Pardon the Disruption: It’s time for lawyers to start helping their clients make data-driven decisions

January 23, 2014

Report reviewBack in December, we put together some thoughts on how to address certain shortcomings in the current law school model. We also discussed how an innovative prototype developed for Harvard Medical School’s Cambridge Integrated Clerkship (CIC) could be applied to legal education. Today, we address another area in which lawyers and law firms have struggled to advance: measurability. Specifically, we’re talking about measuring the probability of success or failure (however those terms are defined) to assist in rendering legal advice to clients.

The difficulty (as we’ve mentioned before) is that predicting outcomes in the legal world is tricky. Extraneous variables—among them factors like the judge, the jurisdiction, the changing status of law, and the attorneys involved—complicate efforts to evaluate how a case or engagement might shake out. As a result, when clients question their lawyers about the likelihood of success or failure when choosing a certain course of action, the attorney is usually left equivocating and waxing about the uncertainties inherent in the practice of law. But the use of computer modeling and decision analysis could help clients in making such determinations.

Here’s a good example: A study conducted last year by NERA Economic Consulting analyzed the factors that could be used to predict settlement figures in securities class actions. Dr. Ronald Miller, NERA’s former vice president who published a paper presenting the findings, offered some interesting insights. For instance, the mere act of filing a class certification motion generally drives up the ultimate settlement figure by 33%. That’s a good fact to know if you’re advising your client on whether to consider resolution prior to plaintiff’s counsel filing their class certification motion, e.g., lawyer-to-client: “Settle now and empirical data shows that you’ll save about a third on the settlement price.” And in the right hands, the use of technology capable of sorting and analyzing huge swaths of information could yield even deeper insights for clients.

Historical data exists (both on the Internet and in law firms’ own files) to help compute probabilities regarding a wide range of outcomes that might influence a client’s decisions. Consider the following examples: After conducting the proper analyses it would be possible to provide clients with statistics on the chances of their stock price rising or falling after pursuing a certain avenue in litigation; employee attrition rates can be tracked based on the inclusion or removal of certain provisions from employment contracts; and failure to comply with recommended (but not mandated) federal regulations might result in an X% chance of future lawsuits. It’s even possible to provide perspective about consumer backlash over a client’s decisions: e.g., “After similarly situated companies sued their competitor for IP infringement, there was a spike in social media discussion of the company for Y amount of weeks.” In today’s world, the data is available to measure all of these things—yet few lawyers are making efforts to do so.

That’s likely because the subject matter seems a bit daunting; most attorneys generally aren’t familiar (or interested in becoming familiar) with regression analysis or probability models. But a good first step is for law firms to begin determining, in consultation with experts and analysts, how best to assemble the data necessary to assist clients in rendering legal advice. Our guess is that, when the time comes, many clients would green light having their lawyers analyze that information to help in their decision-making processes.