Build vs Buy Legal Software: Which Is Right for Your Law Firm?

Legal software has been developed to address these inefficiencies by streamlining business processes like matter management, document management, billing, client communication, scheduling, and reporting. But not all companies have the same needs. Some are able to accomplish their goals through the use of commercially available software, while others need features that are difficult to support in standard platforms.

However, for companies with typical legal operations, off-the-shelf legal software can provide quicker implementation, reduced initial investment, and continuous vendor assistance. More flexibility is provided by custom legal software, which allows organizations to customize the workflow, integration, security controls, and business logic to fit their operations. The downside is that it will take a longer development period and more investment money.

It goes beyond features and cost. It entails evaluating how well they fit the company's cost of ownership, integration requirements, compliance requirements, and long-term business objectives. This guide covers the considerations that lead law firms to decide on a buy versus build approach.

Understanding Off-the-Shelf Legal Software

Off-the-shelf legal software or commercial off-the-shelf (COTS) software is a pre-made solution that caters to the everyday requirements of law firms. Rather than building software, companies sign up to a current solution which can have standard functions like matter management, billing, documentation management, calendaring and client communication.

For many businesses, this is the most feasible place to start. Commercial platforms are faster to enable and have a lower initial cost than custom development, and are maintained by the software provider. Usually the subscription includes updates, security patches, infrastructure, and technical support, which helps to alleviate some of the strain on internal IT teams.

But off the shelf software is built to cater for thousands of organisations, not a single company. This means that companies frequently have to modify their workflows to fit the software, rather than modifying the software to fit the company's preferred workflow. When there is a more particular demand for operations, this condition becomes more apparent.

Benefits of Off-the-Shelf Legal Software

Commercial legal software has several benefits for companies with typical legal needs:

Rapid implementation: Most platforms are implemented and configured within weeks, not months.

Reduced initial investment: With subscription pricing, there isn't a big upfront investment with custom software development.

Tested functionality: Long-running vendors have honed their products over many years of feedback from customers and actual use.

Ongoing maintenance: Software updates, security patches, infrastructure management, and technical support are handled by the vendor.

Regulatory updates: Top legal software vendors constantly update their software to meet new security standards, compliance requirements and product enhancements.

Fixed operating expenses: Subscription licensing simplifies budgeting, whereas it is more difficult to budget for an in-house development project.

Limitations of Off-the-Shelf Legal Software

Commercial platforms address many of business's common problems, but are built around industry practice, not a specific business model. As companies begin to scale up, it can create operational restrictions.

Common limitations include:

Limited flexibility: while companies can configure the platform, the basic workflows and business logic are managed by the vendor.

Vendor roadmap dependency: New features, integrations and product changes are based on the vendor's priorities and not the firm's business needs.

Integration issues: Integration with other systems, such as accounting software, CRM (Customer Relationship Management) systems, document repositories, or other internal applications, can be a challenge and may necessitate extra tools or custom development.

Subscription expenses: Expenses for per-user licensing, premium modules, API access, storage and implementation services can become a substantial, ongoing item on the firm's bill as it grows.

Vendor Lock-In: Moving years of matters, documents, financial records and workflows back and forth with another platform can become expensive and disruptive.

Process compromise: When software doesn't fully support existing business processes, teams may resort to manual workarounds or redundant data entry.

What It Means to Build Custom Legal Software

Custom Legal Software is built to meet the needs of a law firm's operations and not bought as an off-the-shelf solution. The application is built to support the firm's processes, business rules, compliance needs, and technology environment, instead of forcing the firm to conform to the software's pre-designed processes.

When commercial software no longer efficiently supports the firm's operations, custom development is usually taken into consideration. This can be because of dedicated practice areas, complex approval procedures, special client needs or the need to merge several internal systems into one platform.

We've learned a lot from building legal software, one of which is that complexity is not always in the functionality but in the business rules. Financial reconciliation, recurring billing, user permissions, payment processing, and case workflow all need to be synchronized. Developing those connections far earlier will have a much bigger impact on the platform's success than just adding fresh features.

Benefits of Custom Legal Software Development

• Designed around current work processes, rather than forcing teams to alter their existing processes.
• Full application, source code and product roadmap.
• Easy integration with current business systems, document libraries, accounting software and third-party services.
• A flexible design that can adapt to meet the expanding needs of the business, such as the increase in services, offices, and operational needs.
• More control over security and compliance, to meet firm-specific or client-specific requirements.
• Operational efficiency for the long term, eliminating manual workarounds, duplicate data entry and the need for multiple disconnected applications.

Limitations of Custom Legal Software Development

• Greater initial cost compared to buying commercial software.
• Requires longer time to implement because requirements, design, development, and testing have to be finished before implementation.
• Maintenance support (including security updates, infrastructure, enhancements, technical support) that continues over time.
• Project governance is important to help manage project priorities, budget, and future development.
• The key to success is selecting a software building partner that's well versed in both software engineering and legal company processes.

Why Law Firms Are Rethinking Their Legal Technology

Age isn't really the reason for replacing legal software. In most cases, it occurs when the need for a business changes faster than the technology that meets it. Systems that were once suitable for the firm requirement slowly become difficult to adapt, and changes become more costly and time-consuming.

One of the reasons is the changes in the way legal services are given in the company. Digital client contacts, cloud collaboration, online payments, electronic signatures, and hybrid work are no longer merely differentiators. Technology that doesn't facilitate them can cause unwanted friction with both the clients and the internal teams.

The other is the growing demand for interconnected corporate systems. Although the adoption of the latest accounting platforms, document management systems, CRM software, Microsoft 365, eDiscovery tools, payment gateways, and reporting platforms is on the rise among law firms, these solutions still have much room to grow. With an increasing number of applications, integration is as critical as the features of each individual software. Companies are increasingly singling out solutions that enable information to flow between systems without creating data silos.

AI also is shaping technology decisions. AI is being used for document review, legal document drafting, knowledge retrieval, and workflow automation, and interoperability and API availability should be taken into account when reviewing existing software. Companies are now considering how they might implement them within their existing infrastructure without major changes.

This is driving legal technology decisions to be long-term business decisions, not software purchases. Companies are considering if their current systems can meet the new demands or if a new technology plan, such as a custom-built system or a hybrid, will offer them more flexibility over time.

Build vs Buy Decision Framework for Law Firms

The decision on commercial and custom legal software should refer to the business and not the technology. The choice will vary depending on the company's current practice, its future growth plans, and the cost of its future operation. Rather than looking at what features the software offers, consider whether it will be able to support the firm's needs for the next five years. Here are some important factors to consider:

1. Workflow Complexity and Specialization

The first step is to review the extent to which the processes of your firm resemble standard legal processes. Commercial legal software is suitable for businesses with traditional matter management, billing, document management and client intake procedures. But, companies with dedicated practice areas, complex workflows, client-specific needs, or proprietary methods may experience restrictions when they need to tailor their processes to a general platform.

If your firm's competitive edge is the way it provides legal services, the software should be designed to complement your firm's processes, not force changes.

2. Firm Size and Growth Trajectory

As you grow, your operations change, as well, you're likely to have more staff, more offices, more matters, and more practice areas. The changes leave a need for automation, reporting, permissions and system integration.

The platform that is easy to manage for a 10-person company can prove to be more complex for a growing organisation. Assessing scalability prior to implementation can be less disruptive than replacing business-critical software applications several years later.

3. Budget: Upfront Cost vs Total Cost of Ownership

The initial purchase price is just a small part of the investment. An efficient comparison provides the total cost of ownership for the software's anticipated duration.

Commercial platforms usually have lower initial costs but will have ongoing licensing fees that rise as the number of users and storage, premium modules, and API access increase. When considering long-term costs, it's important to take into account implementation, data migration, onboarding, and training.

Discovery, design and development of custom software will cost more up front. Cloud hosting, maintenance, security updates, and post-deployment enhancements are examples of continuing costs.

These are just some of the operational expenses that aren't accounted for in the cost of software that many companies fail to consider:

• Transferring data manually across different platforms.
• Duplicate software subscriptions.
• Processes that are not supported, but can be worked around.
• How long it takes to find information.
• The losses in productivity due to poor user experience.

Five-Year Cost Comparison

4. Compliance, Security, and Data Control

Every law firm has different security needs. There are some companies that have to meet other requirements of clients, contracts or regulations that demand more data control as it relates to data storage, access and control.

When assessing software, take into account whether or not the platform can meet requirements like role-based access control, audit logging, data residency, encryption, document retention policies, and compliance with regulations like GDPR, CCPA, and HIPAA if applicable.

Security and compliance can play as large a factor as functionality in the technology choice for companies in highly regulated industries and/or enterprise customers.

5. Integration with Existing Systems

In most cases, legal software is not the sole business application. The majority of businesses also utilize a variety of additional products, including Microsoft 365, accounting software, document management systems, CRM platforms, e-signature solutions, payment gateways, and legal research tools.

The issue is not only about the availability of integrations, but whether they can be used to meet the business needs without causing duplications. If information isn't transferred from one system to another without intervention, it takes more administrative time, less time for information to be reported, and more time for staff to spend on data maintenance than on data use.

Technology needs to streamline the application environment of the business, not introduce another single platform that operates independently.

Hybrid Approach: Combining Custom Development with Off-the-Shelf Software

Many firms have concluded that the optimal approach to technology isn't to replace all the systems with commercial software, or to create a completely customized platform. Rather, companies are increasingly taking both approaches, keeping successful legal uses and creating custom solutions to address their business needs.

It enables companies to upgrade their technology without impacting daily operations and to not lose their valuable software programs.

Preserve Existing Investments

Law Firms invest many years in setting up their practice management systems, moving data, training staff, and forming processes. Changing these platforms only to overcome a few of their shortcomings can result in additional implementation risk, cost and disruption. A hybrid solution is used to safeguard those investments and add capabilities to the mature systems where necessary.

Build Skills that Add Value to the Business

Custom development is not recreating functionality that already exists, but rather an approach toward addressing problems within the business, which will ultimately improve service delivery or internal operations.

Examples include:

• Client portals for specific legal services.
• Digital intake and case qualification apps
• Document review with internal knowledge (AI).
• Financial and operational reporting executive dashboards.
• Secure collaboration solutions for enterprise users
• Workflows for specific areas of practice.

Such solutions are designed with the existing software, allowing companies to add new features without replacing their base legal systems.

Modernise in Phases Instead of Large-Scale Replacements

Changing the whole legal tech stack is one of the most disruptive IT projects a company can execute. Operational issues can impact day-to-day business activities even after the deployment, such as data migration, user training, process modification and delays to implementation.

A hybrid approach helps minimise this risk by enabling firms to update their systems gradually. Applications can be deployed in stages, one business function at a time, providing the organisation with measurable gains and ensuring business continuity. This gradual process also allows for easier prioritisation of future technology investments, allowing each project to be considered in isolation, according to business value and ROI.

Create a Technology Ecosystem that Grows as the Company Grows

New or changing services or client expectations can alter the technology needs of the firm. A hybrid approach is flexible enough to be able to introduce, replace, or upgrade individual applications without redesigning the technology environment. Rather than a single platform to play the whole game, firms develop an ecosystem that utilises commercial software for the existing legal operations, and custom applications for evolving business requirements. This allows technology to grow and change instead of expensive, organisation-wide replacement projects.

How AI Is Changing the Build vs Buy Decision for Modern Law Firms

AI is transforming the approach of law firms to technology investment. Build or buy decisions in the past were based on functionality, implementation time and cost. Today, companies must also think about how their technology can evolve to accommodate new AI functions as they are released. As AI continues to develop at a rapid pace in comparison to traditional software, selecting a platform that is capable of continuously integrating new models and services has become as crucial as addressing current business demands.

AI Is Redefining What Should Be Built

Commercial AI models have made it easier for companies to leverage AI without the necessity of building their own. Legal technology vendors are increasingly providing various tasks, including document summarisation, contract analysis, legal drafting and knowledge retrieval. When they become standard, it may not be worth developing their own.

The value of custom development is rising when AI leverages the firm's knowledge, processes, and expertise. Rather than developing fundamental AI models, companies are investing in applications that leverage commercial AI, to augment their internal processes, precedents, services for clients, or to provide niche legal functions.

Data Quality \- A Strategic Consideration

The quality of information processed by AI systems is crucial. The lack of documentation, inconsistent records of matters, and disjointed knowledge bases makes it harder to get accurate and reliable answers from AI, irrespective of the software you are using. Consequently, companies are assessing the quality of their data, as well as the features of the software they are considering, before deciding to develop AI solutions in-house or to purchase software.

Flexibility Matters

Differentiators today will become the standard features tomorrow as AI technology continues to evolve quickly. Firms are looking not just for a software application that has an existing AI solution, but one that can take in new AI services without significant redevelopment or system replacement. This change means a greater emphasis is being placed on versatility over any individual AI functionality presently available.

Choosing the Right Partner for Your Next Legal Software Project

A successful legal software project relies as much on the development partner as on the technology itself. An experienced partner is able to clarify required needs, identify potential implementation issues, and create a solution that meets the firm's long-term business goals. The wrong one might deliver a functional program that is hard to maintain, too costly for the firm's operations, or poorly designed.

Look Past Legal Industry Experience

While a legal software developer's experience is important, it does not need to be the sole consideration for evaluation. One better sign is if the development team is aware of the operational issues of the project. A competent partner will ask the right questions before offering a solution that will include user roles, compliance requirements, reporting requirements and growth plans.

When we are working on legal software solutions, we have found that it is not often that the trickiest component of the project is when it comes to creating the standard function. The actual challenge is in building out business logic that mimics the way in which a law firm operates. We've had projects that include complex financial flows, recurring billing, attorney payouts, administrator, attorney, and client role-based access, secure payment integrations and real-time case updates. These requirements influence the architecture of the app from the start, and performing a comprehensive discovery and solution design step is crucial before development.

Review Their Delivery Process

A proposal should describe how requirements will be verified, how progress will be monitored, how quality will be measured and how requirements will be changed throughout the project. Simplified delivery processes minimize uncertainty and deliver more transparency about timelines, costs, and project milestones. Firms need to have an understanding of decision making documentation and escalation before development starts.

Establish Ownership Prior to Development

Before signing a contract, define what software ownership includes. That means the source code, documentation, IP, third-party components, and deployment environment. Additionally, firms need to be aware of future development enhancements, upkeep, and knowledge transfer in case of a shift in development responsibilities. Early answers to these questions helps to decrease reliance on vendors, while safeguarding the company's technology investment.

Assess Long-Term Support

The operational life of the software has not begun at launch but only the start of the project. Continual maintenance is needed for regulatory updates, security enhancements, infrastructure changes and changing business needs. A development partner must have a clear strategy for software post-launch support, troubleshooting, performance tracking and future improvements to ensure software remains relevant to the business over time.

Ready to Build the Custom Legal Software for Your Firm? Let’s Talk

At Coding Crafts, we collaborate with law firms to create innovative and secure legal software solutions tailored to their specific requirements and objectives. We develop software solutions to meet the needs of your legal business today and into the future, ranging from legal practice management systems, client portals, workflow automation, document management, to AI-driven legal solutions.

From initial discovery to solution architecture, development, deployment, and ongoing support, our team is with you throughout the project, maximizing the value of your investment.

If you are considering a build, purchase or mixed model approach, we would love to hear your requirements and help you determine the solution that best fits your firm's objectives.