More on data metrics

In my last column, I wrote about the expected adoption of J-codes in litigation matters, and how it is likely that they will be adopted across all facets of time recording in law firms. This will create a huge amount of new data for firms, their clients and other industry players to explore. And what this means is that data is changing from something that is useful for compiling bills and speeding up document production to something that has much greater currency and the potential to drive some very interesting changes in the legal market.

Of course, that means that practice management systems have to change to accommodate task and phase information, and that may take a while, unless firms drive that change. Not everyone will welcome this change with open arms, but those with an eye on the future will know that it is not only inevitable but also likely to give their firm a potential competitive advantage.

Analysing data

Analysing their own data, especially when it has the detailed granularity that task and phase coding offers, will allow firms to produce much more accurate analyses of their performance. This is useful for both market comparison and analysing profitability and effectiveness across the gamut of matter types serviced by the firm. In a market where fixed pricing is becoming more prolific, firms will need to understand whether they are getting their pricing right.

Moreover, as the amount of data generated and made available grows, firms will be able to buy larger data sets and use this to compare data, which will provide them with a set of relative performance measures. The service is now available to law firms via third-party suppliers, and while it is still in its infancy, it’s clearly catching the imagination. Of course, as the data sets acquired by third parties grow, so does their usefulness both to firms and to those buying legal services.

For those concerned about privacy, the third parties gathering this data anonymise it before they load it into their systems, so that client and firm information is removed but the performance information is retained. Thus, you can accelerate the process by submitting your data.

I find it unlikely that this will always be the case. First, consumers of legal services are always on the lookout for better information about pricing and services, so the likelihood is that they will submit their billing information to third parties for analysis in order to understand whether they are getting value for money. The advance of big data storage and reporting techniques will allow firms and third parties to keep and manipulate enormous volumes of data, and to provide accurate and detailed information about legal services.

Task and phase recording

For larger panel clients, this is likely to mean not only scrutinising their legal spend more closely but also being able to break individual matters down into tasks and phases, which allows them to analyse individual components and potentially instruct firms on this basis in order to maximise value for money. This will more than likely change the way that consumers buy legal services.

For firms looking to gain an advantage from the wealth of information that task and phase recording brings, there are a few things to consider before you start. First, make the requisite changes to your practice management system. For litigation matters, J-codes can be readily used, but beyond that firms will need to look to uniform task-based management system (UTBMS) codes for task and phase information. Second, train staff accordingly, and ensure that you put system rules in place to prevent users from recording time incorrectly.

Once you have good data going in, you need to reconfigure your reporting systems to ensure that you can get useful information out of them. This is not just about buying new software or writing complex queries. You need to plan what you want to extract from the system in a strategic way: define goals, understand how you will use the information, and build methods to qualify the accuracy and quality of the output.It is also likely to push firms to employ data analysts, not something that is hugely prevalent in the legal industry at present.

Data will in due course prove to be the most valuable technical asset that a firm employs. Firms should embrace that notion now, and prepare themselves accordingly. SJ

Damian Blackburn is the director of legal IT consultancy firm SLFtech

@Damian_SLFtech