The 4 Surprising Benefits of Legal Analytics Tools

Legal Analytics
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Introduction

As the legal profession moves forward into 2021, one fact remains incontrovertible: Legal Analytics continue to impact how attorneys approach case research and strategy. By bringing Legal Analytics and transparency to an ever-growing number of legal professionals through my own company, Lex Machina, I have seen firsthand how Legal Analytics transforms legal research and courtroom strategy, translating to more time and opportunities for attorneys to pursue other aspects of their practice or business. Recently, I began to see additional “surprising” benefits of Legal Analytics tools: the optimization of the hiring process; the evolution of the alternative fee arrangement; the effectiveness and happiness of legal teams; and increased client transparency. These recent benefits may not have been the central focus when Legal Analytics was first launched, but they are as invaluable now as the original time-saving and opportunity-generating benefits.

Optimization of the Hiring Process

For a long time, I have discussed how Legal Analytics can help law firms win more business by showcasing their talents and expertise. A symmetrical benefit that has been part of my vision for Legal Analytics usage is for in-house counsel at companies to use the analytics to select the right outside counsel. The focus has been on matching legal talent with potential clients.

However, a surprising benefit that has emerged is when law firms use Legal Analytics not to sell themselves, but to find new individual attorneys to hire. Ultimately, at the end of the day, legal professionals turn to Legal Analytics to showcase or discover experience and track records, whether for a law firm, a client, or an individual. There’s no reason why Legal Analytics shouldn’t be used in a lateral hire process.

Besides allowing legal professionals to showcase or discover experience, Legal Analytics can help law firms preemptively identify potential conflicts with new hires. This is a vast improvement over the antiquated conflicts-check process that preceded Legal Analytics, and is very much in line with the other benefits of Legal Analytics in its ability to save time and resources for legal professionals.

Another unexpected angle to this benefit is the flip side of the hiring process – just as law firms select lawyers, lawyers also select law firms. In the same way lawyers use Legal Analytics to help them pitch clients, and clients symmetrically use Legal Analytics to select their own lawyers, there is a parallel symmetrical opportunity to law firms using Legal Analytics to select individual attorneys: individual attorneys can also benefit from using Legal Analytics to select the law firms they are considering joining.

With Legal Analytics, individual attorneys can eliminate the mystery surrounding the practice area strengths and track records of potential law firms. An individual attorney can consider not only the kind of law they are looking to practice, but the kind of firm they are seeking to join – whether an established thriving practice, or a cutting edge firm on the brink of success. They can use Legal Analytics to determine and understand what kind of cases the law firm handles. For example, an IP lawyer who specializes in trademark law can use Legal Analytics to verify whether a firm practices primarily patent or trademark law. This is a critical advantage, particularly at a stage in the hiring process when the individual attorney is evaluating the direction and potential of the law firm under consideration.

Evolution of the Alternative Fee Arrangement

I once watched a presentation on the billable hour, in which data was presented purportedly to show that alternative fee arrangements were more expensive than billable hours. The presentation’s proof point was that the billable hour is better. With respect, I disagree with the reasoning and conclusion based on an incorrect premise – the benefit of using alternative fee arrangements is not necessarily to obtain a better price. The true benefit is to contain risk against that one case that could result in a cost 300% higher than expected under a billable structure. The reasoning is that it may be worth paying a little more regularly to reduce the risk of an outlier high payment. Ultimately, alternative fee arrangements allow the sharing of risk by reducing risk in both directions, for both parties. In an ideal scenario, the client may pay slightly more for the majority of cases but will also pay less for those outlier cases that far exceed budget expectations.

Legal Analytics can help legal professionals tie everything together with data that is instrumental in deciding what fee to set. With Legal Analytics, a legal professional can discover crucial data on case timing, case activity, and human tendencies. This will allow them to ascertain how long the case is likely to take, how active a particular court is, and the likely behavior of the opposing side. With these three elements, it is easier to structure a more accurate alternative fee arrangement that shares risk in a way as to maximize overall benefit.

This benefit is a surprising recent development. At Lex Machina, our original primary vision was to bring transparency and insight into what was happening in litigation. When we started pursuing our goals of expanding Legal Analytics throughout the legal profession, alternative fee arrangements were still in their early days and not as common as they are now. Now that they have become more widespread, Legal Analytics can help attorneys and other legal professionals more effectively structure fixed fee arrangements in a way that accurately shares economic risk between clients and attorneys. This allows clients to avoid wild volatility, which is a premium that can be worth paying for. In addition to helping lawyers both manage and monitor their litigation activity, Legal Analytics can also help them price successfully.

Effectiveness and Happiness of Legal Teams

When we consider Legal Analytics and its primary benefits, there’s a great deal of discussion around the important advantage of how it can make a legal team more effective. However, a recent unexpected value that has been observed is how Legal Analytics can contribute to making legal teams happier.

The ability to facilitate transparency between an attorney and a client has always been a key objective of Legal Analytics. Now it has become clear that this ability accomplishes more than creating a stronger, more effective business relationship between an attorney and a client. When clients don’t believe they have enough information or transparency, friction can occur. By allowing the establishment of clearer expectations and reducing friction with clients, Legal Analytics can increase both the strength and also the overall happiness of a legal team. This outcome is especially valuable in a field such as litigation, which is interwoven with conflict by its nature. Legal Analytics can help reduce or eliminate conflict amongst the players on the same side. It can pave the pathway for attorneys and clients to make data-driven decisions together in order to structure the most cost-effective and efficient litigation strategy. This will maximize client satisfaction, and increase the effectiveness and happiness of the legal team as a whole.

In addition to the fulfillment a legal team would experience by ensuring client satisfaction and trust, Legal Analytics can bolster the happiness of a legal team by reducing the stress in their legal practice. By incorporating more data and analytics into their workflow, a legal team will be able to reduce or eliminate some of the unpredictable variables when making decisions pertaining to their litigation strategy. This would ease their stress and allow them to advise their clients with confidence, returning full circle to a happier client and a happier legal team.

Increased client transparency

In a typical scenario, when a client is involved in litigation and selects a law firm, the client asks the attorney to recommend a course of action. Ethically, the attorney is charged with fighting vigorously on behalf of the client by taking every opportunity to do whatever is necessary to win on the client’s behalf. However, this may be misaligned with what the client truly wants, if the client is worried about money and would prefer to take a different strategy.

At the heart of the notion of transparency is that anyone, including the client, can use Legal Analytics to calculate and determine the best cost-effective data-driven way to proceed. Even knowing their attorney is compelled to fight vigorously on their behalf, the client can still use Legal Analytics to follow, check, and monitor proceedings in their case and cases like theirs. For example, the client could use Legal Analytics to monitor how the judge in their case has recently ruled in other similar proceedings.

This is especially important for smaller companies who may not be repeat players in the arena of litigation and may not know what to expect. With Legal Analytics, these smaller companies can ascertain the potential outcomes that are typical in similar cases.

Ultimately, the bottom line is that regardless of how much they trust their attorneys, clients will still find value in obtaining external validation and maintaining transparency.

On the flip side, Legal Analytics also enables a law firm or attorney to gain transparency into a client or potential client. Particularly when working with a new client, an attorney who is not yet familiar with the client’s past cases or behavior can use Legal Analytics to attain transparency into how the client tends to act and what they often expect. Hence, Legal Analytics provides independent data and transparency through reference points in similar situations to both lawyers and clients when they are faced with making decisions.

Conclusion

It has become well established that Legal Analytics has and likely will continue to change the way legal professionals conduct the practice and business of law. However, the four unexpected benefits outlined above demonstrate that we have only begun to scratch the surface of the ways in which Legal Analytics can be used to benefit, enhance, and strengthen legal practice and business. As Lex Machina continues to strive to bring Legal Analytics to all areas of the law, we will undoubtedly continue to discover new ways in which Legal Analytics can create advantages to the legal professionals who adopt it.

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