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A Single Source of Truth for Pricing and Legal Project Management

Mon 21 Feb 2022

Pricing, budgeting, and Legal Practice Management (LPM) have increasingly become ground zero for the application of data analytics to legal practice. While data is becoming important in all aspects of legal practice, including strategy, performance management, client intelligence, document review, and many other aspects of the business, pricing is the closest thing the industry has to low-hanging fruit. Most firms already have the data they need for the analysis that can lead to better pricing and processes: their internal financial systems.

The opportunities and challenges that firms face as they work toward more data-driven decisions was the subject of one of the sessions in Litera’s Changing Lawyer Summit 2021. Entitled “A Single Source of Truth for Pricing and Legal Project Management,” the session featured the insights of Jessica Davis, Director of Matter Performance and Service Innovation at McCarter & English. Pieter van der Hoeven, Senior Director of Business Development at Litera and co-founder of Clocktimizer (now part of the Litera family), led the interview with Davis.

Four main themes emerged in the conversation between Davis and van der Hoeven: Single Source, Transparency, Collaboration and Communication, and Quality and Scale.

Single source: it’s not just data centralization

Van der Hoeven asked Davis what she thought “single source of truth” really means with regard to data used in pricing and LPM. To some extent, she responded, single source means pulling data sets together into a cohesive data stack. More than that, however, single source refers to the overall framework and processes, the shared language, and shared and agreed-upon metrics that an organization applies to its data – including even a process for handling disagreements about what data means, if that becomes necessary.

Her vision of single source is inclusive and collaborative, engaging all those who create, analyze, and use any relevant data as the firm’s team works on pricing and LPM matters. This vision by its very nature requires the engagement of a wide range of stakeholders. “You can have a central data source, but if there’s no alignment on how to interpret the data, you risk people using it to undermine each other instead of moving in the same direction.”

Davis has some thoughts on where a firm might look for the data to build out its single source of truth. For pricing matters, the firm’s financial data is the obvious starting point – those systems have lots of data on who’s doing what, how long they are taking to use it; the data is also usually organized by task codes, and by area of law or practice groups.

HRIS systems are also a great source of information about who is working on matters. She pointed out that clients are increasingly asking for information on the demographics of those working on their matters, including information useful for diversity and sustainability requirements.

Information about the legal engagements themselves can be harder to tame. It’s often unstructured, buried in documents, memos, contracts, and other work products. “But that information is often the most useful. The best guide to pricing and planning for an incoming matter is that data about past matters,” said Davis.

Transparency

Much of the data collected in a firm comes from the lawyers themselves, as they record timecard narratives and track progress regarding every matter that moves through their practice. That data is the raw material for Davis’ analytics engine. Van der Hoeven asked whether Davis lets people at the firm know why she’s collecting and leveraging that data and how it will be used – or is there a risk that knowing it will be collected will skew the data.

“I’m a big fan of transparency and explaining to people why we do it the way we do, she said. ”The transparency makes it easier to motivate lawyers to accurately capture data, but it also shines a bright light on everyone’s work.

Collaboration and Communication

If there’s one factor that Davis considers to be the most important when building out a data-driven pricing and LPM function, it’s communication and collaboration. Leading a data initiative in a law firm is not a solitary exercise.

Van der Hoeven asked how a firm might identify sources of data that already exist, including passively collected data or data where she might not know a lot about the source or the process that creates the data. Davis responded: “I am a big fan of just talking to people. I love to initiate conversations or collaboration early on – I kind of see my interactions with the professional world as you might view networking or interviewing for a sales job.” If she is working on a project that she thinks might be related to someone else’s work, even tangentially, she will often send along some information and initiate a conversation about whether they might collaborate. That person might turn out to be sitting on a key data set.

Quality and scale

Aside from Davis’ focus on collaboration and transparency in firm processes, noted van der Hoeven, there is in fact a challenge in maintaining the quality of the data itself. He asked how Davis works with the organization to ensure the data quality that will lead to accurate and consistent results.

“You have to start by thinking about process and being very honest about the culture of your organization. Something that works in one place might not work in another,” said Davis. “And people who are open to putting in some effort in one context might not be so willing in another.”

She provided an example of key process points where lawyers might be asked to provide information, such as entering time records, or opening a new file. If the data is self-reported, are there external data sources that can be used for this? Or is there an external expert who can validate the information?

She used the example of recording the client’s industry, which can be a critical data point when segmenting activity. If the lawyer is providing an industry code, is that done correctly? The key to scaling up these processes is to be sure you have as few errors as possible, so you might want to use an external source to validate that data point.

Again, it all comes back to culture and collaboration. “If you have the ability to influence the culture of the organization, it’s really important to try to encourage everyone to view themselves as a data source. It’s truly important for everyone to see the benefits of what you are doing, and to understand that we all play a part. So you may be frustrated every time you are asked to enter your time accurately, but what it means is that in the future I can give you that spot-on price you’ll ask me for.”

View the video of this Changing Lawyer Summit session here.

To explore more of the industry insights in Litera’s The Changing Lawyer 2021 research, download the full report. Recordings of the Changing Lawyer Virtual Summit sessions are also available on our YouTube channel.


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