AI And The Practice Of Law: Realizing Value

How does one reasonably prioritize and choose which projects to pursue and which vendors to work with?

In today’s legal tech boom, prospective purchasers of new solutions — both in the law firm and in the corporate legal department — are faced with an almost embarrassing abundance of options. Many, many solutions have been introduced in the last 12-24 months with the goal of improving efficiency, reducing errors, and generally helping drive positive outcomes. At the same time, purchasers can’t avoid the realities and limitations of business: limited budgets, limited time, and challenges to get buy-in from senior management stakeholders.

In such an environment, how does one reasonably prioritize and choose which projects to pursue and which vendors to work with? In this month’s column, we attempt to tackle exactly that question and put forth a framework that one can use to categorize and compare solutions. Let’s start by considering a hypothetical workflow in which we are creating a contract for a client. Since we’ve created this type of contract before in past articles, we’ll i) start with a template, ii) customize that template to match the fact pattern for the client, and then iii) deal with any specific client needs.

A rough assumption of such a workflow is that the workflow follows the 80:20 rule, wherein 80 percent of the time is dedicated to repetitive tasks such as tasks (i) and (ii) detailed above. The remaining 20 percent of the work in task (iii), is where the attorney adds value to the client’s matter based on specific experience or knowledge.

This 80:20 model lends itself to a model of value tiers:

Tier 1: Improved Efficiency

The first tier of value includes solutions that create efficiencies by reducing the time it takes to complete a task, and specifically by reducing the time spent on repetitive tasks. If we are able to reduce the time spent on repetitive tasks, we have two positive outcomes:

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  • The task itself takes less time (of particular interest for tasks where the client pushes back on the rate or billability), and
  • The percentage of time spent on value-adding activities increases.

To take our contract example, a simple application of document automation software would allow us to i) select a contract type and ii) enter client data into a form. The software itself would handle the formatting and structure of the starting contract, thus reducing the time spent on the repetitive, non-value-adding work.

Tier 2: Improved Outcome

The next level comprises solutions that can help inform decisions and yield a better outcome. Solutions at this level provide some form of insight without which you would not otherwise have access. Engineering outcomes typically involves some sort of analytics that help us assess what a standard treatment consists of, or predict (based on past history) what is likely to happen in the future.

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Let’s go back to our contract example. During the negotiation of contract terms, there’s typically a fair amount of time spent debating “what’s market,” or standard, for terms. Here the area of contract analytics, where an attorney has access to prevailing market terms, reduces the time of negotiation and drives the agreement to a better outcome for the client. Litigation serves as another well-adopted example in which predictive analytics can add this kind of value. Predictive analytics can provide access to a whole host of information on past judicial decisions and can drive choices on relevant case law, litigation strategy, and venue selection to name a few.

Tier 3: Optimization

The last tier of the value ladder is defined by solutions that enable optimization. The very concept of optimization implies comparison — in other words, for one to know if an outcome is optimal, it’s necessary to be able to look at comparable outcomes. This benchmarking allows the practitioner to assess current workflow/strategies and adjust them in order to improve and/or optimize the outcome for the client.

Let’s assume that a law firm is representing a purchaser of a mid-sized manufacturing company in the consumer-packaged goods (CPG) industry and is drafting a purchasing agreement for the company. While understanding the market standard for such agreements helps improve the outcome, if the purchaser were to understand the incidence of terms of like kind agreements, this would help the firm drive towards an optimal agreement for the client.

Knowing for instance that opposing counsel accepted a specific term 85 percent of the time in all completed deals in the last 12 months would provide a powerful edge in negotiation and would also allow the user to benchmark negotiated terms vs. the previous deals.

These value tiers provide a framework for characterizing the level of value provided by a solution. Typically the value provided by a tier 3 solution outweighs the value provided by a tier 1 solution for a few reasons:

  • To achieve the optimization or outcome effect, a tier 3 solution usually provides the efficiency benefit found in the tier 1 solution. In other words, value is additive across the tiers.
  • Outcome (and optimized outcome) is more important to clients and executive business stakeholders. Strong outcomes drive repeat business, referrals, and successful business strategy.

There are of course additional factors one should consider. How important is the workflow that the solution addresses? What is the general cost (both in terms of actual money and of resources) to acquire, implement, and support the solution? How significant are the risks associated with the solution? These factors could very well make an otherwise attractive solution a poor choice for purchase.

One mechanism commonly used in evaluating potential benefits across multiple factors is to create a scoring rubric. Table 1 shows a sample scoring rubric in which each factor is evaluated on a 3-tier scale with a point value applied to each factor based on the assessment within the scale. For this rubric, higher scores are associated with a more desirable project.

The general idea of using such a rubric is to list each potential project, evaluate each factor, and then rank the projects based on the resulting score. Figure 5 below gives an example of the evaluation of a sample set of projects using the example rubric. In this example, we can see that Project 1 could drive an optimal outcome, but the scores of the other factors are not optimal for implementation (e.g. the workflow addressed is not important, the solution’s expensive, etc…). Project 2, on the other hand, is a pure efficiency play but one that addresses an important workflow and as such scores higher.

The exact rubric factors, etc. will, of course, vary from organization to organization, but using an articulated framework will help spur discussion amongst stakeholders and will provide transparency to everyone as to why one project has been chosen over another. The list of projects, of course, is revisited on an ongoing basis as the market continues to evolve. A clear understanding of where your firm’s potential investments sit on the value ladder, and which factors are most important to your practice, can help you to determine which legal tech solutions will have the most meaningful impact on your business.


May Goren Photography

Dean Sonderegger is Vice President & General Manager, Legal Markets and Innovation at Wolters Kluwer Legal & Regulatory U.S., a leading provider of information, business intelligence, regulatory and legal workflow solutions. Dean has more than two decades of experience at the cutting edge of technology across industries. He can be reached at Dean.Sonderegger@wolterskluwer.com.

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