The new era of data metrics

In September 2014, the agreed list of J-codes for litigation was published with very little fanfare. While this may have escaped mainstream attention, it is nonetheless a major step forward for the budgeting of litigation cases. This obviously only affects those involved in litigation cases at the moment, but it does herald what are, arguably, two inevitable developments in the legal world.

First, the use of a standard set of codes for certain case types across the industry gives everyone involved a chance to start looking at using data metrics to analyse performance, both within law firms and between law firms. Of course, that is not what the codes were designed for, but it is a powerful side effect of this standardisation. The codes split litigation cases into phases, and then into tasks within the phases.

If you are still none the wiser, the codes that have been ratified are to be used when budgeting for litigation cases of up to £10m in value. As these budgets must be monitored, law firm's time-recording systems will need to be organised to work with the same codes. When you think about that for a minute, you realise that all firms will now (in theory) be recording information in these types of cases using exactly the same descriptive convention.

If all firms are using the same methodology to record time on certain matters, this gives rise to the notion that by combining and mining this information, you can gain a perspective on firm's efficiencies relative to their competitors'. It also means that law firms get a new set of information to use when monitoring internal efficiency, which has repercussions for measuring staff performance as well as for measuring the effectiveness of the budgeting process and the valuing of fixed-price work. And it doesn't stop there - firms should also be able to garner more insightful information about how efficient they are at various types of work, which could have an effect on the strategic direction of a firm.

While none of this may sound like the sort of thing you would normally read in a technology column, it is really a pointer to where legal technology is heading over the next few years. The legal IT industry has stretched the use of hardware and software technology to the point where it is difficult to see any quantum changes in these areas. However, data examination and manipulation is very much in its infancy and the availability of standardised information, combined with the likes of big data storage and retrieval techniques, is likely to have a telling effect on law firms over the next few years.

This effect is likely to manifest in two broad ways: the ability for firms to analyse their own data for information about their own performance, and also the ability for third parties to analyse law firm performance and pricing across the industry.

US pressure

Law firms capture a wealth of data in their time-recording and practice management systems, and the change to standardised codes will enhance most firms' data sets. This leads into my second inevitable development: the use of standardised codes will eventually wash through all the work undertaken by law firms. This will happen for a number of reasons, but is most likely to be driven by larger clients demanding more granular and standardised information, and pressure from the US, where code standardisation is more advanced than it is here.

At the point where all time data is recorded using standardised codes, there will be so much more that can be gleaned in terms of data metrics. In the UK, there will be an inevitable scramble to change practice management systems to fall into line with the new J-codes for litigation. Many will see this as an imposition, and possibly even a threat to established practices, but more forward-thinking firms will recognise the potential that using standardised codes could bring, and the advantages of adopting them, beyond litigation matters, before market forces eventually impose them.

The days of static reporting in, and about, law firms is over, and the new era of data commonality will usher in challenges that require more than lip service to a set of codes.

POCKET NOTES

Damian Blackburn is the director of legal IT consultancy firm SLFtech