transaction,” says Dan Wright, head of client service innovation at mid-tier commercial law firm Osborne Clarke.
With that data analysis behind them, he says, firms can take a much better informed view of resources required. “There will be greater definition around what we are going to do so clients can buy the service they want to buy. The more granularity you have about what you are going to do and how you are going to resource it – all of which comes from an analysis of historic numbers – you can put a figure to the client in terms of timings and costs,” says Mr Wright.
But dealing with big data is not a risk-free endeavour for law firms, with the main potential bear trap being “the cloud”. Belying its ethereal moniker, cloud computing is very much grounded in large servers, which are often situated in legally problematic jurisdictions.
“Law firms need to be careful when contracting with IT providers that they have provisions ensuring the data is not held in a jurisdiction the firm doesn’t know about,” cautions Kenneth Mullen, intellectual property and technology partner at London firm Withers.
The main issue is around the “private cloud” versus its “public” counterpart. Law firms should eschew the latter as the data could be held anywhere in the world, with the firm kept in the dark about the venue.
That could be a serious liability issue for law firms as data originally collected in the European Union cannot be transferred out of the EU under provisions of the Data Protection Directive. Likewise, data ending up with a cloud provider in the United States is technically subject to the US Patriot Act 2001. That legislation can pose difficulties for foreign clients with connections in which the US authorities have an investigative interest.
But despite jurisdictional caveats, large law firms clearly view big data as providing a competitive commercial edge over a growing band of rivals, not least outsourced legal process providers. As the C24 analysts reported: “It is a very exciting time for legal firms to capitalise on the data they already have and see what better business decisions they can take today for increased growth, efficiency and security.”