3 Myths About Why You Can’t Afford LegalTech.
In a recent survey by BRYTER it was found the almost 60% of General Counsels say the prime reason they haven’t invested in LegalTech is that they don’t have the budget for it.
Taking a step back from the legal world, this is nothing new or unique to legal teams. In my time consulting across the innovation landscape, a lack of budget for technology has been a consistent theme. We all know there are opportunities to be created from utilising the advancements in tech but securing the finances to be able to invest in these, on top of your existing spend can be exceptionally tricky. However, in so many other business functions, tech innovation is streams ahead.
Why can’t GCs afford tech? What are some of the myths stopping this investment? And how can you bust some of these myths?
1. Inability to rework budget
Re-imagining your legal spend to allow for more investment in LegalTech is an obvious solution, but is this easier than it sounds? The trouble here is that you’re walking the budget tightrope – never mind getting additional budget, even getting the same budget as last year can be a nightmare. In many cases, a year’s budget will be decided on the assumption that last year’s spend will be sufficient, then making incremental increases or decreases.
The first issue with this is that it means any additional expenses, particularly large on-off payments or monthly licensing fees can be hard to add on. Furthermore, a simple rejig of the budget prior to sign-off from finance, reducing spend in some areas to allow for an investment in tech can run the risk of finance understanding that you can exist on the rejigged budget without the additional technology spend.
How to bust this myth?
The solution here is to keep this in your back pocket, especially if you know you certainly won’t get additional spend on last year’s budget. Do your homework, understand where and how you can save cost, but try not to let this on when working with finance.
In this situation, homework is important. Knowing the cost of any tech investment is obviously important, but also understanding the additional support and resource is imperative. Internal development time is costly and scarce; data transitions can be exceptionally time consuming; integrations aren’t always as smooth as promised. Building tech into an existing budget ultimately means understanding the full cost, but also how it can be integrated. Costs can be disguised through working with third parties or law firms so the need for sign-off can be reduced.
2. Lack of alternative resourcing
If securing more budget to invest in LegalTech is going to be an uphill battle, what are some ways of creating space in your existing budget?
As mentioned above, spend is largely decided based on what was spent last year with incremental increases or decreases. For example, I spent £100,000 on law firms and other services last year. I need to spend this again. From the other side, law firms know ‘the business spent £100,000 with us last year so we should be aiming for them to spend at least £100,000 this year, if not more’
This is a factor in why it’s hard to rework budgets.
How to bust this myth?
Do you need to keep spending all the budget on your law firm relationships? Law firms offer an important and mostly crucial service that can either create/save significant revenue for a business, but they are expensive.
Taking a step back - does everything that goes to these law firms need to? Does the work require the high prices of a Senior Associate (who’s going to get the NQ to do it and rubber stamp)?
Re-evaluating what work goes where will inevitably save you money, and create more budget for LegalTech.
3. Business complacency
“I don’t have budget for LegalTech. I probably could find some, but I’m too busy and don’t see the value in changing at this stage.”
To be honest this is an attitude that is pretty common at the GC level. And look, it’s how most legal teams are, which has only fuelled the emergence of LegalTech. The ability to create efficiencies is key, but if you’re too busy to look at this, or worse, think that the level you’re currently working at is optimal, the issues start.
How do we change a mindset and move away from the idea that LegalTech is an afterthought? ‘When things get too unmanageable, then we will invest.’ ‘When the team has capacity, we might look at some tech’. ‘Things work fine for now, so we don’t need any new tech.’
How to bust this myth?
There is certainly an onus on the LegalTech and alternative providers to help shift this. Enabling in-house teams to see the value in making investments in technology. However, there must be a shift in-house too. Lawyers of the future will be better operators, work in different models and adopt new processes. This is already happening.
The in-house legal world is becoming more tech integrated every day and the GC of tomorrow will be fully tech enabled. So, the mentality that you can’t afford tech should be ‘you can’t afford to NOT invest in new tech’
Oct 26, 2022
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