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In-House Legal Departments Eye Law Firms with Legal Analytics Expertise

Legal Analytics: A Game-Changer in Legal Service Delivery

In-house legal departments are increasingly expecting law firms to harness the power of legal analytics, providing tangible metrics on litigation outcomes and cost factors derived from meticulous data analysis, a new survey reveals.

Lex Machina’s CEO Karl Harris and Law360’s legal-tech correspondent Steven Lerner suggest that the evolving relationship between in-house legal teams and law firms is fueling the upsurge in the adoption of legal analytics tools.

Although legal analytics tools have been around for nearly two decades, their application has recently reached new heights. Law firms are leveraging them to gain an edge in securing business from in-house legal departments. These in-house teams, reciprocally, are coming to anticipate the use of such tools by firms.

“A lot of it is pressure from macro challenges in the economy” Lerner noted, as he discussed Lex Machina’s survey findings with Harris on a podcast. “Law firms are going to need as many tools as possible to live up to that higher pressure and all the challenges they face. And that includes the legal analytics.”

Understanding Legal Analytics Tools

Legal analytics tools generally serve two key purposes: fostering business growth and enhancing legal practice.

In terms of business development, these tools allow law firms to attract corporate clients by demonstrating their litigation performance and cost-effectiveness, which hinge on factors like the swift resolution of cases and resource efficiency.

“Pricing is a data-driven exercise” Harris commented. As such, Harris noted that key data points such as the anticipated duration of a case and its likely activity level enable you to align client expectations.

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As for the enhancement of legal practice, these tools equip firms with invaluable insights on judicial preferences and the performance of rival firms.

Harris elaborated, “You could say, ‘Show me the 10 last motions in cases similar to mine that were granted,’” said Harris. “So, that’s what wins. ‘Show me the last 10 motions in cases similar to mine that lost.’ That’s what loses. Then, you could now try to leverage these large language models to write those briefs, write those motions, in language that is similar to the judge or using winning language.”

Findings from the Lex Machina Survey

The Lex Machina survey, which examined the usage of legal analytics tools among 800 legal professionals, found that nearly 70% employ some form of these tools. Remarkably, 99% of the users and 85% of the non-users deem these tools as valuable.

“That’s nearly every single person that uses legal analytics” Harris remarked.

Despite economic uncertainties, in-house teams continue to invest in technology, including expenditure management tools, becoming increasingly critical due to budget constraints, according to Lerner.

“They’re really trying to cut down their cost of outside counsel” Lerner stated.

One strategy being adopted by legal departments to curtail costs is internalizing more work. However, they are also advocating for alternative fee arrangements from law firms, employing analytics tools to assist in structuring these arrangements.

“A lot of firms are going to have to make the business case for their in-house clients to show them why they’re best equipped to handle their outside legal needs” Lerner observed. “Legal departments are asking for it. They’re asking for it more now than they did years ago, because they’re under more economic pressures themselves. It’s going to keep growing, if I were to guess.”

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