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Practice Innovations - Managing in a changing legal environment
Gray Rule
July 2014 | VOLUME 15, NUMBER 3
Gray Rule
Big Law: Big Data
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IN THIS ISSUE:
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»Teaching Legal Research to the Google Generation
»Paying Attention to the Canaries in KM's Mineshaft
»Law Firm Space Planning as a Knowledge Management Strategy
»Crowdsourcing and Work Synergies
»Big Law: Big Data
»Managing Risk Disruption Through Internal Risk Structures: An interview with Donald Caputo, Chief Internal Auditor, Shearman & Sterling
»Risk Avoidance through Succession Planning
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Big Law: Big DataLynn R. Watson, Director of Information Resource Technologies, Hogan Lovells US LLP, Washington, DC
Big Data is all around us; we all experience it and we all contribute to it whether we realize it or not. Law firms are no different, and in many ways are being impacted more than it appears on the surface. Big data is impacting the way attorneys practice law, how they manage their business, and how they interact and relate with their clients. Although big data can be leveraged and used as a differentiator, in some respects, it also has the ability to level the playing field as the free flow of information leads to greater transparency in the field of law.

"The statistics are stunning: about 90% of all the data in the world has been generated in the past two years (a statistic that is holding roughly true even as time passes). There are about 2.7 zettabytes of data in the digital universe, where 1ZB of data is a billion terabytes (a typical computer hard drive these days can hold about 0.5TB, or 500 gigabytes). IBM predicts that will hit 8ZB by 2015. Facebook alone stores and analyses more than 50 petabytes (50,000 TB) of data."

—Charles Arthur, The Guardian

That's a Lot of Data!

Gartner attributes the exponential growth described above to what it calls the "Nexus of Forces:" the convergence of social, mobile, and cloud information. Although these factors have facilitated the growth, it's the "Always-on Generation" that is actually spurring the data explosion.1 The common identifying factor of this new generation isn't an age bracket, but rather, their need to document, store and share nearly every moment of their lives. If you take a minute and reflect on your own personal practices, you'll inevitably find some of the traits lurking within yourself. Undoubtedly, you have accounts with a multitude of sites for everything from retail and travel to social and financial, including several personal email accounts, plus:

  • Facebook®
  • Twitter®
  • Instagram®
  • Box® or Dropbox®
  • Amazon®
  • iTunes® or GooglePlay®
  • Evernote®
  • Netflix®

... You get the idea. You log in and you tweet and retweet, search, read, comment, email, save files, tag photos, check-in, and stream. You're connected, and all the time, via your PC, laptop, smartphone, and tablet. And with cellular data plans and Wi-Fi hotspots, your ability to connect is ubiquitous.

Big Data from Individual to Organization

Here are a few quick facts by which you can gauge your contribution to the big data explosion:2

  • People send more than 144.8 billion email messages every day.
  • There are more than 340 million tweets sent every day.
  • Google receives over 2 million search queries a minute.
  • 100 TB of data is uploaded daily to Facebook.
  • YouTube users upload 48 hours of new video every minute of the day.

Aside from the data that people are consciously generating, there is a wealth of information that companies like Google, Apple, Amazon, and Facebook are collecting in the background. With every visit, they store information such as your device and operating system, your ISP, your location, the date and time, your search terms, your browser, your email address, your click-throughs, your IP address, other IP addresses you may have visited, etc. Even small organizations can easily obtain and store these same types of data points using a myriad of tools available for collecting "machine data."

In addition to collecting data that directly impacts their front office operations, many organizations are leveraging these same capabilities to collect data that they can leverage to streamline their back office operations. For example, companies are collecting data such as invoice and payment information, on-time statistics for supply chain partners, product and sales information, performance metrics, etc. Companies have discovered that by leveraging big data, they can directly impact all aspects of their business, and the concept is quickly spreading across all industries.

Legal Industry and Big Data

There is a level of irony to law firms and big data: traditionally, law firms are not huge generators of data,3 and conventionally, they are not at the forefront of technology, but law firms are getting hit with big data from all sides. Big data is affecting how attorneys practice law, how they are managing their firms, and how they are interacting with their clients.

Effects on the Practice of Law

If anyone has felt the immediate effects of big data, it's the firm's e-discovery attorneys. All of the emails and data being collected and generated by corporate clients is potential fodder for a case. A single matter can potentially bring in terabytes of data that need to be sifted through, sorted and analyzed. To help manage the process, the expectations, and to instill a sense of reasonableness, the US Federal courts instituted Rule 26 of the FRCP which includes the required meet and confer between parties in the early stages of the engagement.4 This meeting is meant to set the ground rules for how discovery is going to be played out. During this phase, the parties collaborate to determine who the relevant custodians are, what timeframes are relevant, how the information should be collected, how it should be produced, and when. In order to effectively engage in these negotiations, the attorneys need to have a real understanding of the relevant data stores and the underlying technologies. They need to know that the data is just as likely to be sitting in the cloud as on a local hard drive, and they need to know that it's possible that relevant facts may be in an email, or may be found on a social networking site like Facebook. Furthermore, relevant data may not be data that was drafted or created by the party in question, but it could be something stored that was generated by a machine—such as the device that was used or the OS on the originating system.

And it doesn't end there. Once you've collected the data in question, the next step is to review it and to produce it. Assigning 20 attorneys to review the data in a closed case room for a week is no longer an option. To deal with these new volumes of electronic data, often a hybrid approach is necessary. Early Case Assessment tools are used to cull the data to a more manageable set so that people with expertise can take over and focus on the most relevant data that remains. Of course, the underlying understanding is that you are protecting your client's data and their privacy by securing the data in question throughout the life cycle of the case.

There was a time when attorneys would start this review process rolling, hand the reigns over to Litigation Support, and back away until they were handed documents for review. However, according to the recently revised Model Rules of Professional Conduct put forth by the ABA, it's no longer an option to plead technology ignorance. Attorneys now have an ethical obligation to their clients to keep up with technology relevant to them and their representation, and they also have a commitment to protect the client's information.5 Attorneys and firms now personally assume the risk associated with how technology is employed when handling their cases.

Of course, big data is also providing new opportunities. There are a myriad of legal issues swirling around big data and its management. There are privacy and security concerns, consumer protection issues, compliance requirements (both in the US and internationally), information governance questions, risk management concerns, etc. Assimilating the disparate data points from their data stores, companies are led to practices that walk a fine line and introduce issues such as consumer profiling, which could lead to questions of discrimination. Furthermore, if a company compiles the data but the veracity of the data comes into question, what are the legal issues and potential consequences? Given that big data is permeating all industries, the real question is whether or not these are questions left to a specialized few, or are these areas of concern that all attorneys should be versed in?6

Effects on the Business of Law

It's an opportune time for firms to begin leveraging the potential of big data. The recent recession has taken its toll, and the existing business model of most law firms is unsustainable in the new marketplace. In order to succeed going forward, law firms need to take a few leads from their corporate counterparts. Gone are the days of unstructured billing arrangements based on unpredictable billable hours and ever increasing hourly rates. Law firms are now confronted with new mandates from their clients to provide accurate billing estimates, alternative fee arrangements, and proof of adherence to legal project management principles and practices. In order to successfully engage on this new playing field, firms need to have a solid understanding of the resources and costs involved in undertaking different types of client work and they need to be able to attain new levels of efficiency.7 Some of the required information can be harvested by analyzing existing data sets, such as the firm's accounting system, the time entry system, perhaps the metrics from the document review system, etc. By being able to marry pieces of information together from disparate systems regardless of the format, attorneys can leverage some of the same technologies as their corporate counterparts, and in doing so, they can start to learn a lot more about their business. For example, the firm can better assess the human resources required for a case, the work breakdown structure by required level of expertise, the potential profitability of a case, and other metrics based on past cases of a similar size and nature. It is worth noting that for most firms this is currently a very difficult proposition because of the state of the historical data that has been collected.

Although not typically producers of big data, law firms are in a position to benefit from big data and big data analytics that can be provided by third parties. Thomson Reuters' Peer Monitor® is one such offering. This product leverages data that would not otherwise be available to individual firms: competitors' billing and expense information straight from their billing systems. Using Peer Monitor, firms can get a sense of how they're performing in the market among comparable firms and use the information to help set billing rates, assess productivity, and review expenses.8

Of course, just as law firms have access to data, so do clients. Clients, especially corporate clients, are quite adept at collecting and analyzing data. When companies spread their legal work among 10 or 20 firms, it is easy for them to start to collect data and begin to analyze it. Which firms am I paying the most to? Which firms are more likely to provide me with partner level versus associate level attention? Which firms are more efficiently able to handle this type of matter and/or have been more successful in handling this type of matter in the past? In addition to the data they are collecting on their own, clients also have the option of leveraging data provided by third parties. Lexis has a product that is part of Lexis Advance called Counsel Benchmarking® which they are marketing directly to clients. With this tool, clients can compare rates between firms, review firm productivity, compare rates between partners, associates, and paralegals.9

Facing Big Data Head On

Firms are getting hit with big data from all directions: from clients, from within, and from vendors. Clients are using big data to negotiate better rates and to determine the real viability of a case before sinking time and money into it. When they do opt to move forward, they are holding firms to the same standards as any other business partner: firms need to have insight and control over their internal processes. Once the client's business has been secured, the firm has the responsibility of collecting and managing the volumes of data associated with the case, securing and protecting that data, and quickly reviewing and analyzing it. When properly understood and managed across each of these areas, big data is a potential differentiator among firms, and as such will determine which firms secure business in the future.

SOURCES

  1. Mellink, Bart. The Nexus of Forces. Tech. Gartner Consulting, 6 June 2013. Web. 20 Apr. 2014.
  2. Conner, Marcia. "Data on Big Data." Web blog post. Marc!a Conner. 18 July 2013. Web. 01 May 2014.
  3. Walton, David J. "How Lawyers and Law Firms Operate in a Big Data World." How Lawyers and Law Firms Operate in a Big Data World. InsideCounsel.com, 11 Apr. 2014. Web. 10 May 2014.
  4. Supra, note 3.
  5. Supra, note 3.
  6. Supra, note 3.
  7. Harris, Derrick. "How New Tech Can Help Lawyers Rethink Their Jobs in the Big Data Age." Gigaom. Gigaom, 31 Dec. 2013. Web. 4 May 2014.
  8. Ambrogi, Robert. "2 New Tools Allow You to Compare Major Firms' Billing Rates." ABA Journal May, 2014 (2014). ABA Journal. American Bar Association, 1 May 2014. Web. 10 Mar. 2014.
  9. Supra, note 8.

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