What is Legal Analytics?
“Artificial intelligence is changing the way lawyers think, the way they do business and the way they interact with clients. ”
Legal Analytics provides new ways to satisfy client needs. Increases in computing power and better access to business data, especially in the last decade, make available to law firms and legal departments algorithmic based techniques for practicing law. Analytic methods can reduce response times, increase efficiency, and allow firms to provide clients with a more accurate and consistent product.
Legal analytics is the art of using analytical methods based on mathematics to solve legal problems and perform legal tasks. Descriptive analytics uses data to describe present conditions. Descriptive analytics can help us understand billing patterns, case outcomes, and prior performance. Predictive analytics uses statistical methods and existing data to predict future outcomes. Predictive analytics can help us understand potential outcomes and improve decision making. Machine learning, a form of "artificial intelligence," uses algorithmic techniques to manipulate information in a reiterative fashion. Machine learning tools can assist document review, enable automated chatbots, optimize decision making, and help build automated prediction tools.
Legal analytics also includes analytic methods that use this data to guide decision making. Behavioral economic concepts such as loss aversion, anchoring and confirmation bias explain party behavior in legal disputes and negotiations. Behavioral economics provides models that allow us to use data to predict third party behavior (and our own), and design strategies to accommodate human actions. When coupled with data analytics, behavioral economics modeling can provide superior decision structures. Game theory techniques, including backwards induction decision trees, also help predict third-party behavior and assist in decision making.
Even though artificial intelligence is now the legal community's hot new word, in reality adoption rates for machine learning and other data analytic tools remain relatively low - most uses within law firms still involve using traditional products, such as discovery and research tools, incorporating some machine learning techniques. But, as we explain, this is rapidly changing as more firms and legal departments start to incorporate analytic methods and tools, and more legal technology vendors build products and services around data and machine learning.
To compete, law firms and departments will have to understand these new tools and their ability to improve performance, increase efficiency, and predict results. Most lawyers lack the background to understand, assess, and properly use these new tools. The typical senior lawyer, even if he or she received training in math, economics or statistics prior to law school, has not been able to use and grow these skills during a legal career. Some techniques, such as behavioral economics, are relatively new, while tools giving lawyers access to data analytics and machine learning only recently emerged. Still, lawyers can learn what they need to know to adopt to the coming changes.