Investing In Legal Technology: a Guide to Strategic Acquisitions

Inesting in Legal Technology InvestCEE Guide to Strategic Acquisitions

In a changing legal market — responding to a data-driven economy — companies and law firms often play it safe, look for the perfect solution and wait for the right moment to jumpstart innovation of legal workflows. Investing into technology requires some expenses and the return on investment is often difficult to predict. Clearly, legal technology acquisitions need to be carefully and strategically considered. Yet study after study shows: strategic thinkers are found to be among the most highly effective leaders, and those organizations that look to the future and take well-managed risks are the ones that persevere and grow. Our team at InvestCEE helps apply this wisdom in legal innovation context.

Over the last couple years, we assisted several legal departments and law firms in Central-Eastern Europe to scope the legal technology market, test new tools and implement legaltech into their workflows. We have learnt from our client projects that for successful investments into legal technology:

  1. organizations need to ensure that the new toolkit is the best possible fit and
  2. there is a team in place responsible for change management.

While technology investments take several years (typically five years or longer), the reality is that the underlying change management process is never easy and so exiting or migrating to an alternative system too early is hardly cost-effective. Strategic thinking, careful planning and mindful implementeation are therefore essential. Here’s our 3-step guide to get it right.

#1 Strategic Planning: Understanding Needs is Key to Investment Success 

To scope the right legaltech tools with the fitting functionality, legal departments and law firms need to be clear about their organization’s actual needs. This knowledge is absolutely essential for deploying the new technology across the entire organization. Accordingly, any acquisition project should ideally start with a strategic session focusing on key requirements. Setting up key performance indicators (KPIs) for the legal department or a given legal workstream is also very much recommended — so that the change management team can later come back and measure success factors against the initial numbers. Strategy and good preparation are indeed essential.

As a first step, legal departments and law firms that consider investing into legaltech need to properly document the actual problems they aim to fix with technology. These challenges and practical requirements (like legal KPIs) are often hard to collect, and collaborating with external consultants comes handy. While consultants are not the only way to tackle the preparation phase of investment, we often see that internal employees have limited capacity to deal with such a detail-oriented process.

It takes time, but also a good understanding of the legal workstreams and business processes to conduct a needs assessment. Additional time and effort is then required to summarize the results into an insightful report that can provide the basis for the legaltech investments and the change management process to follow.

To help organizations conduct a legaltech needs assessment, we prepared an automated questionnaire regarding certain core considerations. The completed document may then be used as a basis for your legaltech strategy going forward.

Click this widget to access the InvestCEE LegalTech Assessment Questionnaire — powered by our legaltech partner Contract Mill. 

LegalTech Investment: Assessment Questionnaire

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#2 Mindset Change: Workflow Evolves with Technology

The introduction of new technology into an organization often causes employee tension — including in legal departments. Adding a new tool, or changing one solution for another, impacts employees in many ways. While technology is often a better alternative to manual tasks (and so may lead to eliminating traditionally repetitive workflows), it also often requires new tasks that were not previously envisioned.

Typically, new technology is brought in to support traditional workstreams wherever possible, but organizations need to recognize that new tools might provide not just more efficient ways of completing tasks, but possibly different ways of working. When working with client teams, we always articulate that with legaltech the goal should always be a qualitatively enhanced work product. And this may require the acceptance of change in workflows.

#3 Action: Piloting Legal Technology

Buying and implementing a new piece of technology is never easy. Even relatively inexpensive legal technology tools (like document automation platforms) require a thorough use case analysis and a couple months of testing before making a successful investment. Certainly, the more complicated or expensive the system (like matter management or AI-assisted document management or analytics solutions), the more nuanced analysis the investment requires.

There may be a significant potential for cost savings in using off the shelf legal technology products over internally developed or custom-designed tools. Yet such cost efficiencies typically apply so long as an off the shelf product meets the critical needs of the organization. An increasing number of legal technology solutions aim to respond to such basic, fundamental needs of law firms and legal departments (like case management, contract analytics or drafting automation needs). Often, these tools are available for piloting at zero or reduced cost for a limited period of time, which offers a unique opportunity to gain insights about legal technology products. Custom programming may still be the best way forward for an organization if there is no off the shelf product that would meet the basic requirements of the legal and business teams.

InvestCEE’s LegalTech Assessment Questionnaire

We prepared the below assessment questionnaire to provide effective support for both legal technology investments & strategic thinking at a time when organizations need to be smart about taking risks. Click this widget (powered by our legaltech partner Contract Mill) to conduct a legaltech needs assessment for your organization! 

LegalTech Investment: Assessment Questionnaire

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