The volume and sophistication of analytics functionalities that vendor technologies offer the legal profession has increased hugely in the last decade.
Many in-house legal and compliance leaders are trying to understand how to manage big data and analytics and also how they can help their profession. A common question is, “Which workflows would benefit from the application of such tech?”
Determine which workflows are most in need of improvement, and then see if and how analytics can help
“Analytics is no panacea, and with so many bold vendor claims, the topic is often confusing to legal professionals,” says Zack Hutto, Director, Advisory, Gartner. “We advise our clients to determine which workflows are most in need of improvement, and then see if and how analytics can help.”
To that end, Gartner experts recommend three steps:
- Brainstorm the areas where analytics can impact the business more broadly. For example, take a broad corporate objective such as “manage enterprise risks” and distil down to a departmental objective of “improving third-party due diligence.”
- Consider the availability and attainability of data that could be used to produce such analytics. This may improve data governance in general.
- Weigh the potential impact and effort involved, and the business value of the output, to prioritize analytics or business intelligence investments.
To help legal leaders start this process, Gartner identified seven of the most promising areas to consider when using analytics to better manage their workload, execute work faster and improve accuracy.
Analytics can help measure the efficacy of compliance training or track new laws and regulations. For example, Google used natural language processing technology to identify payment red flags (e.g., “miscellaneous” as a payment description). This method can be used to track the compliance of policies that require employees to use a technology system.
Common use cases identify high-risk and contentious clauses and track renewal terms. This information helps the legal department to create better playbooks, reevaluate negotiating strategies and determine customer contract-renewal preferences.
Analytics generally have two use cases in this area: Drafting and reviewing license agreements and reviewing and filing patent applications. For the former, analytics can help identify words or phrases that are inconsistent with the desired use of goods or services. For the latter, analytics can identify trends across previous patent applications and then project the cost of similar submissions.
Legal department management
Analytics can be used for managing both the internal legal department and outside counsel. Budgeting and forecasting benefit from the ability to assess past spending and macroeconomic factors (for example, inflation). For outside counsel, opportunities exist to use analytics for improving payment timeliness and reorienting litigation strategies by better predicting case outcomes.
Mergers and acquisitions (M&As)
Analytics can be useful at all stages of M&A. In the due diligence phase, natural language processing can perform complementary reviews of letters of intent and analyze social media data to understand public sentiment about the merger or acquisition. Analytics can also help create a standard, efficient and protective set of clauses for purchase agreements. Finally, analytics can help track the progress of post-merger fund recuperation as well as the overall integration.
Privacy and information risk
Analytics tools make data privacy easier and more effective by simplifying the assessment of different types of data subject information collected within different geographies, as required by major privacy regulations such as the European Union’s GDPR. Analytics tools can also help track unusual behavior and spot potential data breaches or vulnerabilities.
Analytics can classify information, ensure proper retention and manage company information. Metadata extraction and natural language processing make it possible for analytics tools to automatically classify records according to defined rules.
“While there is a fair amount of hype, analytics can be a boon for legal and compliance leaders,” says Hutto. “But, that’s only if leaders intentionally consider which analytics would be useful to their teams and whether the investment will truly make an impact.”