Step into any corporate boardroom during an annual review, and when the talk turns to legal spend, you are certain to hear some talk about reducing costs and improving efficiency. Unfortunately, too often that’s as far as the discussion goes. But new data-driven approaches are turning good intentions to make better business decisions into reality.
Corporate legal departments are well aware that poor decision making around law firms, timekeepers, and billing guidelines can have a real impact on a company’s bottom line. Those decisions can affect the viability of the whole company. That’s why you see more and more legal departments investing in legal spend management solutions, and relying on analytics and insights from their own spend data to inform decision-making around billing guidelines, law firm choices, case outcomes and more.
Imagine a world where engineers build bridges a certain way because “it just feels right,” or doctors prescribe a course of treatment based on a hunch. There would be a huge outcry, and rightly so, and it’s very much the same in a legal department.
In this setting, decisions are based upon a combination of many things. Instinct may be part of it, but a firm’s reputation, industry expertise, and standing in the community all play a role as well. Lastly, analytics can be elemental in making decisions.
Thanks to the combination of cloud computing and big data at the heart of the digital economy, a wealth of data is being generated every single day. It’s just waiting there to be gathered, stored, accessed and analyzed to inform decision-making.
According to a new article on legal resource Law.com, “the global legal analytics market will grow at a compound annual growth rate of over 32 percent, in value terms, between 2017 and 2022.”
What good data delivers is the ability to turn gray areas of uncertainty into black and white facts. It takes away the guesswork and replaces it with concrete evidence. By using reliable data in conjunction with years of experience and a clear-eyed strategy, you put yourself in a strong position to build compelling arguments, no matter the subject matter.
This not only applies to legal arguments, but also to the more day-to-day areas of running a corporate legal department. Labor costs, easy billing, time management, and other daily management and productivity issues can be overwhelming and can create a strong, downward spiral if those decisions are not informed by the data.
No other profession relies more on the simple, persuasive power of a fact than the law. Something is either wrong or it’s right, fact or opinion, legal or illegal. However, not all legal departments leverage data in their decision making processes.
“If you go back a few years, a lot of decisions were made on relationships based on individuals within a corporate law department who perhaps have alliances to their previous law firm,” explains Doug Ventola, managing director of legal consultancy Consilio to Law.com. “Now, we’ve seen a dramatic increase in the way analytics is being adopted, allowing companies to make selections based on real data.”
The tide has turned and there’s no going back. The kinds of questions which can be answered by data include:
The answers to these questions should inform your strategy going forward, and can lead to a real improvement in company workflow, reliability and profitability. But it does require a buy-in from everyone in the company. Data and the insights it offers needs to become part of your company’s DNA.
It’s extremely important that your legal department can trust the data that it’s working with, and that it is secure, yet accessible. The deeper challenge is to build a data-driven approach and sensibility into the day-to-day workflow of your firm.
Start small – Begin by incorporating data into relatively minor decisions that don’t have profound implications if they go wrong. Areas like matter-management and billing are good areas to start with. These will help build data-driven thinking into the workforce, and will ensure that staff are on board with the changes, and see the value in it.
Manage the Data – It’s vital to have an overview of how the data that you work with is gathered, where it is stored, and how it is managed. The goal should be to move all your data from spreadsheets which are stored all over the place into one secure and shareable system that has the right permissions in place for the employees and vendors.
Data Health – Ensuring the reliability and trustworthiness of your data is vital. Lawyers can’t be expected to do it all themselves. Try to work with data professionals who are experienced and can set up systems that gather, store and deliver data effectively.
Strive for Actionable Intelligence – Your ultimate goal should be to provide information that can be acted upon. The data is not just there for data’s sake, it’s there to drive great decision-making.
One size Does Not Fit All – If it’s not being used, then it has no value. Because every legal department is different, you should choose a partner whose software and services can be customized to meet your needs.
Naturally, intuition and gut instinct will always have a role to play. Lawyers build up expertise and relationships, and they get a feel for an issue. They need to be able to rely on their instincts in order to “think outside the box.” But data and intuition are not mutually exclusive. When you can take advantage of legal spend analysis that combine years of expertise with sophisticated data systems, then that is a very powerful combination that will have a profound effect on the way that you do business in the years to come.
To find out more about how Quovant can have a decisive impact on the way your company manages its legal spend, reach out and speak to us today.[/vc_column_text][/vc_column][/vc_row]