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Legal Data Analytics-Can Lawyers Be Data Analysts?

I have often quipped that as a lawyer-turned-financial-analyst, I understand that lawyers talk in beautiful words while the rest of the world talks in charts and numbers. Building the bridge between the two worlds – by turning words into data – is important and can yield powerful information:

  • Where is money being spent?

  • Are we getting value for our spend?

  • Can we do more with less?

Data, however, can be seen as little more than a four letter word by lawyers. Too often it is put in the bucket of ‘nice to have’ and ‘too hard’ when the pile of work keeps growing. In fact, legal data is a powerful tool and it can and must be used to affect change – manage costs, implement improvements to systems and processes, and improve the working environment of the legal team. Nonetheless, a General Counsel wears many hats. Adding ‘data analyst’ to the list is not a trivial suggestion. How important is it, really? What should it include? Can it be done without adding hours to your already overflowing list of tasks? Most importantly, what is the return on investment?

External legal work

Legal data analytics has historically been focused on external legal spend. It is important to collect data – even very simple data – to know which law firms are being used and how much they are being paid. This may sound simple but I have worked with many, large companies who have difficulty finding and articulating this information. Breaking this data down further into spend by work types, or by business division, becomes even more difficult. Transparency about legal costs provides an opportunity to control them and achieve lower rates, or bring work in-house where appropriate.

Automated data analytics systems today can – and should – take this analysis even further, so that the ‘cost’ of an external law firm is measured against the ‘value’ delivered. Such measures ensure the analysis appropriately reflects the complexity of relationships with law firms, the quality of work and responsiveness to deadlines and urgency. Without this additional data, cost management may result in false economy – cutting costs without rewarding those firms who add the highest value, leading instead to sub-optimal legal outcomes.

Internal legal work

Whilst important, tracking external legal costs is only one dimension of a the work managed by a legal team. The opportunity for legal data analytics is far wider than this. In many organisations, 80% of work done by corporate legal teams does not involve an external law firm at all. Data analytics can play a significant role in enhancing the visibility of all the work done by a legal team – both within the team itself and to the broader business. Even simple statistics and visual representations of the number of matters completed, the team members involved or the type of work being done, can powerfully demonstrate the value added by a legal team. Imagine a situation in which one business division of a company absorbs the majority of the legal resources, but generates only a small proportion of the profit for a company. Quantification of legal work and visualization in charts is an objective tool which can facilitate discussion about how work can be redistributed, alternatively resourced, or even eliminated, so that the legal team can focus its attention more appropriately on the business divisions which contribute higher profit. For more sophisticated data analytics, alignment of legal work with a company’s strategic goals or capturing information about the value of each matter, can help to demonstrate the role of the legal team in achieving commercial outcomes. Collecting data on work performed by corporate legal teams enables the role of lawyers to be better understood and valued by the business.

Continuous Improvement

‘Best in class’ is within reach of all in-house legal teams today, irrespective of the size of the team. Sophisticated legal management and legal resolution tools are becoming more affordable and accessible with each passing year and the prevalence of SaaS, cloud based products. Knowing which of these tools to adopt first starts with knowing where the bottlenecks, gaps and opportunities for improvement are within your team. Simple measures can inform decisions about commoditized work and help to identify resourcing mismatches. A vast accumulation of low value and low complexity work can indicate opportunities for automation or outsourcing of work, to liberate your team members for more strategic and complex work. Such changes go beyond mere cost savings and may influence the growth of the business.

Powerful, Data Driven Discussions

‘Data’ need not be a dirty word. Collecting data can be simple and even visualization should be straight forward. The analysis that follows naturally changes the tone of discussion around implementation of change. A data-driven discussion underpins the analysis of a return on investment of technology investment, or motivating a team toward change, and is more likely to bring success. Whilst data analytics around external legal costs are important, data analytics should extend beyond this, and capture information about the entirety of a legal function. By doing so, legal teams are empowered to shift their focus from ‘cost savings’ to ‘value creation’.


More about Jodie Baker

Jodie Baker, Founder & CEO of Xakia, is an innovator, entrepreneur and business builder.

Jodie has a background as an in-house lawyer and financial analyst and was the architect, founder and MD of Hive Legal – winner of many of Australia’s leading innovation and law awards. Jodie has a history of building successful businesses and teams through a shared vision, big picture thinking and attention to detail.

Xakia offers a corporate legal operations platform purpose built for in-house corporate legal teams. Xakia was created in response to a widespread research project targeted at understanding the daily demands on in-house legal team management. A comprehensive list of in-house needs led to the building of Xakia and continue to inform the user-designed approach to its functionality. Xakia was built with a pure focus on legal in-house needs.

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