Taking Legal Analytics to the Next Level

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By Ron Friedmann

COVID-19 Prelude

I started writing this blog post about LegalMation just as the COVID crisis was ramping up. By the time I finished it, the world had changed. As I noted in my blog post last week about Fastcase, this crisis will last a while. And what happens after it remains uncertain. Already, many large law firms have cut costs or withheld partner draws to conserve cash. We are now past the end of the beginning of the crisis. Consequently, law firm management should now plan for what comes next. 

Many industries are already struggling and that almost certainly will continue. At least some practices therefore likely will face fee pressure. It may not be happening yet with “the house on fire”. But it almost certainly will come. And when it does, firms need to be ready to offer better value. That will drive the need to understand costs and manage matters more effectively.

LegalMation offers an interesting approach to cost and outcome analytics. As usual, when I blog about a provider, I do so because I find the product or service interesting and new or different. I am not comparing it to other approaches or reviewing it; rather explaining it.

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The legal analytics revolution continues. LegalMation has developed a new approach to litigation data analytics. I learned about this from the Artificial Lawyer post LegalMation Expands Into Cost Analysis + Lawyer Comparison (19 March 2020). Previously, the company earned kudos in 2018 for its AI-driven approach automating draft answers to complaints.

I wanted to learn more about the new offering so I spoke with James Lee, co-founder of LegalMation and report here. 

The Analytic Paradigm of Predicting Outcomes

Models and Analysis Can Improve Outcomes. Clients want to minimize litigation costs: the sum of legal fees, expenses, and the judgment or settlement. Smart law firms want to achieve better results for clients at lower cost. If lawyers understand how case strategy affects outcomes, then they can improve outcomes and/or reduce cost. For example, if investing more time early in a matter leads to better outcomes, then do that. Or if lawyers knew that using more senior lawyer time early in a matter, say during depositions, improved outcomes, then modify the staffing mix.

How to Model + Analyze Case. To analyze the relationship between outcomes and cost and their drivers requires data and analysis. A word about analysis before turning to the data. Analysis can be bivariate: compare outcomes to just one input. Or it can be multivariate, comparing outcomes to multiple drivers. Either way, lawyers need a good theory of why one variable affects the other because correlation doesn’t equal causation. 

The Data Needed for Models and Analysis. A statistically reliable model requires good data and enough of it. While publicly available data provides some insights, 97% currently lies beneath the surface in the document and data repositories at the law firms and corporations. LegalMation’s approach offers a new approach to surface these data, an approach that may uncover insights previously not attainable. To get to those insights, its software: 

  1. Characterizes what cases are about and classifies them.
  2. Explains the work lawyers did on the case.
  3. Measures the case outcome.

In the next section, I discuss how LegalMation gets these. 

Generating the Data and Analyzing It

High Volume Data and Outcomes Data. LegalMation focused on two types of high volume cases: employment (such as age or disability discrimination claims) and personal injury claims (such as slip-and-fall cases). Most organizations with high volumes of litigation use enterprise legal management software (ELM) to track legal costs. Pulling cost data for analysis is easy.

Characterizing Cases. LegalMation’s key insight was that they could use their underlying machine learning software to characterize both cases and the work lawyers do. Its software extracts information (“entities”) from documents. Examples include jurisdiction, parties, injuries alleged, and dollar claims. By extracting enough entities, the company systematically describes what cases are about. LegalMation captures and identifies up to 500 unique entity-relationships in areas of law: employment, personal injury, insurance defense, and financial services litigation.

Characterizing Lawyer Work. The software also uses entity extraction to analyze lawyer time narratives. LegalMation determines both the phase of litigation and the type of work, for example research, writing, deposition preparation, taking a deposition, or appearing in court. (Assigning the phase depends on both machine learning on narratives and external task set definitions.)  

Phase and Work Type Classification. LegalMation’s first product in 2018 analyzed complaints and automatically drafted answers and discovery requests. To do this on par with a good junior associate, the company had to build and train its artificial intelligence to read passages from filings and comprehend their meaning.  That, in turn, required developing a taxonomy and classification system to differentiate text at a granular level. The ability to analyze outcomes and work is an extension of these capabilities.

In analyzing matters by phase, existing standards for phase and work type were not helpful. The ABA phase and task codes are not very granular and, in any event, the lawyers who use them do not do so well. Moreover, LegalMation learned from law departments that most just wanted hours by phase; task-level detail proved distracting. The company extended its software to capture events in litigation from beginning to end of cases. Getting this right required deep and iterative work with lawyers in law departments and firms. Beyond automating a tedious task, using software to define phases yields more consistent data than human coding. This allows more reliable comparison of billing data across lawyers and firms.   

Visualize Relationships. To analyze these data, LegalMation provides visualization tools using capabilities from Tableau and IBM Cognos.  

Implications 

Legal analytics blossomed in the 2010s. Entrepreneurs realized that public information contained data to provide insight about litigation, data that incumbent providers had failed to tap. Early and successful legal analytic start-ups included Lex Machina, Casetext, Ravel Law, and Judicata. At the risk of oversimplifying, those companies initially focused on the law, judges, and citations. 

Now, LegalMation is focusing on case facts and what we might think of as case metadata.  James showed me several visuals that illustrate intriguing and actionable relationships. For example, plotting the age bracket of a plaintiff against case outcomes in the sample data set shows that the most costly outcomes are for plaintiffs age 50 to 55. That contradicts many labor lawyers’ instinct that older plaintiffs are more costly. It is also actionable: knowing this should affect the type of work lawyers do and their settlement negotiations.

The figures below illustrate this type of analysis for disability harassment claims based on physical (top) vs. mental disability (bottom). The average settlement amounts are quite different. Today, most legal professionals lump all disability harassment claims in one bucket. The data, however, clearly show meaningful differences among sub-types. Knowing this allows lawyers and managers to make better decisions about handling each type. (These charts also illustrate the detailed analytics possible. The panes to left are facets / filters that allow an analyst quickly and easily to select different data slices.)

Mental Disability

Another example compares the cost of lawyer time by phase with outcome. In the sample data, cases with more investment in early phases (e.g. fact finding and depositions) achieve better outcomes than investing more later in the case. That should drive more lawyer work to early in the matter. (Spend by phase is an example of what I view as matter metadata.) The figure below illustrates the part of the analysis that looks at the difference in hours between partners and associates by phase. It is for a single firm. One can produce charts like this for multiple firms and compare outcomes.

James also showed me charts that compare outcomes to a set of specific plaintiff law firms. These clearly show some firms cost more to battle than others. The two figures below illustrate summarizing this type of analysis in a single metric – the dial here – to measure risk. The first shows a high risk score of 114.5 for one plaintiff’s attorney and the second a low-average score of 56.81. The first \s an attorney who takes cases to the end, seen in the bar chart to the left, with a high percent of time on trial and appeal. The second one tends to settle in the oral and written discovery phases – at typically lower amounts. James reports that the risk index compiles multiple measurements / statistics that relate to settlement amounts, hours incurred, and strength of counsel He said “the risk score is working really well in forecasting the level of risk.” The blurred orange / blue bars in the lower right of each figure show the sub-scores for each component of the risk index.

A geek note: The real driver of the difference might not be firm but rather the judicial district (especially if plaintiff firms operate mainly in select districts). Where two explanatory variables correlate with one another, reliable modeling may require some more serious statistical chops. 

James showed me multiple interesting visual comparisons of potential drivers and outcomes. In my former work as an econometrician, I’d call this exploratory data analysis, the practice of examining multiple relationships using visual displays. That stands in contrast to testing specific hypotheses. Good modeling requires both and, as important, having a sound hypothesis for any unexpected relationships that exploration yields.

Conclusion

LegalMation’s ability to characterize matters and lawyer work means that legal professionals can now model how decisions about case strategy affect outcomes. In-house counsel, legal operations professionals, and law firm partners who manage portfolios of related litigation should be all over this. Done properly, it will improve case strategy, and for in-house lawyers, selection of outside counsel. We could even develop best practices for legal strategies.

Even with fabulous findings to improve litigation outcomes or reduce costs, we will face a change management challenge. Empirical evidence alone rarely persuades lawyers to change what they do. To change what lawyers do, be prepared to offer carrots and sticks – and for some hard work.

If you’ve been impacted by COVID-19, LegalMation is offering free usage of its products to help the legal community in this time of need.

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Platform Overview

LegalMation provides a suite of Artificial Intelligence tools to help practicing attorneys and legal professionals automate routine litigation tasks. Unlike existing template generators and form-fillers, LegalMation's ground-breaking AI system is able to dynamically produce responsive pleadings, discovery requests, discovery responses, and related documents that are tailored to the claims, allegations, and requests in the legal document uploaded, incorporating jurisdictional requirements as well as the attorney’s own style, formatting, and response strategy. Developed by a passionate group of award-winning litigators and highly accomplished software developers, LegalMation is focused on liberating litigators to allow them to focus on more valuable tasks in their practice..

LegalMation distinguishes itself from other Artificial Intelligence products in several key aspects.:

  • LegalMation is the first Artificial Intelligence company to focus solely on using AI to automate and enhance litigation tasks.
  • LegalMation uses cutting-edge AI to power its platform and, unlike some other legal tech platforms, LegalMation requires no human involvement to generate its output.
  • LegalMation is not a template generator, form-filler, or other Q&A-driven tool. Rather, our A.I. solutions generate actual work product--caliber drafts of legal documents comparable to that of an attorney or legal professional that only require minor editing and basic review before filing/serving. Drafting these documents from scratch often takes an associate attorney or paralegal an entire day, but our products can produce comparable high-quality drafts in mere minutes.
  • LegalMation’s solutions are ready to use out-of-the-box. You can be up and running on our platform in a matter of minutes.
  • LegalMation’s solutions are fully customizable to your needs. LegalMation can customize the style, content, and strategy behind how its output is created to mirror your current output.
  • LegalMation’s solutions are easy to use and require no computer knowledge besides how to use a mouse and keyboard. Our products are browser-based; there is nothing to download or install. The interface is simple and clean, and designed to be accessible to even the least tech-savvy. As a result, the adoption cost for integrating LegalMation to an existing organization's workflow is very, very low.

Corporate In-House Case Study

A leading global retail giant achieves significant savings on legal fees on its high-volume litigation matters using LegalMation’s Complaint Analysis tool.

The Legal Operations group of a leading global retailer with significant litigation volume across the country was searching for technology tools to increase efficiency and consistency on its litigation matters, lower its legal spend, and obtain more value from outside counsel. Working with LegalMation, the retailer identified two litigation areas with large volume where the deployment of LegalMation’s Complaint Analysis tool could have a significant impact: employment and premises liability tort litigation.

The retailer conducted a pilot of LegalMation’s Complaint Analysis tool by asking select outside counsel to run complaints through the LegalMation Complaint Analysis tool and compare the outputs to those generated by the firm’s typical workflow.  LegalMation’s Complaint Analysis tool was able to generate an answer, requests for production and interrogatories that were almost identical to those generated by outside counsel and tailored to the facts and allegations of each.

Today, this global retailer has made LegalMation an integral part of its workflow and case assignment process. When a new lawsuit is served on the retailer in one of the jurisdictions where LegalMation operates, an in-house paralegal runs the complaint through LegalMation’s Complaint Analysis tool and sends the output, consisting of an answer, requests for production, interrogatories, and other jurisdiction or firm-specific output to the selected outside counsel for the matter.  Outside counsel then bills the retailer solely for the time spent reviewing and editing this initial output which generates significant savings for the global retailer.

Challenge

  • Increasing budgetary pressure to lower outside counsel legal fees
  • Obtain more value from hours billed by outside counsel
  • Lack of consistency in work product and quality from outside counsel

Solution

  • Deploy LegalMation internally to generate initial draft responsive documents in minutes
  • Integrate LegalMation into its initial case assignment process

Results

  • Up to 80% savings on outside counsel legal fees on key early stage litigation document drafting.
  • Reallocation of outside counsel time away from process/routine work to higher value strategic tasks.
  • Increased consistency and quality in work product

Large Firm Case Study

An Am Law 100 labor and employment law firm was searching for ways to become more competitive and capture more market share

Handling over 5,000 employment related litigation matters per year across the country, the Am Law 100 law firm (the “Firm”) needed a quantifiable solution to lower its servicing costs and provide more value to its national clients. The Firm engaged in extensive testing of LegalMation’s platform across multiple offices to determine its effectiveness.

Using LegalMation’s Complaint Analysis tool, the Firm was able to reduce the attorney time spent preparing answers, affirmative defenses, and initial written discovery (requests for production, interrogatories, and other jurisdiction-specific requests) from an average of 6-8 hours per matter, to less than 1 hour (including review time by an attorney). The Firm tested LegalMation’s tools across multiple types of employment cases across various jurisdictions and concluded that the resulting draft documents were not only produced incredibly fast, but were also consistent in quality.

Today, the Firm is able to offer more competitive proposals for its volume matters, which in turn allows it to obtain additional work from national clients.

Challenge

  • Downward price pressure in high-volume, lower-exposure matters
  • Making Alternative Fee Arrangements more competitive and yet more profitable
  • Differentiate from competitors during marketing pitches
  • Lack of work product consistency from associates/paralegals

Solution

  • Integrate LegalMation into volume litigation matters in the Firm’s busiest offices

Results

  • Up to 80% time savings on key litigation tasks
  • Higher profit margins on volume matters, particularly those on AFAs
  • More distinctive marketing
  • Higher levels of associate satisfaction

SMALL LAW Firm Case Study

A high-caliber general litigation boutique reduced paralegal and associate time and money expended on key early litigation tasks by 75%+

A general litigation boutique with around 40 attorneys needed to cut costs in order to stay competitive in a very crowded local market and also sought to minimize reliance on support staff.

Using LegalMation’s platform, the boutique law firm was able to reduce the attorney (and paralegal) time spent preparing answers, initial discovery (requests for production and interrogatories), and discovery responses, including objections, from several hours per matter, to less than 1 hour (including review time by a supervising attorney). The boutique firm tested LegalMation’s Complaint Analysis tool and Discovery Analysis tool across multiple practice areas and concluded that the resulting draft documents were not only produced incredibly fast but also with consistency and quality similar to its own junior attorneys and paralegals. In particular, the boutique law frim, which did not have the luxury of a large support staff, found LegalMation’s Discovery Request tool particularly helpful in dealing with burdensome discovery requests served on its clients.

Today, the boutique law firm is able to offer more competitive proposals for its matters and through the efficiency gained by LegalMation’s platform compete against national law firms with more resources.

Challenge

  • Downward price pressure due to a crowded local market
  • Limited associate/paralegal resources to handle routine drafting tasks
  • Compete against national law firms with more resources
  • Differentiate from competitors during marketing pitches
  • Lack of work product consistency from associates/paralegals

Solution

  • Deploy LegalMation’s Complaint Analysis tool to generate initial draft responsive pleadings, and the Discovery Analysis tool to quickly generate shells and responsive objections throughout the life of a case

Results

  • 70-85% time savings on key litigation tasks
  • Higher profit margins on volume matters, particularly those on AFAs
  • More distinctive marketing
  • Higher levels of associate satisfaction
  • Reduced staff overtime
 

Success Story

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John Smith,
Company Name
James M. Lee
Co-Founder & CEO

James M. Lee is co-founder and CEO of LegalMation. He is a founding partner of LTL Attorneys LLP, a nationally recognized litigation boutique. As an experienced litigator, he has tried numerous cases in federal and state courts. He has been recognized as a top business litigator by various legal publications including the National Law Journal. James has served as lead counsel to a number of Fortune and multinational clients including Wal-Mart, Thomson Reuters, Symantec, and VIZIO. He was formerly associated with litigation powerhouse Quinn Emanuel before co-founding LTL Attorneys. He is a frequent and noted speaker and commentator in the field of AI and innovations in the field of law. He received his J.D. from Stanford Law School, and his B.S. from the University of Southern California. At LegalMation, James serves as the key driver of the Company’s vision and strategy.

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Insurance COMPANY Case Study

A national insurance carrier achieves significant savings on its high-volume, low exposure litigation matters through its adoption of LegalMation’s Complaint Analysis tool

A national insurance carrier with significant litigation volume across the country for its insureds, was searching for technology, tools, and processes to increase efficiency on its litigation matters to lower its litigation costs. This national insurance carrier partnered with LegalMation to identify an area of litigation where LegalMation could have a significant and immediate impact and decided to deploy LegalMation’s Complaint Analysis tool for all of its third-party motor vehicle tort litigation.

LegalMation worked closely with the national insurance carrier to customize the output from its platform to generate documents that mirrored the current output of the national insurance carrier’s attorneys and paralegals.  LegalMation was able to automate the creation of an answer, requests for production of documents, interrogatories, requests for admissions, and deposition notices, all tailored to the facts and allegations of each complaint and almost indistinguishable from those manually created by the insurance company’s attorneys and paralegals.  LegalMation was able to generate this output in 2-3 minutes—a significant time savings over the insurance company’s prior practice for generating this output.

Following a pilot program consisting of processing all of its complaints for a single jurisdiction through LegalMation, the national insurance company made LegalMation an integral part of its workflow for all jurisdictions where LegalMation currently operates. In these jurisdictions, when a new motor vehicle-related lawsuit is served on the insurance company or its insureds, the assigned counsel or paralegal runs the complaint through the LegalMation Complaint Analysis tool, downloads the initial outputs, which are then reviewed by the attorney or paralegal and finalized, all within a few minutes.

Challenge

  • Increasing budgetary pressure to lower legal spend on defense of insureds
  • Obtain more value from staff counsel
  • Reduce legal secretary/paralegal overtime

Solution

  • Deploy LegalMation internally so staff/captive counsel can generate initial response draft documents in minutes

Results

  • Up to 80% time savings on key litigation tasks
  • Reallocation of staff/captive counsel time away from process/volume work to higher value strategic tasks
  • Increased consistency and quality in work product

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