Today’s law firms revolve around data. While all firms are in possession of massive amounts of data, data quality is a major problem for most organizations. Think about any given piece of data your firm has and ask yourself a few simple questions: Where is it located, who has access to it, how is it maintained, and how is it used? If you are like most firms, you will probably struggle to answer even those basic questions.
Given all the data that modern law firms have, many commenters have said law firms need to be data-driven organizations. In reality, though, what firms should be striving for is to be insight-driven organizations—not just businesses that have a lot of data, but businesses that have figured out how to use that data to improve operations and boost profitability.
To gain valuable business insights from data, law firms must be able to identify what high-quality data they have, effectively organize it, and then use it in a comprehensive manner. Before that data can be aggregated and analyzed, however, it needs to be understood from a number of different perspectives.
The path to law firm profitability starts with identifying the data you have and cleaning it up so that it can be used to generate valuable business intelligence.
Understanding Your Data
Knowing what data your firm has is a more complicated endeavor than it might sound. Law firms typically store their data across multiple siloed systems of record. They also usually have data stored on individual computers, whether they know it or not, even if that practice goes against firm security policies. The fact that the firm’s data is spread out rather than in one overarching system creates problems for consistency, context, and quality, making that data nearly impossible to aggregate.
Data identification starts with an assessment of what systems of record hold your data, how that data is being used in key business processes, which of those processes are high value, what is necessary to maintain the data, and what the best systems of record and processes are for maintaining that data. Only once those questions are answered can the firm begin the process of migrating its data from those disparate systems to a single, comprehensive system so that it can be effectively processed.
One key consideration is data quality. Most law firms are driven by traditional customer relationship management-type data, such as organizational, personal, and relationship information. This type of data is highly volatile, as people constantly make life changes, and records are often missing or incomplete. Having a full picture of this data requires updating it, correcting it, and installing processes to maintain it going forward.
Data context also matters. Different types of data are used throughout every organization. Some data comes into the firm in real-time and therefore is best analyzed in real-time, such as data on visits to online marketing campaigns. Other data is better analyzed at set periods in time, such as weekly, monthly, or quarterly accounting information. Every piece of data must be viewed within the context in which it operates in order to extract insights from it.
Once you have a clear picture of the data your firm has, you can begin the process of cleaning it so that it can be useful in generating insight for the organization.
Improving Your Data
Most law firms lack rigorous policies about maintaining the quality of their data. Studies show that bad data costs the U.S. over $3 billion per year and can cost individual businesses up to 12% of their potential revenue. Every week, workers waste up to half their time just hunting for data, correcting data errors, and confirming sources for data. Cleaning up your data is not just useful for gleaning insights into your business; it can also significantly help boost your firm’s overall efficiency.
Substantial portions of law firm information technology budgets are often spent on maintaining, managing, and rehabilitating data. The pressure to improve data quality is greater than ever in light of increasing regulatory demands that require customer data and personally identifiable information to be identifiable, accurate and readily accessible in order to comply with the law.
Fortunately, several tried and true processes exist for improving data quality within law firms. One of the most popular and effective approaches is to consolidate separate systems of record into more centralized, workflow-enabling technologies. The onset of cloud computing has given legal teams access anywhere, anytime to comprehensive cloud-based legal practice management platforms that can process all the firm’s data in a single place.
In the process of migrating data from disparate applications and consolidating it into a single system of record, data can be cleansed so that the new system starts from a position of having good data and good processes for maintaining that data going forward. Performing this system consolidation and instituting more robust integrations among your software and applications will allow you to automate data cleanup in order to better power your high-value business processes that will be generating insights for your firm.
The following steps are critical to improving your data quality to the level necessary for your firm to become an insight-driven organization:
- Document your data stores. You need to know where your data is located, how it is accessed, and who is maintaining it.
- Once you have a good understanding of your data stores, you then need to initiate a data quality assessment. The data quality assessment should look at what business processes are deriving value from the underlying data and what data elements need to be accurately maintained in order to support those high-value business initiatives.
- Document what actions need to be taken to cleanse the existing data and what processes need to be put in place to maintain that high-value data. At this time, it might also be important to consider how system consolidation, migration from legacy systems, and more robust integrations might be necessary to better serve these high-value, data-driven business processes.
Those law firms that have attained good data quality and are able to aggregate that data into systems of record that will support analysis can now look into analytics, dashboards, and reporting options to better enable the firm to optimize business and profitability.
Aggregating Data to Gain Insights
Only when your data is in order can you reap value from that data through analytics and AI. Clean data should be thought of as actionable information that empowers your firm to glean insights through AI and make informed business decisions with the help of tools such as dashboards and reporting. Aggregating your data is the final step to becoming a truly insight-driven organization.
With the right data in the right place at the right time, law firms will be in the best position to run their firms like businesses, focusing on profitability, performance, efficiency, attracting the right clients, hiring the best workers, and instituting sound, efficient business processes.
Good, clean data is the key to law firm profitability. Law firms with aggregated data have the power to better understand operations, make real-time decisions, and increase profitability in every case they handle.
About the Author
Jonathan Reed is the CEO and co-founder of AdvoLogix, a leader in case and matter management software for law firms. Contact him at email@example.com.