Jun 19th: Can data predict judges' rulings?

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In today's episode, we'll cover the use of data science in legal tech firms, how legal spending has increased for legal departments, and more...

Let's jump in!

First, here's an overview of what happened in legal tech recently.

Legal tech companies have been using data science to expand their reach and improve their predictions. One such startup is PreDicta, located in Maryland, which uses docket numbers and data science to predict how judges will rule in cases. Recently, the company acquired Gavelytics, making its predictive offering even more comprehensive by expanding it to state courts.

At the same time, law firms too are taking advantage of data to make improvements in various areas. One such area being billing and pricing behavior, using data to make the process more efficient and effective. An industry report is expected to come out soon after a survey, which will determine how firms track key performance indicators and utilize business intelligence tools. We will be sure to cover the report once it's released.

Tracking KPIs and using business intelligence tools becomes even more crucial for lawyers to remain competitive. It helps lawyers identify trends and adapt their strategy accordingly, leading to better decision-making. We cover the results of the ACC Law Department Benchmarking report as part of the key story next, which touches on many of these points.

The 2023 Law Department Management Benchmarking Report has revealed that legal spending among companies has significantly increased by 29% annually, from $2.4 million to $3.1 million. This increase has mainly been driven by companies with more than $20 billion in revenue, where the median total legal spend rose from $50.8 million to $80 million, a 57% increase.

So, what could be the reason for this rise? Well, the report suggests that the increase reflects the growing regulatory and legal complexity facing companies across industries, particularly new technologies, such as privacy, which is creating new legal challenges. Interestingly, the report also highlighted a shift in priorities for legal departments. Privacy is now the most common business function directly overseen by Legal, overtaking compliance, which traditionally tops the list.

Moreover, the increase in legal spending is not solely attributable to law firm rate increases, although they have raised rates an average of 5.5% in the first quarter of 2023, the largest quarterly increase since before the global financial crisis of 2008-09. Dynamic business conditions, increased regulation, high levels of litigation, and M&A activity, among other things, have driven up the need for legal services.

The report also sheds light on some other interesting findings, such as the fact that larger numbers of legal departments now outsource intellectual property services and discovery (data processing and hosting) to outside counsel. However, 62% and 54% of departments still handle these areas in-house respectively.

Lastly, as for diversity and inclusion, the report found that about three in ten departments track internal diversity metrics related to the legal department’s composition, and 21% report tracking diversity metrics with respect to their outside counsel. On a more concerning note, only 38% say there is a formal strategy to improve legal department diversity, a result seven points lower compared to what was observed last year.

And that's a wrap.

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