It’s hard to read anything in the legal press without being told about the transformative potential of the data held by legal and compliance teams. There are lots of big claims and even more buzzwords like ‘analytics, ‘AI’ and ‘data science’.
I think that most people in the legal market come to these articles with a more fundamental question – ‘what does it mean for me and where on earth do I begin?’
It’s a big question too, as a lot can be done with data to help legal functions. You can look at how time is spent to speed up the contracting lifecycle, better value risk or get more insight out of legal front doors or CRM systems. You can even ‘read’ portfolios of historic contracts to help you to respond quickly to fast-changing events.
But a good answer to that big question begins somewhere else.
Don’t start with the data
It sounds counterintuitive but good analytics doesn’t start with the data. It starts by framing clear questions with valuable answers.
Some of these questions might seem obvious:
- We want to improve our procurement processes – how long does it take us to negotiate contracts?
- Our budget for next year hasn’t gone up but we’ve got more to do – how much of our time is spent on which activities?
- I’m worried that we’re accepting too much contract risk – how often do we end up departing from our standard playbook clauses?
This type of question goes to the cost, quality and time components of running a legal or compliance function. They help you understand how well you are performing against important metrics that can be defined and generally understood.
Other questions might be less obvious:
- One of our suppliers just increased their prices – how exposed are we to inflationary risk across our global procurement teams?
- The new CEO wants to grow in a new country – what agreements do we already have in place there?
- We’re carrying out a major account review – which of our customers has the riskiest contract terms?
Questions like this are more strategic, helping you to take decisions at a management level and to inform and understand broader corporate aims.
The right questions are specific to you
While there are broad classes of question that tend to crop up repeatedly – how long/how much/ how good? – you can’t assume that there is a copy-and-paste list of the right metrics.
Even at a high level, different organisations will have different priorities or need to report on the same concept in different ways. There are often diverse approaches to measuring the same thing, and that’s before you look at where the underlying data sits and how it is organised.
When you get to strategic questions things get even more bespoke. A company that has just acquired another business will be thinking about very different things to one that is working its way through a supply chain shock or a political crisis in one of its main markets.
Ultimately, you know your organisation best – how it is structured, what its strengths and weaknesses are, and where it is trying to go.
Your analytics partner’s first job is not to force a pro forma set of MI reports on you. It’s to work with you to help identify and define the specific issues that are most important to your business. Then they can design and build ways to access and analyse data that informs those issues.
Decisions are more valuable than data
So how do you decide if a question is worth investigating or a metric worth measuring? At a high level, it’s about whether the answer is valuable.
This is a simple statement, but it’s got a big implication that often gets lost – for analytics to be valuable you must do something with it.
This can be taking a decision that is more likely to be correct. Or being able to delegate that decision or take it sooner. It can be driving positive behaviours or understanding that something is going wrong so you can address a problem early.
Successful legal analytics should never be picked up, read with interest and then put down again. It needs to be used. You don’t achieve this by jumping blindly into the data. It starts with thinking carefully upfront about the issues that you really care about.
I’ll head towards the data itself in my next blog. In the meantime, if you’re wondering how analytics might be able to help inform your decisions then please get in touch.
Andrew is the Associate Director, Analytics & Insights for Data Services at SYKE.
He is an industry-recognised legal technologist with a history of innovative work in the sector. A qualified solicitor, he has a 10 year track record of designing and delivering legal technology and analytics. He has a law degree from Oxford University and has been published in a peer-reviewed journal through an R&D collaboration with the London School of Economics.