How Big Data has redefined the legal industry

Rooted in Greek civilization, law is one of the world’s oldest professions, and for all these years, particularly in America, has been steadfast in its commitment to justice for all, and as a way to change things for the better. American lawyer Clarence Darrow, once said, “Justice has nothing to do with what goes on in a courtroom; Justice is what comes out of a courtroom.”

While justice is the noble aim of law which has remained constant over the years, the legal industry, until recently, was also insulated from a fast-changing world of technology.

One of the biggest changes of an age of technology, is the entrance of “big data” into the world, which got noticed, globally, around 2010.  The expression “big data” itself was coined in 2005, by technology expert, Roger Magoulas, to describe the variety of massive, complex data sets that could not be managed and processed with traditional data management tools. Co-founder and Co-director of the MIT Initiative on the Digital Economy, Andrew MacAfee once said, “The world is one big data problem.”

The Harvard Business Review  perceived this as a distinction between BBD and ABD, or Before Big Data and After Big Data.

With the Baby Boomers fading into retirement, and Gen Xers aging as well, the stage is now dominated by the first digital natives, the Millennials, who comprise 35% of the U.S. labor force, making them the largest working generation, and the first to understand the importance of immediate information. With instant knowledge through their smartphones, Millennials also expect flexibility, seamlessness and speed in fulfilling their needs. In fact, they have compelled every industry to scramble into a different way of operating, for the sake of survival.

Thus, many industries began using “big data” for more informed and improved decision-making. However, a recent survey found that the legal industry was one of the slowest to utilize big data. A recent report by the Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute, concluded that many law firms in the U.S. are still fighting the last war. The report’s lead author, a Senior Fellow at the Center, James W. Jones, said, “Firms that take proactive steps to address these serious market realignments have every prospect of doing well. Meanwhile, traditional strategies and models are increasingly unlikely to lead to future market success.”

A recent McKinsey Global Institute report also found that data-driven organizations are 23 times more likely to attract customers, 6 times likelier to sustain their business and 19 times more likely to increase profits.

Remarkably, most legal firms believe that data-driven understanding of legal issues is important, but most do not follow up their beliefs with action or with allocation of resources. Legal culture, education, and training, until recently, belonged to an earlier time, with the general legal mindset dividing the world into  “lawyers and ‘nonlawyers.”

Being the industry that probably produces the most amount of data in a year, the legal industry only recently realized the vital importance of big data to rapid and informed decision making. The legal system is familiar with heavily labor-oriented tasks, with paralegals and researchers scurrying to unearth, index and process information. These enormous expenses are ultimately pushed onto the customer. Furthermore, in understaffed law offices, overworked investigators give cursory attention to individual clients. Yet, for a fraction of that cost and time, Artificial Intelligence (AI) can be substituted to carry out tedious research, lightening the load of courts and legal firms, and speeding up the judicial process. Some time, AI might achieve better results, for clients may be more open talking to a non-judgmental machine, than to a person.

Then, COVID-19 descended on the world in 2020, upending life as we knew it, resulting in, as Thomas Friedman stated in a recent New York Times op-ed, a new historical divide of B.C. and A.C. — the World Before Corona and the World After.

Even as stay-at-home orders, and sickness and death, led to businesses suffering through reduced demand for products and services, today, companies can submit a claim for COVID-19 Business Interruption Insurance.

Parallel to this, COVID-19 has also changed the way the world looks at remote work.

Pre-COVID-19, employers were not overly enthusiastic about remote work, because they assumed people would not really be working, when they “worked” from home. However, COVID-19 proved the assumption wrong. Employers found that unless the job itself required working onsite, employees worked equally well from home as from their office desks.

This situation also includes the legal industry, and suddenly, law offices are engaging in work strategies they had never considered before, moving to virtual workforces and distance learning.  Thus, the traditional legal culture was forcibly reshaped to address needs of nonlawyers, who were the customers. In particular, inhouse legal departments of organizations began handling about 75% of legal work.

This has led to a recalibration of the legal industry, with tech-savvy legal service providers who deliver legal services, but do not engage in practicing the law, picking up 2% of the market share, with prospects of significantly higher engagement in the future.

Therefore, this heightened collaboration of in-house legal departments of companies and legal service providers, is resulting in the traditional legal culture morphing into one required by the COVID-19 era of 2020 and beyond. Law firms are slowly imbibing corporate culture, with the core function of lawyers, which is practicing the law, merging with legal services that include engaging technology and understanding the client’s business. 

It is a new legal culture focused on client expectations, and not fostered by the legal guild.

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