There’s a scene in the movie “Moneyball” where a group of old baseball scouts sit around a table and analyze young players.
Among the list of attributes they cite: a “classy” swing, a “good clean stroke” and passing the “eye candy” test. One scout says the attractiveness of a player’s girlfriend is an indicator of his confidence.
The scene ends with Billy Beane, the Oakland A’s general manager played by Brad Pitt, telling his scouts that instead of “looking for Fabio,” they need to use new information — analytics — to better allocate resources and get results on the field.
A growing number of businesses want to make a similar shake-up in general counsels’ offices.
The big data startups want to transform, or at least supplement, the traditional factors general counsels use when hiring outside counsel — such as longstanding business relationships — with a new, data-driven approach.
The companies, from St. Louis to Silicon Valley, are harvesting vast amounts of data from court systems and government agencies that they say can make hiring outside counsel more results-driven. In addition, the data can tailor litigation strategies to the tendencies of particular judges, courts, case types or even patent examiners.
For some general counsels, it could represent a fundamental shift in thinking.
Does it still make sense to rely on friendships or firm prestige if, say, a database of patent-litigation results shows that a lawyer you don’t know has already defended a company against a patent troll that just threatened you?
Or how do you adjust your argument if the judge handling your case rules on claim construction in a patent case without a hearing 82 percent of the time?
Those are two insights that Lex Machina, a Silicon Valley legal-analytics startup, said have made huge differences for their clients.
“Most industries and professions are in the process of being transformed through analytics,” said Owen Byrd, chief evangelist and general counsel at Lex Machina. “And our view is: Why not law?”
Initially created for a research project by Stanford Law School professor Mark Lemley, Lex Machina uses software that constantly reads PACER documents and turns them into sortable data. It is a tool that puts hard numbers to what’s actually happening in the courtroom.
The company sells subscriptions to its service ranging from “a couple hundred” dollars a month up to $1,000, depending on factors including how many licenses are bought.
Lex Machina’s core data are 150,000 federal cases dating from Jan. 1, 2000. It’s most useful for patent cases, although the company tracks copyright and antitrust cases as well.
It knows how long the average patent case runs before it is terminated before every federal judge. It can tell you how many times each patent has been asserted in a lawsuit (the most asserted patent in the U.S. is No. 6904359); how much money each patent has earned in judgments; and how often judges dismiss cases on summary judgment and in whose favor. It can even tell you what law firms are representing or have represented any company.
It’s all an attempt to get in-house counsel and their lawyers to leverage new bits of information to pursue the best patent litigation strategies — from choosing the right lawyer to getting in front of a particular judge and acting in a way the judge has responded to in the past.
Byrd admits every case is different, and he does not discount the knowledge lawyers have of the court system. But adding real data to the process can provide insights that are otherwise impossible to spot, he said.
“Lawyers like me sometimes will make assertions based on what we call ‘anecdata,’” Byrd said.
For instance, one lawyer will ask another lawyer: What do you know about this judge? That lawyer will respond based on his or her personal or secondhand experience about that judge.
“We’re trying to move past that,” Byrd said. “We have insights about patents that are being litigated that has never been assembled before.
“All of it enables people to be ‘Moneyball’ lawyers. Analytics transformed baseball. And that’s the best I can come up with for an analogy of what we do. It is profoundly changing the practice of law.”
One pharmaceutical company client, Byrd said, changed its typical patent litigation strategy when it used Lex Machina data to determine a judge was very likely to rule on claim construction without a hearing — considered a crucial part of patent litigation because it interprets patent claims.
As a result, the client advanced its best arguments and evidence around claim construction before it normally would have.
“That’s the reverse of a typical claim-construction strategy, where you save your best shot for last,” Byrd said.
“We’ve had other companies come to us … and say, ‘We think we’re pretty good at patent litigation. How do we behave? Do we settle early or late? Are we in the right venues?’ Some companies fight to the death. Some don’t. This company was able to tweak the dials on their IP strategy to make sure it was producing their best results.”
One of the most well-known “legal analytics” companies in the GC-suite is TyMetrix Inc., which is mostly used to track legal department spending and can be useful to craft alternative fees.
A St. Louis startup, Juristat, said it provides in-house lawyers with data-based road maps to get a high-quality patent out of the U.S. Patent and Trademark Office.
Drew Winship, Juristat’s CEO and co-founder, said it’s almost a given that a patent will be rejected at least once by the USPTO in the application process. Juristat’s USPTO-based data can answer the question about what to do next.
When the patent office issues what’s known as a “first final rejection,” which is often not actually final, an applicant has a host of options, including a request for continued examination (RCE), an appeal or an interview with the examiner.
“Almost every law firm does too many RCEs,” Winship said. “Very few do enough appeals or enough interviews, depending on our statistics.”
Those statistics reveal every patent examiner’s tendencies — how often he or she grants patents after RCEs, appeals or interviews. That data can be used to make tailor-made decisions — or make past choices seem ill-informed.
“We found examiners that very big law firms continue to fight with that have never granted an exception when you continue to fight with them,” Winship said.
Juristat’s reports on patent examiner behavior range from $148 for one report to $1,332 for 10. A sale of unlimited reports can be quoted.
Both Juristat and Lex Machina sell their products to law firms as well as in-house lawyers.
But like the talent scouts in “Moneyball” who saw analytics as a threat, Winship and Byrd said some law firms are resistant to using these tools, which often work best when used in conjunction with an in-house department and the law firms that represent them.
“Dinosaurs die out,” Byrd said. “And baseball today is now supercharged with sabermetrics. And so I think we’re still on the front end of the explosion of analytics and its importance to law practice on both sides of the fence.”