Legal technology solutions: Buy versus build

Before reaching for the credit card to buy a new piece of tech or calling your internal IT teams to help you build something, it’s worth pausing to reflect on what is the best outcome for your business and your internal stakeholders.

• What is the problem you want to solve?
• Why can’t that problem be solved today using your existing technology or process?
• What’s the outcome you want to achieve in the best-case scenario?

The clear benefit to building is the ability to create a truly bespoke solution, unique to your organisation and its requirements. This can be essential in instances, where due to your business, industry, existing systems, or regulatory requirements (or a combination of all of four) lead to a situation where an ‘off the shelf’ solution simply won’t do.

However, there are some significant hurdles to overcome to achieve a bespoke solution and if you can’t answer some of these questions convincingly, it may be better to look at licensing first.

Do you (or your business) have experience in building technology, project managing, or articulating requirements? If the answer is no (or even if it’s yes if you have people internally who could help) ª can you afford to have your legal team switch focus for a significant period to work with the development team to build this out?

Do you (or your business) have experience in rolling out technology, and promoting user adoption? Unless you have gone through the process of deploying technology before, with a vendor, or at a previous business, it is unlikely that software customer experience and adoption are strong capabilities within the team. The risk of poor rollout and adoption could be severe – change management is critical and often overlooked or mismanaged – what’s your appetite to drive that change without having any real or limited experience of it?

If you have a team who can help internally - what level of accountability will be placed on that team to deliver the right solution and within budget? With internal politics, and shared business accounting, how realistic is it to impose SLAs and other measures on an internal development team? What happens if they eat through your budget without delivering everything agreed? If your organisation is fortunate enough to have a client facing tech development team, it may be difficult to justify why this team should focus on your project over revenue generating client work.

If you don’t have an internal team and decide to build using external contractors – do you know what good looks like, and do you have the time to help manage that relationship? Do you have capacity to join the whiteboarding, requirements gathering, storyboarding, user testing and development meetings?

How will routine maintenance, bug fixes, and upgrades occur? Depending on your business there may be fixed maintenance periods (e.g. 90 days after launch). What if a regulator change requires a system update? How agile can teams and budgets be to account for such events – if you use someone external how much will this cost?

What happens when technology and security move forward and you are heavily dependent on custom technology, potentially built in a software language that few can understand? The banking world knows this far too well, maintaining 20+ year old systems written in outdated software languages and paying through the nose for developers who are expert in 'last gen' technology.

At what cost? Hoping to replicate a fully featured Matter Management system for under $2 million may be too small an investment.

Licensing solutions from third parties brings a lot of benefits, perhaps the most obvious being the amount of technology for the cost of the license. By offering the same core solution to many customers, the costs (bar linear scaling operational overheads) are shared across all consumers. The cost to develop Microsoft 365 would have run into hundreds of millions of dollars but consumers can license all of it for a mere $100 a year.

In the legal technology space this still holds true – even the most basic of matter management tools may have cost many millions to develop, upgrade, maintain and host, whereas the cost to access could be as little as tens or hundreds of dollars per month.

Speed to deploy. Depending on the level of configuration required, a solution could be ready to roll out the day it’s purchased.

Network effects. As a customer of a SaaS solution, you benefit from a community of users’ feedback, input and suggestions. While this could be frustrating if your feedback is not addressed, you’ll benefit from other people’s ideas and innovation.

Help in driving adoption. Outside of regulatory mandated systems, those that are not used regularly, or appreciated by the business will often be quickly phased out or replaced. Change management and driving adoption is key and through a license fee model. Tech vendors are incentivised to support you with deployment, roll out, training of staff, and driving adoption. Many vendors have entire “customer success” teams with skills in these areas to help you succeed.

The problem with a licensed solution is that it may not be a perfect fit for what you need and ultimately you may need to adopt new business processes which fits around the technology. Even this may end up being a blessing in the long run – most enterprise technology providers have spent millions of dollars in finding the ‘most efficient way to do things’ and built that process into their platform.

The other issue with licensing is that the technology may cover 95 percent of your requirements but it’s in that 5 percent that the value sits and therefore you’ll always be stuck with a ‘almost but not quite good enough’ system.

This point alone needs to be carefully weighed up – ultimately even with all of the challenges and frustrations you’ll face building from scratch – if you can’t deliver the most important aspect of the value you may well end up spending money on a platform that won’t deliver.

The final point to consider is one of onboarding. External vendors may mean non-company-controlled data centers and confidential information being stored outside of your existing infrastructure. Will an external platform pass your risk team assessment?