Law departments are eager to make use of legal analytics technology to better manage their spend and help guide other decisions. According to HBR’s 2017 Law Department Survey of 300 U.S. and global law departments, nearly half of all respondents reported already having legal spend analytics technology, and 24 percent planned to adopt in the next two years. But once the decision is made to implement new or updated legal analytics technology, what is the best way to do it? Law departments have two options: develop it themselves or engage an outside provider.
Whether choosing a do-it-yourself (DIY) or a commercially available analytics solution, the investment of time and resources is significant. There are advantages and disadvantages to each choice, and since analytics technology plays an increasingly vital role within law departments, it is essential to get this decision right.
At HBR, we understand that there are a variety of factors that go into a law department's decision to build their own or buy a new legal analytics technology solution. Below, we have outlined some considerations for each option at various stages of the process, along with our suggestion regarding the better choice.
Law departments sometimes lean toward a DIY solution for licensing reasons. A law department is, of course, just one subset of a larger corporate entity, which may already have some form of analytics technology with available licenses. Law departments may be pressured to adapt those applications to their own departments or may think that they will save money because they will not need to pay additional licensing fees. If the organization has the capability to adapt the application to the needs of the department, it will certainly avoid the time and cost of building an entirely new system, will not need to engage an external provider and will not incur additional licensing fees.
Winner: DIY. When technology is already bought and paid for, and it can be properly customized to meet the department’s needs for an interactive legal analytics dashboard, there may be no need for an outside provider. Law departments that choose this route lose out on the guidance of a provider who may have other advantages, but the licensing cost savings win this category.
Development and Implementation
Law departments that choose to build their own legal analytics solution benefit most when a talented developer is already in house and has the capacity to take on a project. In this scenario, the team can have full control and authority over the technology they will be using during the development process itself. Additionally, since the technology is custom and data is not shared with a third-party provider, there is a perception from leadership that the system is more secure and able to be controlled. Finally, the DIY approach also shows good corporate citizenship: hardworking and skilled internal developers may feel overlooked if a law department chooses to buy rather than engage them to build a system.
However, there are obvious disadvantages to DIY development and implementation. Law departments often miscalculate the time and cost it takes to develop a new system. Projects can drag on far longer than planned and, even worse, be abandoned when budgets are exceeded. Additionally, law departments may see the talented developer or development team they are relying upon suddenly leave or become strained mid-project because another department is in more urgent need of their services. Finally, as skilled as a developer may be, he or she may not have domain expertise in the legal industry, meaning the developer may not understand how the DIY analytics solution should connect to related systems like eBilling and matter management. Other disadvantages may manifest themselves in the future. Custom-built systems are much harder to integrate with new technology or to combine with other systems in the event of organizational changes such as mergers or acquisitions.
For law departments that choose to buy the technology, development and implementation is a much simpler process. Experienced providers like HBR have an understanding of the legal ecosystem and the types of data and systems that are relevant to law departments, so the process of consolidating and scrubbing data is performed by an experienced party. They have already developed core systems, which they can efficiently customize to a law department’s specific needs. Also, because commercially-available legal analytics systems are tailored specifically for integrating legal systems, they are likely more flexible when it comes to integrating new or updated technology, or in an M&A situation. Experienced providers understand and are familiar with the particularities of all the major e-billing, matter management and other core technology systems and their providers, making it easier for them to adapt the analytics technology accordingly.
There is also far greater cost predictability when purchasing legal analytics technology. Because the cost for development and implementation is often a defined cost in a contract, there are no surprises or risks of exceeding scope.
Winner: Buy. Even the most talented in-house developers do not stack up to the domain expertise a trusted provider brings to the table in developing a legal analytics solution. There are too many details and technicalities that can increase time and cost with this type of technology to hand off development to IT.
A law department building its own legal analytics technology should consider the time it will take to train the front-line staff. Onboarding them to the system and making sure it is adopted properly can be challenging, but law departments that have built the solution themselves have the advantage of setting the training schedule and expectations. Additionally, when conducted in-house, ongoing training and education for new employees will not incur additional external costs. However, law departments often do not realize how significant the time commitment is for training.
Those who choose to buy an analytics solution gain the advantage of a team that has experience with the product and training others to use it. Their methodology has been tested with multiple clients, and those conducting the training can anticipate what types of questions employees may have.
Winner: Buy. Training is a crucial part of fostering adoption of new tools, so it needs to be done right. While on-site personnel are often more flexible and available, the cost and resources dedicated to developing an effective ongoing onboarding and training program in-house are extensive. Using an external provider saves that time and cost. And most importantly, system providers are experts on both the system itself and how to effectively train people on it.
Support and Maintenance
A legal analytics solution built in house by an experienced developer, like any system, is likely to need technical support. Arguably, a custom-built system might be easier to fix — after all, the developer that built it is likely right down the hall and knows the ins and outs of the entire operation. In terms of maintenance, making changes or incorporating new systems to a system already customized to the business may be a smooth process. However, there are obvious shortcomings to a system built in house. As with all stages in the lifecycle of a built system, a law department must consider the bandwidth of the IT team.
Legal analytics technology from an external provider avoids many of the shortcomings a DIY system presents. Providers like HBR often offer 24/7 technical support and have the ability to remotely troubleshoot and fix problems at any time of day. This makes maintaining the system much more reliable, as issues can be proactively identified and problems can be resolved without leading to downtime (e.g., a 3:45 a.m. version update).
External providers also sometimes provide advisory services. The best partners do more than simply sell analytics tools — they also serve as an ongoing extension of a law department, offering support for the existing system and advice about the department’s analytics needs on an ongoing basis. This can lead to further efficiencies and improvements in daily workflows.
Winner: Buy. In order to stay efficient and proactive about legal spend, keeping legal analytics technology functioning and up-to-date is imperative. The knowledge and foresight of a trusted provider makes this happen, providing a dedicated set of eyes on the infrastructure that keeps the technology working — something that often does not happen with a built system maintained in house.
Dashboards are quickly becoming as important to a legal department as email. Whether choosing to buy or develop legal analytics technology on their own, law departments need to consider the alternative that will best meet their needs. Before making the investment in either, it is critical to consider the pros and cons of each option and be ready to measure both the short- and long-term outcomes of each.
If your law department is currently in the decision-making process for a new legal analytics solution, we would love to be a part of the conversation. Contact us at SSpringer@hbrconsulting.com or MHarmon@hbrconsulting.com for more information about how your law department can benefit from a solution like CounselCommand.