Using Data for Strategic Advantage | LPI
Clients expect their lawyers to be commercial, business minded, and to be part of the broader, now data-driven business landscape. The ability to analyse, present and apply data to strategic decision-making is now integral to the business of law.
Data has been a commonplace part of legal service delivery for many years – think about statistics regarding courts, cases and particular areas of law, contract numbers and renewal dates, as well as text-based data that is contained within contracts and legal opinions, laws, regulations, and their advisory notes, litigation analytics, and technology-assisted document review during discovery.
Key business objectives
Organisations are likely to have several key business objectives on their agendas – from improving efficiencies, responding to client and business pressures to reduce cost, taking advantage of new opportunities, dealing with increased legal and regulatory complexity, responding to competitive threats, or improving client service delivery. Regardless of the objective, the race is now on to use data more strategically.
The challenge then becomes how to leverage data when making key business decisions to shape how people think and behave, and consequently, drive superior performance to gain strategic advantage – and this requires examining data as it relates to the business of law.
Three areas to support strategic decision-making
For law firms and in-house legal teams, there are primarily three areas to consider when looking at how data can be used to support strategic decision-making:
1. Organisation - organisational data can be split into two subgroups, internal and external:
1a. Internal strategic reviews can and should dig deep into an organisation’s data across all business units, firstly, to help leaders understand their true “As Is” state, and secondly, to then use that data as a realistic basis for the identification of key areas of opportunity, silos that may need to be dismantled, or hurdles to overcome. It may become obvious that the business can be re-shaped in some important way, e.g. from re-structuring practices, mergers or acquisitions, consolidating offices or practices, readiness to attack emerging opportunities, evaluating organisational capabilities and then considering the need to hire laterals, applying sharper focus to specific sectors and industries or other aspects of diversification, re-considering the structure of the partnership and what drives partners to deliver value, executing or accelerating succession plans, re-evaluating profit drivers, examining how to become more sustainable and resilient, evaluating new opportunities or different ways of doing business, re-setting how work gets done and delivered, reviewing work-flows for operational efficiencies, or re-calibrating investment levels on infrastructure (technology, premises, people).
1b. External strategic reviews can examine the aspects of:
- Explore the competitive landscape – learning more about your obvious competitors, as well as emerging competitors such as ALSPs, and thinking ahead to possible new entrants into the market.
- For law firms, the growth of many of their clients’ in-house legal teams means that these teams are now the primary suppliers of legal services to their own organisations and the primary buyers of all external legal services. Understanding which work they are outsourcing to law firms, as well as which work types they are now insourcing, (and which technologies they are using to perform that work), should now be a critical component of data gathering and analysis for firm and practice planning.
- Analyse industry and sector trends, especially as they relate to the businesses of core clients. This analysis is crucial for the future financial well-being of a firm; being overly reliant on industries that have been especially hard-hit by the pandemic carries significant risk. Knowing exactly where a firm stands in relation to still profitable sectors and clients is critical foundation data, necessary for on-going decision-making and risk analysis.
2. Clients – for client data, examining two areas can really support strategic thinking:
- Billing data is often the obvious place to start; review the time expended with which clients on which matters and work-types, as well as how work is allocated. Consider profitability at the matter-level; identifying profitable clients and being able to plot a client profile can help leaders understand how to identify and strengthen strategic relationships, determine where to invest or re-direct resources as well as identify areas that could benefit from more innovative or efficient service delivery. Understand billing data, especially around discounts and client billing guidelines, as this data can inform future service pricing decisions.
- Client listening is another way to gather insights that can fuel improved service delivery, ensuring that you are better positioned to capture valuable commercial intelligence which can then support strategic decisions and actionable improvements. Asking for feedback from strategically important clients helps client service teams deliver high performance and helps ward off competitors looking to poach key clients.
3. People based data is now at the forefront of many organisations’ recruitment and retention strategies – that is, attracting and keeping their best talent.
One area that is now in sharper focus is that of diversity and inclusion. However, D&I data is often collected by the HR team, at the organisational level, rather than being made easily visible to those at the front line.
- To drive real progress on diversity – that is to make an impact upon the daily decisions around hiring, retention, promotions etc. that will drive diversity improvement – diversity metrics need to be available at the team and individual manager levels.
- Keep data presentation simple - data is most effective when it is presented in easy-to-understand scorecards or dashboards that are relevant to the people who make the day-to-day talent decisions, empowering the right people to act. Benchmarking comparisons can then be made by teams as they monitor their progress against organisational metrics; an approach more likely to result in increased ownership.
- The presentation of simple, actionable data is especially true for team composition and work allocation data, if team norms are to move over time. Importantly, clients are increasingly asking firms to track their work allocation data; several tech giants now employ AI to analyse work allocation billing data obtained from their law firms, as a way of supporting their own D&I efforts.
- Consider making D&I goals and progress metrics transparent as accountability is more likely to achieve behavioural change where it counts.
- Frame diversity data in the positive – for instance, rather than highlighting the lack of women, emphasise the progress made by teams that are doing well and share their success stories. This sends the message that diversity is integral to being a high-performing team and that there can be reputational risk for teams that fail to act.
These three areas and ideas are by no means exhaustive, and prioritisation will be different for each business. It is worth remembering that data sets in each area will almost certainly intersect with and impact other data and business units. For instance, an analysis of current and anticipated work types in each practice is likely to inform future recruitment and retention strategies.
Data is for everyone
Lastly, data will remain largely meaningless without data-literacy skills being embedded across all levels and functions of an organisation. This doesn’t mean that all lawyers need to become tech wizards, although some may wish to do so. However, it does mean that most firms will need to take some steps to change mindsets, such as communicating that data literacy is a business priority, and as such, part of everyone’s job. Practical, relevant and innovative learning programmes will need to be designed and rolled out to build new professional and technical capabilities across the business.
Law firms and in-house legal teams must continue to seek ways to boost productivity while keeping a close eye on costs. Dealing with these challenges will require data-driven strategic thinking and technology expertise, using data for strategic advantage to point the way to areas in need of innovation or change.
Authored by Jennifer Milford, Jennifer Milford Consulting.
Subscribe to the Legal Practice Intelligence fortnightly eBulletin.
Disclaimer: The views and opinions expressed in this article do not necessarily reflect the official policy or position of Novum Learning or Legal Practice Intelligence (LPI). While every attempt has been made to ensure that the information in this article has been obtained from reliable sources, neither Novum Learning or LPI nor the author is responsible for any errors or omissions, or for the results obtained from the use of this information, as the content published here is for information purposes only. The article does not constitute a comprehensive or complete statement of the matters discussed or the law relating thereto and does not constitute professional and/or financial advice.