The data centralization journey for law firms
As appeared on ark-group.com on October 14, 2022
Written by Derek Schutz and Tom Baldwin
Law firms collect a lot of data from a number of different sources, but they often struggle to connect the dots and generate broader insights to influence decision making firm-wide. More recently, many firms are actively embracing their data and using it to their advantage while others are still experimenting with and exploring all the data available to them. The momentum of data centralization initiatives is accelerating as firms begin to uncover how it can be leveraged to drive firm strategy.
What is data centralization?
Data centralization entails bringing together data from different tools and locations to create a single source of truth on any number of topics. This may not always mean bringing these data points together in a single location but instead refers to enabling access to data from various silos and linking it in meaningful ways.
Broad data, not big data
Law firms do not usually have big data – they have broad data. Where large corporations have sizable enterprise resource planning (ERP) systems that house most of the organization’s data, a law firm may have 20+ systems that all contain valuable information. The challenge for most law firms is they aren’t sure where to start when it comes to centralizing their data and making it accessible.
What kind of data is accessible?
The sheer possibilities of data that can be harvested at a law firm are endless. Historically, financial reporting and statistics have been the main areas of focus – revenue, profits, income per partner, and billing are data points that have undisputable value to the firm. However, the present explosion of data mining has led to the tremendous expansion of data points available and of interest to a firm including diversity, equity, and inclusion (DE&I), partnership productivity, client categorization, technology-driven time savings, lateral hires, law school outcomes, succession planning, partner hiring decisions, which clients are receiving which marketing communications, and a great deal more.
Which questions should the data answer?
Initially, data is most interesting and useful when it provides answers to practical questions. Firms are well-advised to first determine which questions they are interested in answering before gathering various data points. Attorneys may be disappointed to learn that answers to questions that seem reasonably simple are not readily available. Sorting and searching for something as straightforward as each lawyer’s first name can be anything but simple – a name may appear as Jonathan one place, John another place, and Jon in a third spot. Law firms that do not have basic-level data uniformity may find they have to invest substantial efforts in data process, governance, and hygiene, and purchase additional tools to manage and reinforce data management. That said, once the data is available and the preliminary use cases are solved, that same data can be used to begin to provide insight into questions the firm never even knew it had. Machine learning and artificial intelligence (AI) have also become more readily accessible, providing firms with a wealth of knowledge, well beyond the initial scope of a project.
