Your law practice has to add up

Issue May/June 2017 By John O. Cunningham

In the last edition of this column, I mentioned that many corporate clients I have surveyed want lawyers to talk numbers more than they do.

Both sophisticated general counsel and ordinary consumer clients now want more data-based projections of costs, outcomes and delivery times involved in legal processes,  as Professor Daniel M. Katz has confirmed in his 2013 Emory Law Journal article about the growth of Quantitative Legal Prediction (QLP).

In my own experience interviewing sophisticated legal service buyers, I have learned that they want more of the following from outside counsel, and find it difficult to get because few firms track such data:

  • Average historical costs per type of matter, jurisdiction or forum
  • Average times to completion of trial or close of transaction
  • Historical likelihood of success at or prior to trial
  • Total number of matters a lawyer has handled by category
  • A range of likely recoveries or exposures based on past outcomes
  • The number of matters a lawyer has handled in their industry
  • A lawyer or law firm's percentage of satisfied clients and client defection rates
  • The demographic numbers on likely jury pool candidates by venue

The fact that clients do not always ask for such data does not mean they don't want it. Many just get it from other sources, such as information specialists that aggregate and analyze legal data.

One company, for example, now offers clients the chance to examine success rates and damage awards historically associated with certain subject matters of cases, jurisdictions, judges, and even trial attorneys or law firms. Clients can and do pay for this research, particularly in big-ticket intellectual property, securities and anti-trust matters.

QLP is only going to be more prevalent and critical to legal decision-making in the future, as public data and technological access to it expand exponentially. As Katz has explained, the storage cost for a gigabyte of information was $300,000 in 1981, but was only 10 cents by 2011. Similarly, the processors used to search information in 1971 were a million times slower than they were in 2011.

Thus, it is little wonder that in-house law departments are now using technology to quantify objectively the performance of both inside and outside counsel. Among other types of data, some corporations are tracking:

  • Numbers of transactions handled by each lawyer according to subject matter and year
  • Numbers of litigation matters handled
  • Average size and range of transactions or cases handled by each lawyer
  • Outside counsel spending per matter, per lawyer
  • Average cycle time (the time from start to finish) by matter, case and lawyer

Some companies are also doing comparative measures of productivity and outcomes, pitting the performance of various outside lawyers against each other, and against alternative legal providers. In-house law departments are also benchmarking their overall budget-management performance against that of others in their industry, and they are being held accountable for their total legal budget projections.

As a result, sophisticated clients can get irritated when outside counsel balk at projecting legal costs, cycle times and ranges of outcomes for any given trial or transaction. They actually call it "whining." Private practitioners point to complex variables involved in any given matter, but in-house lawyers say they regularly have to provide QLP analysis for executives who also deal with multi-variable calculus every day when bidding on complex projects or forecasting performance metrics for stock analysts.

Private practitioners often express ethical concerns about disclosing historical data or quantitative projections for fear that such communications could be misleading or misconstrued. In Massachusetts, Professional Conduct Rule 7.1 governs communications about a lawyer's services, and requires truthful statements that would not lead a "reasonable person" to form an "unjustified expectation" about results. The rule itself recognizes, however, that "an appropriate disclaimer or qualifying language may preclude a finding that a statement is likely to create unjustified expectations."

So the crux of the ethical quandary with regard to data disclosures and quantitative predictions is about furnishing adequate information so as not to be misleading. It is a quandary that publicly traded corporate clients face every single day when furnishing information about their companies - information that can influence investors.

In fact, corporate lawyers are regularly called upon by public company auditors to provide quantitative and predictive information with regard to material litigation and transactions. The American Bar Association even has a "Statement of Policy Regarding Lawyers' Responses to Auditors' Requests for Information," and it provides a solid analysis of how lawyers can provide such information, giving full and accurate disclosure to shareholders and potential investors while toeing the ethical line.

More importantly for private practitioners, if you don't provide the data that your client is seeking, eventually someone else will. And then you will have a former client.

John O. Cunningham is a writer, consultant and public speaker. As a lawyer, he served as General Counsel to a publicly traded company and to a privately-held subsidiary of a Fortune 100 company. For more information about his work in the fields of legal service, marketing, communications, and management, check out his website and blog at:

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