The term Data Analytics is extremely popular nowadays. In fact, it is employed in seminars and tech talks as a sophisticated vocabulary or a trendy topic to speak about. However, only a few people are aware of its practical implications.

The purpose of this blog is to give you a basic grasp of buzzword data analytics.

Data Analytics in the Context of Law Firms
Rather than presenting a lengthy bookish definition, let me try describing it in layman’s terms and in the context of law firms.

Consider the scenario, you have two clients, MDT Polymers and Al-Hayat Oil Refinery and revenue from them is as follows:

	MDT Polymers	Al-Hayat Oil Refinery
Revenue in an FY	500,000.00	500,000.00

Now, the question now in front of you might be, who is more profitable? MDT Polymers or Al-Hayat Oil Refinery?

You might consider the following information to identify which client is more profitable:

	MDT Polymers	Al-Hayat Oil Refinery
Revenue in an FY	500,000.00	500,000.00
Hours Spent (in hours)	23 hours	72 hours
Resources Involved	2	4
Resource Average Rate	12,000.00/hour	15,000.00/hour
Average Time to Clear Bills	30 days	57 days
… and some other factors

I don’t think now it’s difficult for you to decide, who’s more profitable?

1. MDT Polymers
2. Or Al-Hayat Oil Refinery

Hope this gives you a good understanding of what data analytics is and how it could play an important role in your decision making.

The Definition, “What is Data Analytics?”
Using the data for decision making based on analysis, pattern, and statistics.

Making it further simpler for you, the adjacent diagram explains the flow of data into strategic decision making. You could see here; data is the base and combining it with the knowledge and information could help you in strategic decision making.

You must be perplexed. What kind of law firms should consider using data analytics?
Any kind of law firm either small, medium, or large may leverage the benefits of data analytics.
For mid and large size law firms it’s a must. But Small Firms can use Data Analytics to improve their understanding of the process and accelerate their growth.

Coming down to the purpose of this blog,

How could analytics help law firms in decision making?
There are five major areas where analytics can play a crucial role and help law firms in making better decisions:

1. Clients’ Assessment
   This we’ll not explain much as we’ve covered the importance of this during our context creation.
2. Matter Assessment
   Following are the basis of analysing the matters:
   • Average Rate
   • Average Invoice Value & Expense
   • Average Payment Recovery Time
   • Productivity in terms of Billable Vs. Non-Billable Time spent
   • Profit & Loss considering all the costs
   • Overall raking of the matter
   • Complexity Level of Engagement
3. Resources Assessment
   Following are the basis of analysing any resource:
   • Productivity (Billable/ Non-Billable Time)
   • Billable Vs. Billed Hours
   • Cost to Firm and Average Billing Rate
   • Client Appreciations
   • Leaves Taken
4. Analysing the Practice Areas, Sectors, and Industries
   Following are the basis of analysing Practice Areas, Sectors, and Industries:
   • Average Rate
   • Billable, Non-Billable and Billed Hours
   • No of clients, matter, and invoices in each segment
   • Average Invoices, Expenses and Receipts
   • P&L
5. Sales
   • No new leads & conversion. Average conversion time.
   • Industries/ Sectors where you’re doing good.
   • Identify the Industries/ Sectors where you’re not doing well but you could do well.
   • Sources give you maximum business leads, internal/ external.
   • How your campaigns are performing to attract new prospects.

Above were the analysis of individual factors but data analytics is sometimes taking the decision based on several factors like above. But hope you get a fair idea about the importance of data analytics for law firms.

Data Analytics is one of the most loved tools in the many tools offered by LegalXGen. We’re helping many law firms in data-driven decision making.

It reduces your technological stack and eliminates excessive and pricey monthly costs for a variety of issues with a holistic solution designed to keep you growing.

Schedule your free demo today and experience the importance of Data Analytics in Decision Making for your law firm and join the thousands of other businesses that use LegalxGen to grow!