Inside Outside Counsel; How Cognitive is Changing Law

Billing is the bane of every attorney’s existence. Whether it’s capturing billable hours or explaining and justifying fees to clients, the business of law is never as fun nor satisfying as the practice of law. Law school prepared attorneys to practice law, but billing is one of the many daily tasks for which law school simply didn’t prepare attorneys. Then again, being an attorney isn’t all fun and games. As a client, reviewing outside counsel bills and setting case budgets are top pain points for corporate legal departments. The fact is that ‘Outside Counsel spend’ ranks as a top concern for in-house corporate law departments across industries. On average, law departments spend between 25% — 50% of their annual budget on Outside Counsel. In an industry that invoices north of $18 Billion, we are not talking peanuts.

Imagine a future in which a cognitive computing engine could be created to support law firms by vastly reducing the repetitive processing of massive amounts of information — which is growing exponentially every day. Imagine also that such a system was capable of sorting through the ambiguity of written human language, understanding contextual nuances, tone — even sarcasm! The reality is that unstructured data has been invisible to computers until now. But with the onset of cognitive computing, we can finally bring our legal professionals the ability to access, store, and constantly shift through scores of both structured and unstructured data. Cognitive computing is allowing legal professionals to easily, visually find subtle patterns and valuable insights historically hidden, but today — in broad view.

Outside Counsel Insights; Support on Steroids

And where better to begin removing friction from a Legal Departments’ workings than in the way they interface with their biggest cost center — Outside Counsel. It seems the way in which Outside Council (OC) charges in-house law departments is by following a detailed litigation management and billing instructions document (50 pages!) But disparate terms and various interpretations over the years have made succinctly understanding — much less comparing — OC legal fees nearly impossible. Today, Inside Counsel lacks insight into trends and patterns that demonstrate the quality of outside attorney performance, resulting in outcome inconsistency and dramatic price fluctuation for similar matters.

Enter cognitive computing. Both Brian Kuhn and Shawnna Hoffman-Childress, Cognitive Legal experts for IBM, are pretty excited. “We’ve been blown away by the success rate,” admits Kuhn, “We’re working with clients who are realizing up to 33% reductions in the cost of using Outside Counsel. That kind of saving unleashes critical resources needed for innovation in emerging technologies — where it will do the most for all parties involved. That feels pretty good.”

Most legal invoices contain structured data in the form of an attorney’s hourly rate, time spent to complete each line item task, and billing codes,” explains Childress.“But they also contain unstructured data in the form of ‘narrative task descriptions,’ which read more like the minutes of a meeting. We are using cognitive engines able to read this unstructured data, understanding language as people do.

‘Narrative Task Descriptions’

In addition to analyzing legal invoices, the work we’re doing reduces outside counsel spend by making it easier to pay the right amount to the right firm for the right defense. And don’t forget, the engine is always learning and improving the information they can access and present to legal professionals. This vastly expands the amount of context and benchmarking insight that can be derived from legal invoices as compared against billing guidelines, which are also primarily unstructured.”

Kuhn continues, “What’s really rewarding is that we are using emerging technology to improve the way our clients run their business. Think of that. Predictive analytics, built from a plethora of data points and using cognitive computing, are helping our clients manage their firms — giving them more confidence to intelligently enter longer-term or fixed price deals based on sound information. No doubt about it — we’ve seen the improvements in bottom line. Our work has been well received because we’re helping clients reduce cost exactly where they need it.

Make no doubt about it. Major corporate legal departments are beginning to use cloud and cognitive technologies to interpret Outside Counsel costs. That means Legal Firms are going to need the same or preferably better information and insights on how best to deliver Outside Counsel to large clients. And yet a shocking 73% of Outside Counsel legal firms do not provide any useful data analysis to their clients. The writing is on the wall, useful analytics can and will change the way Legal Departments run their businesses.”

“We are busy talking to our clients and the wider industry about what cloud and cognitive computing can do to reduce key costs of Counsel. But the cost saving and process improvements we are seeing now is only just the tip of the iceberg. Cognitive engines will be increasingly able to do things like identify effective strategies for similar litigations and more. We are beginning our work in financial services (insurance to be exact) but we see that our solutions will be invaluable to any organization using Outside Counsel. We look forward to helping client in financial services and beyond,” finishes Hoffman-Childress.

Into The Future

Thought Leadership from Subject Matter Experts

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Financial Services Storytelling

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Into The Future

Thought Leadership from Subject Matter Experts

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