Is Alignment With Enterprise Software Vendors the Next Frontier for Legal Technology?

The concept of a New Frontier is a long-standing theme in the fabric of American culture. In the early 19th Century, President Thomas Jefferson sent famed explorers Lewis and Clark on a mission to explore the American Frontier. In the next century, President John F. Kennedy declared a New Frontier as he accepted his party's nomination for President, creating a movement which culminated with the Apollo 11 lunar landing. And, more recently, both politicians and technologists alike developed a concept known as an Electronic Frontier.

Within the computing world, admittedly a less grandiose theater, there have been several architectural shifts from and to multiple frontiers in the past decade. During the past few years, we've all experienced the gradual trend away from “on prem” (systems and servers hosted on a company's premises or data center) towards cloud computing. Interestingly, cloud computing, a technology once seen as a potential security breach and quixotic out-of-the-box thinking, is now viewed as a best practice.

If we decide to invoke a little bit of the Michael J. Fox and Christopher Lloyd in us and dial the time machine back a bit further, we can vividly recall earlier eras like client/server computing, computing with software installed locally on desktops and even mainframe computing.

So, what does this brief history lesson tell us? Perhaps the most salient message is that, however impressive one's current tech stack might be, optimally it is a hybrid position considering the needs of both today and tomorrow. To try and express this concept as something sunny and nice, the ideal spot vacation locale might be both an enjoyable location and a community which serves as a junction point to other cool destinations. In other words, a great place to be which also serves as a better jumping off point for the future.

How does this translate within the realm of legal technology? An analysis of the situation must include the fact the legal technology industry has some unique characteristics. What are some of these?

Well, one distinctive aspect of the legal tech field is the fairly fragmented collection of legal tech providers. What do I mean? Well, consider the e-discovery vertical. There are a slew of excellent providers of services defined within the EDRM (electronic discovery reference model) framework. These, of course, are services like collection, technology assisted review, document processing and categorization, production, presentation, etc.

Building on that theme, this software distribution structure is generally omnipresent in legal vertical markets like document management, legal services time and billing, legal finance and legal business processes like conflicts, intake, resulting in a situation where consumers of legal technology grow accustomed to working with an array of vendors.

Of course, this fragmentation, so to speak, certainly offers some enviable benefits. Importantly, there is ample competition, which drives innovation and attractive pricing. Legal software companies tend to be specialists in their core competency, true subject matter experts with a deep understanding of their targeted functional areas of focus. This adds considerable value to client relationships in this space.

It is important to note, however, that the makeup of the legal tech software industry does not necessarily mirror segments of the larger software industry. The enterprise resource planning (ERP) market, for example, has certain dominant players such as SAP and Oracle. The customer relationship management (CRM) vertical has an exceptionally strong player in Salesforce with companies like Oracle and SAP also maintaining a strong presence. And cloud computing sees a trio of exceptionally strong providers in Microsoft, Amazon Web Services (AWS) and Google.

Now, you might say, hey, this is interesting but what does it all mean? Here is one thought.

Leveraging platform-as-a-service (PaaS) in the ecosystem of software market leaders to deliver legal applications might be the next New Frontier for the legal technology field.

Now you might be thinking, why would companies like Oracle, AWS, Salesforce or SAP want to partner with legal technology companies? Aren't they really just omnivores who want to devour all the little fishes in the sea. Actually, somewhat surprisingly, the converse is closer to the truth.

How might this all work? Well, most large CRM, ERP and cloud platform providers offer application stores which are often referred to as “product marketplaces”. They are, in essence, not dissimilar to the iOs App Store or Google Play store virtually all of us use with our mobile devices.

As we know, broadly speaking, the App Store value proposition is the hosting of approved, vetted applications which are presented to end users in a manner which are convenient to download and use. And, for companies like Google and Apple, their stores both generate licensing revenue and drive more and more users to their specific platform, driving up market share.

Why would legal technology companies want to be in these marketplaces? Isn't it better to just offer products directly via the cloud?

Well, consider the following. Sometimes it's fun to dress up, drive to Midtown Manhattan, go out to a 5-star restaurant and order wines you'd never think to try and eat succulent dishes carved off a skewer or prepared by your table. But other times, you might just prefer a home cooked meal at home with some friends.

The cloud vs. marketplace concept is kind of similar. Both approaches, of course, work well. So why not be in both arenas? After all, virtually all common apps we use on our phones are available in both Android and iOs. It just seems to make good business sense to offer your product via multiple distribution mechanisms.

Assuming the ERP/CRM/cloud platform software marketplaces take hold, this delivery model offers obvious advantages, especially within large companies and organizations. If an entity purchases an enterprise-level license to deploy Salesforce to the entire sales organization (or an ERP system like SAP or Oracle), it's likely going to be a competitive advantage for a legal tech provider to offer a solution within a customer's approved framework. Applications from a product marketplace might even available at preferred pricing to users. And it is clearly true that administrative tasks required in most software implementations—think security reviews—will be streamlined when the offering is bundled through an enterprise marketplace.

Not surprisingly, like many new things, an emerging concept such as the corporate marketplace contains a smattering of hurdles to clear. Here are some of them.

First of all, it must be noted that most of these marketplaces are fairly new within the enterprise software world. It remains to be seen how rapidly they will ultimately take hold and become intertwined into the fabric of entities like the Fortune 500, educational institutions and, in our parochial interest within the legal technology arena, law firms.

Integration is another challenge. For example, it may be a challenge to get data out of an ERP or CRM platform. However, it also should be noted that in some cases, integration might actually be easier and enabled by these platforms. How might that work? As an example, when a legal department is working with sales/marketing on a project, technologies like Chatter, a common element contained in the Lightning Platform as a Service offering within Salesforce, would surely facilitate closer working relationships. This is an area which will be interesting to watch.

Control could be another huge nut to crack. Do leading legal technologies companies really want to share some of their revenue with companies like AWS, Salesforce, SAP or Oracle? Probably not. But, in my opinion, it's likely they will see the writing on the wall and hop on the proverbial train before it leaves the station in order to survive.

Is PaaS the next New Frontier for legal technology? We are in the infancy stages now of possible transformation, it's hard to predict. Maybe it will end up being an end-state no one really wants to go. But clearly there are some nice possibilities for those creative companies within the EDRM framework and other legal technology vendors to quickly expand their footprint and user base. It should be interesting to follow.

Kenneth Jones is Chief Technologist of Tanenbaum Keale LLP, a boutique litigation law firm and Chief Operating Officer of the Xerdict Group, a SaaS legal collaboration software company. Xerdict is a wholly owned subsidiary of Tanenbaum Keale.