The business dynamic between in-house legal teams and law firms is a driving force behind legal analytics adoption, say Lex Machina CEO Karl Harris and Law360 legal-tech reporter Steven Lerner.
Legal analytics tools have been around for almost two decades but their use has spiked as law firms turn to them to win more business from in-house legal teams, and in-house teams, in turn, come to expect firms to use the tools.
“A lot of it is pressure from macro challenges in the economy,” said Lerner, who spoke with Harris on a podcast to discuss results of a survey conducted by Lex Machina, a legal analytics software company acquired by LexisNexis in 2015. “Law firms are going to need as many tools as possible to live up to that higher pressure and all the challenges they face. And that includes the legal analytics.”
The tools typically fall into two buckets: one for building business and one for improving the practice of law.
Business-building tools help law firms secure corporate clients by enabling them to showcase their litigation win-loss record and how they’re capable of working at an efficient price point based on how quickly they can resolve cases and with what resources, among factors like that.
“Pricing is a data-driven exercise,” said Harris. “How long is the case likely to last? How active is the case likely to be? Those data points [help you] set expectations with clients.”
On the law practice side, the tools give firms intelligence on judges and the performance of other firms.
“You could say, ‘Show me the 10 last motions in cases similar to mine that were granted,’” said Harris. “So, that's what wins. ‘Show me the last 10 motions in cases similar to mine that lost.’ That's what loses. Then, you could now try to leverage these large language models to write those briefs, write those motions, in language that is similar to the judge or using winning language.”
The Lex Machina survey looks at the use of analytics among 800 legal professionals and found nearly 7 out of 10 use some form of the tools today, and among 99% of users, along with 85% of non-users, the tools are considered valuable.
“That's nearly every single person that uses legal analytics,” said Harris.
In-house teams aren’t letting economic uncertainty slow their investment in technology, including spend management tools, which are becoming integral because of cost constraints they’re under, Lerner said.
“They're really trying to cut down their cost of outside counsel,” he said.
One way legal departments are lowering costs is bringing more work in-house, but they’re also expecting law firms to offer alternative fee arrangements, for which they’re turning to the tools to help them structure.
“A lot of firms are going to have to make the business case for their in-house clients to show them why they're best equipped to handle their outside legal needs,” Lerner said. “Legal departments are asking for it. They're asking for it more now than they did years ago, because they're under more economic pressures themselves. It's going to keep growing, if I were to guess.”
