Firms can use data to help improve diversity, work allocation, and reduce the costs of legal work
While business teams have long worked with data to support better decision-making, drive efficiencies, and align with industry best practices, legal service providers have been criticized in the past – perhaps deservedly so – for being behind the curve. But things have been changing for a while now, starting well before the pandemic but advancing more rapidly since. With a renewed focus on corporate purpose, transparency and embracing new ways of doing things, law firms and legal departments now welcome the shift to a data-driven work environment.
Legal providers are using internal personnel (including data scientists and analysts) and third-party providers to make significant progress in using data to:
- Enhance the diversity of client teams;
- Ensure more fair and equitable allocation of work to junior lawyers; and
- Provide opportunities to lawyers who seek greater flexibility while at the same time significantly reducing the costs of delivering legal services to clients.
Moving the needle on equity, diversity & inclusion
Client expectations of their legal service providers have advanced. This evolution is evident from requests for high-level diversity statistics at the firm level to demands for greater diversity on the teams carrying out the work. As clients ask for metrics on the roles, responsibilities, and level of involvement of diverse team members, law firms leading on this front will work in partnership with their clients to align on diversity goals, learn from each other and collaborate on initiatives. At the heart of meeting client expectations is data.
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Law firms are developing comprehensive demographic data tracking systems that comply with privacy legislation. Some solutions even involve integrating diversity information with billing software. Client requests are leaning towards more transparency. Law firms achieve this through regular reporting so clients and law firms can see trends, have better-informed conversations about performance relative to a client’s diversity and inclusion goals, and discuss opportunities to partner on diversity and inclusion initiatives and programs.
Clients now request more specific data and, more importantly, hold firms accountable to ensure they staff teams with practice excellence and diversity in mind. These requests are a welcome catalyst for law firm change. The firms that use the data, bolstered by our clients’ voices, to implement short-term actions and longer-term succession plans that support the career success of diverse lawyers are the firms that will truly move the needle on diversity in the legal profession.
Rethinking work allocation
The diversity of legal teams carrying out work for clients has been traditionally driven by the demographics of the legal service provider more generally but also by specific staffing decisions made by the lawyer leading the project. However, law firms are moving away from “open market” systems where senior lawyers choose which junior lawyers will support them. While the traditional approach may have had its benefits – including autonomy for partners and avoiding delays in assigning work – it also allowed partners’ unconscious biases to seep into the decision-making process when delegating work.
Providing better support for a firm’s diversity and inclusion goals is reason enough to rethink how firms make staffing decisions, but structured work allocation systems offer other benefits as well:
- More equitable distribution of work between associates (reducing the capacity of under-used associates and avoiding burnout amongst those who are at or over capacity);
- Better matching of associate skill sets to the requirements of the work;
- Supporting the professional development goals of associates; and
- Efficiency in finding available and appropriately skilled associates.
As with diversity and inclusion programs, there is an emerging market of companies whose work allocation software systems involve extensive data collection, suggest file staffing based on data in the system, and track the progress on matters. The software can also track the development goals of associates and collect feedback from associates at specified times during the assigned project. Firms can generate dashboards from work allocation systems that allow practice group leaders or regional managing partners to understand better how the firm is allocating work at a macro level.
The rise of flexible work
The career paths of law school graduates have become far less predictable over the past decade. After practising at prominent law firms or in-house, many lawyers decide that while they want to continue to carry out interesting work for clients, they would like greater work-life balance and increased flexibility in choosing projects.
For several years, in-house legal departments have been utilizing alternative legal service providers (ALSPs) to assist with overflow work when they have a shortage of in-house resources to manage those matters. Some law firms in Canada and the US have entered this space by setting up captive ALSPs with rosters of high-calibre and experienced contract lawyers who can carry out work for clients at a significantly lower cost than law firm associates. These firms are finding that winning and retaining work is no longer just about dealing with clients’ complex matters. It is now about day-to-day issues that in-house teams previously handled themselves or with help from more traditional ALSPs.
Some interesting developments that captive law firm ALSPs are experiencing include:
- A significant increase in demand for and supply of contract lawyer resources since the start of the pandemic;
- The implementation of software to make forecasting decisions and to match the supply of resources with the demand for those resources from clients;
- Sophisticated measurement systems to ensure that clients are satisfied with the quality of the services delivered by contract lawyers, such as net promoter score (NPS) surveys, enabling a prompt response if clients have any concerns about the quality of work; and
- Quantitative data reflect the significant cost savings generated by using lower-cost contract lawyer resources instead of or as a supplement to traditional law firm staffing models.
Data-driven insights are significantly changing how lawyers work. They can help to change behaviours, promote equity, diversity and inclusion, and support flexible work models. But firms also use data to proactively respond to clients’ evolving needs.