Internal Data Meets External Metrics: Make big data more than a buzzword by benchmarking against industry peers

Tuesday, May 31, 2016 - 16:47

The benefits of big data can be obscured by the buzz surrounding the phrase itself. David Moran and Bill Sowinski of Wolters Kluwer ELM Solutions go beyond the hype to discuss what metrics corporate legal departments should implement and how GCs can use benchmark data to ensure that their departments contribute to the company’s overall profitability. Their remarks have been edited for length and style.

MCC: Tell us a little bit about your backgrounds and roles. What is your experience working with big data in the legal industry?

Moran: I’ve been at Wolters Kluwer ELM Solutions for eight years. I began in the implementation department, and then about seven years ago I moved to product management. One of the first things I did was help create the LegalVIEW® data warehouse, the world’s largest database of legal spending and matter management information, which is gathered voluntarily from corporate legal departments. From LegalVIEW® we can identify and suggest best-in-class metrics and benchmarks for clients to implement. 

My current role is senior director of product management for legal analytics. In addition, I oversee the data warehouse and market metrics. I work closely with clients to help them understand their own data and improve the operational efficiency and performance of their legal department.

Sowinski: My background is as a litigator. At one previous employer, our strategy was to accumulate large amounts of information about our matters, plaintiffs, codefendants and internal documents. I worked with my IT department to combine that data and generate information to devise strategies that significantly improved our business results. Relying on some of that experience, I do the same sort of thing at ELM Solutions but for a variety of clients and with many different types of data.

MCC: “Big data” is a catchphrase across industries these days, but why is it important in a corporate legal setting, and does it truly provide value?

Moran: Data itself – the internal data that legal departments gather from various systems, like those that ELM Solutions provides – is very helpful to departments’ internal goals in understanding what is going on in their matters. But it also supports the company as a whole and its profitability, in that understanding the data can mitigate risk and, if they have spend information, sometimes even lower costs.

Legal departments right now are internally focused because that is where their information is. Big data allows them to turn outward and see the results as compared with their peers, to see how they stack up. It allows them to see what the typical spend is for certain types of work, whether they are able to keep budgets like other companies, and more importantly, to drill down into more granular information in an apples-to-apples comparison.

Sowinski: Big data feeds data intelligence, and that leverages the expertise of really good resources and ensures that everybody stays properly focused. Data is an important supplement to but not a replacement for the personal expertise of the legal and operations professionals.

The beauty of data is that it’s not difficult to obtain; the worldwide amount of recorded data doubles every two years. Once you have the information, the hardware and software do all the work. It becomes an invaluable, highly scalable resource that can be extraordinarily effective when used by big companies, small companies, insurers and law firms.

MCC: Can data ever be too big? How can general counsel ensure that they and their staff are not overwhelmed by the volume of data available?

Moran: No, data can never be too big. It’s more important that when we think of big data, we also think about business intelligence and its evolution and capabilities. In today’s world there are many BI software tools that allow us to use desktop computers to distill large amounts of information. What used to take hours now takes seconds and focuses that legal department attorney on actionable information. If you can collect that data, it’s never too much; it’s more that you have the right systems in place to allow that focus.

Sowinski: I agree. The issue is not simply the amount of information; it’s the imposition of discipline to capture purposeful, accurate information and then use the required subsets. You need discipline to clearly identify the questions you want answered, and then you access the relevant information to address those questions. The key thing is to bring discipline relative to the capture of the information and its use – the computer does all the rest.

Moran: Also, it’s important to remember that you don’t want data for data’s sake. As a legal department, think strategically about what data you want for what purposes. Collect it either internally, using systems like Passport®, or tap into external sources. Allow people to access only the relevant information that is driving your department.

We tell clients to begin at the core metrics that drive your business around your spend and build over time. Don’t try to do everything at once. Start thinking from your base staff and look outward from there. The ability to use data with business intelligence software tools combined with their own expertise – be it internally or externally with some of the additional services we provide here at Wolters Kluwer ELM Solutions – is paramount to bringing information to the forefront, to a point where people can use it to take action.

Those two factors – bringing the right data that you need from the sources that drive your business and blending that into an ecosystem that includes a business intelligence tool – give departments a great view of what is going on internally and externally.

MCC: Are there common metrics that all legal departments should be sure to capture and compare?

Sowinski: First, you need to appreciate that all cost, all activity, all matter resolutions, everything is a result of somebody doing something. Folks in law firms, the folks in your office are all doing something. Identify the drivers of your costs and inventory and then understand who is driving them. What are they doing? When you get your arms around that, you understand the cost dynamics.

After that, we suggest that our clients build three metrics: outcome metrics; performance metrics to make sure you’re driving results; and key performance indicators, KPIs – also called exception reports – to make certain that if there is an issue or if someone is in noncompliance, you can identify that and correct it very quickly.

Moran: Especially at the beginning, common metrics identify inefficiencies that could be impeding a department’s performance. Those inefficiencies could be internal, where things might be happening that you weren’t aware of, or external, so you can then have a conversation with outside counsel about the issues that came up.

A lot of our clients are taking the next step, using tools like the Real Rate Report to benchmark against their peers. It is a step-by-step process to go from the basic components to taking that “world view,” if you will.

MCC: What about putting big data to work on internal goals? How can GCs and other legal and claims department leaders use big data to communicate the value of the work they are doing?

Sowinski: When we work with clients, we always advise that they first use basic analyses and impose a discipline upon themselves, then internally measure where they are. You really want to nail down your current performance. Then you can reliably evaluate your performance against your peers. And because you continue to measure the same thing, you can evaluate your improvement over time.

Moran: Bill’s right – a lot of the service we provide our clients is helping them internally. They ask: Find out how much my spend is! What rates am I getting? What is our staffing profile? You can generate that information across all relevant segments, via matters, law firms, the lawyers who work for those firms and your own internal attorneys.

Industry benchmarking provides detailed information on, for example, relevant spend and staffing measures, allowing you to ensure that outside counsel budgets do not exceed averages for similar work.

You can roll that up further with metrics about risks – what are our risks or significant litigation? Or by delving into cycle time: How quickly do we get to resolution for a particular matter? Put governors on that type of work. Then you can look at your internal benchmarking again, against industry averages that we provide. Are we doing well by now, or do we need to improve, and where?

MCC: With so much emphasis on big data and so much work being done on it, what are the next developments coming up? How can legal professionals expect to see big data leveraged in the next few years?

Moran: The prescriptive and predictive analytics functionality is being slowly worked into the legal profession, and is providing guidance. It’s not going to answer every question, but what big data will do is provide better guidance to the attorneys who are overseeing a portfolio of matters so they get a sense of, for example, what the likely duration of a matter will be. And by using the business intelligence tools that we have, they’ll start to see when something changes in a particular matter and how that impacts the risk – it will bring up red flags.

In the next few years, that predictive component will help guide experts and attorneys to make strategic decisions and have a better sense of how to successfully litigate risk.