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Data Analytics Gain Ground in Law Firms, but Doubts Remain

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By Casey C. Sullivan, Esq. on July 29, 2015 12:58 PM

When it comes to making litigation decisions, lawyers usually depend on their experience, research, and gut instincts, rather than hard data. That's slowly changing, however, as more firms begin to embrace the use of data analytics when deciding how to pursue litigation.

Of course, startups and the media have been calling data analytics the future of the legal profession for years now. While data analytics are becoming more common, they still have a long way to go to meet their full potential.

Companies Make Big Promises, but Many Go Untested

The growth of massive, cheap storage and increased processing power has made the collection and analysis of big data easier than ever before. Instead of having your intern spend a week researching malpractice outcomes in the Southern District of New York, for example, you can use a company like Lex Machina to find out those same results in minutes.

So why don't more firms use data analytics? Most of those analytics tools haven't been accepted because they don't have third-party validation, according to a recent report in Bloomberg BNA.

To gain the trust of the legal community, data analytics startups would need to validate their results by opening their products to third-party testing, law professor Dan Katz tells Bloomberg. That would allow independent parties to run data of known cases through analytics programs to see if the predicted results matched the actual results -- something most companies have yet to do, according to Katz.

Questions Remain

Data analytics can also be complicated by the shear amount of variables involved in litigation. There are definite patterns for how certain judges and certain jurisdictions treat specific issues. For example, challenges to government regulations are much more likely to be successful in the D.C. Circuit than anywhere else. Juries are more sympathetic to criminal defendants in Brooklyn than in Manhattan. But when it gets down to more specific questions in litigation, predictions can be harder to make.

It's also unclear how increased certainty would impact litigation. Currently, uncertainty about litigation outcomes often pushes parties to settle. But then again, uncertainty can also cause parties to overestimate their position.

The Bloomberg article notes a 2008 study which looked at 2,000 civil cases in California. In over 60 percent of those cases, plaintiffs rejected a settlement offer and ended up with an equal or worse trial outcome. That kind of error can be especially significant in states like California, where plaintiffs who reject a more favorable settlement offer must then foot the defendant's legal bill.

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