Law Technology News has a
panel—although it actually seems
to be a list of isolated commentators, not an interactive group discussion—talking
about "how the emergence of business intelligence financial analysis software
is going to affect the legal community over the next year?"
Responses range from: It’s great stuff and its use is "likely to increase
at a rapid rate" (Robert Meadows, CIO, Heller Ehrman) to "It will make the
ordinary practicing lawyer’s life in big law firms that can afford the software
even more
hellish than it is now!" (Martha Fay Africa,
Managing Director,
Major Lindsey & Africa). Not unreasonably, each commenter tends to
see the impact of BI from his or her own persective. Thus:
- David Clark, IT Director of the 70-lawyer Jones Waldo Holbrook& McDonough
(Salt Lake City), says "it is probably not on the radar like it is for some
of the larger firms, but … [this] will change in the very near future." - My friend Michael Kraft, founder and GC of Kraft Kennedy & Lesser, Inc.
(New York), focuses on how corporate law departments use it to help evaluate
outside counsel. - Larry Bodine, the legal marketing consultant, says "BI software will change
law firm marketing at a fundamental level." And - Another friend, Judy Flournoy, CIO of Loeb & Loeb (Los Angeles) and President
of the International Legal Technology
Association, says her firm is evaluating
which BI suite to implement but says "they have become a must-have."
Actually, I have another take on BI analysis altogether, and for better or
worse I don’t see any of the LTN panelists addressing it.
My take is that both the evangelists for, and the denouncers of, BI tools
tend to fall into the classic trap of thinking in terms of Static Analysis
rather than Dynamic Analysis. What do I mean by that?
Suppose a legislature is about to pass a tax increase on a certain behavior: Say, driving across the (currently toll-free) East River bridges into Manhattan. The legislators will predict that the tax increase will raise revenue by $x. But they rarely ask, then what? "What" is that people will change their behavior in light of the new tolls; they’ll car-pool, use mass-transit, choose another route into Manhattan, etc., and the revenue raised will be some number < $x.
To generalize, people (non-economists in general, and lawyers in particular)
tend to look at the consequences of a change (say, introducing BI tools into
an AmLaw firm) in terms of what I think of as one clock cycle; but you have
to look at it in terms of repeated, continuing clock cycles. So
the "single clock cycle" school would predict that once BI is introduced, partners
whose practices are suddenly cast in an unfavorable shadow will start kicking
and screaming about the flaws in the BI analysis, the absence of qualitative
factors making it all so one-dimensional and superficial, the value of omitted
intangibles, etc. Sally Gonzalez of Baker Robbins is probably pointing
at this phenomenon when she observes that:
"In most cases, BI tools are of limited use because the underlying
financial systems often do not contain information on the time and expenses
associated with nonbillable activities, such as business development (e.g.,
meetings and entertainment), developing a proposal, delivering a pitch and
closing a deal."
The single clock cycle school will predict that BI will meet a steep, perhaps
insurmountable, wall of resistance from anyone whose ox is gored.
But the multiple clock cycle school (that would be me) will come up with a
different view. Yes indeed, BI will tend to identify winners and losers
in its own terms when first introduced: The more profitable and less
profitable practice groups, offices, clients, matters, and even individual
lawyers. But the game has just begun. The astute firm—starting
with the Managing Partner, but essentially including the COO or Executive Director,
the CFO, and practice group leaders—will use the BI results not as an
end of semester report card but as a start of semester learning tool and coach’s
clipboard.
Look, no one wants to end up on the short end of the BI stick: Certainly
not the aggressive, hyper-competitive, chronically over-achieving people in
your firm! And that’s not what it should be used for. Instead,
it should be used to help teach the laggards what the leaders seem to know
(or at least show them how the leaders seem to behave). Use BI to demonstrate
that there are smart and not-smart ways to staff matters; smart and not-smart
ways to accomodate client pressures for lower fees or discounts; and smart
and non-smart ways to determine what’s working and what’s not in terms of career
and professional development, and marketing analyses.
Ultimately, those opposing the adoption of BI are adopting the position: "Don’t
tell me what I might not want to hear." Those urging BI’s adoption
must understand the bedrock reality of that fear, and move beyond it by reassuring
people that BI is not to condemn the bottom X%, but to help everyone start
migrating their practice towards the performance of the top A%.
That takes more than one clock cycle.
