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Big Data may mean Big Insights.

At least, that’s one major takeaway I got from the Legal Trends Report released by Clio late last year.

Yesterday, I shared my December editor’s column from Arizona Attorney Magazine in which I discussed the report and a few of its findings. But I also had promised to write about the part of the report that wasn’t so much about law practice, but about the power of data to make positive change.

Today, let me get back to that.

Here is the pertinent part of my column I’ll extrapolate on today:

“First—and maybe less interesting to you—is the newfound power of data to provide insight. I’ll write more about this in the future (probably in my blog https://azatty.wordpress.com/), but it’s incredible that via our own real-time software choices, companies like Clio can assess the state of law practice—all within the agreed-upon terms of use. They can see, moment by moment, how many new matters are opened, how many invoices are generated, how many remain unpaid. Does this spell the end of surveys based on self-reported data? We’ll see.”

Before I dive in, here again is a link to the complete report. Read it yourself and let me know what you think.

Clio logo

Data + lawyering? Yes, please, say Clio.

Besides the bullet points I mentioned in my column, here are a few more macro-level insights by Clio:

  • The total 2015 realization rate (actual hours billed as a proportion of actual billable hours worked) came in at 81 percent, but this differed noticeably by practice area and by state.
  • The total 2015 collection rate (actual revenue proportional to hours billed) was 86 percent.

So let’s jump in, shall we, and start with Clio’s premise, regarding the dearth of practice decisions driven by data.

Essentially, they’re saying, in the 4,000-year history of the legal profession, lawyers, firm owners, and decision makers have suffered from a scarcity of industry data. Law firms have had only sparse resources to find the business insights required to run a viable practice.

I know, dramatic, right? In the very first line of their executive summary, they’ve got me with a compelling narrative. Plus, they have subtly conjoined me with every great lawyer, from Hammurabi, to Abe Lincoln, to Sandra Day O’Connor. Those folks—and me. We’ve all suffered the same law practice pains that arise from insufficient reliable evidence. But we’ll solve it together.

OK, I joke, but there’s something to their point. The mass of data that we rely on do come from (as Clio says) self-reported data and often small sample sizes. And is there a way to know if the data we rely on REALLY came from firms of a size like our own firm? Unlikely.

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Hammurabi had a great Code, the best, really. But who knows what he could have achieved with better data?!

But the advent of Big Data and data aggregators has changed all that. Now companies like Clio—and others you interact with every day—have access to your actual choices and interactions with their products. They can see, moment by moment, how many new matters are opened, and how many invoices are generated, and how many remain unpaid.

Here is where I must note that Clio (like all reputable companies) is using all of our online decision-making anonymously, stripped of identifying data. But when they take this massive batch of anonymous data, and analyze it, a remarkable picture of us as a profession emerges. The world is changed—for the better.

So that was a bit of a wake-up call.

But I leave you today again, once again, with their visceral image of your practice as a funnel.

Any of us who practice or have practiced law understand that there is a flow to the work, and that we need matters to begin, end, and get paid for—and hopefully all those things overlap in multiple matters so there is actual cash flow. But picturing it like a funnel invites a disturbingly accurate assessment of where we all stand.

Because we are all busy, I invite you to turn to the report’s page 35. Or, if you’re really busy, I’ll type it for you:

Funnel Cloud? The Devastating Conclusion

Out of an eight-hour workday, the average firm collects payment on only 1.4 hours of billable time. These unit economics would be devastating to almost any industry, and they help explain why, despite charging an average $232 per billable hour, the average small-to-mid-sized firm struggles to make ends meet.

I hope you weren’t standing up when you read that.

Once again, here is a link to the complete report.

Enjoy.

Clio logo

Data + lawyering? Yes, say Clio.

Was it way back in December that I wrote about the new Clio law practice report? And promised you more?

Sorry about that.

Yes, it was in the December issue of Arizona Attorney Magazine that I chatted about the Clio Legal Trends Report. You can read the column here.

Because I’m super-helpful, I’ve pasted in below what I wrote, so you don’t even have to click.

And tomorrow, I’ll offer some more thoughts on what we can learn from the Clio report—and reports like it. Here’s my column (plus an image):

We thought we understood the way the world worked—and then the Cubs won the World Series.

I suppose it’s good we’re still capable of being surprised. It probably says something nice about our capacity for joy. Or something.

Of course, surprises are not always happy, which occurred to me as I read a new report on law practice trends.

Via their “Legal Trends Report,” the people at Clio—the cloud-based practice management people—want you to know two things about your law practice.

First, your practice is a funnel—one that may be malfunctioning.

And second, consider using data—actual facts based in reality—to drive your practice decisions.

Clio will likely say I’m oversimplifying a vast array of takeaways from the report released in late October. But those takeaways—and the underlying facts—are pretty stunning.

dec-2016-editors-column-on-clio-report

Here is a link to the complete report. Read it yourself and let me know what you think.

And here are two insights compiled by Clio:

  • The average rate billed by lawyers across the United States is $232 per hour.
  • The total utilization rate (billable hours as a proportion of hours available in a working day) for lawyers in 2015 was just 28 percent. For solo lawyers, that number drops to just 22 percent.

What makes this noteworthy?

First—and maybe less interesting to you—is the newfound power of data to provide insight. I’ll write more about this in the future (probably in my blog https://azatty.wordpress.com/), but it’s incredible that via our own real-time software choices, companies like Clio can assess the state of law practice—all within the agreed-upon terms of use.

They can see, moment by moment, how many new matters are opened, how many invoices are generated, how many remain unpaid.

Does this spell the end of surveys based on self-reported data? We’ll see.

The second takeaway is related to the unprofitability of many attorneys’ law practices. When we look at just two of Clio’s many charts—Arizona’s average hourly rate, and its (gulp) average collection rate, the situation appears dire.

There’s definitely more to the picture. But as we head into 2017, we will seek ways to tell the true story of law practice challenges.

Until then: Go Cubs.

Fastcase logo

Time to get your Boolean search skills up to snuff, with Fastcase.

Two items to add to your calendar, each from companies that are State Bar of Arizona member benefit providers (see the complete list here):

1. On Thursday, Oct. 20 (10:00 a.m. MST), Fastcase offers its “Introduction to Boolean (Keyword) Searches (2016),” which is part of your legal research member benefit.

2. And on Tuesday, October 18, 2016 (11:00 a.m. PT | 2:00 p.m. ET), Clio offers a free webinar titled “The Shift to Mobile Legal Services.”

As Clio describes:

Clio logo

Mobile + lawyering? Yes, say Clio.

Mobile devices have fundamentally transformed consumer behavior across a number of industries—and legal is no exception. Today’s legal client expects on-demand service and a seamless client experience, and modern lawyers are harnessing mobile technology to help deliver. Are you? Join us to see how attorneys can utilize smartphones in their everyday practice to great benefit, and how to address the inherent security concerns that come from mobile lawyering, including:

  • Ethics to keep in mind when accessing client data in public
  • How to setup your mobile phone for secure access
  • What apps to choose for legal practice, including a sneak peek at Clio’s new app
  • How to protect yourself and your clients while practicing on the go

(These are the same folks who brought you the well-regarded Clio Cloud Conference. Read about it here.)

Clio logoIn the upcoming issue of Arizona Attorney Magazine, you can read a follow-up to a great panel discussion on selecting the right law firm model to match your approach and expectations. It was hosted by David French and was a great way to assess your own practice. I hope he continues to hold similar roundtables.

As you think on those law practice issues, consider a webinar tomorrow that examines niche practice as a source of satisfaction and profitability. It’s hosted by two smart people, so my confidence level is high that attendees will gain a lot of value.

Here are the details of the event, hosted by Clio practice management:

Date: August 9, 2016

Time: 11 a.m. PT — 2 p.m. ET

Clients are no longer seeking lawyers with broad skillsets and general knowledge, but rather experts who focus on a unique industry and specialize in the laws that surround it. Now more than ever lawyers need to abandon the “any case that walks in the door” approach and start a niche practice in order to grow their businesses and find success.

Join Joshua Lenon, Clio’s Lawyer in Residence, and Jay Harrington, author of One of a Kind: A Proven Path to a Profitable Legal Practice, to learn how you can command higher rates, attract high-value clients, and increase your profile by starting a niche firm.

In this one hour webinar Jay and Joshua will discuss:

  • Why it’s important to carve out a niche
  • Why lawyers with niche practices develop more business and command higher rates
  • How to pick a profitable and sustainable area of specialty
  • How to market your niche practice through various thought leadership and content marketing initiatives
  • How to customize your practice management software to your niche

Register for the webinar here.