Leadership in the Law: The Role of Big Data in Law Practice

Big Data in its most basic form, then, refers to looking across different data sources to draw insights that may not be readily available to others. Another phrase for this is “predictive analytics.” The results can be startling. The mass retailer Target was called to task recently by a concerned father, upset that his teenage daughter received several coupons and advertisements promoting maternity wear and baby clothes. As it turns out, Target's automated analysis of frequent shopper purchases had not only predicted, based on a pattern of buying behavior, that the teenager was pregnant, it prompted a series of relevant promotions to be mailed to the teen.

The father apologized to Target after the incident caused his daughter to confess. The daughter's purchases weren't obvious markers, such as pregnancy tests or pre-natal vitamins, but they matched a pattern of similar purchases by other shoppers who ultimately ended up purchasing maternity wear and other more obvious indicators of pregnancy.

Data Mining and Your Firm

How can these data mining techniques be applied in a law firm setting? The uses are numerous, and relate to both the business side of the practice as well as legal services delivery.

Here are three examples that most law firms can embrace today, even without sophisticated tools or an army of quantitative analysts poring over spreadsheets.

1. Targeting

Many law firms use an unsophisticated approach to targeting prospective clients, known in industry parlance as “anyone who can afford us.” This is exacerbated since the economic downturn, as law firm leaders urge partners to chase every billable hour. The reality is that many pursuits are dilutive ' meaning that winning the work is not a wise economic decision. This can result from lowering rates to win work that might otherwise be lost to lower-cost competitors, or from taking on complex work for which the firm has minimal experience and the non-billable effort needed to get up to speed erodes profits. It may also mean that winning work from prospect A prevents us from working with a more lucrative prospect B, or perhaps the work ties up resources that are then unavailable for a more profitable engagement.

Savvy firms incorporate internal and external data points to stack rank their targets, focusing more on those where winning is more beneficial on a relative basis. The internal data sources include practice and matter profitability, resource availability, conflicts, experience and existing relationships. External data points include analyst reports reflecting growth industries, “share of wallet” reports suggesting which prospects are more or less likely to change law firms and market trends. The resulting score helps partners and their business development colleagues hone in on targets where success is more likely, and avoid targets where success comes at a much higher cost.

2. Content Marketing

This approach refers to the creation of an integrated mix of marketing tactics directed to specific clients in an effort to educate and inform them on relevant matters, and not merely to broadcast a general message about a law firm's capabilities to a wide swath of clients and potential clients. In its simplest form, it refers to “pushing” content to clients and prospects based on self-identified interests. In more advanced forms, marketers help lawyers craft content that is compelling for specific audiences, say a review of pending legislation to a specific industry niche. But more than that, it reflects sending the right type of content, in the right format, at the right time, to achieve maximum exposure.

Most law firms that publish client alerts employ software to manage e-mail subscriptions. In much the same way that television studios analyze viewer behavior to identify prime times for attracting an audience, these software packages can help marketers identify when to publish law firm content to achieve maximum views (by tracking who opens the e-mail) and engagement (by tracking who forwards the e-mail to others), and other characteristics, such as what length and tone produces the best result. It's hard enough to encourage lawyers to produce timely content, so it's critical to know, for example, that pushing this content at 9 p.m. on a Friday evening after the lawyer finally crosses the assignment off the to-do list will lead to far fewer views than waiting until Tuesday morning at 8 a.m.

There are additional techniques to combine event attendance, past engagement data, industry and geographical coding and other elements to increase the likelihood of providing the right type of content to readers who have not otherwise identified their interests.

Matter Budgeting

As we have written in this space previously, preparing proper matter budgets provides benefits to both clients, who increasingly value predictability as much as, if not more so than, hourly rates ' and to law firms, which are constantly challenged to improve profits and deploy resources efficiently. But a common lament from lawyers in every practice is that all matters are different, so a budget based even on a similar fact pattern will likely expose the firm to risk should the matter deviate course. Predictive analytics in the form of simple decision trees informed by past experience can go a long way toward informing matter budgets.

A decision tree is merely a nested series of decisions reflecting common scenarios. Experienced lawyers can easily draw a flow chart with key decision points, or points of diversion, where a matter will go one way or another. While fact patterns and parties and circumstances differ, many matters follow similar paths, or at least finite paths, allowing experienced lawyers to complete a decision tree with likely probabilities. This technique provides two immediate benefits: it confirms the lawyer's subject matter expertise in a way that a league table, deal list or detailed bio cannot; and it reduces the client's surprise as a matter runs its course.

Truly, no lawyer can predict with absolute precision how a matter will proceed, how long each stage may take and the corresponding costs for each stage. But experienced lawyers can better manage client expectations by advising the possible paths and even which paths are more likely based on the matter's particular characteristics.'

Conclusion

As with our opening scenario, any lawyer can recite the general elements of a legal matter and try to win an engagement by offering low rates, but only experienced lawyers incorporating big data and predictive analytics techniques can differentiate on factors far more substantial than price.

Big data. It's not just for big business anymore.

Timothy B. Corcoran, a member of this newsletter's Board of Editors, authors the Corcoran's Business of Law blog. He advises law firm leaders on strategy, business process improvement, legal project management and business development. Reach him at [email protected]. Phone: 609-557-7311.

The latest fad phrase in the legal trade press is “big data” and, as with many fad phrases, it means many things to many people and is a complete mystery to others. Let's break down what it means and why it matters to law firm leaders.

Big data refers to the synthesis of large data sets in order to draw insights and conclusions to gain a competitive edge. While there are new tools and techniques that ease the examination of larger and more complicated databases and even unstructured data, the concept is far from new. Lawyers have always employed big data techniques in their practices, though in the past we may have called this “experience.”

For example, a lawyer advising a client to settle a matter rather than litigate typically reaches this conclusion based on past exposure to a similar fact pattern, knowledge of how a specific jurisdiction or even a specific judge is likely to treat certain types of matters, familiarity with opposing counsel and the firm's litigation and trial tactics, and an understanding of past defendants' tolerance for the time, energy and cost of a protracted defense. The combined knowledge of these disparate data points provides this particular lawyer with certain insights that other lawyers may not be able to replicate, at least without much more effort.

Big Data in its most basic form, then, refers to looking across different data sources to draw insights that may not be readily available to others. Another phrase for this is “predictive analytics.” The results can be startling. The mass retailer Target was called to task recently by a concerned father, upset that his teenage daughter received several coupons and advertisements promoting maternity wear and baby clothes. As it turns out, Target's automated analysis of frequent shopper purchases had not only predicted, based on a pattern of buying behavior, that the teenager was pregnant, it prompted a series of relevant promotions to be mailed to the teen.

The father apologized to Target after the incident caused his daughter to confess. The daughter's purchases weren't obvious markers, such as pregnancy tests or pre-natal vitamins, but they matched a pattern of similar purchases by other shoppers who ultimately ended up purchasing maternity wear and other more obvious indicators of pregnancy.

Data Mining and Your Firm

How can these data mining techniques be applied in a law firm setting? The uses are numerous, and relate to both the business side of the practice as well as legal services delivery.

Here are three examples that most law firms can embrace today, even without sophisticated tools or an army of quantitative analysts poring over spreadsheets.

1. Targeting

Many law firms use an unsophisticated approach to targeting prospective clients, known in industry parlance as “anyone who can afford us.” This is exacerbated since the economic downturn, as law firm leaders urge partners to chase every billable hour. The reality is that many pursuits are dilutive ' meaning that winning the work is not a wise economic decision. This can result from lowering rates to win work that might otherwise be lost to lower-cost competitors, or from taking on complex work for which the firm has minimal experience and the non-billable effort needed to get up to speed erodes profits. It may also mean that winning work from prospect A prevents us from working with a more lucrative prospect B, or perhaps the work ties up resources that are then unavailable for a more profitable engagement.

Savvy firms incorporate internal and external data points to stack rank their targets, focusing more on those where winning is more beneficial on a relative basis. The internal data sources include practice and matter profitability, resource availability, conflicts, experience and existing relationships. External data points include analyst reports reflecting growth industries, “share of wallet” reports suggesting which prospects are more or less likely to change law firms and market trends. The resulting score helps partners and their business development colleagues hone in on targets where success is more likely, and avoid targets where success comes at a much higher cost.

2. Content Marketing

This approach refers to the creation of an integrated mix of marketing tactics directed to specific clients in an effort to educate and inform them on relevant matters, and not merely to broadcast a general message about a law firm's capabilities to a wide swath of clients and potential clients. In its simplest form, it refers to “pushing” content to clients and prospects based on self-identified interests. In more advanced forms, marketers help lawyers craft content that is compelling for specific audiences, say a review of pending legislation to a specific industry niche. But more than that, it reflects sending the right type of content, in the right format, at the right time, to achieve maximum exposure.

Most law firms that publish client alerts employ software to manage e-mail subscriptions. In much the same way that television studios analyze viewer behavior to identify prime times for attracting an audience, these software packages can help marketers identify when to publish law firm content to achieve maximum views (by tracking who opens the e-mail) and engagement (by tracking who forwards the e-mail to others), and other characteristics, such as what length and tone produces the best result. It's hard enough to encourage lawyers to produce timely content, so it's critical to know, for example, that pushing this content at 9 p.m. on a Friday evening after the lawyer finally crosses the assignment off the to-do list will lead to far fewer views than waiting until Tuesday morning at 8 a.m.

There are additional techniques to combine event attendance, past engagement data, industry and geographical coding and other elements to increase the likelihood of providing the right type of content to readers who have not otherwise identified their interests.

Matter Budgeting

As we have written in this space previously, preparing proper matter budgets provides benefits to both clients, who increasingly value predictability as much as, if not more so than, hourly rates ' and to law firms, which are constantly challenged to improve profits and deploy resources efficiently. But a common lament from lawyers in every practice is that all matters are different, so a budget based even on a similar fact pattern will likely expose the firm to risk should the matter deviate course. Predictive analytics in the form of simple decision trees informed by past experience can go a long way toward informing matter budgets.

A decision tree is merely a nested series of decisions reflecting common scenarios. Experienced lawyers can easily draw a flow chart with key decision points, or points of diversion, where a matter will go one way or another. While fact patterns and parties and circumstances differ, many matters follow similar paths, or at least finite paths, allowing experienced lawyers to complete a decision tree with likely probabilities. This technique provides two immediate benefits: it confirms the lawyer's subject matter expertise in a way that a league table, deal list or detailed bio cannot; and it reduces the client's surprise as a matter runs its course.

Truly, no lawyer can predict with absolute precision how a matter will proceed, how long each stage may take and the corresponding costs for each stage. But experienced lawyers can better manage client expectations by advising the possible paths and even which paths are more likely based on the matter's particular characteristics.'

Conclusion

As with our opening scenario, any lawyer can recite the general elements of a legal matter and try to win an engagement by offering low rates, but only experienced lawyers incorporating big data and predictive analytics techniques can differentiate on factors far more substantial than price.

Big data. It's not just for big business anymore.

Timothy B. Corcoran, a member of this newsletter's Board of Editors, authors the Corcoran's Business of Law blog. He advises law firm leaders on strategy, business process improvement, legal project management and business development. Reach him at [email protected]. Phone: 609-557-7311.