In many sectors of the global economy, big data is proving a useful tool for businesses to leverage data analytics in order to tailor their offerings to audiences and gain an edge over the competition. The growing availability of digital data in the legal sphere means law firms are now cashing in on this ‘Moneyball’ approach to decision-making. In this article, we consider how big data can help your firm revolutionise its operations, improve business growth and enhance your client service strategies.
The potential of big data
Law firms are under more pressure than ever before to increase efficiency, enhance productivity and stand out from the competition in order to survive. Increasingly, they face making more complex strategic decisions on growing their business, while delivering explicit value to their clients. And this is where big data can help.
Big data offers law firms the opportunity to look at parts of the business with an empirical approach, and its widespread use in other sectors has proven that a switch to a data-driven approach is the next logical step.
It’s worth noting that big data analytics is not new in Australia. Companies such as Woolworths for example, invested millions into big data in a bid to better analyse the online and in-store spending habits of its consumers. Meanwhile, telecommunications giant Telstra has been building its analytics assets for over four years, and is using big data to drive improvements in its customer service.
Lawyers generate an enormous amount of data on a daily basis – think precedents, advice, correspondence, court judgments and evidence discovery. As more firms digitise information and create (and store) documents electronically, such raw data is now available in copious amounts. Firms that harness and use it correctly can extract meaningful insights to improve productivity, stay ahead of the curve and make better business decisions on the whole.
So how can big data be utilised by firms effectively?
Optimising internal efficiency and driving strategic business growth
Analysing the chunk of raw information sitting on your servers can help you understand what’s really going on in your business. With the right algorithms, firms can transform internal data into insights on practice operations, which may reveal opportunities to increase savings and efficiency. For example, historical data showing patterns around time spent on similar cases can help lawyers plan their schedules ahead of time, or forecast how much revenue can be brought in for the month if they are billing by the hour.
Similarly, external data can be analysed to identify areas of market growth and consumer spending behaviours to enable more profitable decisions regarding business strategy. For example, by understanding how potential clients interact with the business (i.e. through certain devices or at different times of the day), you can tailor your marketing messaging in a way that is more likely to hit the mark and obtain conversions.
With the push for alternative fee arrangements, it has become increasingly important for firms to be able to assess the viability of a variety of pricing options. Software tools are now available to pull historic data from your billing systems to perform side-by-side comparisons of various pricing arrangements, assess the impact of adjusting variables and run hypothetical pricing models against upcoming jobs. With such tools, firms can pitch for work and put specific job proposals to clients with confidence in their profitability.
Predicting case prospects and profitability
Algorithms and data-driven searches can be employed to scrutinise thousands of previous cases and assess the prospects and estimated costs of taking on a particular matter. They can even provide insights on how to argue the case and optimise litigation strategies.
An even more powerful application is when big data is used with artificial intelligence (AI). How so? As data sets become too large to deal with effectively, AI (formed by complex algorithms and cognitive computing technology) can help analyse and make sense of huge chunks of information quickly, saving lawyers infinite hours.
International law firm Pinsent Masons has recently placed their matter management in the hands of a program that reportedly employs the use of big data, assisted by artificial intelligence (AI) “to provide more consistent, accurate and quicker outcomes”.
The technology can “disaggregate” large matters and import data and precedents from a knowledge bank to assist users to prepare different components of the case. It is employed routinely on contract risk reviews, litigation, project management and property matters.
To date, we have really only seen the genesis of big data in the legal sector. However, there is no doubt that it has a place in the future of practice management, and the legal sector is bound to see many more innovative applications in coming years.