A retroactive analysis of litigation data can help legal departments identify trends and determine where to allocate resources to reduce the likelihood of future litigation. But as the legal risks facing companies grow and intensify, it’s critical to leverage data to keep looking for earlier and earlier indicators of risk.

By Scott Forman

Recent years have brought significant advances in the use of analytics to identify trends in legal data and mitigate risks. For instance, by conducting a retroactive analysis of their litigation data, legal departments can better understand key issues driving lawsuits, such as which policies, regulations and regional locations are most often implicated in litigation. Armed with these insights, in-house counsel can determine where to allocate resources to reduce the likelihood of future litigation.

This type of analysis is important, but as the legal risks facing companies grow and intensify, it’s critical to leverage data to keep looking for earlier and earlier indicators of risk. With the wide-ranging business and reputational risks that come with employment-related litigation and the increased pressure to recruit and retain employees in a hyper-competitive talent market, human resources data provides a particular opportunity to spot emerging issues that may impact an organization’s operations and future success.

Data as seemingly routine as that relating to attendance, hours worked, job performance, and enrollment in benefits can, when viewed in combination, direct employers to potential problem areas. If left unaddressed, such issues—whether it be lack of employee engagement, management opportunities, noncompetitive wages or benefits, or simply a misinterpretation of company policies—could have significant labor relations issues that have legal and/or HR-related consequences.

How It Works: A General Overview

On its face, using data in this manner might seem like a fairly straightforward practice. Employers collect the data they need, identify a baseline, and look for deviations that, when viewed in conjunction with other data sets, tell a story. Then, they work to make the necessary adjustments based on trends uncovered in the data.

But the key is to figure out how to bring all the relevant data inputs together in a way where they can be analyzed holistically. A dip in attendance, for instance, might not mean much in a vacuum. However, if the majority of those deviations come from a specific business unit—and those same employees have lower performance scores, are filing complaints, and/or aren’t enrolling in the same benefits they did previously—this may be a sign of a lack of employee engagement. Knowing that drops in employee engagement can lead to larger issues, this indicates that resources should be invested to get a better understanding of what may be emerging so that it can rectified.

What those investments entail depends, of course, on the organization and the problem at hand. In this case, it might involve additional training to managers or better communication about benefits, but others could call for a range of different solutions, such as wage and benefits modifications, clarifying or updating company policies, and adopting new ways of responding to employee complaints.

Key Challenges and Best Practices

In practice, undertaking an initiative like this comes with its fair share of considerations and challenges.

In-house legal departments should start by clearly identifying the scope of the program: What are the critical vulnerabilities unique to their organizations at this particular time? What data will they need to collect to help mitigate them? Which data inputs are already being tracked or are most readily available? Which departments and individuals need to be involved in gathering the necessary data?

Oftentimes, collaborating with outside counsel can help identify the key data sources—both within the company and specific to its industry—that could provide valuable insights. Such a list might include:

• Employee benefits (e.g., who is using which benefit, at what frequency)
• Job performance (e.g., employee reviews)
• Employee engagement surveys
• HR-related questions (e.g., any areas with a higher volume of inquiries)
• Attendance records and hours worked
• Employee complaints (e.g., filed with the government or internally)
• Turnover (both voluntary and involuntary)

The more difficult obstacle, however, is the data collection itself. The often siloed nature of organizations’ data means the information needed might be spread across various departments in various different formats and systems. For example, salary data that may be used for pay equity audits tends to be siloed within the compensation function of an employer’s HR department. Yet if this information is shared at an early stage and viewed alongside other data inputs, it could reveal broader issues related to overall engagement and other issues.

As chief data officer of a global law firm, I’ve seen firsthand the importance of effectively capturing, classifying and applying data—and have found the following principles to be useful in doing so:

Education is key. The most common objections when it comes to data collection is that it will take too much time, require too many resources, and tack on unwanted costs. That’s why it’s crucial to be able to inform people at all levels about the value of collecting this data. Make the business case: if it costs X to collect Y data, but it might prevent a lawsuit or employee turnover that would cost Z, it’s well worth the investment.

Focus on data governance and management. A crucial aspect of breaking down siloes is ensuring that there are effective processes and controls in place to collect the data, organize it, and ensure and maintain its consistent quality. This entails, for instance, mapping data and implementing a governance model to provide a “single source of truth” for the organization; understanding who will have control over what assets; and establishing clear rules and policies related to its use.

Find the right partner. For in-house legal teams already grappling with increased workloads and the need to address increasingly novel and wide-ranging legal issues, finding the time and resources to monitor emerging areas of risk can be a challenge. They also may not have access to in-house analysts and data scientists and the depth of HR and employment law knowledge needed to execute an initiative like this on their own. One option is to partner with an outside law firm that can bring the necessary legal and data capabilities, offer the benefit of attorney-client privilege, and utilize data on the company’s legal matters that they already have access to from their existing relationship.

A Path Forward

Ultimately this type of data-driven approach is designed to help spot percolating issues before they develop into larger problems or costly litigation and to help busy legal departments determine where to focus the company’s resources to address any potential issue that may arise.

Yet in an era where company leaders are looking to their legal departments to operate more like the rest of the business, promoting data governance and implementing such an approach can deliver benefits beyond its immediate scope. For example, establishing and measuring key metrics to demonstrate the program’s success can go a long way toward helping in-house counsel demonstrate their department’s effectiveness and communicate big-picture workplace issues to a C-suite audience.

Many have taken important steps to get started on this journey. In a tight and fast-evolving talent market where employee satisfaction and engagement are paramount, now is an ideal time to take those data-driven approaches to the next level.

As chief data officer for Littler Mendelson, Scott Forman directs the firm’s use of data to improve internal business functions and client service delivery. He leads a cross-functional data governance program, manages a team of data scientists, and oversees how the firm identifies, captures, classifies, maintains, and applies data and information.

Reprinted with permission from the August 30, 2022 edition of Corporate Counsel© 2022 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.