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Do Moves in Legal Portend Bigger Legal Software Changes?

Last summer I joined the legal market advisory board.  My involvement helps me stay current on developing technologies that may benefit the legal market. A Box announcement today triggers this post but I’ll say a few words before I get to that.

The few vendor-specific blogs posts I write are about interesting products that may portend market changes. Examples includes Equivio (2004, near duplicate detection), Index Engines (2006, improved accessibility of offline data), and Vlingo (2008, voice recognition portends power of smartphones tapping cloud services).   Vendors do not compensate me to write these posts or serve on their advisory boards.

Joining the board prompted me to think about the impact of Box and the cloud generally on large law firm legal software, especially document management software (DMS).

As Box announces new partnerships, my thinking evolves. Earlier this year, it integrated with IntApp. So large law firms can use Box with and across systems as cloud storage, including permissions. Today, Box announces some 20 partnerships (press release) with legal software vendors specializing in areas such as practice management, timekeeping and billing, attorney networks, etc. Examples include Guidance for discovery and Fastcase for legal research.

So, what might Box’s impact be? I was around in 1992 when law firms first started using DMS. It did not solve the problems I thought it would. In fact, it created new ones (e.g., half the lawyers use it and half don’t). I understand why firms stick with DMS but can’t help wondering if DMS as we know it is nearing its end of life. It’s not just that Box may be an alternative. And it’s not just that SharePoint and its ecosystem may be another…

More generally, it should cause us to question the future of legal market specific software. I understand the need for customized software; for example, I am currently involved with developing and deploying legal project management software (Cael LPM™ by Elevate Services). But the market – both customers and vendors – must balance the need to meet legal specific requirements with economics and scale.

Box and other cloud providers can potentially sell millions of seats to thousands of organizations. Contrast that enormous reach, which spreads development cost over so many users, with legal market scale. The large law firm market has no more than 400 organizations and 500,000 seats. The development and service cost per user is much higher. Nonetheless, many companies have prospered creating highly customized software for the legal market. In the age of cloud and economies of scale, however, will those economics still be so favorable?

Cloud providers may just have unbeatable scale benefits. Beyond scale benefits, inherent cloud features may overcome the advantages of vertical focus. Consider just two: simplification of mobile device integration and facilitation of  cross-organization collaboration.

Of course, recognizing the full potential requires connecting to legal-specific software. So the question is less whether vertical software will cease to exist and more whether it will play as dominant role in the future.

I write this not to call for action or to predict change. Rather, I write this to provoke a discussion. Do large law firm CIOs need to re-think the core stack supporting law firms? More specifically, if you were a CIO of a brand new, 1000-lawyer firm and had to build the IT infrastructure from scratch, would you buy the products your firm has today? Would you even consider solutions other than the cloud?

As an ex-CIO, I know we have to deal with the installed base. And I know security is a huge concern. But migrating to new ways of working may be critical to prosper.


[CODA: I prepared this post earlier this week.  Today, IBM to Announce More Powerful Watson via the Internet appeared in the New York Times.  It’s well worth reading.  Watson is another example of a horizontal, cloud-based service.  Can it perform eDiscovery predictive coding?  I don’t know but the article mentions IBM’s computational linguists – experts who know how predictive coding really works. Arguably, predictive coding is simply a subset of a broader range of problems that Watson can solve more cost effectively than dedicated tools.  So this article also illustrates the horizontal versus vertical software issue.]

  1. Carolyn Elefant

    I have been using Box for close to five years now; I initially explored it as a potential platform for collaborative projects and now I use it for both storage and project management. I have thought about the economies of scale issue that you raise from the solo/small perspective. As you describe, large firms can develop custom systems in house or work with specialized legal vendors for bespoke solutions. Although there are a bunch of lawyer-specific practice management companies that have come a long way in a short time in developing products for solos/smalls, in my view, most of these companies are playing catch up to platforms like Box or Basecamp which predated these systems, plus can develop fasters because of economies of scale. My concern is that solos/smalls will have to settle for generic LPM products that aren’t necessarily a fit for a particular practice because they don’t have resources to self-develop or to persuade a mainstream provider to add other features. The solution that I am exploring is API – which is an inexpensive way for solos/smalls to knit together the suite of tools that work best for them as well as aggregated bargaining power – sort of like what GAO did with Facebook – to convince companies to incorporate security features, etc…My research remains a work in progress.

  2. joanie mann

    There have always been certain “fundamental” needs that businesses have and to which technology has usually been applied. As business moves to the Internet (the new operating system of sorts?) and adopt mobile and other varieties of devices… it stands to reason that the solutions meeting basic and fundamental needs will adopt in large numbers. At the core of it, all businesses need to communicate, produce and share information, and keep score. When cost-efficient and simple to use solutions meet those needs, businesses will go there first (and may find that it works well enough to just stick with that). Make sense?

  3. Ben Weinberger

    In response to your question, “More specifically, if you were a CIO of a brand new, 1000-lawyer firm and had to build the IT infrastructure from scratch, would you buy the products your firm has today? Would you even consider solutions other than the cloud?” the answer is a clear “yes” in many respects. The true “cloud” solutions, taken as a whole, would prove more expensive than rolling your own – in many respects – especially given the partnership model’s bias toward CapEx over OpEx spend. The true art of running an IT Department with regard to the technical side of things is being able to integrate all of those disparate systems. I challenge you to name one all-encompassing solution that CIOs starting a brand-new 1000 lawyer firm could even consider using as an alternative to on premises solutions. There are many cloud services that absolutely are the correct choice for most any firm, but, there is no across-the-board magic solution that represents the appropriate mix of capability and cost.

    • Ron Friedmann

      Thanks for the comment. You are right that, for large law firms, there is no single, all-in-one cloud solution. But the same is true for on-premises software. Cloud or behind-the-firewall, the CIO building from scratch would face integration work.

      Assuming that’s right, do we know the cost to “do a cloud integration” versus “on-premises integration”?

  4. Ricardo Barrera

    Law firms with IT departments reminds me of factories long long ago who had their very own dynamos. Both Lexis and West now have their own native LPM applications. Does that mean that Clio and Rocket Matter need to have their own native legal research capabilities? Some start-up will soon buy that other start-up,, or will the latter buy one for former?

  5. William Kellermann

    When the tax group in the General Electric legal department is the largest tax practice in the world, limiting the ‘law firm’ market to 400 firms and half-a-million seats is a bit conservative. On the flip side, back in the day of LexisNexis Counsel connect, one commentator wrote that no pure software play targeting legal alone could ever grow beyond a $50 million a year company. The solution was to expand into other service professions, which then diluted the razor focus of ‘by lawyers, for lawyers.” So this is not a new problem.

    There are many drivers for market fragmentation when servicing the legal market and many, many areas of unique concern that continue to make servicing law firms and corporate legal departments a unique proposition. Not that all are valid concerns but all reflect real and difficult attitudes. Years ago John Tredennick wrote a great summary of lawyer’s objection to typwriters, telephones and, yes they did, female secretaries, in turn-of-the last century New York white-shoe law firms.

    But the bottom line – what happens to privilege in a world of rampant NSA snooping? What happens to data storage in a world of Ransomware, where systems have reached levels of sophistication and ease of use beyond the ken of average consumers, lawyers included? Such drivers will continue to provide a reasonable basis for niche players for some time to come.