Spreadsheets for Lawyers: It's Not All About Efficiency

January 16, 2014

The Law Firm “Tech Audit”

Casey Flaherty is an attorney at KIA Motors best known for his law firm “tech audit,” which confirmed that associates at law firms don’t know much about the basic software applications – like Excel, Word and Adobe – they sometimes use to perform billable work.

This audit has garnered quite a bit of attention, and some well-considered criticism. Most of the debate, however, focuses on questions of efficiency and cost-saving — how much time it takes lawyers to do things poorly, how much wasted expense results, whether lawyers should be off-loading such “administrative” tasks to others, etc.

Technology Is About Quality Too

Efficiency matters to me, big time. I think it’s a core professional obligation for all lawyers. That said, all the talk of efficiency risks obscuring the fact that technological competence* also impacts the quality of a lawyer’s work. Spreadsheets in Practice – Real-World Examples

As a commercial litigator and white collar defense lawyer, I used spreadsheets in some fashion in almost every case, and my basic comfort with Excel yielded some big results.

For example, I once defended a company against claims by a distributor who alleged that faulty products caused him to lose tens of millions of dollars. During discovery, the distributor hit us with dozens of tattered boxes of musty order forms and cancellation notices. In a short period of time, I took a few sample records and built a basic spreadsheet model that would allow us to use the records to test the plaintiff’s causation allegations and damages calculations. When the results looked promising, I handed it off to a paralegal and scanning vendor who completed and refined the analysis. The result was a powerful worst-case damages model in the low six-digits instead of in the mid eight-digits.

Another time, I litigated a case that turned on the adequacy of bank practices. Again, working with a paralegal and discovery vendor, I put together a very basic spreadsheet model that allowed us to analyze reams of bank records for patterns that fit our theory of the case. I didn’t do the scanning or the data entry, but my familiarity with Excel allowed me to experiment with multiple models and to appreciate how the data could be used to support our case. The resulting analysis became the basis for my cross-examination of an expert witness and played a big role in the court’s decision awarding our adversary nothing on a $25million-plus claim.

In another instance, I worked on an arbitration in which the sellers of a tech startup, who stood to benefit if earnout triggers were hit, challenged my client’s efforts to develop and market the underlying technology following the acquisition. Just a little facility with Excel allowed us to analyze sales records, customer profiles and other data to help rebut the plaintiffs’ allegations.

As a last example, early in my career, I used Excel to create a very detailed chronology of events and documents in a complex SEC securities fraud investigation. This was the simplest possible use of Excel – no formulas, no fancy data tables or graphs – just a straight-up chronology. But it became a critical resource to the entire team (which was good for me professionally) and ultimately yielded some key insights that helped us persuade the SEC not to take action against our client. A Little Understanding Can Offer a Big Advantage

In dozens of other matters throughout my 10-year career, a little comfort with spreadsheets went a long way in identifying flaws in opposing experts’ methodologies, ferreting out important patterns or trends that affected the merits of a case, or conveying complicated information to a fact-finder, client or witness.

There was nothing unique or brilliant about any of this work, and I wouldn’t claim any special expertise at all. In fact, these examples involved an embarrassingly basic understanding of Excel, which I combined with my expert grasp on the legal and factual circumstances of each case.

But the ability and willingness to integrate a tool like Excel into my work gave me an advantage. Many other lawyers couldn’t or wouldn’t work with – let alone build – a spreadsheet, even a simple one. And that gave me an edge, which I was happy to put to good effect for my clients and, ultimately, for my career. Ignoring Technology Means Doing Lower Quality Work

The corollary to these observations, at least to my way of thinking, is that ignoring or avoiding basic technology leads to lower quality work. The refusal to learn how to use technology like spreadsheets means you’re not serving your clients with the level of competence they deserve. Arguably, the ABA’s revision to Model Rule 1.1, which has been adopted by at least some states, suggests the same thing.

So if you’re a law student or new lawyer, or even a law school thinking about adding technology skills training to your curriculum, don’t view the legal technology conversation only through the prism of efficiency. That’s just part of the equation.