Is data a key priority for in-house legal teams?

Barely a day goes by without industry experts touting the revolutionary possibilities of legal technology. Beyond media headlines, however, in-house legal departments have generally been slow to adopt and fully leverage innovative platforms.

This is despite our research showing the desire is there. Nearly 9 out of 10 in-house legal clients believe disruptive technologies – such as data science, AI and the cloud – boost the efficiency of the function, with 81% of candidates saying the same. Yet, over one-third of the organisations we polled claimed they had no plans to implement these technologies in the foreseeable future.

Some departments are likely taking a wait-and-see approach. Earlier this year, a LexisNexis report found that early adopters of legal solutions may not have achieved the added value and user take-up they expected, which has led to inertia and ‘tech fatigue’ across the sector. A fifth of GCs the firm surveyed said at least one recently installed piece of technology at their business had low or zero usage.

Nevertheless, the tide may be starting to turn, particularly with regards to data and analytics. Corporate law departments are increasingly keen on embracing data science to effectively measure, manage and report on their business performance.

The path to data maturity

Approximately 45% of respondents to our 2019 Legal Market Report said they currently utilise data science, AI or the cloud. Meanwhile, research from HBR Consulting has revealed a step change in how in-house teams approach data, despite analytics still being relatively underdeveloped within many departments.

HBR offered insight into how advanced in-house legal teams are with their analytics programmes. The firm split respondents into five broad categories based on their relative maturity in handling data:

1. Foundational (19%): What information is available?
2. Descriptive (34%): What happened?
3. Diagnostic (31%): Why did it happen?
4. Predictive (13%): What will happen?
5. Prescriptive (3%): How can we make the best happen?

The results show a large majority of in-house legal departments are using data retrospectively. In other words, their focus is on collecting information, analysing it and diagnosing problems that have already occurred.

Just 16% of respondents are leveraging data to predict the future and evolve the function to optimise performance. However, 57% of those polled claimed data science and analytics were either a ‘high’ or ‘medium’ priority, indicating momentum is building among in-house lawyers to make better strategic use of their information.

How do in-house teams intend to use data?

The upshot of the report appears to be that in-house departments are beginning to take data more seriously, but we may be a year or two away from effective modelling and prescriptive activities.

There are a multitude of ways that departments can use data, ranging from simple to complex. HBR has helpfully listed several examples of tasks that in-house legal departments hope to accomplish by better utilising their data in the future:

• Low complexity
  • Selecting outside counsel; 
  • Reporting to the business; 
  • Reporting to internal law department stakeholders; and
  • Evaluating outside counsel financial performance. 
• Medium complexity
  • Early case assessment; 
  • Evaluating opposing counsel and/or parties; and
  • Assessing judge behaviour and/or trends by venue. 
• High complexity
  • Identifying and mitigating pre-dispute risks in the business; 
  • Predicting dispute outcomes (e.g. settlement/judgement amounts);
  • Reviewing contracts and related risks; and
  • Evaluating outside counsel’s substantive performance. 

The most common projects that in-house teams hoped to complete using analytics are the selection of outside counsel, evaluating external counsel’s financial performance and reviewing contracts and related risks.

Preparing for tech-driven in-house legal environments

The pace of technological change among in-house teams may have been slow up until now, but there are signs that lawyers are beginning to appreciate the strategic value that innovation can bring to their departments.

At the very least, businesses will be keen to free up their lawyers from laborious, manually driven processes so they can spend more time on growth-oriented activities. But what are the best ways to prepare for a technological future?

Here are some key recommendations to facilitate change within in-house departments:

• Implement recruitment processes that attract and retain lawyers who are tech-savvy and comfortable with analytics;
• Retrain existing staff to improve their IT and cyber skills;
• Appoint a member of staff to monitor technology risks and opportunities; and
• Recruit a legal technology specialist who can identify the right suppliers, staff and platforms required to facilitate change management programmes. 

However, recruiting tech-savvy staff may be easier said than done in the current economic and political climate.

Our research shows that technical skills are in short supply among in-house lawyers, with 45% of employers citing shortages in this area as their key recruitment challenge last year.

Finding the right talent

Half of in-house legal teams feel they are inadequately resourced to tackle the challenges they face in today’s business landscape, according to Barclay Simpson figures.

One of the key problems facing corporate law departments is the higher salaries on offer in private practice. Pay for junior lawyers has increased nearly year on year at many of the major US and UK legal firms, encouraging a growing number of lawyers to remain in private practice for longer.

Shallow talent pools mean businesses need more help than ever before to attract and retain the right staff to achieve strategic objectives, including driving technology adoption and data analytics within departments.

A recruitment partner that has a comprehensive understanding of the market is therefore essential to ensuring the best outcomes for both clients and candidates. To discuss your in-house legal hiring needs, please ring me on 020 7936 2601 or email at djc@barclaysimpson.com.

Our 2019 Market Report combines our review of the prevailing conditions in the in-house legal recruitment market with the results of our latest employer and candidate surveys.

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