Defensibility: The Overlooked Goal of Legal Technology Solutions

When you look at the pricetag associated with investments in legal technology, it's safe to say that having clear-cut goals is a necessary component of any purchase. There are a variety of goals that enterprises who take the plunge have in mind. Maybe increasing the efficiency of your team or reducing long-term costs is the priority. Maybe it's the tactical goal of imposing a consistent process around key operational tasks. Or perhaps the goal is to ensure that legal matters are handled in a defensible manner.

Exterro and the Association of Corporate Counsel recently conducted a survey of 250 in-house counsel and legal operations professionals across 18 countries, representing companies from under $100 million to over $1 billion a year in revenue. The resulting report, the 2021 Legal Technology Report for In-House Counsel, dug into the factors organizations had in mind when making technology purchases, and the results were interesting, to say the least.

When it came time to make a decision, consistency and particularly defensibility simply did not rank as compelling reasons for a purchase when compared to the twin business imperatives of efficiency and cost reduction. 

At one level, it's just common sense. It's easier to conduct a cost analysis based on increased efficiency or a straightforward cost reduction than to quantify the benefits of process consistency or legal defensibility. But those goals are also important. A little deeper examination of the data and critical thinking is revealing.
 

Increasing efficiency with legal technology

The top factor in organizations' decision to invest in technology was efficiency, with 64% of respondents. For enterprise-scale organizations, with multiple matters ongoing at any time, relationships with multiple law firms and legal service providers, and complex in-house data sources to manage, efficiency rather than 1-for-1 cost savings are paramount. This is reflected in the fact that 75% of general counsel (GC) and Chief Legal Officers (CLOs) ranked efficiency first, including 88% of GCs and CLOs at companies with over $1 billion in revenue. 

Thinking about building a business case for a purchase, a necessity to make substantial investments, the math is straightforward. If a hypothetical SaaS solution costs $100,000 a year, and it can save approximately $1,000 in costs per matter (whether employee time or something else), then it makes sense if the company has more than 100 matters per year, and doesn't otherwise. 

Reducing costs with legal technology

Reducing costs is the secondary most common goal identified by respondents in the report, with 27% of responses. Counsel and legal operations professionals cited it at rates significantly higher than GCs and CLOs (in the mid 30% range vs. approximately 12%). Most likely this is reflective of their more tactical perspectives, saving a direct cost on a project or discipline they are concerned with, rather than a broad-based efficiency gain shared among many members of a team. 

Improving consistency and defensibility with legal technology

Consistency and defensibility were specified as top factors much less frequently than cost reductions or efficiency, totaling less than 10% of the survey responses. Nonetheless, they should be critical components of legal departments' thinking for a couple of importantreasons.

First, while the saying may be, "a penny saved is a penny earned," another equally relevant saying is, "you can't cut your way to growth." Legal departments that view cost-cutting as the path to success and influence in enterprises may find that they are shrinking their domain rather than producing value. 

Second, and more importantly, process defensibility may not seem to matter... until you find out in the course of a legal matter that you lack it. E-Discovery sanctions, adverse rulings, or fines related to data privacy violations can all have a seemingly disproportionate impact on organizations bottom lines. They are red flags indicating a profound failure of process that surely reflects poorly on departmental leadership. The legal technologies that assure defensibility, as highlighted in the report, include e-discovery techology, matter management, privacy and compliance, and cybersecurity, all areas of increasing concern to legal departments today.

The incremental gains legal departments achieve by saving money and increasing efficiency are important, but can all be undone by failure to act in a defensible manner in one legal matter, privacy breach, or e-discovery sanction. Perhaps defensibility should not be overlooked, or else it might end up doing more damage than multiple cost-savings technologies can recoup.

For more insight into legal technology for in-house teams, download the 2021 Legal Technology Report for In-House Counsel today!