In-house legal departments increasingly use data analytics and AI for making data-driven decisions
Thomson Reuters highlighted key steps for in-house legal departments to implement data analytics, including identifying data sources, determining measurement metrics, and utilizing dashboards and legal operations professionals to improve operations.
In-house legal departments increasingly use data analytics and AI to enhance efficiency and make data-driven decisions. Historically, these departments struggled with accurate assessments and reporting due to a lack of data. However, businesses now expect legal teams to operate similarly to other business functions, making data analytics essential.
Data analytics involves creating, categorizing, and examining data sets to inform business decisions and improve operational efficiency. This encompasses budgets, spending, and litigation outcomes. AI assists by managing large data sets and quickly identifying patterns. For example, AI can swiftly review years of outside counsel bills to identify low-value entries or analyze company data for potential legal violations.
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With executive teams prioritizing data-driven decisions, legal departments must provide accurate data to support their operations. Data analytics offers visibility and insights, leading to actionable intelligence and improved legal decisions.
To implement data analytics, legal departments should first identify available data sources, such as e-billing systems, matter management systems, departmental reports, data from legal tools, other company departments, publicly available data, and government data. E-billing systems and matter management data are effective starting points.
Next, determining measurement metrics is crucial. Metrics can be descriptive (what happened), diagnostic (why it happened), predictive (what will happen), and prescriptive (what should be done). For instance, a descriptive metric could track reducing the hourly rate paid to outside counsel by 10 percent year over year.
Legal departments should seek quick wins by utilizing existing data and developing simple measurement questions. Creating straightforward reports and sharing results can showcase successes and highlight improvement areas. Transparency is valuable, even if findings are unfavourable.
Another benefit of data analytics is creating dashboards to visually summarize key points, aiding discussions. Dashboards can present summaries of outside spending versus budget, commercial agreements completed, key case or project statuses, and the company’s intellectual property.
Legal operations professionals are well-suited for handling data analytics, given their expertise in data manipulation. If no legal operations team exists, in-house or temporary help can be considered.
Resources like the Corporate Legal Operations Consortium (CLOC), ACC Legal Operations, the Thomson Reuters legal tech blog, and internal company resources offer best practices for data analytics in legal departments. Starting small and gradually addressing more complex questions can enhance efficiency, decision-making, and operational excellence.
