The buzz around the benefits of Big Data continues. The March 2018 issue of Of Counsel led with an article on how legal analytics is extending beyond litigation and enabling law firms to master current pricing and management norms.
With the use of analytics, firms are increasingly changing the way they do business, in particular around management, budgeting, pricing and more. In short, says Lisa Smith of Washington-based Fairfax Associates, “Analytics provides benchmarks for what the norms are.”
While many firms are creating their own internal data collection-analysis programs, others are still reaching for the expertise of third-party companies, like Austin-based LLM, Inc. The company’s CEO and president Cas Campaigne shared his expert opinion on what, in particular, firms are using Big Data for.
“We see an increase in use around the spend analysis. We see firms trying to determine how to be as profitable as possible, especially with the huge increase in alternative fee arrangements.”
While analytics are useful in quoting AFAs, Of Counsel urges caution in overreliance. It’s also important to assess outcomes and change systems. Lindsay Stevens, LLM, Inc.’s Vice President of Technology, agrees.
“It’s important to look at your end goal. So if you’re using analytics for AFAs, you have to ask what your end result is, both pro and con, and consider what changes you’re going to make to your model and business practices.”
Ken Vaarsi, pricing and product development director for Silicon Valley-based Fenwick & West, sees analytics as a marketing tool. Clients appreciate the predictability that Big Data provides and can reward a firm with repeat business. More specifically, with these numbers, a firm can have a cost-benefit and risk-reward conversation. Vaarsi states that a data-backed [price] estimate gives clients confidence.
As the applications of Big Data increase, so, too, do the sizes of staff within firms that are specializing in this area. Also on the rise: the creation of pricing and product development departments. LLM, Inc.’s Campaigne adds:
“I wouldn’t say that this [emergence of specialized teams] is commonplace yet, but we’re seeing more and more of it, especially within the AmLaw 100 firms.”
Campaigne has also observed an increase in midsize and boutique partnerships using analytics and effectively competing with larger firms.
In addition to firm management, budgeting and pricing, firms are also using Big Data to develop strategies. The March article offers a strategic success story from Thompson Hine. The firm offered a client the big-value add of analyzing their data by phases of work and geography. This resulted in the identification of outliers and eventual correction, saving the client money.
The applications and benefits of Big Data will continue to grow.