Big Data: Too Much of A Good Thing?

There has been a lot of chatter of late about “big data” and measuring law firm rates, efficiency and value. In a marketplace as fragmented as the market for outside counsel, big data no doubt can help separate those who provide solid bang for the buck from those who over charge and under deliver. But it has inherent limits.

  • Law firms often charge different rates to different clients. Attempting to account for the myriad of different “rack rates” firms put forth to existing and potential clients creates inherent limitations in using “big data” to select new service providers.
  • Arbitrage in the marketplace is not easily measured. What rate a law firm is willing to provide on any particular engagement is a function of any number of factors. Among others these may include:
    • how busy the firm is,
    • the firm’s desire to secure a significant engagement to absorb some of its annual inventory of hours,
    • the firm’s desire to grow certain practice areas,
    • the firm’s perception of how representing a particular client may help it secure other clients,
    • an individual partner’s desire to do the work.
  • The impact of competition in the marketplace is not fully known absent competitive selection processes. What a firm says it will charge often changes when it knows it is facing competition to do the work. Even during the RFP process what a firm is willing to offer can change significantly.
  • The terms of engagements often are not easily captured by big data. For instance, a firm may agree to write off a large portion of its billings if a transaction does not close. Or it may place the terms of a success fee entirely in the hands of its client if a certain trigger event occurs. Such terms often deliver significant value to a client that is not easily measured on an objective basis.

About the author – Dave Sampsell is a 20-year lawyer with extensive experience managing large, complex legal engagements around the world and overall corporate legal budgets. He presently serves as General Counsel of a NASDAQ listed company and is a Founder and Principal of BanyanRFP. BanyanRFP saves companies time and money through an easy-to-use, private and secure online application for the creation and processing of legal services RFPs. For more information, visit

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