There’s nothing like a hit to the bottom line to get companies rethinking the way they do things, and Olivier Fischer has a perfect example.
One of his retail clients, who will not be named, was coming to the unfortunate conclusion that it was running a store location, which was no longer profitable. The decision was made to shut it down, but there was just one problem: important details about the lease (such as when it was up for renewal) were nowhere to be found.
One painful penalty later, the company in question decided it was time to invest in some contract management software that would help its in-house legal team avoid a similar situation.
“When we meet with in-house counsel, there is usually a problem, something that needs to be fixed,” says Fischer, managing director of Legal Suite, based in Montreal, which sells such tools. “They have a lot of work to manage and they’re overwhelmed, or it can be there were some risk issues within the organization, or fines.”
There’s also the need to be more productive, better organized, or even changes in corporate culture that get in-house counsel looking at software as a possible answer. However, cost and the challenge of force-fitting tools made for law firms into a general counsel setting can make the purchasing and deployment process complicated.
There may also be shifts in technology and business models that could change the way such tools are acquired — where corporate counsel are not necessarily considered the primary customer anymore.
The tipping points for in-house software
Although several vendors that offer specific software for in-house counsel exist today, including Legal Suite, they all face a formidable competitor. It’s not another company, it’s an attitude among some in-house lawyers that they can do well enough without it.
“It’s hard to justify the cost,” says Dan Pollack, a lawyer based in Toronto who runs his own private practice while also serving as a part-time in-house counsel at Masterfile Corp., a stock photo image library. “I’ve been approached a few times by vendors for various products, including the larger, well-known vendors. They have very good products, but whenever we’ve gotten to costs it seems prohibitive. We can manage the files we have.”
It’s not that the price tag of legal software isn’t worth it, he adds. It’s just that in many cases they were designed for companies so big they basically have their own internal law firm. Matter management software isn’t helpful when you’re not dealing with a lot of matters, and billing isn’t necessarily relevant either. And considering that Canada is largely a nation of small- and medium-sized businesses, Pollack is probably not alone.
On the other hand, when companies get bigger, they may find themselves still acting like small-time operators in terms of legal processes. Darren Gower, marketing director at Eclipse Legal Systems in the U.K., said his firm often comes across customers that suddenly feel out of their depth.
“You’ll find them trying to handle everything with Excel and Word. The files will be here, there, and everywhere,” he says. “Once the volumes are too great, and you’re dealing with a lot of complexity, it no longer lends itself to this piecemeal approach.”
Eclipse offers software called Proclaim, which includes a version for in-house lawyers with modules for diary and task lists, automated document production, and process management. Similarly, Legal Suite’s product spans contracts, insurance, litigation, and a host of other areas. The other obstacle to using more standardized tools, Fischer says, are corporate IT departments, who sometimes suggest workarounds using products like Microsoft SharePoint to store files and documents.
“They’ll sometimes block us a little bit, because they’ll tell (in-house teams), ‘Look, we have people on the bench, so we can develop something for you,’” he says. “But then, what IT implemented doesn’t work, or they are not able to maintain it. IT departments have experience in managing software, not necessarily creating it.”
As such, some of the off-the-shelf corporate counsel software is probably a lot better than products that turn out to be better suited for paralegals or third-party law firms, says Lorne O’Reilly, general counsel at Superior Plus Corp. in Edmonton. His department recently deployed contract management software so it could evolve from using simple spreadsheets to something that can receive invoices, analyze and track progress on claims, and so on. He says in-house lawyers who get on top of the technology early will save themselves considerable frustration later on.
“Most often we’re in the situation where we need to do something to expand our capabilities because we are under-resourced,” he says. “The organization prefers to have other resources allocated to operations or finance.
Legal is left to do what it can. For many operations, though, there is an opportunity for better processes.
Software can help do that.”
Right now many of the vendors in this space are niche players, and one potential issue for lawyers is what will happen to some of the tools in the longer term. In other areas of business software, the trend has been towards consolidation, where the largest companies buy up tools with an existing market. Then there are startups, like Salesforce.com, that focus on a particular piece of a business and wind up dominating. Could the same thing happen with corporate legal software?
Andrew Bartels, an analyst with Forrester Research based in Cambridge, Mass., is doubtful there are a lot of legal software M&As on the horizon.
“Both Oracle and SAP already have their own contract lifecycle management products. You may start to see some degree of integration around that with their other products,” he says. “I don’t see those niche vendors disappearing, though, because they tend to have superior functionality. They look at this area and design this from the perspective of counsel as opposed to more of a technology perspective.”
There is, however, an opportunity for more startups to enter the market, Bartels says, and offer lower-priced, on-demand offerings, challenging the more established, expensive players.
A good example of this might be Contractual.ly. Based in Vancouver, it was founded by Martin Ertl, a lawyer who left private practice several years ago to create software for the oil sector. He says the idea behind Contractual.ly is to take a common business process — managing sales and procurement contracts — and do with them what vendors in so many other areas have done: move it into “the cloud.” In other words, have the software run on servers outside the customer’s walls but allow them to access contracts or other files wherever employees happen to be.
“We try to think deeply about what’s important for businesses and their lawyers. We want to enable collaboration with in-house legal and outside counsel. We see our product being of key value to in-house legal groups,” Ertl says. At the moment, though, Contractual.ly may be more likely to deal with a sales team than the legal team, because it’s their workflow that may be the real pain point for the organization.
This is another factor lawyers may not expect: their peers in other departments may end up acquiring software for their own purposes, and then it gets extended into other areas of the business, including legal.
“What makes it interesting is you’ve got a lot of internal stakeholders who are interested in things like contracts,” Bartels says. “But the general counsel are very important and critical to those functions, and they need to stay involved in those discussions.”
Room for improvement
Of course, anyone can offer legal software in the cloud, and the existing vendors are all moving that direction. Legal Suite’s Fischer says between 70 and 80 per cent of the deals he’s done in the past year have been cloud-based, despite security and compliance concerns, and Eclipse offers a hosted version of Proclaim as well.
Mobile computing might be the next frontier for competition. While most vendors say they can offer their products for use on a tablet, there aren’t a lot of tools to manage in-house work from an iPhone, even though there are customer relationship management tools that are now available as apps.
“I tend to not feel comfortable with editing documents on my phone or a tablet,” Pollack admits, “but if the right product came out that, I’d consider it.”
Eclipse’s Gower says that while the entire portfolio of tools might not wind up on a smartphone, pieces of it may make sense, like a mobile time recording tool. At the moment, however, Ertl says there’s plenty of room to be innovative just on the traditional desktop software side.
“We’re really focusing on the user experience, to make using our software delightful, which is not a word that you often associate with legal software,” he says.
That’s putting it nicely, according to Gower. Poor design winds up wasting money in the case of some legal software projects. There’s not a lot of room for a steep learning curve anymore.
“[Lawyers] are often trying to solve some pretty complex things and have multiple streams of work going on. We have to simplify the actual product experience for their staff and their users,” he says. “They know if it’s not reasonably simple to use, no one will buy into it or use it.”
Corporate counsel wouldn’t mind seeing some different approaches to feature sets in the product either, according to Pollack.
“What would be good is a CRM type of product as opposed to time management and billing products that are really more in line with very large law departments or private practice law firms,” he says. “That could be something that would be helpful, especially if it’s geared towards not only practice management but combining it where you have some access to practice materials and substance of law.”
Helping to justify the investment and establishing the best return on investment metrics could be seen as a feature in itself, O’Reilly suggested.
“What you’re looking at, really, is how does your organization expect to utilize the software, how much front-loading is involved and what does it take to hit the ground running?” he says. “What are those essential KPIs for the software itself? What are the outcomes you’re expecting to receive in getting the reports your need and tracking progress?”
Here’s one way to think about those questions. The right software should not only help boost productivity or ease workflow. It should also aim to help justify the value the legal department brings to an organization. Reporting on the outcome of litigation, proactive steps in-house counsel has taken to avoid a problem or reducing the time and effort that would have been required from other departments to take on a task are all ways to get at that story.
“It gives that extra validity, where we’re not just a cost centre but a true resource and contributing just as much as other business units are,” O’Reilly says.
Contractual.ly’s Ertl agrees. “These are people who often get asked to do stuff at the last minute. It’ll be 4 p.m. on a Friday afternoon and someone’s asking, ‘Can we get a contract done?’ Counsel is pulling their hair out,” he says. “[The software] should be about enabling in-house counsel to better serve other parts of the organization, and showing they’re bringing value to the whole organization.”