Caitlin M. Goforth
“[W]e are now seeing the emergence of a strong buyer’s market in which clients are looking at the overall value of the legal services they receive. The emphasis going forward will clearly be on finding ways in which legal services can be delivered more efficiently and cost effectively.”
— Jim Jones, former Managing Partner, Arnold & Porter, LLP
“The most successful firms will be the ones that understand that their clients are already using benchmarking data to evaluate law firms, and that they need to get ahead of the curve and successfully leverage external competitive data to provide their clients the efficiency and cost competitiveness that they are demanding.”
— Christian R. Lueth, Director of Finance and Accounting, Dykema Gossett, PLLC
“How much is this going to cost?” This question is transforming the legal market and forcing law firms to abandon the common practice of billing for services rendered. In the changing marketplace, law firms cannot increase profitability without lowering costs. Understanding the economics of legal practice is necessary for law firms to succeed in today’s global legal market. Law firms can achieve this by taking advantage of the wide variety of technological products currently available.
Other industries have adopted technological solutions to become more efficient and more cost effective, but the legal market continues to lag behind. If a law firm could “rigorously analyze risk and cost,” “respond to [alternative fee arrangements] and value-based pricing requests with confidence knowing the reality of pricing in the market,” and secure new business through “competitive offerings with budget certainty,” why would it not? Quantitative legal calculation (QLC) products allow law firms to automate the cost process. QLC products place at the fingertips of every law firm the ability to quantify its data against the data of an entire market, gaining a price advantage and allowing it to operate more efficiently.
By harnessing the power of QLC products, law firms can identify market benchmarks on “matter-based fees, durations, staffing allocations, and hourly rates,” which would allow them to “price, plan, and budget legal services.” Variable inputs could also be assessed to establish effective pricing strategies. The intelligence that QLC products provide generates a “win-win fee structure,” bringing “strong value to . . . clients and a reasonable return for the Firm.” The legal market is slowly following other industries that have implemented data driven business models. Clients are armed with business intelligence, and they are using it to leverage “legal spend” because, “[w]hen you know, you have the advantage.” QLC products allow law firms to seize this advantage. Access to real market data gives law firms the visibility to manage the business of law in a more profitable way, guaranteeing actionable insight.
In order to understand the competitive advantage, this Comment will profile the top QLC products on the market and explain how law firms benefit when they use big data products. Part I will look at how procurement is transforming the model for legal services. Part II will explore why it is advantageous for law firms to translate big data into business intelligence. After detailing the solutions that business intelligence provides to the new legal market, Part III will review three elite products that cater to the needs of law firms: Thomson Reuters’ Peer Monitor, ALM’s Legal Intelligence and RivalEdge, and TyMetrix’s MatterAnalyzer. This Comment will demonstrate that the model shift from billing hours to procurement has generated the need for law firms to make intelligent business decisions assisted by QLC products.
AUTHOR. I would like to thank my family and best friend Nick for their steadfast support, and Professor Kevin Lee and Editor-in-Chief Emily Mather whose encouragement led me to develop a passion for legal technology. Many thanks for the hard work of the entire Campbell Law Review.