McMillan LLP has announced a plan to work with IBM on new software that will improve accuracy of price models for legal work.
The initiative by the law firm and the technology company will involve the work of a data scientist who will sift through the firm’s internal data to spot legal patterns and trends, as well as boost certainty around pricing.
Tim Murphy, executive partner at McMillan LLP, says the project is focused “on using analytics to provide predictive value,” and moving away from anecdote.
“One of the big problems law firms have is that every lawyer is an independent pricer and manager of legal services,” says Murphy.
“What we’re trying to do is bring the skillset of all of them up, by virtue of providing them with reliable, objective data, not just their anecdotal personal experience as a basis for pricing, staffing and that communication with a client.”
A news release announcing the project said it will be “powered by IBM’s comprehensive predictive analytics system, SPSS, and running on IBM Cloud, the platform offers advanced algorithms and techniques that aggregate, analyze and interpret McMillan’s internal data to strengthen the decision making process.”
Internal data that will be used includes billing information, or time spent by lawyers on a file (tracked by areas such as client, matter, lawyer, partner, associate, value, time or office).
There could be further analysis on the number of documents created, how many drafts were done, and how many people participated in the process.
“All of that is buried in the technology we already have; what that reveals is what this [data scientist] is skilled in,” says Murphy.
For example, Murphy says a sample could be taken of an area of law where services are provided on a regular basis, such as the purchase and sale of a business. Lawyers may act for the seller or the buyer or one of the bidders, he says.
In the new initiative, the data scientist will use predictive software to analyze past deals the firm has participated in to “produce a set of learnings to have a richer conversation” with clients, says Murphy.
This might mean studying a number of past deals that the firm has participated in, says Murphy, to illuminate a “more informed” discussion around pricing for legal services.
“We can have a way richer conversation with our client, give them some comfort and insight into the pricing,” says Murphy.
Or, it could mean gathering intelligence to share with clients about where potential pit-falls may lie, thereby helping prevent a “busted deal.”
“You think about the power of that information both from the client perspective and from our perspective, we think it has huge potential,” says Murphy.
He says it will also assist the firm in figuring out how to staff particular files.
“[T]here is a degree to which the legal industry is still like a guild, built on the model that was almost pre-industrial, and is slowly catching up, and it’s really obviously market pressures that are driving the change,” says Murphy, who says the “drive is to be one of the most innovative firms.”
“We think one of the ways in which we can help achieve that goal is through the use of data and analytics, and so that’s why we’re excited about this collaboration,” he says.
McMillan LLP has about 280 lawyers in six offices, including in Vancouver, Calgary, Toronto, Ottawa and Montreal. It also has an office in Hong Kong.
The ambition is to have the first results of the project this fall, says Murphy.
Findings will be shared with the law firm’s lawyers, who can then share the information with clients.
Part of the drive will be to connect with in-house counsel, says Murphy.
“What the focus of the firm is, if we’re going to be an innovative supplier of legal services, our view is we’re going to have to have a different kind of discussion and relationship with in-house counsel, because we know they’re looking for better-informed external counsel who can provide value to them,” says Murphy.
McMillan LLP won’t be the only beneficiary, says Murphy.
“From the IBM perspective, their interest is they’ve got this platform, they’ve not seen it used in a legal context, so it’s an opportunity for them to see how it can be used and see whether it creates a market opening for them, and that was their interest in collaborating with us, so we’re quite keen on it, and we think there will be learnings in both directions,” says Murphy.