11 Mar 2015

Data analytics poised to move up another gear in legal

Data analytics will move to a new level in law firms over the next two years, with additional applications beyond e-discovery, legal techies predict.

Data analytics are gaining traction in the legal market Khakimullin Aleksandr

Data analytics in the legal marketplace will dictate legal spend in the next couple of years with large organisations and law firms seeing such information as core to legal strategy, according to research from Huron Legal. In a survey of 129 legal technologists, two in three (68 per cent) of respondents said their organisations’ investment in legal data analytics would increase in the next two years. At the same time, 37 per cent of respondents said the biggest challenge to effectively implement legal data analytics in organisational decision making is securing buy-in from senior leadership on the value of analytics.  'It is clear that the legal industry is starting to recognise the power of data analytics, as evidenced by the burgeoning use of emerging legal technology and the willingness to increase investment in analytics,'  Nathalie Hofman, managing director at Huron Legal, said. 'However, in order to realise analytics’ full potential, legal professionals at all levels must be educated about how to best to use them. Analytics can inform decisions in a number of areas, leading to greater efficiency and cost effectiveness.'  


Respondents also highlighted other challenges in effectively implementing legal data analytics, including: quality of data (22 per cent), cost of implementing data analytics effectively (23 per cent), lack of accessible data (9 per cent), and threat to the practice of law (9 per cent).  When asked about the one or more areas where data analytics is currently being applied in their organisation, e-discovery came top with 64 per cent listing it, one in three said litigation management such as strategy and staffing whilst nearly a quarter (24 per cent) pointed to law department management (ie matter budgeting, legal project management). Only 10 per cent of respondents said that data analytics is not being applied at all within their organisation

Benefits of data analytics

When asked about the biggest benefit in the application of data analytics in the legal industry, almost half of respondents (45 per cent) selected cost management/savings. Almost a third (31 per cent) chose improved decision making, while another 13 per cent selected predictive outcomes (ie in spending amounts or litigation outcomes), and 11 per cent noted risk reduction/management. 'Analytics can provide great value in law department cost management, for example, in managing outside counsel costs and developing alternative fee arrangements. The next level is to use analytics in risk management and predicting outcomes of litigation – uses that can have a significant impact on an organization as a whole,' said Hofman. “This is where we see the future of data analytics in the legal function.'

Law lags behind other industries

 When legal technology professionals were asked for their opinion on where legal stands relative to other industries in its use of data analytics, nearly two thirds (64 per cent) said behind other industries, another 28 per cent said on par with other industries, and only 8 per cent indicated the legal industry was ahead of other industries.