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: johnocunningham.wordpress.com.