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The Hidden Cost of Bad Data in Law Firms – and How To Fix It
Thursday, May 9, 2024

Got Quality Data in Your CRM? Most Firms Don’t. Here’s What to Do.

In today’s data-driven world, law firms rely on large amounts of data to develop relationships, win new business, and serve client needs. Whether attorneys or professionals are managing client relationships in their CRM or leveraging knowledge and experience management systems, accurate data is vital for firms to thrive in the increasingly competitive legal market. 

However, trusted research organizations report that 90% of client data in CRM systems is incomplete. Inaccurate contact information, outdated case information and duplicate records aren’t just eyesores, they’re costing firms dearly.

How Much Does Bad Data Cost Firms?

Gartner recently reported that bad data is costing businesses a staggering $12.9 million in lost revenue. What is even more concerning is that this bad data is sabotaging business initiatives, causing 40% to fail due to ineffective strategies created from flawed data analysis. 

The good news is there are a few simple, yet effective strategies you can follow to preserve your data from going bad and prevent your firm from incurring unnecessary costs. 

1. Standardize Data Entry

One of the biggest challenges to achieving data quality success is outdated or incomplete records and inconsistent data entry. Maintaining clean and correct records isn’t just a matter of good practice, it is a fundamental requirement for effective legal operations.

To overcome the issue of inconsistent data entry and incomplete records, we recommend that firms create and implement a data standardization guide. This documentation clearly establishes guidelines and protocols for entering and formatting data across the firm. 

By defining standard formats, naming conventions, and validation rules, firms can increase data quality and the operational efficiency of their firm. The standardized data makes it easier to analyze and aggregate important information, and can be used to create reliable reports supporting informed decision-making.

2. Deduplicate Contact Records

Duplicate data can hinder a firm’s ability to operate efficiently, maintain data integrity, and deliver high-quality legal services. Duplicate records can take up unnecessary space within a database and can cause staff to spend extra time and effort to reconcile the duplicate entries.

To effectively clean duplicates, firms should start by analyzing their existing data to identify all duplicate records. After all the dupes have been identified, firms can then leverage data cleansing tools that have the processing capabilities to consolidate duplicate records across large data sets with minimal intervention. After automated tools are used, we highly recommend having a staff member conduct manual reviews of the identified records to confirm the irregularities have been fixed.

Proactive measures can also be taken to prevent duplicate records from being entered again, like regular data audits to ensure the initial clean was effective, and to refine any automated algorithms used to identify and consolidate records.

3. Dedicate Data Quality Resources

The biggest mistakes we see when trying to achieve data quality success is failing to dedicate the necessary resources to maintain the data. Over time, data can quickly become outdated or incorrect as people change jobs, organizations merge or get acquired, and other irrelevant records going unnoticed in your system. These persisting records can reduce the overall reliability of the technology, causing professionals to not want to use the system since they cannot trust the data.

To mitigate the degradation of your firm’s data quality, firms must allocate dedicated resources to maintain their system’s records. Data Stewards or CRM Administrators can be hired internally to conduct regular data audits and provide ongoing user training to convey the importance of maintaining data quality on an individual basis, and its impact on the system’s integrity.

For firms with limited budgets and resources, outsourcing these data management positions can offer a cost-effective solution to effectively maintain its CRM data. Outsourced service providers have access to specialized expertise and deep industry knowledge, ensuring the utmost quality of work. They also have access to advanced technologies that may be too expensive for smaller or mid-sized firms. External providers can cost-effectively enhance data management processes for law firms while enabling their professionals to deliver exceptional services to clients.

Maintaining accurate and reliable data is crucial for firms to stay competitive and relevant in today’s competitive legal landscape. Research underscores the significant financial costs and business related impacts of bad data quality, emphasizing the urgency for firms to address these issues. Implementing strategies such as data standardization guides or deduplication efforts can yield substantial benefits by enhancing data quality and streamlining database management.

However, sustaining data quality requires dedicated resources and ongoing commitment from firm personnel. Firms can ensure the long-term health of their data by hiring internal resources like Data Stewards or CRM Administrators, or hire outsourced service providers to manage your data cleaning.

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