- Law firms are increasingly giving clients access to anonymized, internal data that may give them an edge in a dispute or deal.
- The firms view it as a way to keep clients “sticky” in a competitive legal market.
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Lawyers have a reputation for keeping secrets, but more of them are starting to see value in sharing proprietary data with clients.
Under pressure from their clients to provide more certainty about how a lawsuit might progress, employment law firms are turning to internal databases to estimate damages and give settlement values. And transactions lawyers see value in analyzing the nonpublic aspects of the deals they work on and sharing that information with clients.
The data isn’t for sale. But similar to how banks and consultants share insights as part of their offering to clients, attorneys and others in the legal industry say providing unique data is a way to keep clients “sticky” in a competitive marketplace.
“Clients would call us and they’d say, ‘what are you seeing for’ — fill in the blank — ‘pricing,’ ‘leverage in this particular industry’ — and we knew what the answer was,” said Stephen Boyko, whose private credit group at Proskauer Rose tabulates information for the roughly 200 debt deals it processes per year. The firm began publishing a select handful of statistics about defaults on such deals in May, but issues lengthy reports that are for clients’ eyes only.
Other players in the private credit markets have asked about buying Proskauer’s data, but Boyko said the firm has decided against it. “I’d rather have it be something that’s part of the relationship than to charge them $50,000 for something,” he said. “I’d rather them send me another transaction.”
Over the past decade or so, startups and big names in legal research like LexisNexis have been aggregating, formatting and analyzing public information from court databases and securities filings to offer insights into litigation, regulation and corporate activity. Law firms have also been getting public data in front of clients; Dechert puts out quarterly reports on the timelines and outcomes of investigations by antitrust authorities in the US and Europe.
But a growing number of law firms have been using their own data to make themselves more valuable to clients.
Law firms like Proskauer are finding that the data they generate from their engagements is a hot commodity. Michael Rynowecer, the president of BTI Consulting, who focuses on law firm-client relationships, said private equity and M&A lawyers get deep into the weeds on deals and can provide exclusive data to their clients.
“If I put out a brochure on it, it might be interesting, it might be telling, it might be helpful, but it doesn’t have that you-just-whispered-something-in-my-ear approach,” he said.
Doug Ellenoff, whose firm Ellenoff Grossman & Schole has a bigger market share than many larger firms when it comes to winning mandates for special-purpose acquisition companies’ IPOs and acquisitions, said lots of SPAC data can be gleaned from public records. But some information that doesn’t concern public shareholders — like the sources of funding that a SPAC sponsor usually taps for its own investment in the new company — isn’t something most lawyers can provide, he said.
“We have aggregated data on those that’s anonymized so we can guide our clients,” Ellenoff said. He’s comfortable disclosing fees — his firm charges between $200,000 and $250,000 for a SPAC IPO, depending on its value — but said the firm saves its insights on nonpublic aspects of SPACs for pitches and client interactions.
If his firm published such data, “everyone would take what we created,” Ellenoff said.
Litigators also have proprietary data they can wow clients with. Justin Sanders, a co-managing partner of the employment defense firm Sanders Roberts, said his firm can use detailed records of the attributes of the cases it works on — from the specific legal claims plaintiffs bring to their seniority level within a company — to give employers a sense of what’s at stake and what they should consider settling for. But he said care must be taken to keep confidences.
“We’re not selling data,” he said. “We’re selling advice, based on data.”
Several lawyers and law-firm consultants made that same distinction. While law firms can use data to give their clients certainty and add value, they don’t see themselves as a substitute for the investment bankers and accounting and consulting firms like KPMG, EY, PwC and Deloitte that their clients turn to for everything short of legal advice.
“We are providing our clients with a granularity of information about market terms and trends that others in the industry cannot,” Boyko said in an email. “We don’t view our data as displacing investment bankers or financial advisors but augmenting the information that others can provide.”