By Vishal Anand, Esq., Associate Director, Pangea3
Not long after Data Scientist was named “sexiest job of the 21st century” by Harvard Business Review, those with power over Big Data quickly turned their eyes to the practice of law. Over the past year, Big Data has become the buzz-phrase and, subsequently, is having a real impact on the legal landscape.
Big Data, generally referring to massive stores of raw data, falls into two categories: analytical use and enabling new products. GCs and lawyers have started to use Big Data technologies as a tool for taming volumes of electronically stored information (ESI) in a cost- effective manner. Here are the 10 most impactful ways in which GCs and law firms are using Big Data:
1. Predicting Legal Costs
The same analytics that help retail stores predict your buying habits, also mine enormous bytes of data for corporations eager to size up the legal services market. The modern GC is already using benchmarked data to evaluate legal matters, including fee norms. Invoicing platforms like Tymetrix’s LegalView offer benchmarking solutions that study legal costs across industries, practice areas, geography, firm size, experience and more. This information helps GC’s weigh their options from angles they might never otherwise considered. As the technology simplifies and gains traction, more GC’s will scrutinize their expenses at a microscopic level.
2. Predicting Case Outcomes
Big data analytics are helping GCs predict the results of a case even before their trusted legal advisors are aware of it. Cutting-edge solutions are helping lawyers predict case outcomes by studying years of historical data, including the kind of law in question, its related issues, the ruling history of the judge, etc. One such solution is Lex Machina a big-data firm that mines precedent cases for patent litigation history and then correlates the information, helping clients define the contours of their litigation and reassess strategy. As the depth of data improves, tools like Lex Machina will favorably impact the lawyer’s case analysis and can lead to quicker, more efficient settlements.
3. Finding the Needle in the Haystack of Compliance
The legal and compliance community in the financial services sector has arguably been impacted the most by Big Data. The economic upheaval of 2008 led to the Dodd Frank Act and a new generation of compliance requirements for banks, the byproduct of which was the creation of data at an exponential rate.
The Dodd Frank Act and FINRA regulations require banks and other financial institutions to monitor a larger pile of structured and unstructured data in order to detect any trace of anti-money laundering, trading abuse, and other types of malfeasance. The techniques banks historically used for such fraud detection became insufficient virtually overnight. Chief Information Officers (CIOs) now must work with their GCs and compliance counterparts to identify systems like Digital Reasoning that sift through both structured and unstructured data, to locate any traces of insider trading or other suspicious activity.
4. BYOD Debate
With the need to stay connected in a 24 x 7 world, corporations are looking into “Bring Your Own Device” (BYOD) practices for employees. Ideally, this allows firms to maintain cost efficiency and offer flexibility to employees in remote locations; however, these advantages are being outweighed by concerns around regulatory compliance relating to data privacy and trade secrets.
In highly-regulated industries, financial or healthcare for example, BYOD may not be appropriate at all. BYOD requires GC’s to employ policies that specify the scope of device use, expectation of privacy pertaining to corporate data, security encryption, and regulations for security breach. In the case of litigation and related e-discovery, capturing communication and data from such personal devices can pose another Big Data challenge, unless you have a plan and system in place. GC's should collaborate with their HR, IT, and business counterparts to make prudent decisions regarding BYOD practices.
5. New Roles within the GC Division
In virtually all industries, GC’s, like their HR, IT, or finance counterparts, are being asked to collect, analyze, and report on issues that require the aggregation of vast amounts of data. While technological advances dramatically increase the ability to quickly gather and distribute information, it cannot ensure that everything brought to you by Big Data is effectively managed, understood or applied.
Effective management of data in the legal world is a novelty. Very few lawyers possess the skills to congregate data that help GC’s differentiate real signals from noise. Therefore, GC’s are recruiting analysts from within other departments to study and predict outcomes based on data congregation. Firms tasked with Basel III or Dodd Frank compliance, are also inviting consultants to work with their lawyers. The “blacklines” are giving way to spreadsheets and Big Data is creating new positions within the GC division.
6. Data Deluge and Privacy
The elephant in the room with Big Data is privacy. Maintaining privacy is more difficult as information is multiplied and distributed at lightning speed around the world. While technological advances can improve a firm’s ability to exploit Big Data, privacy concerns could attract a regulatory backlash that would dampen the data economy and stifle innovation.
As personal information such as financials, medical records, online activity, etc. continues to rise to the surface, GC's should revisit privacy policies to tighten the legal framework around personally identifiable information (PII). The policies should promote a firm-wide data anonymization practice—the process of removing identi?ers to create anonymized data sets—that effectively protect users against tracking and pro?ling. The focus should be on finding that sweet spot between data-driven firm needs and individual privacy.
7. Predictive Coding
Litigation, especially for insurance firms and financial institutions is a big expense. Cost for e-discovery is significant, and Big Data technology like predictive coding is playing its part. Simply stated, predictive coding involves utilizing software that predicts which documents in a data set will be responsive and which will be non- responsive.
Predictive coding, if used correctly, can reduce the number of documents sent for human review by ranking the documents according to a pre-defined level of responsiveness. The successful implementation of predictive coding depends greatly upon a strong litigation support team with proficient processes and advanced analytics, coupled with counsel that knows the case and how to leverage the use of this technology.
8. Social Media
GC's have recognized that social media, if handled with caution, can reap immense benefits. However, standard communications policies are being rewritten, as GC's and corporate communications teams establish processes to review and approve content from employees using new technology controls.
The bigger question lies in the personal use of social media tools by employees, and, particularly, corporate leadership. GC's know that the velocity of Big Data can lead to pertinent reputational risks if these tools are mishandled. GC's and corporate communication departments are training employees on media use and alerting them to mistakes that can lead to exposure.
9. Monitoring the Big Data in International Cloud
GC's are finding many uses for cloud computing, including hosting content for review and doing e- discovery, consolidation with local drives and shrinking the “inbox,” alignment of records retention with new practices, and enhanced search for compliance and litigation purposes. However, the question posed to GC’s is – how do we meet global regulatory requirements for data protection given the lack of international consensus on regulation of cloud computing products?
Recently, European Union regulators demanded Google rewrite its privacy policies regarding the use of the personal information collected, even though the company’s policies were approved by U.S. regulators. Due to the lack of continuity, GC’s must reach out to local advisory teams to customize local privacy policies in compliance with regional regulations. This is particularly important for firms with a European presence who must comply with measures in EU law regarding processing of personal information.
10. Efficient Contract Management
Until the last couple of years, contract management had been a bulky, fragmented, largely manual process, often resulting in poor and inconsistent data and unreliable reporting related to B-to-B transactions (i.e., sell-side and buy-side). With Big Data analytics, GC's are now looking to leverage advanced integrated technologies, allowing them to accurately capture and monitor to maximize the effectiveness of the business cycle.
One such technology, allows insurance and financial firms to extract relevant data from agreements into their contract workflow or risk management system without having to conduct an intensive manual review. This empowers GC's in highly- regulated industries to effectively manage their regulatory inspections and report on such data in a fully auditable manner. Separately, transactional and behavioral data (e.g., price, termination events, products, location) captured with such high accuracy becomes the golden source of truth and is leveraged to provide real-time business intelligence.
As information becomes more democratized, broader channels of law will become available and accessible for detailed analysis using Big Data practices. However, Big Data is no panacea – GC's can identify trends and uncover incredible clues in their data, but only if they know how to apply them towards a concrete goal. GC’s must embrace available resources and talent in order to make safe and informed decisions about the power and use of Big Data.