Big data has sparked a revolution in how corporate America conducts research, identifies customers, advertises itself, and pursues profits. But just as big data has enormous implications for corporate clients, it has equally important consequences for the business and practice of law — business of law, meaning how firms are structured, managed and financed, and practice of law, meaning how attorneys perform legal work on behalf of clients.
Compared to other modern professional services organizations, law firms generate very little actual data. In addition to providing great fodder for lawyer jokes, this fact means that law firms are unlikely to use internally produced big data to drive client outreach or management strategy.
But it doesn’t mean that big data won’t affect how law firms do business. Already, some of the most sophisticated clients are using big data to manage their legal spending. Some clients are vetting law firms based on meta-analyses of bills; others are holding reverse auctions and using requests for proposal heavily based on law firm use of technology. Some clients, especially insurers, are using extensive relational databases to supervise litigation and manage costs. On the backend, clients are using big data to analyze their bills. They can determine whether there were any violations of client guidelines, and reject fees and expenses that violate set parameters. They can also do comparative analyses to make sure that attorney tasks are being billed in line with market trends and historical precedent.