How to Use Legal Analytics Tools to Improve In-House Strategy

There’s a goldmine of data in all those files if you could just get to it.

Sound familiar?

For many in-house legal teams, wrangling data to improve efficiency can feel like a fruitless chore. And a lot of potentially game-changing insights go under the radar as a result.

Tools like AI and advanced analytics provide a much-needed edge — allowing in-house counsel to use insights from their data to speed up workflows, resolve matters more efficiently, and proactively plan their resourcing strategies.

But if you’re still unsure where to even start with analysis, developing a “data-driven strategy” is often a daunting prospect. The good news is, not only is it possible, it’s more straightforward than you think.

In this blog, we break down the essentials of legal data analytics, showing you how to harness data analysis tools to reclaim time, resolve matters more efficiently, and improve your team’s legal strategies.

What is Legal Analytics?

Legal analytics is the process of collecting, collating, and interpreting legal data across multiple sources to identify patterns or uncover insights that drive value. In recent years, the capabilities of analytics tools within the legal industry have become more powerful, with artificial intelligence enabling deeper insights and more nuanced interpretation of complex data for legal professionals.

Using AI-powered analytics, in-house teams can process, search, or summarize large datasets faster, allowing them to identify trends, derive insights, and enhance their approach to handling legal matters. They can also use past successes and failures to plan for and manage future work.

How Legal Analytics Tools Improve Legal Department Strategy

There are a range of ways legal analytics software can be used to improve your team’s strategic approach — and naturally, a lot will depend on your specific business needs. With that said, the benefits of these tools can be broken down across four broad strategic areas:

• Better legal spend management
• Real-time budget tracking and forecasting
• Increased operational efficiency
• Data-driven decision-making and forecasting

Better Legal Spend Management

One of the most valuable uses of legal analytics tools is to gain improved insight into how your department is spending its budget—and where you could make improvements.

Key Examples

Let’s run through how this works with a practical example.

Faced with a tightening budget, your team needs to optimize their outside counsel spend. Using an analytics tool, you begin digging into historical billing data across different matters and law firms.

One of the first aspects you decide to investigate is timekeeper resourcing, and you quickly uncover a pattern where partners at some of the firms you work with are repeatedly engaged on matters that more junior team members could handle. In other words, they aren’t always resourcing work so that staff are operating “at the top of their license.”

Another issue arises when you start digging into outside counsel guideline compliance and realize that several of your firms aren’t adhering to the guidelines you set (e.g. excessively billing for internal communications, charging for previously prohibited expenses, etc.). Naturally, this is costing your department—and, by extension, the business—a lot of money that could be better spent elsewhere.

As you work through the data on these two issues, you notice a third. The rates some vendors are charging you seem higher than they should be (compared to similar matters handled by other firms). It quickly becomes apparent that you need to benchmark rates and performance to develop a clearer idea of how different vendors stack up—both in terms of pricing and effectiveness.

How Legal Analytics Software Helps

Using good legal analytics software, you’re able to do more than just uncover these issues. You can unpack each scenario in detail and open the way to conversations with your law firms that could result in large cost savings.

Better still, you can identify which of your firms are most compliant, which deliver the best performance, and which best control their costs by billing only what’s absolutely necessary.

That paves the way for building out more strategic partnerships with your best vendors, and possibly netting a volume discount in the process.

Real-time Budget Tracking and Forecasting

When legal teams have a handle on spend, it’s often because they can track it against their current budget to quickly identify if things are going off the rails or where more efficient resourcing is needed. The key here, however, is to look for a tool that offers real-time budget-tracking capabilities.

Going back to the previous example, let’s say your team flagged a recurring issue with partners being assigned tasks that associates could easily handle. Real-time budget tracking lets you spot when this pattern happens again so you can address it immediately. Similarly, if a firm starts billing above agreed-upon rates, you can catch those discrepancies early and take corrective action.

Another key capability is being able to conduct an in-depth analysis of historical data pertaining to your matters and spend. This gives your team a better understanding of trends and provides a basis for future budget forecasting.

For example, you might notice that costs or workloads tend to spike during certain times of the year, like contract review requests surging at the end of each quarter as sales teams push to close deals. Armed with this knowledge, your team can plan ahead and build more accurate, predictive budgets based on actual resourcing needs, allowing you to proactively manage costs before they become an issue.

Increased Operational Efficiency

As the above examples show, using a legal analytics tool can lead to large gains in operational efficiency. Especially if those tools are part of a dedicated matter management platform that can track metrics like:

• The number of matters per attorney
• The proportion of matters being handled by outside counsel
• The distribution of complex versus routine matters
• Matters by legal practice area
• Average time taken to resolve specific types of matters

The benefit of having this kind of information on hand is that it makes it possible to take both a bird’s eye view of how legal work is distributed and handled across your department and to dig into the fine-scale details on a matter-by-matter basis. That makes it much easier to ensure matters are resourced efficiently and that workloads across the legal department team are properly balanced.

For example, if you find that certain team members routinely handle the most complex matters, you can rebalance assignments to prevent burnout and create growth opportunities for junior team members. Or, if the data shows that specific types of matters are prone to bottlenecks or delays, your team can review their processes and streamline workflows to improve turnarounds.

Data-driven Legal Decision-making

Any worthwhile analytics tool should also offer in-depth reporting features—not just access to data, but the ability to distill it into clear, actionable insights. That includes making it easy to interpret complex trends, as well as to share that information with decision-makers in other departments and at the C-suite level.

Using reporting, your team can make strategic decisions that are rooted in all the relevant information. Whether that’s anticipating upcoming challenges or dealing with unexpected ones as they arise.

For example, if your industry is facing new regulations, you already know there’s going to be a surge in workload. But by analyzing the historical data, you can pinpoint which tasks typically take up the most time and resources and where outsourcing might make the most sense. This improves your team’s legal service delivery and enables them to be more agile in how they adapt their workflows and priorities.

Similarly, if the data reveals a sudden uptick in work from a particular department or practice area, reporting allows you to dig deeper into what’s driving the increase. From there, team leadership can prepare as needed — either by adapting to a long-term business need or by mobilizing resources to serve a temporary one.

Finally, robust reporting makes it much easier to advocate for budget changes or additional headcount. Being able to point to hard data showing exactly where your team’s resources are stretched is far more compelling than relying on anecdotal evidence alone. It also makes it a lot easier to demonstrate the real value legal brings to the business.

Adding AI to Legal Analytics

The final capability to look out for in an analytics tool is robust artificial intelligence integration.

Using AI, teams can rapidly sift through reports, spot burgeoning trends, and streamline legal research to uncover insights that may otherwise go unnoticed. This makes it easier to make the right calls quickly and can streamline the process of finding new efficiencies or cutting costs.

Leveraging AI-powered Tools

The key to success with AI is to make sure your chosen platform includes it as a central component of their capabilities rather than as an add-on that ticks a box.

Brightflag, for instance, uses AI for invoice review to check that invoices are compliant with outside counsel guidelines, that the work performed is within budget, and that the correct rates have been charged. Our platform leverages a combination of AI features, including natural language processing and supervised machine learning (using examples), to automate the process of interpreting invoices. The upshot is that all of the data extracted is then available for your team to access in an instant — across thousands of invoices and hundreds of matters — making it far easier to derive strategic-level insights.

Finally, your analytics tool should ideally also offer Generative AI functionality, like Ask Brightflag, to allow you to access data insights using natural language prompts. Having legal technology with this functionality means that instead of digging through reports or navigating dashboards, team members can get the answers they need instantly just by asking in plain language. Which makes it much easier to move your matters along quickly.

Building Your Legal Data Analytics Strategy

The strategic considerations and capabilities discussed above lay the foundation for a legal department strategy that truly works for your team. Legal data analytics, especially when enhanced by AI, has the power to reshape how your department operates, driving value that extends beyond the legal team and provides a competitive advantage to the broader business.

However, the real value you can gain from data analytics depends on the tools you choose and how well they align with your team’s needs and goals. That’s why, at Brightflag, we’ve focused on developing a comprehensive, user-friendly matter management and e-billing platform. One that makes it easy for in-house counsel to access, analyze, and report on critical data, turning it into actionable insights and effective strategies.

Want to see how Brightflag’s AI-powered platform can support your team in making smarter strategic moves? Book a demo today and experience it firsthand.