We’ve all heard of Big Data and data analytics, but what we actually hear is big resources, budgets and time requirements, with little tangible return on these investments. And really, what does data analysis have to do with lawyers and GCs anyway?
In part 1 of this blog we debunked the seven most common myths surrounding data analysis. In part 2 we demonstrate why data matters now more than ever, especially when it comes to areas such as due diligence.
Big data has taken hold of the corporate world, with 85% of respondents to a recent survey believing big data will change the way we do business, according to an article in Law Gazette. And, as the environment in which we work transforms to focus more on the business of law, the impact of big data and data analysis cannot be avoided; at least not for those law firms and GCs who want to prosper in this brave new world.
Data itself means nothing and discussing it can feel daunting and out of reach. But the data – and especially the data analysis technology – is, to some extent, irrelevant. It is what data can do that we need to focus on. According to Forbes, for a typical Fortune 1000 company, just a 10% increase in data accessibility will result in more than $65 million additional net income. While most organisations are unlikely to see those kinds of returns, the fact remains that, as GCs and lawyers become more concerned with providing value and profit to the business, data is an excellent conduit for this. And, not just in monetary terms, but also in providing increased efficiencies within the legal team or law firm, helping to provide a more stable and improved working environment, and adding a new level of insight and credibility.
For example, if we consider conducting due diligence during an acquisition process – an often expensive and arduous task that is usually a one-time discovery process – every clause, term and detail is examined in a blanket approach to eliminate risk from the deal. But taking a risk-based approach and using data analysis to drive a quantitative examination of the risks helps to find the anomalies and exceptions that are likely to present a greater risk than the standard clauses, more efficiently. This saves time and helps the deal to progress more quickly, removing the likelihood of deal fatigue and resulting in a happier client or CEO.
There are further efficiencies to be achieved, even if the data cannot be analysed during risk profiling. Usually, once due diligence is conducted, the 35 lever-arch boxes containing all the contracts, terms, negotiations and information usually sit solitary, never to be opened again. But if the due diligence process is captured with all the relevant commercial data tagged and made searchable, the process becomes of infinitely greater value. For example, by aggregating this data, synergistic gains from the deal can be searchable and tagged, so when deals with suppliers require renegotiation or when license agreements are due to expire, the legal team is alerted and new, better value contracts drawn up. Therefore, this not only helps the client or business to save money, but it demonstrably helps the law firm or GC to add value to what they do. It helps lawyers and GCs think beyond just the immediate deal and ensures the due diligence process provides ongoing worth. Not only that, but, because the data is searchable and accessible (and not just held within the minds of those working on it), it helps remove the friction of the transaction, creating a smoother deal process, faster outcome and less risk of deal failure.
This is just a single area within the practice of law that could be assisted by data analysis and help improve services offered by lawyers and GCs. Other areas such as contract management, eDiscovery and early case assessment have equally advantageous outcomes, with data analysis providing a tool to help add a new level of commerciality and efficiency to everyday tasks.
The challenge for lawyers is that as big data becomes more prolific in the corporate world, more and more clients and stakeholders will simply expect the same level of independent quantitative analysis from their law firm or GC that they receive from their finance or marketing teams. Basing decisions, especially around risk, simply on a GC’s hunch, or individual’s previous experience will no longer satisfy a CEO’s appetite for fact-based data when it comes to decision making.