Big data has sparked a revolution in how corporate America conducts research, identifies customers, advertises itself, and pursues profits. But just as big data has enormous implications for corporate clients, it has equally important consequences for the business and practice of law — business of law, meaning how firms are structured, managed and financed, and practice of law, meaning how attorneys perform legal work on behalf of clients.

Compared to other modern professional services organizations, law firms generate very little actual data. In addition to providing great fodder for lawyer jokes, this fact means that law firms are unlikely to use internally produced big data to drive client outreach or management strategy.

But it doesn’t mean that big data won’t affect how law firms do business. Already, some of the most sophisticated clients are using big data to manage their legal spending. Some clients are vetting law firms based on meta-analyses of bills; others are holding reverse auctions and using requests for proposal heavily based on law firm use of technology. Some clients, especially insurers, are using extensive relational databases to supervise litigation and manage costs. On the backend, clients are using big data to analyze their bills. They can determine whether there were any violations of client guidelines, and reject fees and expenses that violate set parameters. They can also do comparative analyses to make sure that attorney tasks are being billed in line with market trends and historical precedent.

Most observers agree, though, that big data is likely to have more effect on the practice rather than the business of law. In an important sign of the times, in August 2012, the American Bar Association (ABA) House of Delegates adopted recommendations by the ABA’s Ethics Commission regarding the definition of “competence.” It has been amended as follows: “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education, and comply with all continuing legal education requirements to which the lawyer is subject.” In other words, being a dinosaur when it comes to technology is no longer idiosyncratic; it’s grounds for malpractice.

Recognition of that fact comes not a moment too soon. Big data is already changing how various types of litigation are conducted, including employment, insurance, intellectual property, antitrust and general commercial litigation. One area where its influence is keenly felt is in discovery. Put simply, formal document requests are becoming irrelevant as they are increasingly replaced by Rule 26 conferences. At these conferences, attorneys agree on the names of ESI custodians, the sources of ESI to be collected by these custodians, and the methods for searching each source. ESI vendors will likely develop applications that will automatically identify potentially relevant data. Advancements in this area could profoundly alter calculations about when to pursue litigation. Being able to avoid common discovery disputes would streamline the process of preparing for trial, reduce costs and potentially make it possible for certain cases to go to trial, rather than be forced into settlement due to discovery cost alone.

To engage in trial work lawyers must understand the nature of electronic data — where it exists and how to obtain it, authenticate it and get it admitted. More specifically, though, lawyers today must also understand the potential value of social media evidence, how to access unstructured data, and when to marshal big data analytics to build a case. Many types of data automatically generated by social media applications and mobile devices constitute a potential treasure trove of evidence that most attorneys currently ignore. For example, in a claim for emotional distress, an attorney can gather a great deal of evidence about the plaintiff’s everyday activities based on his or her use of social media and mobile devices. Once identified, practitioners need to understand how to get this evidence admitted or excluded.

Big data might at some point even be an important tool for setting litigation strategy. Because it uses historical analyses to predict future outcomes, big data could be channeled to predict the outcome of individual lawsuits. At least one company is already giving it a try in the intellectual property realm. Lex Machina is a Menlo Park-based data-sourcing company that has compiled data from 147,000 cases, 120,000 filings, 16 million docket entries, 185,000 documents, 1,400 judges and 28,000 decisions. Using data analytics, Lex Machina churns through this material to try to predict the likely outcome of current intellectual property cases. Can similar types of analytical models really be that far off, especially in the areas of employment and personal injury?

Another area of potential impact is on the process of jury selection. There are already applications that help lawyers track information about prospective jurors. Big data adds the possibility of having the ability to pull information about prospective jurors from their publicly-available data in real time. Instead of relying on self-reported information, trial lawyers in the near future might know a lot more about those twelve strangers sitting in the box. And if political candidates can use such data to target their messages, perhaps attorneys will use it to mold their arguments as well.

Big data is already influencing the kinds of arguments made in class actions and other lawsuits that typically invoke statistical sampling, which has historically been used to extrapolate about both cause and effect. To the extent that big data, by making it possible to review the entire data set and not just a sample, trumps probability-based calculations, will statistical sampling still be allowed? The answer likely depends on the specific factual and legal issues in dispute. But there can be no doubt that the use of big-data analytics will create many opportunities for lawyers to tell a much richer and more real story than they have in the past.

Finally, information governance is likely to become a central practice area in most law firms, as its importance to C-suite executives continues to increase. It is not yet clear whether particular lawyers will specialize in information governance or whether every lawyer will need to participate in data security and data management. (Remember that when the Internet was first developed, many people predicted that there would be Internet practice groups at every major law firm.) At the very least, every lawyer will need to understand the basics of big data so that he or she can advise clients about new technology and comply with ethical obligations.