The synergy between the ‘IBM scenario’ and the legal software marketplace

Thursday 8 April, 2021

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Insight Legal Chairman, Brian Welsh gives his thoughts on “better the devil you know” cop-out clauses for risk-averse software buyers and suggests that with so much innovation happening in the legal software sector, you may be missing out on something much better.

“Nobody ever gets fired for buying IBM”

If you work in the technology industry, that’s a phrase you’re probably extremely familiar with.

I know I am. I first heard it about twenty years ago and I’ve been hearing it continuously ever since.

What does it mean?

“Nobody ever gets fired for buying IBM” means that, rather than buy a more suitable or competitively priced product from a less well-known technology company and take the chance you’ll be in the firing line if something goes wrong, IBM was the tech industry’s safest bet. They had such a strong reputation that, if a problem with their product did occur, it would be a total anomaly. No-one could ever have predicted it, IBM would inevitably sort it out, and the purchaser would be shielded from any repercussions.

And, twenty years ago, there were plenty of reasons why buying from IBM and not taking a risk on a smaller provider was a sensible idea. IBM’s trustworthiness and ethos for only taking a project on if they knew they could see it through and deliver ‘beyond expectation’ were legendary.

But times have changed.

Now, the software and technology IBM supplies doesn’t have any discernible advantage over the products and services supplied by their bigger or smaller competitors.

Which means, “Nobody ever gets fired for buying IBM” has become the “better the devil you know” cop-out clause for risk-averse software buyers. Rather than choose the product of another tech company even though they know it offers a better solution, buyers are still going with IBM because they’ll be better shielded from any negative consequences. Or because they feel lack of ownership in the organisation they’re working for and have the attitude that, “I only work here, so I’m going to go with the lesser IBM option (even though I know it isn’t completely right) because it makes my life easier.”

Why is it dangerous?

The fallout from this kind of “Nobody ever gets fired for buying IBM” thinking is obvious. Not only does it negatively impact innovation and deny oxygen to the competitors who might be doing an even better job than IBM (if only buyers would have the courage to invest in their product), it also means that the organisation the buyer works for is being denied access to the best technology available because their employee is afraid of making a potentially unpopular decision. It sets up a ‘blame culture’ wherein employees believe that taking any kind of chance could be terminal to their career, so they’ll play everything safe by going with the established provider even if it’s against their better judgement.

In an age when the ability to make competitive decisions is more critical than ever, that isn’t an attitude any organisation should encourage.

But I’m seeing it happen more and more often in the legal software marketplace.

The synergy between the ‘IBM scenario’ and the legal software marketplace

It’s all to do with the serious amount of Venture Capital-backed consolidation that has taken place in legal software over the last two decades. Right now, there are four consolidators in the legal software market who have hoovered up around fifteen independent firms. That’s what gives us the IBM scenario and I’ve watched it happening on an almost weekly basis, to the detriment of the sector.

Why to the detriment of the sector?

Because it’s almost certain that the consolidator will only be concentrating their efforts on one ‘go forward’ product, so any other products they own – one or more of which your legal firm may currently be using – have just become legacy. They’ll be devoting little to no innovation or development on those products, which means you’re suddenly working with software that’s no longer supported and has effectively reached its end-of-life.

This is where the “Nobody ever gets fired for buying IBM” cop-out clause applies, because it leaves the legal firm’s software buyer with a couple of options. The easiest option (and the one they won’t get fired for) is to accept an upgrade to the consolidator’s go forward product. It’s quick and it’s perceived to be risk-free, especially because the consolidator/supplier owns both product sets, but just because it’s perceived to be risk-free doesn’t mean it necessarily is.

On the other hand, there are numerous reasons why the legal firm’s buyer shouldn’t take the easy upgrade option and, instead, spread their net and look elsewhere.

  • Even though they’ve got the go forward product, the new consolidator/supplier may not be the best company to migrate your data.
  • Do they hold the same values and beliefs that the software company you originally bought into does? The chances are, probably not. In my experience, VC-backed consolidators don’t tend to factor in beliefs and values when they’re hoovering up new acquisitions.
  • Will they offer the same standard of support?
  • What does the ownership of their business look like? Is it owned by people who already have a demonstrable expertise in (or commitment to) the legal software industry, or are they opportunists who could care less about what sector their software is servicing?
  • If the company already works in legal software, are they ‘superstar providers’ for your type of legal firm? Don’t forget, one size never fits all where legal software is concerned.
  • Are their contractual terms the same as your original providers?
  • Will they give you back your data if you ever want to leave? Some companies have a habit of not doing that, so make sure you ask the question.
  • Would the ‘riskier’ provider offer you better contractual terms?
  • Does the ‘riskier’ provider have values and beliefs that are more in line with yours?
  • Is the software supplied by the ‘riskier’ provider a better fit for your legal firm?

If the consolidator can answer all those queries and concerns to your satisfaction, then I’d completely understand you moving forward with them. But if they stumble on any one of these issues, think again.

With so much innovation happening in the legal software sector, you may be missing out on something much better that would work fantastically for your company.

Given that software can transform productivity and streamline processes, it has a direct impact on your bottom line.

If you have any questions, don’t hesitate to get in touch. I’m happy to give you my perspective on how to make better choices for your firm.