Legal Data Analytics Fundamentals, Part 4: The Why.
This is the final instalment in our blog series designed to make the concept of “legal data analytics” less intimidating for Legal Departments. Indeed, the fundamentals of legal data analytics are universal. We want to show that legal data collection can be simple and relatively painless.
The measurements in this blog article will help you assess the qualitative nature of your work: its risk, complexity and strategic value. Or, to put it simply: What’s the point?
What’s our potential exposure?
For in-house counsel, risk management is a prime directive. Actively monitoring and measuring this category will endear your team to the C-suite and the board.
For tracking purposes and simplicity, we recommend you set defined ranges – or, in the context of risk, pain thresholds. We use low, medium, high and critical. Within your business context, consider your own definitions; your “low” could mean “$1 million or less” or “$10 million or less.” (Of course, there are other types of risk, such as reputational, regulatory, et cetera.) Define your ranges, then apply a risk metric for every matter.
Sort your legal matters by size of risk, then review them to check:
Where is the bulk of your work, and how is your work trending? If your in-house legal team is drowning in small-risk legal matters, there may be opportunities to engage additional junior staff, a lower-priced firm or even a non-law firm vendor.
Are your resources properly aligned according to risk profile? While you don’t want your most expensive law firms dedicated to small-risk legal matters, the opposite also is true. You don’t want the highest-exposure problems going to law firms that may be ill-equipped to solve them or lack the institutional knowledge to advance the company’s goals.
Are you assigning your lowest-risk legal matters to your most advanced litigators or your most expensive firms? Get creative in the small- and medium-risk buckets with alternative fees, automation and more.
How challenging is this work?
Your work varies in complexity, from basic queries to international transactions. By monitoring legal matter complexity, you can proactively address (and improve) your resourcing, staffing and ROI.
For every legal matter your team is working on, rate the complexity. We like a scale of 1 to 10. As long as the members of your in-house Legal Department can classify matters uniformly, the exact system is up to you.
Once legal matters are categorized, start to examine them:
- For simple legal matters, look to see what could be automated, eliminated or outsourced – the more of these you move off your plate, the more time you will have for the work that truly needs your expertise
- For complex matters, review your resourcing to ensure it is appropriate for the difficulty level, then consider the most efficient option
What is the strategic value of this work?
Some legal work will advance your company’s most important objectives; some legal work is done to keep the proverbial lights on. Your most important work deserves your best and brightest, and legal data analytics can help you ensure the right mix of internal and external resources.
For every new matter, enter a measurement of its strategic value. We like a scale of 1 to 10, but you can choose a metric that works for your Legal Department and your context. One note of caution: For this metric to be useful, every member of your team will need to have a clear understanding of the organization’s strategic objectives.
Once you have rated your projects by strategic value, segment them for analysis:
- For matters with low strategic value, look for opportunities for efficiency. Internally, this could mean automation, self-help tools or assigning lower-level personnel; externally, consider lower-priced firms or vendors.
- For matters with high strategic value, check to make sure your best legal talent is on the case. Internal or external, individuals handling this work should have familiarity with the company’s strategic goals and the special expertise to construct creative legal solutions.
Where do we go from here?
We’re glad that legal data analytics have piqued your interest; within the metrics of your operations, you’ll find myriad ideas and opportunities for your Legal Department. If you missed the first three parts of our series, you can find them here: The Who, The What and The When.
Download the in-house legal data analytics white paper
If you are ready to dive in further, download our free e-book, In-House Legal Data Analytics for Beginners. This guide will show you how to design and deploy your own legal data analytics program – regardless of the size or sophistication of your Legal Department. You will see examples of reports, see how to apply your metrics for instant improvement, and learn how other in-house lawyers applied their data. If you would like to learn more about Xakia's legal analytics software, speak to the team today for a demo.