The tyranny of hunches: using analytics to give your firm a strategic advantage.

• Author: Walters, Ed
• Position: Special Issue: Technology & the Practice of Law

Law firms are amazing organizations. They are full of very smart people; they utilize incredible amounts of information, and, as businesses, they generate a lot of money. And yet, for many client decisions--including some bet-the-company decisions on behalf of clients--the most important source of information for law firms is the hunch.

After practicing law for a short time, I became a business owner, and now our company employs four law firms to do our legal work. As a consumer, this hunch-based mode of decisionmaking drives me crazy. I would wager that many clients feel the same way about hunches.

Experience--as a Hunch

How much is my case worth? Where is it most advantageous to file suit? What is this judge like, and how is she likely to rule in this case? How long will it take to reach a disposition? What is my likely exposure? What will the legal fees be? Should I accept this settlement offer? How many important precedents exist, and what's the most important one in this case? Is this contract clause standard?

These are not abstract questions. They are core to the practice of law, and for clients, these are the major questions they face about legal services, and in some cases, about the very future of their business, their family, or their medical care after an accident.

We answer these questions with hunches. Usually bad ones.

"How much is my case worth?" is not a question that is answered with a number. The answer is a distribution of outcomes from similar cases. "What is this judge like?" is not a collection of war stories, or a question about who threw a fundraiser for the last election. Many friends of mine became lawyers so they could be safe from math and science in school, and they have stayed that way for their entire careers. The bad news for them: This mode of delivering legal services is doomed. The day of hunches is ending.

The Rise of Legal Analytics

Legal decisions in the future will be made with data. Not all at once, but starting now, and increasing every year from here forward. This is not controversial--it is malpractice to think otherwise. Data transforms industries. By transforms, I mean destroys. A good example of this is Yahoo!, which was the original way we found information on the early World Wide Web. When a lawyer wanted to find a piece of information on the early Web, one would look at the outline index on Yahoo!--which hand-categorized each page on the early Web. This mode of finding information died...