Business Intelligence for Law Firms Zena Applebaum Published by In association with
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Business Intelligence for Law Firms Zena Applebaum Published by In association with
Contents Executive summary...vii About the author...ix About the contributors...xi Acknowledgements...XIII Glossary of terms...xv Part One: The theory of business intelligence Chapter 1: Setting the stage for intelligence... 3 Business intelligence... 4 Competitive intelligence... 5 Market intelligence... 6 Intelligence in any form... 6 Back up and security... 7 Intelligence in law firms... 7 Business intelligence at the heart of knowing what one knows... 8 Chapter 2: The law firm difference... 11 Law firm business challenges... 11 Organizational structure... 11 Hourly billing... 13 Working silos... 13 Meeting law firm challenges with business intelligence... 14 Big data... 15 Chapter 3: Business intelligence inputs... 17 Accounting... 19 Administration... 19 Marketing... 20 Knowledge management... 21 Precedent systems... 21 III
Contents Legal process management... 21 In a perfect world... 24 Chapter 4: The road-map to successful business intelligence... 25 The six-step road map for business intelligence success... 25 New roles and responsibilities... 27 Business intelligence analyst... 28 Speed bumps... 29 Innovative competition... 29 No clear strategy... 29 Bogged down in technology... 30 Chapter 5: The numbers game... 31 What is an alternative fee arrangement?... 31 Billing systems... 32 Paradigm shift... 33 The math... 35 What this means... 36 Success factors for alternative fee arrangements... 36 Accounting data The other stories... 37 New client openings... 37 Matter openings for existing clients... 37 Cross-selling opportunities... 38 Chapter 6: Knowledge management is business in intelligence... 39 What is knowledge management?... 39 Taxonomy/categorizations... 41 Knowledge management data sets for business intelligence... 43 Opportunities in knowledge management... 44 Chapter 7: Business intelligence for marketing and marketing business intelligence... 45 The marketing experience database... 45 Metrics: finding meaning in experience... 46 Client relationship management: an obvious but underused data center... 47 Setting strategy with marketing business intelligence... 47 Social media and news feeds... 48 Tools for supporting marketing business intelligence: brand intelligence... 49 Marketing intelligence monitoring strategy... 49 Marketing business intelligence... 49 Chapter 8: E-discovery and legal project management... 51 E-discovery/document management... 51 The e-discovery toolbox... 53 IV
Business Intelligence for Law Firms E-discovery inputs for business intelligence... 53 Legal project management... 55 Communication... 56 Firms applying legal practice management... 57 E-discovery and legal practice management as data... 57 Chapter 9: Secure intelligence protecting what one knows... 59 Why security needs institutional intelligence... 59 How much security is required?... 60 Shared challenges, shared toolsets... 62 Breaking more silos... 63 Actionable intelligence... 63 Unrealized opportunities... 64 Chapter 10: Putting what one knows together... 65 Data warehouses... 65 Whether or not to centralize business intelligence... 66 Collaboration... 67 Putting business intelligence to work... 67 Knowing what one knows... 68 Part Two: Further discussion and case studies Chapter 11: Even lawyers gotta have personality... 71 Personality rules... 71 Drivers, emotions, personality, basic and complex motives... 72 The five factor model... 73 Motivations and values... 74 Defenses... 75 Putting it all together... 75 Chapter 12: Legal project management Seyfarth Shaw LLP s use of process mapping... 81 The mechanics of the process... 82 Process maps as training tools... 83 Process mapping sessions with clients... 83 Legal project management conception... 83 Process data... 83 Conclusion... 84 Chapter 13: Market research as business intelligence input... 85 The rise of legal market research data... 85 Firm 1: Competitive intelligence and brand development... 87 Firm 2: Globalization and revenue growth... 88 V
Contents Firm 3: Merger intelligence... 89 Conclusion... 90 Chapter 14: The future of big data in law firms... 91 Democratization including self-service business intelligence... 91 The practice of law... 92 Confidentiality... 92 Data warehouse architecture as a primary focus... 93 Master data management/data governance... 93 Index... 95 VI
Executive summary Business intelligence, or BI as it is known, is the art and science of capturing and assessing or analyzing data collected in the backend of technology applications within an organization for the purposes of innovation, process improvement or forecasting change. BI as a discipline was long ago adopted into mainstream business practices, particularly and not surprisingly in large data-driven organizations such as the consumer goods and hospitality industries, but it has only recently begun to be incorporated into the law firm environment. Taking its cues from process improvement strategies such as Six Sigma, law firms have started to look at the data they collect and/ or to actively start to collect data using the technologies they currently have in an effort to improve client relationships, maximize costs, and essentially harness the data flowing through the firm for a variety of purposes. Data of this sort can be actively or passively collected, allowing for a range in the level of commitment required in starting a BI function. This report is aimed at a broad law firm audience and is based on the premise that all administrative groups within a firm should be working together to provide collaborative intelligence inputs for BI. The report takes a practical view of BI and breaks down the data sets available to many of the non-legal parts of law firms and explains how understanding the underlying data in these areas of law firm management can improve competitive advantage through BI. Wherever possible, the report provides examples from legal or other industries, as well as providing a series of charts, tables and graphs to illustrate the key concepts. It is the intention of the report to provide a didactic approach to understanding BI in the law firm context. The report starts at the very beginning of the BI process, explaining the differences between BI, competitive intelligence and market intelligence, and ending with an industry insider s futuristic view of where BI is headed in the context of law firms. In between there are 10 chapters followed by five case studies or thought pieces from industry specialists on topics ranging from data security to how marketing and BI dovetail. Specific examples are given throughout. Since BI in law firms is a relatively new concept and those practicing BI maintain a strong competitive advantage, several of the firms the author spoke with were unable to share best practices or case studies. Therefore, to provide illustrative examples, the report includes case studies from several non-competing service providers in the industry, whose clients have consented to share how the two worked together to achieve BI success. There is also a terrific and illuminating case study on the uses of BI in the legal project management process by Seyfarth Shaw. In Chapter 1, the stage for intelligence is set. The basic concepts of intelligence and the central theme of the report that knowing what one knows is a competitive advantage when underscored by BI are discussed. VII
Executive summary Chapter 2 looks at law firms and what makes them different from other industries. Here differences in lawyers personalities compared to the general public are explored, along with some explanations around how law firms function as a business and as a professional practice. In Chapter 3 the various BI inputs, from time keeper entries to customer relationship management system records, are addressed across the various administrative and management functions of law firms. Several of these functions are revisited later in the report in chapters containing specific examples. Chapter 4 is a roadmap for BI success in law firms. This chapter is a highlight of the report and focuses on the six fundamental steps to creating and nurturing a successful BI program in a law firm. It also includes some challenges or speed bumps to be aware of with regards to BI. Chapter 5 starts by looking into what each management area of law firms has to offer in terms of BI. This chapter considers accounting data and how it can be used to help increase a firm s profitability including changing the way a firm thinks about revenue and profitability. Knowledge management is covered in Chapter 6. This is the discipline concerned with model precedents, clauses and research memos. How the sharing of this data set enables a firm to determine what it knows from a substantive point of view and how capturing this information can transform a firm s efficiency and increase its bottom line are discussed. Chapter 7 takes a look at the marketing a firm does and encourages firms to understand how much intelligible and useful data is available within the marketing produced by the firm. There is a two-pronged approach here, in terms of marketing intelligence and using BI as a key marketing differentiator. Chapter 8 brings many of the lessons learned in earlier chapters together by introducing the concept of legal project management, which feeds off of the BI inputs from accounting and knowledge management data and provides a terrific outlet for marketing. This chapter provides some examples of what firms in Canada, the U.S. and internationally are doing with respect to legal project management. The remaining chapters are written by industry insiders, including legal project management experts at Seyfarth s in Chicago, who discuss various issues raised throughout the report from their distinctive perspective. These chapters provide firsthand experience and case studies of firms or service providers as they grapple with and implement many of the strategies presented in the report in relation to law firm BI. Contributors to this report include: Mark Sirkin, Heather Eskra and Kim Craig, Mark Gediman, Lisa Hart Shepherd, Adam Carlson, and Norm Mullock. VIII
About the author Zena Applebaum is the manager of intelligence and intranet at Bennett Jones LLP, a leading national and international law firm based in Canada. Zena s primary responsibilities include conducting analyses of market and competitor performance to inform the firm s growth, practice development, business development, client relationship management, counter-intelligence and marketing. Tying it all together, she enables the collaboration and sharing of information and intelligence throughout the firm via its award-winning intranet. She brings a unique perspective to intelligence and the dynamics of market and industry issues as a result of broad business development, marketing, and corporate research experience across a variety of sectors including technology, hospitality, government, healthcare and professional services. A frequent writer and speaker, Zena imparts information on competitive, market and business intelligence topics in Canada and abroad, with a particular emphasis on the legal sector. She is a regular guest contributor to the 3 Geeks and a Law Blog. Her articles and chapters have been published in PM Forum Marketing Magazine, the Strategic and Competitive Intelligence Foundation s Starting a Competitive Intelligence Function (2008), and by The Ark Group. Zena is a Toronto steering committee member of the Strategic and Competitive Intelligence Professionals organization, an advisory board member of the Special Libraries Association competitive intelligence division, and a member at large of the Professional Marketing Forum. Zena has a joint academic and applied Masters degree in communication and culture from York and Ryerson Universities. Zena Applebaum lives in Toronto, Canada and can be reached at applebaumz@bennettjones.com, on LinkedIn at ca.linkedin.com/pub/zena-applebaum/0/305/b70, or on Twitter at ZAppleCI. IX
About the contributors Toby Brown Toby Brown is the director of strategic pricing and analytics for Akin Gump Strauss Hauer & Feld LLP (www.akingump.com). In this role Toby works with firm partners and clients in developing pricing arrangements and service delivery models that drive successful relationships. Toby maintains the American Bar Association award-winning 3 Geeks and a Law Blog with two colleagues at www.geeklawblog.com. He is active on Twitter as @gnawledge and can be found on LinkedIn at www.linkedin.com/in/tobinbrown. Adam Carlson Adam Carlson, MS, CISM, is a co-founder of Carlson & Wolf LLC and helps law firms achieve effective, business-focused security programs. He has over 10 years of experience in information technology and security management. Prior to his consulting role, Adam worked as an external security auditor and later served as chief security officer, being responsible for securing a diverse technology portfolio. Kim R. Craig Kim Craig is director of the legal project office at Seyfarth Shaw LLP. She is the 2011 recipient of the International Legal Technology Association s Professional Services Champion of the Year Award for her leadership in legal project management. She has extensive experience in law firm management and expertise in several areas including legal project management, process improvement, enhancement of technology systems and applications, legal industry operations and knowledge management. Kim oversees the development and delivery of training, strategic planning and execution of the firm s legal project management program. Heather Eskra Heather Eskra is a senior project manager with the legal project management office of Seyfarth Shaw LLP. She has worked in the professional services industry for 20 years. Heather works closely with the firm s attorneys and clients on various legal service projects, leading voice of client interviews, incorporating process mapping to improve efficiencies and deliver substantive value for clients, as well as determining and implementing effective control mechanisms to monitor the performance of legal service deliveries. Lisa Hart Shepherd Lisa Hart Shepherd established specialist research company Acritas in 2002 and is currently its chief executive officer. Since 2002, Lisa and her team have conducted a wide range of research programs for the world s largest law firms. In 2006, she developed Sharplegal, now the most XI
About the contributors comprehensive annual study of the global legal market. Containing in-depth analysis of the main factors shaping the future of legal services, Sharplegal insight helps law firms to undertake strategic planning with greater accuracy. It has helped many of the Global 100 to achieve service excellence, brand strength and global growth. Mark Gediman Mark Gediman is the director of information services for Best Best & Krieger, LLP. Mark has been with the firm since 2000, managing the research needs of more than 200 attorneys and paralegals in nine offices from California to the District of Columbia. He is co-founder and co-chair of the Competitive Intelligence Caucus of the Private Law Libraries Special Interest Section of the American Association of Law Libraries and past president of the Southern California Association of Law Libraries. He writes and presents regularly on competitive intelligence, research and library management issues. Norm Mullock Norm Mullock is a veteran and active champion of data-driven innovation in the legal industry. As vice president and head of IntApp s integration practice, Norm leads the company s efforts in expanding law firms adoption of modern data architecture and management strategies and the value derived from these efforts. Prior to joining IntApp, Norm spent more than a decade advancing the adoption of leading business intelligence solutions with business intelligence pioneer, Redwood Analytics, a company Norm co-founded. Norm holds an MA in international public policy and a BA in economics and political science from the University of Michigan. Mark Sirkin Mark Sirkin, PhD, is a psychologist and chief executive officer of Sirkin Advisors, a consulting firm specializing in the development of leadership and human capital in professional service firms and organizations. His book, The Secret Life of Corporations, which re-imagines organizational structure and management for success in the twenty-first century, was published in 2004. He has presented and moderated discussions to professional organizations and has been a frequent contributor to legal publications including Pro Bono Wire, Law Practice, Lexpert (in Canada), New York State Bar Journal, and West LegalEdcenter. He works with law firm management on issues of succession, team work, and leadership development. He has pioneered the method of human capital audits in law firms. XII
Acknowledgements If it takes a village to raise a child, then it takes a small assembly to draft a guide to business intelligence. Thanks are due to my supportive family, and to all those at Bennett Jones LLP who encouraged me through this project. I must also acknowledge the many individuals and thought leaders who were directly or otherwise involved in the research and writing of this report. Thank you to each of the report s contributing authors listed here in alphabetical order: Toby Brown at Akin Gump LLP, Adam Carlson at Carlson Wolf LLC, Kim Craig and Heather Eskra at Seyfarth Shaw LLP, Mark Gediman at Best Best & Krieger LLP, Mark Sirkin at Sirkin Advisors, Lisa Hart Shepherd at Acritas, and Norm Mullock at IntApp. The case studies and supplemental reading are your strokes of genius. My heartfelt acknowledgements also go to Kingsley Martin at kiiac, Katie Cuyler at Bennett Jones LLP, Michel Bernaiche and Dr Craig Fleisher at Aurora WDC, John Alber at Bryan Cave LLP, the 3 Geeks and Law Blog, the legal Bradys, and to all of the presenters at the ARK Business Intelligence Conference in New York in May 2012. My gratitude also goes to anyone who has written about business intelligence in the legal space recently; your editorials and discussions were the inspiration for this report. And finally a nod of encouragement to all the law firms who grapple with business intelligence issues on a regular basis. This report is written by you and for you; thank you for taking the time to consider the issues and for pushing the profession forward. XIII
Glossary of terms Alternative fee arrangements (AFAs): Big data: Big law: Business intelligence (BI): Client relationship management (CRM): Competitive intelligence (CI): Document management system (DMS): Data warehouse: E-discovery: Enterprise search: Driven by client demand and directed by business intelligence, AFAs are billing methods based on something other than the traditional hourly billing model. Data that is a by-product of transactions and processes from diverse areas within a business environment. Law firms over a defined size practicing in a broad range of industries on a national or international scale. This term generally refers to firms on The American Lawyer AmLaw 200 list. The ability of an organization to take all its capabilities and convert them into knowledge, ultimately getting the right information to the right people, at the right time via the right channel. Programs that monitor contacts and the interaction with those contacts. A systematic and ethical program for gathering, analyzing, and managing external information that can affect any business, association, partnership or firm. A system that manages documents and work products. Such systems categorize documents based on creation date, author, document type, work group, etc., and also contain editing and access trails. A server/program/system where large amounts of data are stored. Electronic discovery applies to the exchange of electronically stored information among litigants during the course of civil litigation. The types of electronic information covered by e-discovery include (but are not limited to) word processing documents, e-mail messages, electronic spreadsheets, different image or sound files, and material from databases. A search across many different datasets and platforms, including but not limited to a document management system, the portal or knowledge management intranet, billing systems, and/or even e-mail. XV
Glossary of terms Factor: Gross margin: Key intelligence topics (KITs): Knowledge management (KM): Legal process management (pricing and project management): Partner compensation, as it effects profitability. Revenue minus all costs, except partner compensation. These topics help intelligence programs define their goals and align with corporate strategy. KITs should be clear objectives and strategies that are updated regularly. In law firms, knowledge management is primarily concerned with sharing legal knowledge and know-how for the purpose of increasing efficiencies. The utilization and management of all or some of the data inputs of a firm in order to set expectations with clients. Leverage: Marketing experience database: Market intelligence (MI): Matter-centric: Profits per partner (PPP): Realization: Security incident and event management (SIEM) systems: The ratio of work (measured in hours) billed by partners versus nonpartners. Leverage is also the term used to broadly define the ratio of partners to associates in a firm. Where for marketing purposes a firm records the cases that it has tried, won or lost, the deals or transactions it has advised on, and any arbitrations, inquests and other related experience. The information relevant to a company s markets, gathered and analyzed for the purpose of accurate and confident decisionmaking in determining market opportunity, market penetration, and market development. A focus on a specific matter/case/issue/transaction handled for a specific client. The evaluation method created and used as a benchmark by American Lawyer for profitability. It is defined as the factor multiplied by a firm s hourly partner target rate. Billed and paid work compared to standard rates. These are developed to monitor for breaches of security. These systems have the ability to aggregate and correlate logs from a variety of information systems. XVI
Business Intelligence for Law Firms Taxonomy: Utilization: A predefined classification system based on a set of presumed relationships. A measure of productivity based on the number of hours worked per lawyer. XVII