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All businesses should be guided by data, and law firms or legal departments are no different. Of course, there will never be a substitute for wise and experience-driven decision-making – but taking these decisions against the background of much more solid information will improve them tremendously. Fortunately, there is now an increasingly wide array of software and other tools for legal businesses to capture data about their operations. Here, we’d like to share some of the main advantages of doing so, to help legal businesses start thinking about where they might like to invest in legal analytics.
Make informed decisions on hiring
There are nowadays a number of options when it comes to taking on staff. Of course, the backbone of any firm or in-house team is a core of great lawyers permanently on the books. But given that the world is getting increasingly specialized, it’s sometimes necessary to bring in some outside help to ensure you are not stumped by that niche question about international aviation law that’s been troubling one of your key clients. (Legal.io’s Flex Counsel services is an excellent way to accomplish this). Furthermore, taking on temporary staff might be the best way to cover periodic spikes in your workload, maternity leave, or a spate of absences among your main team.
But what is the most efficient way to go about these decisions? Legal analytics can help you answer these questions in an informed manner. For example, spending $1 million per year on external counsel might seem like a huge expense, and some partners might be pressing for this bill to be slashed. But has there been a decrease in suits or complaints against the firm since this outlay was made, and if so how much is this worth? Has your firm been able to take on cases that it wouldn’t previously have had the expertise to run by itself, and if so how much has this additional work brought in?
If you’re armed by some numbers, you’ll be able to make much better decisions when it comes to whether to take on external counsel, recruit new staff, or – if need be – decline work that lies too far outside your specialisms to be profitable for you and your firm.
Set appropriate targets
Few things are more demotivating for employees than targets that are unrealistic. And expecting your lawyers to hit a greater fee target than they can manage will only lead to poor forecasting in your own strategic planning. This means that getting targets right matters.
But how to come up with appropriate targets for your lawyers? Well, you shouldn’t be simply shooting in the dark. Know what the average hourly client spend is for the different departments in your firm, how many clients are coming in per month in each field, and so on. Then think carefully about where your lawyers’ time should be going and how much they should be making against this background. In other words, ensure targets are realistic by making data-based choices.
Ensure you can justify your work
When it comes to in-house legal departments, legal teams’ work can go unnoticed. The lawyers are there as a resource to be used when problems arise and forgotten about once the issue has resolved. But the rest of the company can sometimes forget that legal work is continuous and adds positive value to the business in itself.
Ensure you have data on how many matters you have opened and closed each month, and how much time and money is being spent and saved per matter. If you are involved in a wider project like designing a better process for patent capturing, try to record evidence of how this has changed the business’ operation. That will help you justify the department’s work.
All told, the more information we have, the better. Legal analytics can be a powerful tool for ensuring decisions are made in the most informed way possible, to the benefit of all concerned.