Trending: How to Evaluate Legal Technology that Improves Efficiency
By Dera Nevin
I dislike much of the marketing around legal technology. As a long-time evaluator and buyer of legal technology, I find that the information that I am given about products does not help me understand how the technology will likely impact those I buy and implement it for – usually, the working lawyer whether in a law firm or law department – or their business. I find my observations to be particularly prevalent in the segment of the market that I refer to as “efficiency technology” – products that advertise themselves as helping to streamline legal services delivery. Let’s dig into what to look at when evaluating efficiency technology and deciding whether it is appropriate to buy, and where and how to implement.
Frequently, the key selling point of an “efficiency technology” is that it improves or eliminates inefficient processes. Such technology is advertised feature-first, with an emphasis on those features and functions that replace specific manual tasks currently done to deliver legal advice or services. This go-to-market approach is currently prevalent for expert systems, analytics and “AI” techniques such as natural language processing and machine learning. The marketing for such technology often emphasises that, once it is incorporated into legal service delivery, it can help with automating manual tasks to reduce time associated with completing work. The legal technology helps to reduce costs largely by removing billable hours and assigning them to a machine or by permitting the work to be assigned to a lower-cost resource by standardising the work – or both.
Often, and particularly early in an efficiency technology product’s life, the efficiency to be gained is not expressed with precision against a defined benchmark. The focus of the product’s marketing is on “saved or reduced time” and “reduced cost” without stating explicitly how much time or money will be saved. Sometimes the cost-savings to be achieved by its introduction are obvious, but this is not always true and the return on investment (RoI) can be difficult to calculate.
While “saving costs” in the delivery of legal services by using technology in lieu of person-hours can be laudable, there is often little analysis or hard fact to show the full scope of the cost impacts from a total-cost-of-ownership perspective (including capital costs and indirect expenses) of introducing this technology.
For example, a lot of the new technology will require significant manpower (often, non-billable) to train and manage the inputs and outputs of the technology; this can be very true of machine learning technology but is not limited to just machine learning technology. Sometimes these costs are borne by the vendor and incorporated into the cost of the product but, in other contexts, the new users need to train, configure or set-up the technology before it can be reliably used. This means there can be significant labour and time costs imposed on a purchaser in addition to the cost of licensing or acquiring the software or technology system.
In addition to this labour cost, there can be costs associated with cleaning up data, implementing new workflows or in training before the technology can be relied upon actually to replace the work carried out by humans or permit humans to trust it to use it without human intervention. During this period there can be significant loss of productivity with hours diverted from billable work, not to mention the need to duplicate efforts (while training or testing the outputs from the technology). This time and these costs are often not factored into the evaluations of cost-savings possible when “efficiency technology” is used but these are important to factor into any assessment of the cost of the new technology and to evaluate the total cost and RoI of the service delivery associated with its purchase.
Introducing technology to achieve efficiency is still a significant innovation. There can be challenges to business models associated with the introduction of this kind of technology, as has happened with the movement of much document review to lower-cost and specialty providers. But efficiency is often really secondary to what has actually happened: the removal and/or replacement of lawyers from delivery of the work, largely because the technology allowed for standardising an aspect of their work that formerly required opaque judgments that previously could not be easily measured.
Standardisation is valuable, but in evaluating the impact of this technology I also work to understand the total cost of implementing it, because new technology changes the way delivery costs are borne (and by whom). For example, much of the writing about efficiency technology looks to what costs (often labour) are currently within the service delivery model that will be externalised. However, there are often new (and sometimes higher) costs that will be introduced alongside the technology that need to be factored into understanding how the technology will impact the business. In addition to understanding how the technology will impact the business, as I evaluate how the technology performs I also try to understand how the technology will accelerate changes to the business, including the revenue and cost model. These, largely, are strategic questions and indicate how technology purchases relate to overall business strategy.
Buyers of legal technology can play a critical role in improving the purchase of legal technology by ensuring the strategic questions are asked and fully answered within a business requirements document before going to market. This has a number of benefits in addition to understanding the true cost of the proposed technology purchase. Most importantly, when a buyer has really worked through how the proposed new technology will affect the business, more effective implementation decisions may be possible because the question “why is this technology available to me” will be more transparent and relevant to the practicing lawyer.
Dera J Nevin practices Information Governance and eDiscovery at Baker McKenzie LLP and is affiliated with its WhiteSpace Collab Innovation Hub. Opinions expressed in this article are the author’s alone. In this space she proposes to address common questions from readers about the evaluation and implementation of legal technology. You can contact the author at [email protected].
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