AreYou Thinking Statically or Dynamically?

Law Technology News has a panel—although it actually seems to be a list of isolated commentators, not an interactive group discussion—talking about "how the emergence of business intelligence financial analysis software is going to affect the legal community over the next year?"

Responses range from:  It's great stuff and its use is "likely to increase at a rapid rate" (Robert Meadows, CIO, Heller Ehrman) to "It will make the ordinary practicing lawyer's life in big law firms that can afford the software even more hellish than it is now!" (Martha Fay Africa, Managing Director, Major Lindsey & Africa).  Not unreasonably, each commenter tends to see the impact of BI from his or her own persective.  Thus:

• David Clark, IT Director of the 70-lawyer Jones Waldo Holbrook& McDonough (Salt Lake City), says "it is probably not on the radar like it is for some of the larger firms, but ... [this] will change in the very near future."
• My friend Michael Kraft, founder and GC of Kraft Kennedy & Lesser, Inc. (New York), focuses on how corporate law departments use it to help evaluate outside counsel.
• Larry Bodine, the legal marketing consultant, says "BI software will change law firm marketing at a fundamental level."  And
• Another friend, Judy Flournoy, CIO of Loeb & Loeb (Los Angeles) and President of the International Legal Technology Association, says her firm is evaluating which BI suite to implement but says "they have become a must-have."

Actually, I have another take on BI analysis altogether, and for better or worse I don't see any of the LTN panelists addressing it.

My take is that both the evangelists for, and the denouncers of, BI tools tend to fall into the classic trap of thinking in terms of Static Analysis rather than Dynamic Analysis.  What do I mean by that? 

Suppose a legislature is about to pass a tax increase on a certain behavior: Say, driving across the (currently toll-free) East River bridges into Manhattan. The legislators will predict that the tax increase will raise revenue by $x. But they rarely ask, then what? "What" is that people will change their behavior in light of the new tolls; they'll car-pool, use mass-transit, choose another route into Manhattan, etc., and the revenue raised will be some number < $x.

To generalize, people (non-economists in general, and lawyers in particular) tend to look at the consequences of a change (say, introducing BI tools into an AmLaw firm) in terms of what I think of as one clock cycle; but you have to look at it in terms of repeated, continuing clock cycles.   So the "single clock cycle" school would predict that once BI is introduced, partners whose practices are suddenly cast in an unfavorable shadow will start kicking and screaming about the flaws in the BI analysis, the absence of qualitative factors making it all so one-dimensional and superficial, the value of omitted intangibles, etc.   Sally Gonzalez of Baker Robbins is probably pointing at this phenomenon when she observes that:

"In most cases, BI tools are of limited use because the underlying financial systems often do not contain information on the time and expenses associated with nonbillable activities, such as business development (e.g., meetings and entertainment), developing a proposal, delivering a pitch and closing a deal."

The single clock cycle school will predict that BI will meet a steep, perhaps insurmountable, wall of resistance from anyone whose ox is gored.

But the multiple clock cycle school (that would be me) will come up with a different view.  Yes indeed, BI will tend to identify winners and losers in its own terms when first introduced:  The more profitable and less profitable practice groups, offices, clients, matters, and even individual lawyers.  But the game has just begun.  The astute firm—starting with the Managing Partner, but essentially including the COO or Executive Director, the CFO, and practice group leaders—will use the BI results not as an end of semester report card but as a start of semester learning tool and coach's clipboard. 

Look, no one wants to end up on the short end of the BI stick:  Certainly not the aggressive, hyper-competitive, chronically over-achieving people in your firm!  And that's not what it should be used for.  Instead, it should be used to help teach the laggards what the leaders seem to know (or at least show them how the leaders seem to behave).  Use BI to demonstrate that there are smart and not-smart ways to staff matters; smart and not-smart ways to accomodate client pressures for lower fees or discounts; and smart and non-smart ways to determine what's working and what's not in terms of career and professional development, and marketing analyses.

Ultimately, those opposing the adoption of BI are adopting the position:  "Don't tell me what I might not want to hear."  Those urging BI's adoption must understand the bedrock reality of that fear, and move beyond it by reassuring people that BI is not to condemn the bottom X%, but to help everyone start migrating their practice towards the performance of the top A%.

That takes more than one clock cycle.