Legal Analytics: The Future of Intelligent Design
Baseball has always been a game of numbers. 715, 61, 1901, 511, 1.12 … those bare numbers carry added value when attached to significant historical accomplishments. Of course, it’s difficult to compare numbers across different eras, especially when each era features its own brand of performance enhancers: from dead balls to spit balls, greenies to steroids. But much of what gets baseball statheads off is comparing players. “Comps“ are rampant in both analytics and fantasy circles. If the object is to make comparisons, then the central question is which particular statistics will be compared.
The search for more relevant analytics in baseball (the study has been coined “sabermetrics“) represents a quest to get at a player’s intrinsic value by excluding as many external factors as possible. If a player’s true value can be determined in a relative vacuum, he can be compared against another player in his own comparative vacuum.
Take, by way of example, the history of ERA (earned run average), a very simple statistic that tracks the number of earned runs a pitcher yields every nine innings (the length of a standard game). ERA was likely invented by Henry Chadwick sometime in the second half of the 19th century, and it remains the casual fan’s number-two metric for determining a pitcher’s success (wins are first, strikeouts are third). Yet, over time, more advanced statistics have been developed, the underlying notion of which is ERA does not effectively represent a pitcher’s value because it depends on too many factors outside a pitcher’s control, including team defense and park factors (how various home fields play). There are now a number of variations on the traditional ERA, including ERA+, PERA and QERA.
Associated statistics take aim at settling independent values for pitchers as well, including WHIP and FIP. With the development of advanced statistics, it’s far easier to compare pitchers’ relative worth in a way that better represents their inherent value.
Used correctly, these statistics become a way for teams to discover market inefficiencies. Teams that analyze more relevant statistics achieve a competitive advantage over the teams that use traditional, or less relevant, statistics, or that continue to rely on “the eye test.” Teams that subscribe to advanced metrics will invariably do a better job of sourcing players who are just good, rather than routinely turning over players who look good. This is how teams like the Oakland Athletics and Tampa Bay Rays remain competitive on small-market budgets.
The trend in sports for more and more discrete analytics is not limited to baseball. In basketball, for example, Daryl Morey, formerly an executive with the Celtics under Danny Ainge, has rebuilt the Houston Rockets by assembling a team that conforms with notions derived from advanced statistics. The movement is less a movement now than it is an established management practice. The Massachusetts Institute of Technology, in fact, hosts the annual Sloan Sports Analytics Conference, a forum for the sports statheads to meet and greet and to discuss new approaches.
Got Your Number?
So, here’s a number for you: Do you know how many analytics conferences there are for solo and small firm attorneys? Zero (0).
While large law firms do invest in statistical analysis, derived both from numbers aggregated internally and at an industry-wide level, smaller law firms do not generally maintain or manage statistics related to their businesses. In fact, most run their practices on a combination of gut reactions and guile, making ad hoc decisions based on what feels right at the time, rather than looking at numbers that might justify (or not) their movements.
In this way, solo and small firm lawyers are very much like “baseball men” prior to the Moneyball conversion. Once certain teams started making decisions based on hard numbers, rather than suppositions and unrefined projections, the new-school teams were able to pluck valuable players at a deep discount (and place them in better positions to succeed, ultimately) because the old-school teams did not have them appropriately valued. Now, that competitive advantage doesn’t last forever (although there’s something to be said for being the first mover). If the data analysis structure is in place, though, it also becomes easier to pivot toward new, as yet unrecognized, value propositions.
Of course, the analogy extended from baseball to law practice is not perfectly apt. Clearly, there are differences in drafting a baseball player versus targeting client marketing. Data appropriately defined, however, can help both baseball GMs and business owners make more informed decisions. If a solo attorney, for example, creates a statistical breakdown that represents a hypothetical best client, doesn’t that make it easier for her to market her law firm and position it to reach more of those sorts of clients? The old saw is that knowledge is power; and that is the thrust of the argument here as well.
I don’t know that there will ever actually be a legal analytics conference for the solo and small firm world, but it would be cool if it came to pass. Still, even if solo and small firm lawyers never develop and utilize advanced statistics related to their law practices, applying some relatively simple statistical analysis will serve them well.
As you might imagine, I have some suggestions about how well.
Using Data in Your Law Practice
Let’s take that broad example of law firm marketing and flesh it out some. The way you collect and use data in your practice can (and should) affect, at the very least, your client intake, marketing planning, return on investment analysis and potential client targeting. Let’s consider each in its turn.
- Most lawyers have an intake form, which ends up attached to the client’s file. There are usually two drawbacks here: (1) the forms are not broad enough in what they collect; and (2) lawyers don’t analyze the data they collect. To create a useful intake form, you must offer meaningful choices. How did these potential clients find you? Provide checkboxes for all of your marketing outlets — and encourage selecting more than one option, since it’s likely someone will have heard about you more than once before deciding to hire you. Capture that decision point. Once the relevant data has been collected, look at it. Figure out where your client inquiries come from, and which clients you end up representing. This will tell you if the marketing channels you think are working are actually working. You’ll only know if you collect and manage the data. It’s a deceptively simple thing to do, yet people often bypass ready data for their feelings about what that data should look like; but it’s more than a feeling. (Yes, I just did that.)
- Your marketing plan should be data-driven as well. You should update it as you change your marketing endeavors, based on the data you collect respecting your relative success or failure in prior marketing attempts.
- Likewise, feeding your data through an ROI formula will allow you to revise your marketing plan in a way that is informed and coherent.
- Once you have a statistical compendium of your best clients, you can tailor your marketing to those potentials, through the channels via which they access their information. As that point, your vetting is reduced because you end up signing up the clients you want far more often than you’re wading through those you don’t. See that, it’s just like Harry Chapin said: “All (your) life’s a circle.”
Of course, this extends beyond the marketing construct.
- Can’t you judge an associate attorney’s effectiveness, at least in part, based on data?
- Success rate in litigation?
- Average hours billed on common transactional projects, in comparison with other attorneys in the firm with the same experience?
Emotional intelligence is so important in the workplace in part because employers often make hiring, firing and promotion decisions based almost entirely on likeability, rather than quantified performance. If you’re a small firm, how do you really know if one of your multiple practice areas is a dog, unless you capture your time effectively, and bill it out seasonably? If you’re pivoting in and out of practice areas without looking at even rudimentary revenue charts, you’re just guessing. Even if you’re charging out at flat rates, or contingencies, doesn’t it make sense to track your time anyway? This way, you can examine those logs and see where you might add efficiencies to your workflows.
Competitive Advantage? Be a Stathead for Your Practice
Given the prevalence of analytics in other industries (sports is just the example I chose), it is important for lawyers to take note of the competitive advantage effective statistical analysis supplies — at least dip your toes in the water. If you’re starting from scratch, the notion of collecting and monitoring data can be daunting, but there are some considerations that may make the concept a little less horrifying.
For one, the problem of “big data” (that all of the information that is or is going to be gathered cannot possibly be coherently classified on a large scale) is not your problem. Realize that your data is big enough data. Solo and small firm lawyers are not collecting Google-size data sets or purchasing expensive systems to leverage industry-wide data. You will gain a competitive advantage among similarly situated lawyers if you just collect and review data about your own practice, because your competitors are probably not doing that at all.
Know thyself, and you will make better decisions about your business.
Don’t totally ignore the broader industry trends, though. Take what the big firms are doing, and the software they’re using, and apply the processes to your own data. You may never get your hands on specific court-wide data on judges’ decision-making patterns, but you certainly can keep your own records. Then you can utilize your own data to figure out how judges have ruled in cases and motions involving you and your colleagues.
The more information you collect, the less likely it is you’ll be relying on outlying data, and the closer you’ll be getting to accurately predicting results.
When You Analyze Your Figures, Look for Trends
If you can use data to spot trends before your competitors do, that’s probably about as close to foresight as you’re going to get in this life. If you can pinpoint a sub-area within one of your practice niches where there is a recent uptick in business that seems like it might hold, and you start marketing directly for more cases in that area, you’ll gain that first-mover advantage, and may never cede the head start. By the time your competitors catch up, you may have already set yourself up as the go-to expert in a burgeoning field.
If you track your time and find inefficiencies, curing those inefficiencies will afford you more time to do billable work, or to carve out new marketing niches based on your data projections.
The upshot of all of this (both this paragraph and the preceding couple thousand or so words) is the more you rely on your internal information systems to make informed decisions about your practice, the less likely you will be to lean on “anecdata”— anecdotal hunches about what works and what does not work for your business.
The answer to taking the guesswork out of your business decisions is to instead place your faith in the hard numbers.
A Moment to Remember
I recently learned that the daughter of a fellow Saint Anselm College alumnus, and one whose college career overlapped with my own, has died. She passed away in her sleep and was only 2½ years old; she had shown no signs of illness prior to her death. Her father has established a memorial fund for her, which will be applied in an entirely inventive fashion: He and his wife will select a family at random, and give to them the entirety of the funds collected, under the express condition that the family use all of the money to take their own daughter on a lavish vacation, and then share the experience with his family.
If you’re looking for a unique reason to donate to a charitable cause, here it is. Consider a contribution to Savannah’s Stolen Moment Campaign.
Jared Correia is Assistant Director and Senior Law Practice Advisor at the Massachusetts Law Office Management Assistance Program. Prior to joining LOMAP, he was the Publications Attorney for the Massachusetts Bar Association. Before that, he worked as a private practice lawyer. Jared is the author of Twitter in One Hour for Lawyers. He writes on practice management topics for Attorney at Work here, and for the LOMAP blog here. Follow @jaredcorreia.