Law Firms as… Software Companies?

In the same week in November, two articles emerged online regarding law firms and software development. The American Lawyer posted an article about Bryan Cave and its new initiative that includes, in part, building software for clients in corporate legal departments.

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A few days prior, Tim Corcoran, a law firm consultant with a software background, posted a piece titled: “When should a law firm develop its own software?” The first line of that article rather succinctly stated: “Never. Law firms should never develop their own software.” So I guess we know where he stands on this issue.

These two pieces standing side-by-side raise interesting questions about software development in firms. Should firms be engaging in custom software development activities? Or are we steering too far out of a firm’s core competencies?

What is a law firm?

A good starting point for thinking about this question is considering what it even means to be a law firm. Most people would say that a law firm is an organization that is in the business of practicing law and delivering legal services. However, what it means to be a law firm has certainly evolved over time. Lawyers have always been advocates and subject matter experts. Over the past several decades, we’ve seen that role evolve to include more holistic advising, from business counseling on the corporate side to counseling families as a social worker might on the consumer side. In fact, morphing into a more global advisor has become a business imperative to provide added value to clients in a competitive market.

In the past decade, we’ve seen an even further shift in what it means to be a law firm. Firms have become staffing agencies (see Allen & Overy’s Peerpoint), business process consultants (see SeyfarthLean) and now software companies (see BCXponent by Bryan Cave, a business advisory unit that also builds software). Sometimes these business lines are spun off into separate companies, sometimes not. A number of these initiatives seem to have been successful strategic moves, but many are so new that the long-term success remains to be seen.

On the operational side, firms have grown back office functions that keep pace with the size of their firms, requiring a large number of personnel in a variety of disciplines to simply keep the business running. While firms will always have the need for IT help, this is a function that is typically outsourced at the smaller firm level. For firms that have internal IT personnel, that team is usually focused on areas like database and network administration, hardware maintenance, etc.—not the development of custom software for internal use. If you go to any legal technology conference, you’ll see that outside vendors are alive and well, selling software to firms of all sizes, typically negating the need for custom in-house development.

Software Development in Response to Operational Needs

The two articles address law firm software development in two very different contexts: for internal operations, and as a strategic client offering. Corcoran was focused on law firms trying to build enterprise-grade software for their own use. His arguments against law firms building software are good ones. He makes a number of points, including noting that building software well is very difficult, expensive and often requires resources and skills that law firms lack internally. He concludes that law firms should focus on buying software from outside vendors (or partnering with outside vendors) as opposed to building it themselves.

Although examples exist of law firms building software for internal use and then successfully marketing it as a product to other firms (see CS Disco, where a law firm actually pivoted into a successful e-discovery company), this is certainly not commonplace. Even if your firm intends to build the product internally and never bring it to market, it still carries a high risk of unnecessarily wasting a lot of resources for an inferior product—no matter the skills of your internal engineering talent.

I always tell firms that no software is ever perfectly suited for your needs. There are always going to be little things that aren’t quite how you wish them to be. But if you work with a reputable software vendor, you can request features and changes, and those vendors will either a) work to build a custom solution for you, if possible, or b) put it in their backlog for future development if enough people have asked for it. Chances are, even if the product coming off the shelf isn’t completely perfect for your needs, building it internally without proper design support, and without dedicated developers to maintain, test and iterate your own product will likely end up being rather unsatisfactory in the long run.

I do hesitate, albeit momentarily, to dissuade firms too much. Firms should be applauded for considering making long-term investments in products that will allow its lawyers to be more efficient. Firms need to focus on doing their work better, faster and cheaper for the sake of their clients. But building technology in house can be fraught with complications. One notable example is the downfall of Clearspire—a new model law firm that had all the promise in the world. Clearspire, at the outset, sunk millions of dollars into a custom platform for its firm to run on (even though many off-the-shelf solutions were readily available). Although it received a lot of press for its innovative model and some traction in the market, the firm folded after only a few years in business, crushed by the overhead it incurred building that platform.

Software Development As a Strategic Business Line

I spend a lot of time preaching the virtues of innovating to increase efficiency and value to clients. Typically, those discussions center around internal operations or the actual delivery of legal services. Here, firms that are doing software agency work are decidedly expanding their businesses beyond delivery of legal services. Is this an example of smart entrepreneurship—solving a client problem while expanding their businesses? Or is this lawyer hubris, thinking that we can do anything?

Of course lawyers can run a software firm. But the issue becomes murkier when the software agency is associated with an entire law firm. BCXponent appears to be structured as a division within Bryan Cave. The thought of a bunch of law firm partners making business decisions for a software agency just doesn’t sound like a great idea, even if the lawyers running the division are well-suited to run a technology company. Consider the potential for tension between software and billable legal services. Much legal software is intended to increase efficiencies and automate tasks where possible. I can see these law firm software agencies gladly helping legal departments create their own internal efficiencies… but what about software that may lessen or eliminate their need for outside counsel in certain contexts? Is this something the parent law firm would really support? I can easily imagine angry practice heads if software decreases the need for their particular form of counsel.

If, however, the agency is formed as a separate entity, run by multi-disciplinary teams of entrepreneurial lawyers, engineers, etc., without oversight by the law firm, this begins to sound like a good idea to me. At the product level, lawyers have deep subject matter expertise and an understanding of their client’s needs that Joe Software Company would have a hard time grasping. If you couple that with technical knowledge, it creates a real opportunity for the lawyers-cum-software execs to proactively suggest solutions for their clients where the client may not even know a solution to a problem is possible. That’s extremely valuable.

To Develop or Not to Develop?

Bryan Cave is known for its innovative culture, and the firm seems to have developed a strong team for its new venture, so I hope that this effort is a wild success. If other firms wish to follow suit, either to build tech for internal use or to build products for clients, here’s my advice: proceed very, very carefully. Probably only a handful of firms in the world have the ability to pull this off successfully with the right team, the right culture and the right structure.

This certainly doesn’t mean that your firm shouldn’t try to innovate—it absolutely should. I caution only against the attitude that anything and everything can be accomplished within existing law firm structures. If your firm wishes to pursue an initiative that involves software development, consider finding a partner and building it outside of your firm. Your IT department will very likely thank you for it.

About the Author

Nicole Bradick is chief strategy officer at CuroLegal, a legal technology consulting and software development firm. She was the founder and CEO of Custom Counsel, a national network of freelance attorneys that was acquired by CuroLegal in 2015. She can be reached at nbradick@curolegal.com or on Twitter @NicoleBradick.

 

 

(Feature Image Credit: ShutterStock)

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