Last summer I joined the Box.com 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.]