Law Technology Today From the ABA Legal Technology Resource Center
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What is legal analytics, and how is it relevant to the practice of commercial law?
The lawyer of tomorrow will routinely make decisions based on data. In fact, some lawyers are already doing so today. How? They use a relatively new tool, called legal analytics, to mine previously unavailable insights from data derived from millions of actual dockets and case documents. Legal analytics uses advanced data-enriching technologies like natural language processing and machine learning to clean, structure, and analyze raw data from years of litigation records. Litigators can then search the enriched data to get accurate, facts-based answers in a matter of minutes to questions that would take weeks or months to answer using traditional methods of inquiry.
For lawyers in commercial practice, such questions might include: How has Party A pursued litigation in a specific legal topic in prior cases? What tactics do attorneys from Firm B tend to deploy in similar cases or situations? How often does Corporation X defend commercial contracts or business tort claims in federal court, and how often do they win? How often do they settle? Which law firms are most experienced opposing Company Y in federal commercial cases? What are the predilections of Judge Z in cases like the one we are facing now? Do those behaviors indicate we should seek a change of venue?
Legal analytics is distinct from legal research.
While every litigator uses legal research or reviews the research of associates or staff to prepare for litigation, few have ever encountered or used legal analytics. Legal research to identify relevant statutes, cases, rules and so on will not be replaced by legal analytics, nor will legal reasoning or the highly developed skills and experience of lawyers themselves. Insights derived from legal analytics, however, provide litigators with data-based insights they have never had access to before which can inform both case strategy and decision-making related to the business of law.
Analytic tools have been available for only a few years, but those who have adopted them are finding they can gain a significant competitive advantage in high-value legal matters, including commercial cases. They are also finding legal analytics indispensable in activities like creating a custom short-list of outside firms to handle anticipated litigation, identifying talent for recruiting purposes, tracking trends in specific practice areas and identifying areas for business development investment.
How legal analytics defines a “commercial” case.
Federal cases involving claims asserted by one business against another for breach of contract, a specific business tort or for both are defined as “commercial” in legal analytics. Such cases are identified under various Nature of Suit (NOS) and Cause of Action (COA) codes in the Public Access to Court Electronic Records (PACER) service—which, in fact, contains no NOS code specifically for commercial cases. Many commercial cases arise from NOS Code 190 (Other Contract), while others may be coded in PACER as copyright, trademark, patent, securities or antitrust disputes that contain contract or business tort claims.
While parties to commercial cases include business entities like corporations, limited liability organizations, partnerships, non-profit corporations and so on, legal analytics also includes cases in which an individual is named as co-plaintiff or co-defendant. It does not, however, include cases in which an individual sues a business or vice versa, if there are no business entities included among the individual plaintiffs or defendants.
Contract-based claims included under the commercial category in legal analytics include breach of license, breach of joint venture agreements and requests for termination of a contract. Business tort claims include legal disputes focused on misappropriation of trade secrets, for instance, as well as conversion of property, negligent misrepresentation of facts, and tortious interference with contract or business relationships. (Legal analytics excludes product liability claims from the commercial category.)
About 70% of commercial cases include a breach of contract claim, 55% include a business tort claim and 30% include both. The “commercial” designation in legal analytics was created with the requirements of both companies and their law firms in mind. The category thus includes cases involving businesses as well as the subjects (i.e., contracts and torts) businesses litigate most often.
Commercial cases often overlap with other practice areas, such as intellectual property, securities and antitrust cases. When lawyers focused on commercial cases are confronted with issues arising from these less familiar practice areas, legal analytics can provide them with crucial granular insight that would otherwise be simply unattainable—such as data on existing IP cases with commercial claims, for instance.
How does legal analytics organize data from commercial cases?
One of the ways in which legal analytics structures raw litigation data is to apply case tags to it with commercial-specific findings. Tags for breach of contract findings include Contract Breach, Contract Existence, Contract Rescission, Contract Termination, Unjust Enrichment and Contract Defense. Tags for business tort findings include Conversion, Defamation/Trade Libel, Fraud Misrepresentation, Misappropriate of Trade Secret, Negligence, Tortious Interference and Tort Defense.
Commercial cases in legal analytics are also identified via general litigation tags. These include orders for contested dismissal or summary judgment, declaratory judgment, class action, multi-district litigation, jury trial, bench trial and appeal.
Resolution coding for commercial cases in legal analytics is the same as for other kinds of litigation, including factors like whether and how a claimant or defendant won (default judgment, summary judgment, consent judgment, trial, judgment on the pleadings or judgment as a matter of law), the type of settlement (stipulated dismissal or plaintiff voluntary dismissal) and the type of procedural outcome (dismissal, contested dismissal, transfer, consolidation, stay, multi-district litigation, severance).
Damages and remedies are also indicated with case tags in legal analytics. Commercial-specific damages tags include contract-related damages: Contract Damages, Liquidated Damages, Restitution and Other Commercial Damages such as statutory enhancements or cost of audits to calculate damages. Business tort damages tags include Tort Compensatory Damages and Punitive Damages.
Two commercial case-specific remedies are also tagged in legal analytics: Specific performance, an order to perform or fulfill contract terms, and replevin, an order to return goods wrongly obtained because of a business tort. General litigation remedies like preliminary injunction, temporary restraining order and permanent injunction are also identified with tags.
How can legal professionals use insights from legal analytics to gain an advantage over the competition?
Litigators can search using the legal analytics platform to identify patterns in the prior behavior of attorneys, firms, parties and judges and predict likely outcomes based on that factual data. For example, analysis of specific judges can yield timing and motion metrics. Litigators can compare two judges in terms the timing of key events in their commercial cases, such as the median time to summary judgment. They can also analyze judges on motions practice by identifying the percentage of summary judgment motions a particular judge grants on average. A litigator might also wish to identify which motions or other tactics have typically succeeded in similar cases before the same judge, and then use that information to shape case strategy.
Litigators can use similar approaches to analyze the behavior of opposing attorneys in similar types of cases, the track record of different firms in such cases, and the litigation tendencies of individual parties in specific types of commercial litigation focused on specific legal issues. Legal strategies that have worked in specific contexts in the past are likely to succeed in future cases, and legal analytics gives litigators the tools they need to isolate and analyze certain variables, replicate successful tactics and increase their chances of developing and executing winning case strategies.
Litigators are also using legal analytics to test potential alternative legal strategies in light of factual information about similar prior cases. This is especially useful when they wish to be responsive to clients who want to investigate different strategic approaches. Legal analytics provides lawyers and clients with a means to objectively assess the likely outcomes of different scenarios by performing a series of searches and adjusting search parameters to evaluate and compare likely outcomes, including variables like remedies and damages awarded.
Finally, law firms and legal departments are using legal analytics to inform tactics and decisions they deploy in the business of law. For example, marketing professionals can use the platform to identify commercial litigation trends to address as themes in advertising, PR, collateral, branding and messaging. A firm that is pitching to new or existing clients can look up a prospect’s litigation history and the records of competing firms to identify relevant areas where they hold an advantage over competitors and sharpen the impact of their presentation.
Improving the quality of legal services.
Experienced commercial litigators may be apprehensive about the potential for legal technology to change the way they practice. They needn’t worry. We will always require skilled lawyers to work closely with clients, collaborate with team members, shape strategy, make key tactical decisions and present persuasive arguments. However, by providing them with access to new information and insights, legal analytics can help litigators provide clients with better representation more efficiently, and ensure they are more competitive—both in the courtroom and the legal marketplace.
