Anatomy of costs: being able to use patient data instead of statistical samples helped cut government penalties over billing © Getty Images/iStockphoto
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When it comes to forensic analysis, law firms often turn to third-party providers. In defending a large US healthcare client against government allegations of billing improprieties, however, Norton Rose Fulbright chose a different path. The work meant sifting through millions of files from hundreds of hospitals and it chose to develop its own proprietary tool, NSight.

“We decided to build our own capabilities to host, analyse and marshal the information,” says Jeff Layne, partner and head of business readiness and development at the firm. Being able to understand fully how a client’s system works helps resolve problems more effectively: “It makes us better lawyers.”

As well as developing ideas and services aimed at a few clients, or even just one, some firms are looking into creating more standardised, fully tested legal products that can be more widely marketed.

Such services can also reduce the need to use lawyers, however, and in North America this may be generating some resistance to embracing the trend. For example, for the European edition of the Innovative Lawyers report this year, there were three times as many entries from law firms seeking to “productise” their services, compared to US law firms, according to RSG Consulting, which conducts the research for the rankings and awards.

Nevertheless, in North America, a growing number of legal products are being developed by firms and in-house teams aimed at delivering such efficiencies.

IBM has used Watson, its artificial intelligence technology, to help companies reduce the amount they spend on outside counsel. Among other things, the tool — called Outside Counsel Insights — improves the accuracy of billing and budgeting.

The data that the technology can analyse include written descriptions of legal tasks. “It can look at a narrative description and see if that complies with the billing guidelines,” says Donna Haddad, a senior legal counsel in IBM’s Watson group.

Beyond cost reduction, technology tools can improve the results law firms achieve for their clients. Mr Layne says this has been the case with NSight. The tool collects, stores and manages client information, improves its reliability and brings together different sources of data.

For one healthcare client, being able to replace flawed statistical samples with actual patient data led to an initial government claim for $4bn in penalties being reduced to $14m.

Tools such as NSight also enable lawyers to collaborate with clients in real time. These types of technologies can simplify other legal tasks.

For example, to help manage transactions for companies raising capital, Dentons lawyers Rebecca Kacaba and Mat Goldstein created cloud-based software called DealMaker. It reads complex subscription agreements, generates documents and populates them with information, automates signature tracking and allows companies to monitor the status of a deal.

By eliminating the need to fill in forms manually and drastically reducing the volume of phone calls, faxes and emails, the tool cuts legal fees from an average of $15,000 to $8,000, says the firm.

Although it manages many tasks formerly executed by humans, David Little, managing partner of the Ottawa office at Dentons Canada, believes that even if some routine tasks can be automated, this kind of tool will not result in less work for lawyers. “It’s allowing traditional parts of legal services to be handled through artificial intelligence and freeing up lawyers to pursue innovative areas that require new laws and new ways of doing things,” says Mr Little, who is also co-chair of the firm’s venture tech and emerging growth group.

Whether or not legal tech tools pose a threat to the headcount at law firms, the creation of new products may change the way people are managed in the legal sector.

Wendy Butler Curtis, head of practice analytics and service innovation at Orrick, Herrington & Sutcliffe, says that the firm — which has developed a litigation case management product called CaseStream — is spending a lot of time training all its employees on technology. “It’s constant because the tools are changing and the market is expanding,” she says.

The firm has created new roles such as data analytics attorneys and an in-house statistician. Sometimes it hires people who have technical skills but not necessarily a legal background.

Technology tools are not only valuable to firms and their clients. In some cases, they can be sold or licensed to provide new sources of revenue.

This is the case with DealMaker, says Mr Little. “We’re certainly not limited to using DealMaker within Dentons,” he says. “It’s like any other sector — if you develop a tool that can help any number of users and there’s a chance to monetise it, that should be very much part of the model.”

Copyright The Financial Times Limited 2018. All rights reserved.