The Data-Driven Law Firm: The Next Frontier

Law firms face a combination of not easily surmountable obstacles in their pursuit of a data-driven future. Each of these hurdles presents a challenge in its own right. Combined, they can stymie even the best-intentioned and most well-equipped. The most well-worn path for law firms is tackling the "data issue" in increments or with a singular focus (e.g., creating a new taxonomy or deploying a technology solution). This approach, though, ignores the way in which data weaves across functions throughout the firm as well as the critical shifts in mindset required to effectively integrate data into daily decision-making. The truly exceptional law firms — tomorrow's elite — will approach their transformation to become data-driven on multiple fronts, calling on cross-functional teams and leaders to drive their evolution.

The most common steps on the journey to become a data-driven law firm:

• Clean it up. Better data hygiene, for both existing data and data intake, is a prerequisite for getting relevant, useful insights from internal sources. Often, firms will bifurcate these two steps, choosing to tackle the inanimate (existing data) rather than the ones who can talk back (people … eek!). This approach is a mistake. While historical data is an incredible asset, the ability to capture and use real-time information will ultimately be key to gaining advantage—and will take longer to execute effectively. A parallel, collaborative approach to improve the data and the process by which is it is captured will get the firm further, faster.
• Get connected. Information flow is one of four key elements to successful strategy execution, more important even than accountability. Many law firms contain numerous silos, both in the way they operate and in how they store data. Practices, offices and various other internal groups within law firms often suffer from isolated communications. Similarly, different databases house essential information on even the most basic fundamentals such as clients and matters. In order to effectively use data, the barriers to information sharing must come down. Like with data hygiene, the best approach is a dual one, tackling both the technological integration of data at the same time as the establishment of stronger, more open communication paths.
• Deploy technology. There is no question technology plays a role in taking full advantage of the power of data. Manual manipulation of spreadsheets, though highly effective, is time consuming and inefficient. Technology tools can help to integrate disparate data sets, put key metrics in the hands of the people who need them and enable faster analysis to stay ahead of clients and competitors. Technology follows the clear articulation and communication of needs and objectives for not just the firm but also the end-users. As with any major shift in behavior, a widespread user understanding of the why behind technology must precede deployment (and will help speed adoption). As law firms tackle other challenges on this list, the critical need for this analytic talent will become increasingly evident to some and they will seek it out. Others, unfortunately, will submit to failure. They will place their data-driven effort into the graveyard alongside other failed initiatives to become more client-focused, improve project efficiency or adopt a better aligned compensation system. Eventually, these choices will come back to haunt them.
• Hire the right talent. Data scientists and analysts are critical assets in any data-driven organization. Without the capacity to analyze data, organizations will fail to identify the critical insights and relevant information needed to make better, more strategic decisions. In other words, law firms will remain where they are now: sitting on vast amounts of data with which they can do almost nothing without herculean effort. A minority of law firms today have incorporated analysts and data scientists into their firms. At this juncture, most support a single function (e.g., pricing, project management or case analytics). Few are integrating internal and external data to yield competitive advantage and almost none are imbued with a senior ambassador able to effectively translate and wield the data for strategic effect.
• Develop data savvy. Data savvy is high among those qualities becoming increasingly important in the next generation of lawyers, not just for the purposes of understanding the business of law but also to practice law and communicate with clients effectively. Specifically looking for and developing lawyers' data skills is vital. Equally, if not more important is the addition of empowered business leaders who embody the same. Neither is a foregone conclusion. The relatively recent advent of demand for data savvy means it is not just law firms that lack this skill set. Companies in virtually all sectors share the challenge of creating a workforce equipped to use newly available insights for strategic advantage. A combination of leadership, cultural shifts and training will be needed to overcome this hurdle.
• Cultivate a data-driven culture. Several years ago a law firm client revealed, amidst discussion of the firm's use of competitive intelligence, that virtually every decision at her firm was predicated on data. "It's cultural," she said. This perspective is unique. It is also one the data-driven organization strives for, the simple acknowledgement that everything we do, we do for a clearly defined reason, supported, validated or complemented by facts. Cultural change is not an easy undertaking and is one best approached with a deliberate recognition of where an organization is today and where it is headed. Further, cultural change is most effective when enveloped in a broader, global change mission. Intentionally incorporating data-driven concepts into major initiatives and undertakings across the firm can help to motivate the changes in thinking and behavior.
• Foster change-minded leaders. The transformation of any organization, strategically, operationally and culturally, demands effective leadership at multiple levels. For some firms, this leg of the journey will be the easiest — those at the top already resonate change and are leading by example and equipping the next generation to excel. Most firms, however, face significant obstacles in this realm. Some leaders are slow to embrace change or, when they do, uncertain how to create or execute on a vision. Others refuse to step aside to make way for aspiring leaders and, inadvertently (benefit of the doubt) thwart the energy and drive of emerging leaders. Also common are those leaders who, in their desire to push a data-driven agenda, override the value of people and experience. Leading change is a delicate balance. Equipping law firm leaders with the knowledge and tools will perhaps be the lynchpin of the data-driven law firm (see also, Why Leadership Efforts to Drive Data-Driven Change Fail).

The journey to becoming a data-driven law firm requires a holistic, well thought-out plan, replete with a vision of what's to come. For inspiration, MIT's Sloan Management Review offers select case studies of various organizations that succeeded in making the shift. And perhaps for urgency, the McKinsey Global Institute's report, "The Age of Analytics: Competing in a Data-Driven World," predicts the advancement of deep learning technology may replace 31% of what lawyers do — or $61.8 billion globally according to their calculations. What more reason does a firm need to explore what it takes to be one of tomorrow's elite?

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Marcie Borgal Shunk is president and founder of The Tilt Institute, a firm dedicated to unveiling new perspectives on law firm growth through intelligence, innovation and intuition. She specializes in helping law firm leaders make better, data-driven business decisions. Shunk is also a member of the ALM Intelligence Fellows Program. More information on the ALM Intelligence Fellows Program can be found here.