I read a great recent article about how “free” deposition software can cost a legal practitioner big-time, and it got me thinking: The costly problem of free tech is much bigger than just depositions.
Think of legal tech as a parachute for the legal practitioner. Would you trust your life with a “free” parachute? Probably not. The stakes are too high, the risks posed by an unforeseen error are too high, and you intuitively know that when it comes to important and critical items, they cost money for a reason. Saving a few bucks on a parachute doesn’t do any good if you are in the hospital with a broken leg because it did not work as promised!
The misplaced belief in a legal tech free lunch is negatively impacting nearly every aspect of legal practice today. With tech that overpromises and underdelivers, sneaky hidden fees, unforeseen opportunity costs, and too-good-to-be-true deals, legal practitioners are facing quite a litany of “free” legal tech landmines. This blog explores the true cost of free in the legaltech context.
What exactly is a “free lunch?”
The concept of “no free lunch” refers to the practice of American saloons offering “free lunch” to patrons who purchased overpriced alcohol at their establishments. The phrase itself evolved into both a popular adage and economic truism in the 20th century, with Milton Friedman employing it to highlight both opportunity cost, externalities, and hidden costs of purportedly free lunch.
The “no free lunch” conundrum is alive and well in the practice of law where many programs have low or no cost legal technology in place that does not work well and often is blocking progress. One of the largest challenges I faced when running a global ediscovery program not so long ago was convincing my firm that spending money on new technology was a worthwhile investment. Understanding the cost of antiquated technology in terms of client experience, outcomes, and even attorney experience was the first step in driving innovation and adoption of new powerful technological solutions. Once leadership understood that free carried substantial hidden costs, the decision to adopt better solutions was a no brainer.
Why is cheap legal tech so costly?
The law of unexpected impact (or colloquially, the butterfly effect) comes into play with free legal tech. Cheap legal tech may impact people or create unforeseen vulnerabilities that are costly in and of themselves. Understanding these risks is also a key component in evaluating cheap tech.
Antiquated technology lacks safeguards and may expose you or your firm to unacceptable levels of cyber risk. The world around us has changed substantially in the last decade and many legacy tools have not kept pace as a result of funding, M&A activity, or lack of legacy knowledge of how to best manage a tool.
Frustrated lawyers turn to Shadow IT
If your internal legal tech leaves much to be desired, savvy lawyers will likely look elsewhere for better solutions. Best case, they may look to approved service providers, and worst case, they may turn to shadow IT. In the former case you face losing revenue and in the latter you may face potential cyber risk.
As I recently discussed, legal technology pricing has historically been opaque, complex, and downright unfair in some cases. This is especially true when you are faced with a free lunch or too-good-to-be-true deal. Undisclosed line items, self-destructing free trial offers, and unexpected investment of time and money to make a tool work add up for legal practitioners that deploy cheap or even free legal technology solutions. Offers in the legaltech space carry significant costs that are not immediately transparent and can materially impact user experience and client outcomes.
Sneaky offers with fine print
When saloons offered a free lunch, the cost was wrapped up into more expensive and mandatory purchases of alcohol to get the deal. Legal tech is much the same. “Free” data processing often comes with elevated hosting charges; tiny all-in matter costs have hidden support costs and exclusions galore; and unbelievably low per-GB costs are coupled with sky-high subscription data volumes and multi-year commitments regardless of actual consumption. Nothing is as favorable as it first seems with this trendy pricing that looks good in a spreadsheet comparison at the beginning of a matter — and practitioners are often faced with a vastly higher final bill.
Self-destructing free trials
Much like a late night infomercial, some legaltech companies sometimes try to rope in unwary clients with offers promising 30 days no hosting, first 90 days free, or up to X GB free. In and of themselves, these offers are not a bad thing. The trouble comes into paradise when a less functional tool is brought in for the initial cost savings. Free trials are never indefinite, and the cost in terms of time and money to switch ediscovery providers mid-matter is often prohibitive. It is important that your case team looks at functionality and cost over the total life cycle of a matter to determine who to engage. Otherwise you may be stuck for however many years a case goes on with touch that ultimately costs more and doesn't work exactly in the matter your team requires.
Exorbitant hardware and support costs
It is important to evaluate legal tech in terms of total cost of ownership over the life of a case or your program and for many tools that include substantial hardware investment and services to support the matter and the tech. A tool which may appear cheaper on a licensing basis, but which has substantial hardware and human cost may not be the right choice for your program.
Stuck with a square peg for a round hole
Selecting a legaltech tool because it offers free gimmicks or a cheaper entry point has another hidden cost: the time and resources necessary to make an off-the-shelf solution with limited or no customization options work for the specific needs of your matter or program. Factoring in the human and resource costs of making an inflexible tool work is imperative when evaluating legaltech solutions.
The unforeseen costs associated with legaltech free lunches may be less readily apparent than the hidden costs discussed above, but no less impactful. From having tech that simply is less functional to losing your competitive advantage, the impact of cheap legal tech on a law firm can translate to lost clients and ultimately lost revenue.
Lack of functionality, latency, and falling behind
Better tech is not generally cheap, and opting for a solution with a free lunch approach all but guarantees your firm will be stuck with antiquated tech that lacks the resources and innovation to keep up with the competition. In the case of ediscovery, this often translates to tech with substantial latency and downtime or simply lacking basic functionality and scalability. It also means settling for tech without the latest bells and whistles. The difference today is tantamount to taking a horse and buggy to a NASCAR race.
Losing a competitive advantage
Clients today are savvy and often demand innovative deployment of technology by their outside counsel to reduce cost and accelerate time to insight. If your program is reliant on antiquated legal technology, clients may opt for a competitor that leverages tech better. Organizations like the Corporate Legal Operations Consortium (CLOC) and an increase in legal operations roles within corporations highlight the increased sophistication of many corporate buyers when it comes to engaging with outside counsel and legal technology. If your response to an RFP doesn’t highlight the best-of-breed legal tech you are using to drive efficiency, and the competition does, you may face a serious challenge.
Sophisticated clients expect more out of their outside counsel today. Given the current economic conditions, the degree of competition law firms will face is only going to increase. Outdated and slow tech may cause clients to reconsider engaging with your firm and ultimately cost revenue.
Understanding a full picture of hidden costs, opportunity costs and externalities when evaluating a “free lunch” type of deal more often than not exposes it for what it is: a gimmick used to overcome lack of functionality and high total cost of ownership. Better technology empowers your organization to maintain a competitive edge and keep your clients happier. Investing in the best tech is like buying a great parachute, you are grateful at the end of the day when your landing goes off without a hitch.