You don’t have to be a big law firm to generate ‘big data’. And you don’t have to be one to use it effectively either. In this blog, I look at the steps any firm of any size can take to use data analysis to improve its decision-making and performance.
Law firms of every size are awash with data. It’s generated by the finance department, CRM software, time-recording systems, case management software, HR… the list goes on. It comes in thick and fast from all directions in a variety of formats.
One thing all firms have in common is that they are aware that they should be doing more with their data. They know that it contains vital hidden information that can give it an edge over its competitors.
The questions most firms ask are: How do we do it and where do we start?
Here are six steps every law firm can take to start using their data effectively.
1. Don’t start with the data, start with a question
Data in itself is meaningless. It is nothing more than raw material. As a recent article in Wired put it: “Big data has limited value if not paired with its younger and more intelligent sibling, context. Data and knowledge are not the same things. Contextualisation is crucial in transforming senseless data into real information – information that can be used as actionable insights that enable intelligent corporate decision-making.”
This begs the question: how do you give context to your data?
The starting point is to ask yourself what problems you are seeking to solve or what questions you would like answered? You may, for example, want to know if you are charging enough or whether less profitable areas of the practice really do bring new clients into the firm as you suspect.
The questions you ask will be driven by an understanding of where your firm currently stands and where you want it to be. By framing a precise question, you have a starting point for your data analysis.
2. Work out if you have the data you need
Most firms find that they are already collecting the data they require or, at least have the capacity to do so. A big mistake is to splash out on a shiny new software programme promising all sorts of bells and whistles when the information you need may already be under your nose.
It may simply be a case of tidying up or reformatting what you already have or adding to it with external data. Part of this process might involve bringing in an external consultant to assist you, particularly if you don’t have an abundance of in-house resources.
3. Analyse the data properly
It’s one thing collecting the data you need, using it properly and working out what it means is another.
As Tim Harford, author of The Undercover Economist put it in an article in the Financial Times: “Big data does not solve the problem that has obsessed statisticians and scientists for centuries: the problem of insight, of inferring what is going on, and figuring out how we might intervene to change a system for the better. Harford quotes Professor David Hand of Imperial College London: “We have a new resource here but nobody wants ‘data’. What they want are the answers.”
In the context of law firms, it may take a number of people with insight into the business to gain a full understanding of what the data is revealing. Meredith Slawe, a partner at US law firm Akin Gump that uses data analysis extensively, says: “I am all for robust data, but to maximize its effectiveness, I think it is best paired with the knowledge and insights of lawyers, marketing and business development personnel, and/or financial managers. It is when you combine rich data and thoughtful people that accurate and fully developed information emerges.”
4. Present it in a way that is easy to understand
No matter how earth-shattering your data analysis may be, it will fail to make an impact if it is not presented properly. Lawyers and the people who manage law firms are busy people and they need to be able to pick up the key findings quickly.
Dr Stephanie Evergreen, the author of Presenting Data Effectively: Communicating Your Findings for Maximum Impact says: “I think the big issue is we often forget how hard it is to be a consumer of data. It’s great that everything has become so data-driven, but I think we have so much of it that we have what I have been calling ‘the burden of knowledge’.”
Data can be presented in any number of ways and much will depend on the information that is being put across. Visual representations in the form of graphics, images and heat maps along with the way the written word is ordered and presented can make a real difference.
It is vital not to underestimate the importance of the way in which your findings are communicated, especially to sceptical people within the firm.
5. Generate a data culture
Once a firm dips its toe in the water and sees how useful data analysis can be, it usually wants to delve deeper.
Hopefully, its first foray will encourage other stakeholders of the value of data analysis, but this isn’t always the case. In my experience, it is important to foster a culture that supports the use of data. This may mean bringing in new people, software and processes but that in itself is unlikely to be the enough. The firm’s management must lead from the front by emphasising the importance of data analysis to the way the firm is run. It should not be seen as just an IT project – the use and benefits should be seen as a ‘whole firm’ activity.
6. Expand your horizons
AI is the legal technology buzzword of the moment and for good reason. It is already being embraced by several law firms for client matters such as litigation disclosure, legal research and document assembly.
Where it has been slower to take off is on the practice management side, but this is changing. Last year, for example, global law firm DLA Piper won a Legal Marketing Association award for the predictive analytics model it built with an external consultant. The firm’s marketing team uses it to predict which clients are at risk of leaving the firm or reducing the instructions it gives it, as well as understand what they can do to reverse the trend.
The successful firms of the future will be the ones that embrace data analysis and new technologies to improve not just the service they offer to clients, but the way their own business is run.
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