Avoiding LegalTech Stupidity: Adapt or Suffer

The mandate of this blog is to help people avoid making the same old bad decisions when it comes to legal technology and legal operations. It has been inspired by Charlie Munger’s quote,  “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

The ability to adapt to changing business conditions should be a critical measure in evaluating LegalTech solutions. Otherwise, the utility of your solution will be limited to the period of time between when you set the criteria (ie. specifications) and the first incidence of change (which is almost guaranteed to be shorter than you predict). 

When that moment arrives, your systems and real business conditions will be misaligned, forcing your people to work longer and harder to overcome the gap between what you implemented and what you actually need to be effective. The result? More divergence from reality, less value from technology and more useless non-work time required by your people just to operate.

Future-proofing your business systems

A huge amount of time and investment go into reviewing and selecting LegalTech solutions. The process itself is lengthy, complicated and all too often fails to achieve the desired result–largely because it prioritizes the features and benefits needed today vs. the ability to adapt to future business needs and requirements. 

A more practical approach for future-proofing your investments in business processes and tools to support them might be applied from famed Mathematician and essayist Nassim Nicholas Taleb’s framework for creating more resilient systems:

• Resilience Building: Focus on creating resilient systems, which includes building adaptable operating models.
• Continuous Learning: Cultivate a mindset of continuous learning and adaptation to respond effectively to new information and unseen events.
• Skepticism Toward Forecasts: Be skeptical of forecasts and expert predictions that do not account for the role of randomness and uncertainty.

Let’s explore how this applies to legal operations and the factors that might potentially break the rigid model imposed by many of today’s business systems. 

Factor in Your Business Variables

At the very least, the types of changes that you already know your organization faces should be factored into your purchase decision frameworks. These are well-known for law firms and in-house counsel and do not require any capacity for prognostication.

Normal Course Changes (from most frequent to least frequent):

• Workflow Standards
• Short-term Leave
• Long-term Leave
• Integrated Technology Upgrades
• Team Turnover
• Reorganizations/Scope of Responsibility
• WFM/Remote Policies
• Compensation/Incentives
• Management
• Strategic/Initiatives
• Core Operating Technology
• Layoffs
• Mergers & Acquisitions
• Ownership
• Market Entry/Exit
• Product/Service Expansion
• Major Technology Shifts (eg. GenAI)
• Market Disruption
• Economic 
• Social
• Political
• Regulatory 

Your Legal DMS Isn’t Future-proof

Let’s look at Legal DMS (Document Management System) implementations as an example. [Note: I don’t mean to unduly criticize DMS providers and consultants. The same can be said for almost all technology providers in the Legal space, but given this is foundational technology for most legal groups, it makes for a good example.] 

The general goal of a DMS is to create a single, standardized, and secure source of documents (emails, etc.) to reduce searching, duplication and rework. Basically answering the question, “where is the document I need?” as quickly, cheaply and accurately as possible for legal teams.

The design of a DMS requires the implementation team to create a taxonomy or classification system for the documents so that as content gets saved by users, the correct classification attributes are applied to the content to be easily stored, secured, retrieved and reused.

Unlike a standard folder system we’re all used to on our PCs, documents in a DMS “appear” in a location (Workspace, Folder, etc.) because of bottom-up search. Meaning when you navigate to a location in a DMS, a search for all documents that meet the pre-designed criteria of that location (eg. Client, Matter, Project Type, Document Type, etc.) will then create a view of documents that appear as though they are “in” the container.

The benefits of this approach materialize when you complete a simple document search using any term or attribute and compare the results between a DMS and another solution. If you’ve ever tried a document search on your PC or Mac where you have a large volume of documents, you’ll be generally frustrated with the results. DMS searches on the other hand work spectacularly well.

Reality bites: real world scenarios that can break your DMS model

Now let’s say you’ve suffered your way through a DMS migration and implementation project (because it is tedious, time consuming and very expensive) and you have rolled-out your DMS.

Then a corporate reorganization is announced and the in-house legal department is required to change the scope of their services. Which means using outside counsel more to take over work that was previously handled in-house, focusing existing staff on new types of work, laying off some staff who do have the required skills or experience for the new work, and hiring new team members who have the requisite skills. 

In a best-case scenario, a new document cabinet needs to be established with a new taxonomy (classification structure), new security rules, new users and any relevant and important historical documents will need to be “migrated” from the previous cabinet and taxonomy to the new one. 

This likely means outside implementation consultants need to be engaged, and a new migration process needs to be undertaken over a shorter - but not short - period of time than the original implementation, and there will be “before, during and after” document access challenges that your legal team will have to deal with. Costing them extra time to get their work done and a transitory period of increased frustration.

When DMS clients find out how much, how long, and how challenging this change is they generally lose it. And rightly so. It’s a very tedious process and doesn’t happen quickly. The fact is, this kind of scenario is fairly predictable, and it should have been considered as a criteria in the purchase decision. 

Even with existing DMS technology there are ways to mitigate these adaptation risks, but they have to have been considered prior to the initial implementation. The next wave of AI-powered DMS offerings will likely not require these adaptation risks, but as of now this is a very relevant scenario.

Changes like these may occur frequently, some may almost never occur. Some may present minimal risk, while others can turn into large scale events. These are the kinds of things that should at the very least be considered when making LegalTech purchases.

Factor Adaptability into Your Procurement Process

Since most procurement processes rely on a spreadsheet-based classification system, we suggest you add a tab specifically to score Adaptation with columns which include Organizational Change, Likelihood of Change, Frequency, Ability to Adapt, Time to Adapt, Cost to Adapt, Action Required to Adapt and a resulting Risk Score to name a few (our spreadsheet below has more content). This isn’t meant to generate a precise score. But adding them to your analysis will decrease the chances that you’ll be surprised by the cost and time required to adapt to what you assumed were routine business changes. Forewarned is forearmed as the expression goes.

Download our Adaptation Workbook

If you’d like a copy of our example Excel file with our adaptation workbook tab, register below and we’ll send you a copy.

The goal is to understand how easily each potential solution you are considering can help you build resilience and adaptability into your operating environment. Or not. A lack of adaptability is fine for some scenarios as the risk and cost to work around these shortcomings is small.

Conversely some changes in your operating environment might break or render the technology you are considering valueless. So having at least some rudimentary framework for assessing the most predictable changes in your business and how much cost and risk they might present can help the selection team avoid embarrassment and the loss of some reputational capital.

It goes without saying that can't optimize your selection process solely for adaptation and resilience. We all know you have a job to do now—one where you need time-saving tools that reduce your administrative burden and increase your effectiveness. That said, not including adaptation and resilience as decision criteria in your LegalTech purchasing process would be foolish.

The more adaptable and resilient your technology is, the less burden is placed on those who have to spend their time working around these solutions as conditions change—rather than working with them. So improving adaptability and resilience ultimately means less frustration, burnout and turnover.