The Benefits of Being a Data-Driven Lawyer

By Sophia Lee

Case management software lead management data

The idea of being a data-driven lawyer can seem intimidating at first. But contrary to popular belief, it doesn’t require crunching numbers or analyzing a ton of raw data. Taking a data-driven approach to running your law firm simply means keeping track of and utilizing certain metrics—such as your billable hours and financials—to improve the way you work. We’ll take a deeper dive into this topic in this blog post. 

The Benefits of Data-Driven Law Firms

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While taking a data-driven approach when running a law firm requires a bit more effort; it comes with many upsides. 

Increased profitability

If you run a data-driven law firm, you have the potential to generate more revenue. 

For instance, if you collect data about your firm’s finances, you can see how certain resources are utilized and answer questions like: are your lawyers meeting the minimum number of billable hours? How much time is being spent on client work versus administrative tasks? Are there any areas where processes can be improved from a time management standpoint?

Understanding the answers to these questions can help you identify opportunities to increase profitability. 

More growth opportunities

Data is powerful because it allows you to make predictions based on patterns you’re seeing and help you identify opportunities for potential growth.

Let’s say you compare year-over-year data to see how much certain practice areas have grown over time. You notice that your real estate practice has been stagnant for the past few years. With this information in hand, you can either strategically increase your marketing efforts for this practice or re-allocate some of your budgets to better-performing areas—depending on what you think will help your firm’s growth the most.

Improved decision-making

Taking a data-driven approach is also beneficial to decision-making as it gives you an objective way to analyze your options and choose the best path for your law firm. 

For instance, you may be thinking about changing your fee structure and aren’t sure whether it’s a smart move. By looking at your internal data, you can view the last time you raised your rates and determine if there was a drop in new business afterward. You can even pull in external data to see how other law firms are approaching their rates. 

How to Run a Data-Driven Law Firm

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Creating a data-driven law firm doesn’t happen overnight. But there are steps you can take to start moving in the right direction. 

1. Set up systems

The first step to running a data-driven law firm is to set up systems, processes, and tools for capturing data. Some law firms choose to track everything manually. But if you want to save time and money, invest in systems that can automate the data collection process.

Data-collection tools include: 

2. Organize your data

Once you collect the data, you want to ensure it’s practical for improving your law firm’s business. What does this look like in practice? Here are a few ideas: 

  • Organizing and updating any spreadsheets that contain data.
  • Customizing any software to make sure it captures the right data. 
  • Regularly reviewing time and expense reports to ensure accuracy.

Keep in mind that organizing data is an ongoing process, so make sure someone takes ownership of each task. 

3. Get started 

Once you have the data collected and organized, it can be challenging to know where to start.  Begin by identifying your goal, then pursue the lowest-hanging fruit. 

For instance, you might need quick ways to grow revenue this quarter. After looking at your client data, you notice that you’re losing significant business during the client onboarding phase. With this information, you can  introduce a client intake form on your website or find other ways to make the process as seamless as possible.

4. Cultivate a data-driven culture

Finally, the best way to run a data-driven law firm is to make data a key part of your firm’s culture. This means investing in resources, tools, and systems that support data collection. And encouraging decisions based on data, not gut instincts. In addition, each lawyer should take ownership of a specific dataset or database. 

All of these small actions create an environment where it’s clear that data is king. Over time, everyone at your firm will adopt a data-driven mindset and reap the productivity and cash flow benefits from this approach. 

Take the steps to become a data-driven law firm

There are many benefits to running a data-driven law firm and making decisions based on complex numbers. By making this shift in how you approach your work, you’re opening up additional possibilities for growing your business. If you’re curious about how MyCase can support your data needs, give us a try (it’s free). In addition we can teach you more about business management such as how legal project management software can help, the power of data analytics, and performance management.

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