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4 surprising benefits of using legal analytics tools

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Legal analytics continue to be a necessary and growing part of how modern attorneys approach case strategy and research. Analytics tools enable attorneys to bring data-driven decision-making to their practice and business, improving both the quality and the efficiency of work they perform for their clients.

The benefits I have seen are powerful and sometimes even surprising. Four such unexpected benefits are the optimization of the law firm and attorney hiring process; the evolution of the alternative fee arrangement; the effectiveness and happiness of legal teams; and increased transparency for clients. While none of these was a direct purpose of legal analytics tools when we first brought them to market, it is exciting how valuable these unexpected benefits have become.

The hiring process

Traditionally, when we discuss the benefits of legal analytics, the primary focus tends to be on case strategy or law firm business development. But new client acquisition for law firms is not the only value of analytics in connecting legal professionals and clients. Legal analytics also can be used to assess the litigation track records of individual attorneys, making it a powerful hiring tool.

Analytics not only aids in the assessment of potential new lateral hires but also can help identify any potential conflicts they may have. This use of analytics early in the hiring process saves the law firm time and resources when making decisions, especially when compared to a manual conflicts-check process.

This application of analytics is not limited just to the perspective of law firms hiring individual lawyers; it is also beneficial for individual lawyers choosing the law firms they wish to join. Individual attorneys can easily identify a practice’s track record and areas of strength, and in this way, they are able to vet potential firms before applying and can walk into an interview with a depth of preparation that is difficult to obtain otherwise. 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.

Alternative fee deals

The primary benefit of using alternative fee arrangements is not simply for clients to obtain a better price; instead, where this billing system shows its true value is in risk containment. The risk of the billable hour lies with those cases that result in a cost that is significantly more than what was initially forecast. When faced with such high potential worst-case scenarios, there is value in paying a small premium on “typical” cases as a means to reduce the extreme risk from costly outliers. Alternative fee arrangements allow risk-sharing by reducing it for both parties. In an ideal scenario, clients may pay slightly more for the majority of cases, but they also will pay significantly 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. Legal professionals, with the aid of legal analytics, can discover data on case timing, case activity and human tendencies that can be directly applied to a fact-based estimate on parameters such as how long a case may take, how active a court may be and expected behaviors of the opposing side. With advanced knowledge of the potential impact of such considerations, it is easier to structure a more accurate alternative fee arrangement that benefits the client and the legal professional alike.

Happiness of legal teams

Greater transparency has always been a designed benefit of legal analytics, and this increased transparency results in stronger and more effective relationships with clients. Through these stronger relationships and increased transparency, friction between the legal team and the client is reduced, and client frustrations are minimized. The impact of this can be particularly valuable in litigation, in which conflict is inherent. Legal analytics helps reduce the potential of conflicts between parties who are working on the same side, making it easier for attorneys and clients to work together and make data-driven decisions in the most cost-effective manner while optimizing their litigation strategy. This, of course, results in increased happiness for the entire team.

With a more transparent fee structure and a more efficient overall legal strategy, clients are more likely to be satisfied by the work of their legal team, which will serve to enhance the relationship. This client response can alleviate some stress on legal teams and further that sense of team happiness.

Transparency for clients

Ethically speaking, attorneys are charged with fighting vigorously on behalf of their clients and with pursuing any opportunity they can to achieve winning results. While this is the type of focus and commitment clients look for in their legal representation, the range of possible outcomes also may be limited by the unintended side effects of such laser focus. It is at this intersection of legal tenacity and cost-benefit analysis where transparency plays a critical role.

The fundamental concept of transparency is that anyone, including the clients, can use legal analytics to calculate and determine the most effective direction for their legal strategy, using real data to help them factor in cost, efficiency and the range of possible outcomes.

These tools can open up greater insight into clients’ legal histories—with which the attorneys may be unfamiliar—including their prior cases and behaviors around those cases. Additionally, analytics tools provide greater transparency by analyzing similar situations, which can be beneficial to lawyers and clients when it comes time to make smart and cost-effective decisions.

Independent of clients’ faith and trust that their attorneys are doing all they can on their behalf, it is still beneficial for clients to use legal analytics to follow proceedings in their cases and cases like theirs. This is particularly valuable for smaller companies that find themselves in legal situations that are unfamiliar and new. Through legal analytics, these companies can familiarize and ascertain the potential outcomes that are typical in similar cases.

Regardless of how much the clients trust their attorneys, clients will still find value in increased transparency with their legal team and strategy. In turn, that increased transparency can foster greater trust in their attorneys.

Legal analytics will continue to impact the way that legal professionals conduct the practice and business of law. These impacts will be both predictable and unexpected. The four surprising benefits of legal analytics I discussed in this article show that we have only begun to scratch the surface when it comes to the value and applications of this powerful legal technology. It is a very exciting time to be involved with legal analytics tools, not only because of the benefits they have already demonstrated, but also because there is so much more they will be able to accomplish over the coming years. n

This story was originally published in the December 2021/January 2022 issue of the ABA Journal under the headline: “New Insights: 4 surprising benefits of using legal analytics tools.”

Karl Harris is CEO of Lex Machina. In his role as CEO, Harris leads strategy and execution at Lex Machina. He holds a JD from Stanford Law School, an M.S. in computer science from the University of Texas at Austin and a bachelor's degree in computer science from Dartmouth College.

This column reflects the opinions of the author and not necessarily the views of the ABA Journal—or the American Bar Association.

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