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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.

hammurabi

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.

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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.

big data word cloud

Big and small intersected in a great way this month, in the cover story for Arizona Attorney Magazine.

Our topic is big data (or Big Data, if that’s how you roll). We’ve grown accustomed to hearing about the power of large-scale data to alter the modern experience—for example, just think of how many results you get when you Google … anything, really. The vast amounts of digital information available to us have transformed our lives. (Plus, technology’s only just getting warmed up.)

Dr. Melissa Kovacs of FirstEval

Dr. Melissa Kovacs

But we wondered how Big Data affects lawyers and their cases. And that’s where the talented Melissa Kovacs comes in.

Dr. Kovacs described a few practice areas that could benefit greatly from a wise use of large datasets. In her essay, she also describes how this data can be illustrated in highly visual ways; that will be a benefit to lawyers, juries, other fact-finders—and to lawyers themselves, who may be numbers-averse (guilty as charged). Her whole story is here.

But I mentioned big and small; what’s up with that?

Put simply, Melissa’s article is concise—blissfully so. It cuts to the chase and does not inundate readers with too much information. But can we have such shorter stories for the cover feature? Sure. Why not?

It’s not uncommon for magazines to reserve the cover for only their longest, weightiest pieces. And sometimes that makes sense.

But Melissa’s piece is timely, relevant, and well written. And I love the fact that our cover image of a tsunami of information is wedded to an article that can be consumed easily. It’s a tranquil pond illustrated by a tidal wave.

Arizona Attorney Magazine, January_2016 cover

Come on in; the water’s fine. Read the whole thing here. And read more about her firm FirstEval here (be sure to read her blog posts; they’re good, and not just good for a data scientist, but truly good!).

Opening spread for our data story by Melissa Kovacs, Arizona Attorney, January 2016.

Opening spread for our data story by Melissa Kovacs, Arizona Attorney, January 2016.

University of Arizona Law School Professor Jane Bambauer

University of Arizona Law School Professor Jane Bambauer

Scouring law school websites may not be your idea of fun. Maybe it ranks right up there with scouring sites of county recorders, or tax-advice columnists. (Cue the angry tweets from all three providers.)

But you may be surprised at the valuable information located at law school sites. Today, I share some news from the University of Arizona Law School.

First, I point you toward a podcast with interview of UA Law Professor Jane Bambauer. In it, she  discusses her Stanford Law Review article called Is Data Speech?

The podcast is on the unsurprisingly good site of Surprisingly Free (“A weekly podcast featuring in-depth discussions with an eclectic mix of authors, academics, and entrepreneurs at the intersection of technology, policy, and economics”—yo, bookmark it!). In the July 23 interview, Bambauer “addresses several issues relating to whether data can be can be considered speech, how to define ‘data,’ and whether data collection can be covered by the First Amendment.”

If you’re more of a visual thinker, you can read a draft of her paper here.

University of Arizona Law School logoThis is a fascinating topic, and perhaps I’ll prevail on Professor Bambauer to cover this topic (and others??) in Arizona Attorney Magazine.

Last month, she was a co-host at a law school event (and I’m still sorry I didn’t get the chance to talk to her, as she was swarmed by law students and others). Below are a few photos from the July 10 law school event, held at the downtown Phoenix Palomar Hotel.

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And then, in case I needed reminding that I didn’t hang out with professors nearly enough in law school, I see a new book is out that bears reading. It’s called “Saving the Neighborhood,” and a co-author is UA Law Professor Carol Rose.

You can purchase the book here. And from the same spot, I share a description of the volume, which clearly has much to say about our society and the evolution (or not) that it’s witnessed.

“Saving the Neighborhood tells the charged, still controversial story of the rise and fall of racially restrictive covenants in America, and offers rare insight into the ways legal and social norms reinforce one another, acting with pernicious efficacy to codify and perpetuate intolerance.”

University of Arizona Law School Professor Carol Rose

University of Arizona Law School Professor Carol Rose

“The early 1900s saw an unprecedented migration of African Americans leaving the rural South in search of better work and equal citizenship. In reaction, many white communities instituted property agreements—covenants—designed to limit ownership and residency according to race. Restrictive covenants quickly became a powerful legal guarantor of segregation, their authority facing serious challenge only in 1948, when the Supreme Court declared them legally unenforceable in Shelley v. Kraemer. Although the ruling was a shock to courts that had upheld covenants for decades, it failed to end their influence. In this incisive study, Richard Brooks and Carol Rose unpack why.”

“At root, covenants were social signals. Their greatest use lay in reassuring the white residents that they shared the same goal, while sending a warning to would-be minority entrants: keep out. The authors uncover how loosely knit urban and suburban communities, fearing ethnic mixing or even “tipping,” were fair game to a new class of entrepreneurs who catered to their fears while exacerbating the message encoded in covenants: that black residents threatened white property values. Legal racial covenants expressed and bestowed an aura of legitimacy upon the wish of many white neighborhoods to exclude minorities. Sadly for American race relations, their legacy still lingers.”

I know; heady stuff for a Monday morning. Well, it’s August, and school is back in session. Let’s get learning.