Stephen Shapiro is a speaker and advisor on business transformation. He wrote an article titled, “The Art of Decision Making” after the publisher rejected his preferred title of, “When You Sit on the Fence, You Get Splinters in Your Ass!” In his article, he argues that “movement in any direction is better than stagnation or indecision,” and he concludes that “if you sit on the fence, all you will get are splinters.”
Appara has done a study on the State of Canadian Legaltech. Since it relies on lawyers to identify the barriers to adopting legal tech, it misses some things that we lawyers do not talk about in public, such as compensation systems and firm culture.
I suppose that most vendors of just about anything take their potential clients as they find them. Sellers of vacuums do not try to convince me that I have to keep my house cleaner. They just show me how great their vacuum is.
Maybe that approach is just not good enough for selling legaltech to law firms.
I think that there are three things that tech providers have to better understand.
The first is how law firms look at profits. Simply put, law firms like things that increase this and next year’s per-partner profits. They are not quite as good at appreciating things that will increase per-partner profits five years from now. Vendors need to find ways to reduce the upfront costs and make it up on the backend.
Second, many law firms charge fees based on hourly rates. A solution that reduces the number of hours required to complete a matter by 50% may result in a firm charging 50% less to their clients. Law firms just cannot see the point of that. It should not be the job of the vendor to help law firms move to fixed fees for certain types of work, but maybe it is.
Then there is the third and largest problem. Law firm compensation systems developed out of an hourly rate culture, which means that they often reward lawyers based on hourly billings as opposed to profitability. Let’s say that you have five departments in a law firm, each headed by a partner. Four of them bill by the hour and one of them invests in technology and reduces the time that she spends by 50%, while maintaining the same level of profitability. If the now more efficient partner does not replace that billable time with other work, or God forbid, starts taking the time to spend with her family, the comp system may decrease her income. If she does replace the hours and is now twice as profitable as the other four partners, the system may not reward her. So, why invest?
If LegalTech providers want to get law firm partners to jump off of the fence faster, they have to develop a deeper understanding of law firm cultures and find ways to help law firms adapt them to be more welcoming to their products.
And to those who would say, “but that isn’t our job,” I would say, “sucks to be you.”
Read more of my thoughts on lawyers buying software here: https://bit.ly/4a8sCzJ