In 1984, one hit wonder Animotion sang: “I will have you. Yes, I will have you. I will find a way, and I will have you. Like a butterfly, a wild butterfly, I will collect you and capture you. You are an obsession.” That obsession may have been fleeting, but law firms’ new found obsession with data is likely to have staying power. As the next generation of law firm leaders go to sleep at night thinking about flat and volatile demand, along with the growing need to focus on value, they are realizing that the treasure trove of value in all of the data they collect can help generate revenue without regard to billable hours and can enhance the value of lawyer time, including creating opportunities where billing for hours makes little sense, much to clients’ delight.
The data has always existed within law firms but, like a wild butterfly, was unreachable. And no one thought to even try to catch it. It was unstructured, uncatalogued and dispersed across a multitude of Windows Explorer file folders — possibly folders in some document management system, but to no avail. Now, as the conversations around data analytics percolate and legal minds churn, we are hearing remarks like — “Wait a minute, I have thousands of documents with all of this data on…” Pick a topic and law firms have extensive data on it — M&A deal terms, gender wage disparity, real estate loan origination. The list goes on.
Think about a large M&A practice having negotiated hundreds of deals with parties represented by competing law firms. Those documents contain the negotiating positions of those firms on a number of terms in the context of different industries, regions, and various other circumstances. Extracting data from those documents and housing that data in a dynamic analytics platform like the one offered by Matterhorn Transactions[1] enables lawyers at several firms using the platform to come to the negotiating table with a real competitive edge. The same platform is being utilized by law firms to keep track of data relating to court proceedings — in any given proceeding, who was the lawyer, who was the judge, what motion was filed on what argument, and what was the outcome.
We have, in prior columns, made reference to contract authoring tools like Thomson Reuters’s Contract Express and competing products such as Leaflet — products that automate much of the mundane work that goes into the production of contracts and litigation documents. But we have not focused on the resulting structured data. Yes, these tools enable lawyers to produce documents that are better, faster, and cheaper, but they also enable lawyers to automatically build a structured database containing the contents of those documents, which can be utilized for other value-added services or which can be sold for various purposes. For example, a firm that generates all of a company’s executive employment agreements utilizing a contract authoring tool that automatically reposits each clause of the contract in its system ends up with a a database of key legal and commercial terms by region, department, class of employee, gender, among other things. Other examples include: venture capital fund raising document negotiated terms which can signal a trend in the abundance or scarcity of capital in the VC market or changes in the terms surrounding venture investing, or bank loan document data which can provide early market signals regarding the variance in interest rates, availability of loans, and the level of development activity by region or industry.
Several law firms are already offering such content through subscription services to clients and prospective clients as a way to demonstrate depth of expertise beyond just being another group of smart lawyers. Utilizing data to distribute unique perspectives or judgments on developments within a particular market or industry enables lawyers who adopt the tools to stand out from their peer firms, which often merely publish traditional notes about new law or precedent. Demonstrating that they are market leaders that can offer market insights, and not just great lawyers, enables forward-thinking lawyers who use their data effectively to generate client wins and grow revenue. Interestingly, as law firms continue to ponder alternatives to the billable hour and the value in their data, they are also starting to consider the notion of selling subscriptions to data-enhanced content rather than just using data as a marketing tool.
The traditional resellers of content (e.g., Thomson Reuters, Wolters Kluwer, Lexis, Bloomberg etc.) are taking note — they were once the only ones who knew how to catch butterflies. And so, they thought only of one another as competition. Those content resellers typically negotiated exclusivity arrangements in licensing agreements with content and tool providers limited only to their own circle of competitive content resellers. More recently, however, these resellers have been insisting on exclusivity arrangements that preclude content and tool providers from enabling any law firm to publish data that may be competitive with these resellers’ offerings. Clearly, the likes of Thomson Reuters, Wolters Kluwer, Lexis, and Bloomberg have come to appreciate that the law firms have figured out how to catch butterflies too.
Sanjay Kamlani is Executive Chairman of Matterhorn Transactions.
David Perla and Sanjay Kamlani are co-founders and managing directors of 1991 Group.