What Is Legal Analytics and How You Can Use It to Benefit Your Law FirmBusiness Advice & Research
Table of Contents
- What Is Legal Analytics?
- What Kind of Data Do Legal Analytics Tools Analyze?
- How Does Your Law Firm Benefit from Legal Analytics?
- The Takeaway
Data drives business decisions in every industry in the world. Data also empowers discoveries in various fields, such as medicine, biotechnology, manufacturing, and even insurance or law. Access to data has sped up many business operations and processes, and data science and machine learning opened up a whole new world of possibilities.
As a legal professional, you have probably already had a chance to experience the importance of data in law practice. Whether in digital or some other formats, information is absolutely essential for lawyers, and legal analytics tools have made it more accessible than ever.
In December of 2019, ALM Intelligence and LexisNexis surveyed 163 large law firm professionals about their use of legal analytics. The results show that 90% agree that legal analytics make them more efficient and effective legal practitioners. They also found that 70% of these firms already use legal analytics tools in their everyday operations.
You may have already heard about or used Lex Machina, Premonition, Casetext, or LawLytics, to name just a few of the tools out there. There are plenty of legal analytics tools in the market, and your administrative team shouldn’t have too much trouble finding the best solution for your business.
If you still didn’t have a chance to explore the benefits of legal analytics, here’s a brief introduction to the field that can help you evaluate the advantages it could bring your firm.
What Is Legal Analytics?
Legal analytics includes collecting data, analyzing it, and harnessing its power to benefit your clients and law practice. Maybe you’re thinking: “why make a fuss about it? Legal analytics has been around for ages now.” You are right, of course, because legal analytics is not something new we invented just yesterday.
Lawyers used to store multiple client files in the stuffed drawers of their office cabinets and pulled them out when they needed to make an informed decision about a new case. They would also go through pages and pages of legal publications and trial reports to put their new case into perspective they could analyze.
That process lasted for hours, sometimes even days, if the case was particularly complicated. It was effective, but it wasn’t efficient enough.
Artificial intelligence (AI) and machine learning brought a revolution to the world of legal analytics and simplified the process as it did with many manual processes we used to have. Legal professionals now use analytics tools to compile and analyze massive amounts of data, like court records, historical trial data, and their own collected information.
That empowers lawyers to evaluate new cases before accepting them, streamline workflows, and create better strategies. Legal analytics tools save lawyers a lot of time, making them more productive and their practice more efficient and profitable. The tools also provide invaluable information on opposing counsel, giving lawyers a competitive advantage.
What Kind of Data Do Legal Analytics Tools Analyze?
Legal analytics tools process vast amounts of data to help lawyers be more productive and make data-driven decisions. The result is valuable insights lawyers can use to assess new cases, potential outcomes, settlement amounts, financial gains, or billable hours they’d need to put in for each client.
We can divide the data that analytics tools gather and process into three major categories:
- Legal industry and litigation data sets
- Law practice business data
- Client data
Legal industry and litigation data sets make up a significant portion of everything collected and analyzed. Tools compile historical data on what kind of lawsuits end with settlements and which ones reach the courtroom, judge, and jury. You’d get an analysis of cases outcomes and a possible prediction of how your new case could end.
Knowing the usual settlement amount or how the judge or jury would handle the case could help you advise your client if they should settle the case or proceed to trial. It is also good to know how the process would benefit from an expert witness who would testify in your client’s favor.
If you are the one being sued, you’d probably like to obtain all available information about legal malpractice settlements and the best course of action for your case.
Law practice business data is the information about your business operations and your activities as a lawyer. It shows your firm’s litigation history, appeals rates, the number of cases you handled, and billing history. Suppose you have employees and plan to continue hiring. In that case, your legal analytics tool could provide you with information about the current workload and payroll and allow you to make future growth projections.
Client data rounds up all the data you have on former, current, and prospective clients who requested a consultation with your firm. Analyzing client information, such as their online information collected from your website, the cases you worked on, outcomes, and your billing could help decide how to handle future clients.
If your company offers services in multiple practice areas, analyzing client data could help determine which area is more profitable. Focusing on practice areas that bring more financial gain for your firm would be a wise business decision.
Data is a potent tool when you know how to use it, and using the right analytics tool for your law firm can help you utilize it to its full potential. Beware that the data you collect is your responsibility, and you should make sure to protect it from any outside dangers, such as cyberattacks or data breaches.
How Does Your Law Firm Benefit from Legal Analytics?
Legal analytics and reporting tools allow you to leverage the power of data and pull reports that would help you manage risks and make better business decisions. Data can help you answer many questions and make better predictions in many aspects of your business. We will list a few ways your firm can benefit from legal analytics:
Streamlining eDiscovery and empowering better business decision-making
eDiscovery or electronic Discovery is the initial part of every litigation process when involved parties exchange evidence, relevant records, and information related to the case in digital format. The Discovery process used to be a time-consuming endeavor because all documents were collected and distributed in physical form. Technology brought a much-needed revolution to this part of the legal industry, transforming Discovery into eDiscovery.
Since lawyers now have tools to collect and analyze data, the eDiscovery process has become more streamlined and efficient. The tools analyze patterns in client data and help lawyers prepare their strategies for each process. A few types of analytics help streamline eDiscovery: structural, conceptual, and predictive analytics.
Structural analytics organize and streamline data sets. Conceptual analytics discovers relationships between documents and binds them based on their type and overall sentiment. As the name suggests, predictive analytics predicts what documents would be the most relevant to the case.
Having all this information available and properly classified empowers lawyers to make initial predictions about a case, even though they usually choose not to share them with the client. Analytics can also give predictions about certain motion outcomes or the possibility of winning a case in trial and simplify deciding whether to settle the matter before it reaches the courtroom.
Analyzing historical data to assess risk better
If your long-term client got sued, you’d probably have to take the case because you wouldn’t want to jeopardize your relationship with the client. Analytics tools could provide you with the input you need to create a strategy and approach the case in the best possible way. They will also allow you to make predictions about the process outcome.
If, however, a new client approaches you with an idea to press charges against someone and requests legal representation, analytics will allow you to assess the risk you would need to take on and decide if the case is worth your time. If it would require too much of your time and resources and the outcome could be less than satisfactory, you might not want to engage.
Deciding what cases not to take can be even more important than deciding which ones to accept. A drawn-out process that lasts forever ends up draining your energy and piling up numerous billable hours for both you and your team.
Improving legal research and boosting productivity
Imagine if you’d have to Google everything you need for a case, read a bunch of unnecessary articles online, and flip through pages and pages of legal literature. It’s a good thing you don’t have to do that anymore. The research process is so much easier and more efficient when you have all the relevant data in one place.
Since analytics tools sort the data in proper groups, all you have to do is know where to look for it. Of course, you’d still need to work with your client, listen to them carefully and set adequate expectations.
Better budgeting and financial management
Data analytics and reporting tools allow you to pull financial and billing reports that can help you budget for the next quarter or fiscal year. If you need to cut costs but are unsure which ones, instruct your financial department to pull these reports and analyze them to predict future spending.
You can also pull information about employee salaries and the billable hours they put in if you need to perform any additional analysis. These reports can also assist with making future hiring plans because you can learn how much each employee costs you and if you have the budget for expanding your team. If your budget is limited, you can consider hiring an outside counsel for a specific case.
Hiring more people won’t help you much if your practice isn’t profitable. You will need to make some other changes, too, and analytics can help figure out which ones.
Improving marketing campaigns outcome to attract new clients
Even though word of mouth is still the best promotion a lawyer can get, a good investment in marketing campaigns always pays off. Analytics is critical in marketing, and learning about what works in a legal marketing campaign would help you allocate funds to better use.
For example, analytics can help you identify an “ideal” client for your firm, where to find them, and what marketing channels you should use to reach them. If you focus your efforts on capturing those ideal clients, your firm should be able to channel new business without overspending marketing resources. An adequately focused marketing campaign can significantly increase your firm’s profitability.
Legal analytics is a field in the making, and there are still many improvements to implement and many stumbling blocks to overcome. At the same time, we can’t deny that it has revolutionized the legal world, starting from law schools to law firms and litigation practices.
You should, however, be careful when using legal analytics predictions when promising things and certain outcomes to your clients. If you don’t live up to their expectations and your promises, they may decide to file a legal malpractice claim against your firm.
Carrying legal professional liability insurance is another one of the best practices for lawyers. Your legal malpractice insurance policy would kick in to help you defend the claim in case of any unintentional errors you might have committed when handling one of your client’s cases.
If you still don’t have a legal professional liability insurance policy in place, sign up to Embroker’s digital platform and get started by requesting your online quote now.
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