With a whole host of legal technologies in the marketplace, it may seem easy to say that there's an solution to purchase for every problem. But in the real world, many corporate legal departments may be asking themselves: Should we even purchase externally at all?

The panelists at the ACC Xchange conference's “Buy or Build? An Old Question Takes on New Meaning for Law Departments” panel have tackled this key question on a number of different applications, ranging from the highly tech-intensive (e-billing, contract management systems) to more process-oriented practices (legal review, leadership development). And what they found is that the question needs careful consideration at the beginning, during and post-implementation.

The panel included Reese J. Arrowsmith, head of legal operations at Campbell Soup Co.; Nitin Batra, head of global legal services and productivity, Citibank; Cade Lobodzinski, legal operations specialist at McAfee; and Carol Simcox, manager of legal operations at TE Connectivity. Chase D'Agostino, associate vice president of corporate solutions at QuisLex, served as the moderator for the panel.

Building the Team and Process

It may sound simple, but it's sometimes neglected: You need to have a team and processes in place before a buy vs. build decision is actually made.

First comes leadership buy-in, usually from a general counsel or another executive level person. Simcox noted, “When we were looking to do an RFP for an e-billing system, the general counsel was the executive sponsor. He was 100% behind us.” Without that buy-in, a new project will never get off the ground, let alone precipitate decision-making.

Next comes the decision whether to bring in outside help, such as consultants, for the project. Lobodzinski noted, “The point in the process that we usually pull them in is where we as a legal department have defined what our requirements are.” The benefit, he added, is that, not only does the legal department get their expertise, but “they let us build up our talent and skill set internally. That helps us with our sustainability … helping [to] maintain and sustain the project all the way to the end of life.”

But it's not only consultants that can be brought in to help make the decision, Batra added. “In a legal department, we're almost at every step of the way making a decision on, should we have a law firm tackle this work, or should we tackle it internally? That's in a way a buy versus build decision.” He said his legal department made a conservative determination towards tackling work internally. When telling the finance department that they were looking to make a fixed (external) cost into a variable (internal) cost, “the burden of proof is on us” to show it's a financially sound decision.

Finally the correct processes need to be put in place. Arrowsmith said he tends toward buying rather than building solutions, partially because ensuring that the processes in place are correct and sustainable is tough. When thinking about building a solution, he added, “talk to your IT team and compare the requirements to what your vendors say.”

Costs and Assessing What's Real

So you have the people and processes. Now you need to have a plan in place, to make the actual buy versus build decision and figure out how that decision will be executed.

Arrowsmith said, when he makes this type of decision, he puts together a project proposal, then he and the GC go together to the company's CFO. More than anything, this requires hard numbers: If looking to institute a contract management solution that will add an artificial intelligence component, for example, the company could see $1 million in expenses in the first year but $3 million in cost savings over five years.

“Every time I have said that … the CFO had said, 'I'm going to come back, and I want to see these cost savings.'” he explained, “The hard part is the soft savings when you're putting risk mitigation projects in place that you can't quantify.”

Another tricky piece comes with resource allocation—Arrowsmith reminded the crowd that legal is just one faction fighting for a limited pool of IT talent and time. “If you kick off a project with an intention of building it versus buying it, are you going to get the amount of resource allocation you need?” Also, he asked, “do those resources have the ability to get the project right the first time? It can get tricky.”

Lobodzinski added that it's important to remember that legal will be a continual stakeholder, especially on projects built internally—there's work in being a stakeholder. “That's been an issue for us in the past, to make sure we have the bandwidth … to get the solution to where we want it.”

For the Long Term

Finally, once a decision has been made and a solution is in place, it needs to be maintained for the long term. Sometimes, this means customizing an externally purchased solution to meet specific legal department needs, essentially melding buy and build together.

But customization should not come without serious consideration, Batra explained. “If you think about the ongoing maintenance, there's a trap that people fall into, especially when you build something. You end up having to take care of everything … and, when you customize a solution to the point where you can't get those core upgrades and patches from the vendor, you end up getting left behind very quickly.”

Simcox also pointed to the importance of long-term customer service as an important piece of the entire process, particularly when it comes to reevaluating whether a solution is actually working. She noted that legal departments need to be able to swallow pride and move on if needed: “Not all decisions are going to be the perfect ones. Hindsight is 20/20.”

Reassessing is an important part of the process, Lobodzinski said, especially because what's right may change over the years. “You can have made the right decision three years ago, but things have changed, and you have to continually reassess that,” he explained. He added that it's particularly tough when you have a long implementation “because that's a moving target.”