Whether it’s e-signatures, virtual data rooms, or robotic process automation, most law firms have adopted technology to make team and client processes more efficient.
However, when your firm wants to offer a new capability, many teams wonder whether they should buy the tech through an ‘off-the-shelf’ offering or work with software developers to build the tech instead.
It’s never an easy decision. There are costs, timelines and in-house capabilities to consider.
The key is to make the right decision for the company, as going down the wrong route can be costly. Industry figures vary but a single hour of IT downtime can cost between US$1 million and over US$5 million, according to Information Technology Intelligence Consulting. Gartner puts this figure between US$100,000 to US$540,000 per hour.
To help make the decision easier, here are three questions you and your team should consider before deciding which route to take.
1. Can off-the-shelf tech truly align with our business processes and needs?
Opting for a solution that is readily available out of the box often seems like the easiest option and sometimes it can be. However, with off-the-shelf solutions, you have to adapt your workflow around the software, instead of building the software around your workflow.
The issue is that, as Jason Boehmig, co-founder and CEO of Ironclad puts it in his interview with the FT, “Technologists, when they made software for lawyers, didn’t get it — and lawyers didn’t really use technology because it wasn’t what they wanted”.
The good news is that, according to a recent report by LawtechUK, over the last three years investment in lawtech startups and scaleups has grown by 101%. However, LawtechUK estimates that the in-house development of lawtech by legal service providers will still account for up to 20% of the total activity in the sector in 2026.
The challenge for you and your team if you do decide to choose an off-the-shelf solution will be finding the right specialist provider whose solution integrates with your existing systems and suits your requirements.
2. Are we looking to commercialise our offering in the future?
This is an important question to ask at the beginning of a project. If there are even remote plans to commercialise the designed, developed and tested IT solution, then having IP rights will have many benefits – as well as become a revenue opportunity.
Building a solution yourself means you can design it around your existing business processes. It also allows you the opportunity to forge ahead of your competition, who are likely to all be using the same off-the-shelf solutions.
However, if you are not planning to commercialise the solution, the next question you should ask is: “can we afford the investment of time, resources, IT infrastructure and more to develop this”?
A report by Synopsis and the Consortium for Information & Software Quality estimated that the cost of failed development projects in 2020 was US$260 billion. Equally, research by Couchbase reported that nearly four out of five digital transformation projects faced failure, delays or scaled-back plans, putting the cost of failing to launch on the first attempt at US$ 5.5 million per enterprise.
Developing your software in-house can be a risky affair unless you and your team have the right experience and skill sets. Risks include software failures, legacy system problems and cybercrime. You need the right skills – or partner – in place to avoid such risks.
3. Do we have the in-house capabilities to build it ourselves or do we need to outsource?
According to our recent survey of 300 IT leaders, 63% of respondents reported difficulties in finding and hiring strong talent, while 54% said access to talent was a strong reason for deciding to outsource, followed by the need to save on costs and acquire knowledge and experience.
Many in-house teams are unlikely to have the skills and expertise required to build their new software solution. For this reason, outsourcing can be hugely beneficial as it allows businesses to access a wider pool of tech talent from markets outside of the UK, such as tech hubs in Eastern Europe. These specialists are ready to get started on projects quickly, without the delays caused by lengthy in-house recruitment processes. The flexibility of outsourcing also means you avoid HR hassles and only need to hire talent for the length of your project.
As the challenge is not only to find new tech talent but also to help develop and improve your existing in-house digital skills, outsourcing can support this by providing experts to train and work alongside your in-house teams. 74% of the organisations we surveyed said that they saw outsourcing as a way to help them improve and adopt better software development practices, such as agile delivery and quality auditing.
The bottom line
Legal businesses have three options when it comes to lawtech: they can try to buy the software they need off the shelf, they can try to build a solution themselves in-house, or they can partner with an outsourcer and bring in additional skills and expertise to help.
Of these three options, the latter offers the most rewards. Not only does it ensure that the software solution you build fits seamlessly around your internal processes and solves your business problems today, but it allows you to commercialise your offering in the future. Through outsourcing, your in-house team will gain development knowledge and training, which also adds value to your business.
Ultimately, this decision will come down to the scale of your ambition. To lead from the front in legal tech you can’t just use the same off-the-shelf software solutions as your competitors. Instead, custom-built, innovative technology is the way forward if you want to forge ahead.