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Data: The true catalyst 
for transformation 
in legal

Data in Legal Panel recording no play button

As data becomes an integral part of how law firms operate and deliver services, the legal industry undergoes a significant transformation. Traditionally focused on the accumulation and management of knowledge, law firms are increasingly leveraging data to improve their expertise and efficiency. Recently, Henchman convened an expert panel featuring Tricia Stephens-Adams from Schulte Roth & Zabel, Ilona Logvinova from Cleary Gottlieb, David Wang from Wilson Sonsini, and Michiel Denis from Henchman. Their discussion explored the true power of data within the legal industry, offering insights into the definition, management, and strategic use of data to transform legal practices.

What’s in a name?

Data’ is a broad term, currently being used all over the place in the light of AI and opportunities created by (legal) tech. David Wang, Chief Innovation Officer at Wilson Sonsini, defines data as information that you systematically use in a digital system for a specific purpose”. Unless all these elements are present, Wang prefers to talk about knowledge or information. Law firms have piles and piles of documents sitting around. To me, that’s not data unless you have a digital system where you can use it for a specific purpose.”

To illustrate the difference, Tricia Stephens-Adams, Director of Enterprise Applications & Development at Schulte Roth & Zabel, uses a Lego analogy

Imagine having a big bucket of Legos and throwing them on the floor. I like to think of each of those bricks as data – it’s just a raw fact or a raw number. On its own, it has no context or meaning. And it’s not until you start putting those bricks together that you start to give it context, you start to give it meaning. Maybe you’re building a house? Knowledge is not just knowing how, but also why it was designed that way. And from what you’ve learned, maybe next time you’ll be able to build a castle or even Hogwarts, instead of a house.”

In other words, that means data is a collection of knowledge that needs to be geared toward a thoughtful and strategic end, ready to be used for something. In the past years a shift has happened from traditional knowledge management to a more sophisticated concept known as knowledge engineering, which means the thoughtful use of data. Ilona Logvinova, Director of Practice Innovation at Cleary Gottlieb thinks of data in two categories: first, it’s content or information you can use, and second, from a functional capability perspective, data means some level of readiness for data science use cases. We need the content and we need to be able to use it right away because AI is happening in real-time. We’re all looking to evolve and innovate by incorporating AI into our workflows. This requires us to look at data as an evolved form of knowledge management.”

Make the most of it

According to Logvinova, we are getting to a point where technology can be used thoughtfully to extract expertise from your existing knowledge base. It can help you to gain a competitive advantage by leveraging the power of your data. Logvinova explains: It’s thinking about, first of all, what do you consider your true knowledge bank? What are your highlights in terms of your practices, what are your strategic priorities? And then think about what tools or technologies are out there, or what you can build or develop internally.”

Logvinova advocates the automation of certain legal services. We don’t need to do everything manually. In the legal services value chain, there is quite a bit that is ripe for automation. And if we think about that automation potential, it means that we can use our expertise to work with data points that are elevated by the right technologies. By having broader data capture and brighter data accuracy, we can give more expert guidance and come up with sharper arguments on the litigation side. Essentially, we’re getting more out of the existing data and the expertise that we already have”.

Start with the business purpose and work backward into your data,” Wang adds. Since all law firms record time, Wang finds it imperative and even low-hanging fruit to turn the information from timesheet entries into usable data that is not dependent on manual labeling by lawyers. If you know how to use that data and get it operationalized, it can help you to figure out pretty much any question about what is going on in your business.”

Stephens-Adams backs up Wang and Logvinova with a practical example of card key data, and how Schulte Roth & Zabel built its remote policy: When people come in and out of the office, they swipe in and out. By itself, that’s not super sexy. It’s just some facts and figures, but when you combine that data with data from your HR system, you can see different demographics. You can see the behavior of different titles or practice groups, and you start to see who’s following your remote or hybrid policy. But where it gets sexy, is when you start overlaying that information with additional data from your accounting system. Because now you can see if people who work in the office are billing more time than people who work from home. You start to see trends or patterns over time. Many law firms are building their remote policies based on what other firms are doing, but if you look at what works for you and impacts your business you can make better, more informed decisions.

Traditionally, law firms have not used data-driven approaches to shape their strategy, to develop a way of operating or thinking about things. I strongly believe that data-driven approaches can be business drivers of a law firm.”-
Ilona Logvinova, Director of Practice Innovation, Cleary Gottlieb

Keeping up with high-quality data

Although the legal industry still heavily relies on decisions based on experience and gut feeling, Wang believes it is important to invest in good data by implementing better collection systems or standardizing processes. Think about the example of the card key data: how is this data being collected, and are people, for example, not checking in to the office for each other?

According to Stephens-Adams, you have to start with a strong foundation. We didn’t have a data management program, we are just creating one right now where we are establishing standards for our data and working towards having consistency through all of our different systems and applications, but also through our reports and dashboards. We’re also working with the data owners and starting to hold them accountable for the integrity of data in their systems.” For companies that don’t have a dedicated data team, Stephens-Adams advises having someone who drives the data initiatives and thinks about the different data roles and what can be outsourced. Having someone dedicated to the data initiative will ensure it doesn’t become a side project. And in general, you need to think about how to install a data-driven culture.

Unraveling the true potential of data goes beyond the capacity of traditional knowledge management according to Wang. I’m talking about a whole other dimension, not just the curation and management of information, but rather the use of that information with capabilities. Are you going to feed that information into a model, or use it to train something? All of those things are beyond the capacity of traditional knowledge management, and so I think you need a dedicated data function that works with the knowledge management function.

Knowledge management essentially used to be like library services whereas now we are talking about data. The thing that people don’t realize is that some of the highest-quality lawyering in the firm happens in the knowledge management department. It’s maybe not the state-of-the-art, shiny new stuff. But you know, it’s the things that you do a thousand times and where you understand every nook and cranny of the problem. – David Wang, Chief Innovation Officer at Wilson Sonsini

In conclusion

Quantum computing, Web 3.0, automated labeling, Augmented Reality (AR), Virtual Reality (VR), and wearable tech – all of these exciting innovations share a common foundation: data. Data isn’t just a resource, it’s a transformative force driving the next wave of innovation in the legal industry – especially when combined with the capabilities of AI. By understanding the nuances of data, implementing robust data management practices, and leveraging the right technologies, law firms can drive innovation and gain a competitive edge.

Interested in watching the full panel discussion? Here’s the link to the recording.

Discover our Data in Legal report