PredictiveLawFirmOne of the trends wrought by the new era of technology is to reimagine your product or service as a new category. Hotmail isn’t an email service, it is the web as a platform (since Hotmail is a web-based service). Tesla isn’t a car company, it is an automaker as an energy company (since a driving force behind Tesla’s success is the battery technology). It seems that products and services are no longer what they appear to be, they are merely portals to something else.

While the renaming game might seem like semantics — a way to gussy up a product or service that is what it is (Hotmail is an email system, Tesla is a car), to others it brings a fresh perspective to what you can do with an evolving technology. Today, we have lots of services using the web as a platform, and Tesla’s work in batteries has expanded the ways we can store power in homes and businesses. This discussion naturally leads to the question: is a law firm really a law firm?

The Law Firms Of The Past

Let’s start with where law firms have been. For roughly 100 years, the era during which law firms grew from one or two person entities to the size they are today, law firms have been service providers. The operating model was straightforward. Clients had problems and needed solutions. If the clients believed the solutions lay within the domain of lawyers, the clients went to law firms. The lawyers listened to the problems, did whatever research was appropriate, and then presented solutions. This is, of course, a simplified version of the model, but one that still functions today.

One of the many challenges to this model falls in the middle part, where I said “did whatever research was appropriate.” Think back to the pictures you have seen of lawyers’ offices in the early 1900s. Not many law books in their libraries. Research was easier and often involved knowing a small group of cases relevant to an issue.

We all know the story. The number of trial court decisions, appellate decisions, statutes, regulations, codes, and other materials a lawyer needs to consult to do that appropriate research has exploded. A search a few decades ago that found a few dozen cases today may yield a few thousand cases. In a recent decision getting some visibility, a Federal appellate court judge did some Internet research to supplement his analysis. Why? Because, according to the judge, the parties to the dispute weren’t getting to the court all of the information it needed. The volume of information relevant to a decision grows every minute.

Another way of thinking about the issue is to describe this voluminous data as a set of data sets. For example, one data set could be case law. Another data set could be statutes, and so on. Using this approach, what exists in the computers of a law firm could be a data set or multiple data sets. This isn’t a new idea, and I’m sure there are many knowledge management experts yawning at this point (and picking apart my description), so I’ll move on.

The important point is to start thinking about much of what lawyers work with and have stored in their systems as data, which then generates the question – what do we do with this data? Do we let the data sit and just call upon it (assuming we can find it) when we need to answer a question? Or, do we find a greater purpose for it? So far, we haven’t done much because the data isn’t easily accessible or isn’t very easy to use.

The Law Firms of the Future

Instead of thinking about the law firm as a service provider, let’s think about it as a data warehouse. Within its computers exists a tremendous amount of information about clients, behaviors, and outcomes. Each lawsuit, counseling session, and drafted document contains information about how clients operate, where they have risks, and where they have opportunities.

Many industry observers have commented on the failure of firms to build robust knowledge management systems to access and use this information. But, when they talk about knowledge management they usually use the term in a traditional sense. They talk about having access to the information so lawyers don’t reinvent the wheel. If I could easily access what happened in other similar matters my firm has handled, I could get to a client solution more quickly and efficiently than if I start building the wheel myself.

Another approach, is to think of the law firm data warehouse as a tool to use in predicting behaviors. Right now, I’m not aware of any law firm that could do what I’m about to describe and I don’t think any are even close. But, if we don’t imagine the future, it will be harder to get there.

The law firms of the future could track the data streams coming in and going out to build very interesting data warehouses. The information stored in their computers would move beyond simple knowledge management into very interesting data sets. With those data sets, lawyers (or at least technologists working with lawyers) could build models to use in predictive analytics.

What would be in these data sets? Instead of tracking descriptive information about the document (client name, date created, matter name, type of matter, etc.) the data captured would be client relevant. For single plaintiff employment cases, it might be demographic information about the plaintiff, geographic information about the employment locus, and information about the claim specifics. Assume we identified two dozen data points and captured them for every case. Within a year, the data set at a firm that handles a substantial number of these cases would be quite impressive.

From that data set, we could start running predictive analytics models. We would start learning about the triggers for claims and what behaviors to avoid. Combined with external data sets (the EEOC makes available information about claim frequency and outcome), we could build a model that prompts some questions. What things should a business do to reduce or avoid certain types of claims? Where should a business do more training? What type of training would help?

Instead of driving behaviors based on experience and what an individual lawyers has seen, we would drive behaviors based on broader data sets and more representative information. Most importantly, we would have flipped the legal service delivery model on its head. The law firm as reactive legal service provider becomes the proactive predictive analytics firm helping clients reduce risk.

The Clients of the Future

If the role of many lawyers evolves to predictive rather than reactive, why won’t clients take on this responsibility and stop using law firm lawyers? They won’t for many of the same reasons IT departments and HR departments outsource some of their work. The skills needed to do high quality predictive lawyering will not be easy, or even cheap, to come by. Those law departments with ten or fewer lawyers certainly won’t hire teams of data scientists and social scientists any more than they hire teams of legal specialists today.

Larger departments will have the option of hiring the teams necessary to do predictive lawyering, but will have to address many issues if they want to do so. Will law departments want to become data analytics hubs? Will they have the tools and resources to support teams? Should it be the function of a law department to do predictive analytics?

IT and HR departments learned long ago that their value to organizations often doesn’t lie in data crunching, it is in taking on strategic tasks. Law departments that are bulking up today would be wise to look at departments that have gone before them and ask whether taking on lots of in-house lawyers is the best way to use limited resources. I think a better path to the future for mainstream lawyering will be using in-house resources to do strategic work, built on analytical work done outside.

What Will Law Firms Become

Some percentage of law firms tomorrow will still resemble law firms of the past. These may be the very high end, bespoke work firms, the so-called “bet the company” law firms. But, there is a very interesting space for law firms that see the future as a combination of humans and technology. For those firms, understanding that they are data enterprises — just like retailers are data enterprises using their interactions with customers to predict what will sell and at what price — could drive an entirely new type of legal service model. These new firms will use data scientists, technologists, and even social scientists to build business models around proactively helping clients. These will be the predictive analytics law firms.