How the Blooming LegalTech Landscape is Locking Itself Into New Silos and Why That is Bad
By Tom Braegelmann, Lawyer at German law firm, BBL, previously GC of legal AI company Leverton and a well-known legaltech commentator.
It’s a given that it is not good to have silos in business and that you should avoid a silo mentality, right?
A silo mentality wreaks havoc when people, departments or organisations do not want to share knowledge with others.
Silos in this sense mean real borders (physical, or via technological means) that keep knowledge separated and exclusive – and all of that is bad because it is inefficient, prevents the free flow of ideas and may thus lead to failure. Nobody wants that.
Unfortunately, the currently blooming landscape of LegalTech/LawTech startups; increasing tide of LegalTech financing rounds; growth of the use of legal processing technology and rapid adoption of modern software (AI, blockchain, you name it) in legal transactions; is largely uncoordinated and thus is prone to create new silos by accident.
Many powerful software solutions are cropping up that are however not as easily aligned or synched as the marketing exuberance would like to admit.
We are facing a LegalTech landscape scattered and peppered with high tech silos, but there is no overarching LegalTech dashboard along the lines of Office 365 or Google Docs even remotely in sight.
But only with some kind of democratic dashboard that would bundle most of the new and up and coming tools (like Kira Systems, Leverton, Ross, Lawlift, etc…) up, together with the powerful traditional legal software solutions like legal databases, e-discovery and data rooms, into one perfect whole, would heads of legal departments and law firms be able to drop yet another round of software tools on their partners and employees. They are already chafing under the yoke of constant digitisation of the workplace – let’s cut them some LegalTech-slack!.
If these companies unwittingly created LegalTech silos that grow into mighty solutions, but continue to find it harder and harder to align, sync, and cooperate (due to SaaS-solutions that cannot communicate, non-standardised data formats, fragmented and contradictory big data, different UX), this may prevent the adoption of LegalTech on a large scale.
That is bad because arguably LegalTech can improve access to justice for all, such as for the poor and excluded, and it can lower legal costs and speed up justice without running roughshod over the rule of law (at least that is the hope).
Of course, silos are all a result of free market competition – (i.e. ‘may the best LegalTech solution for each use case win, good riddance to the rest!’) – but the resulting LegalTech silo mentality may slow down and counter the overall adoption of LegalTech.
Law firms and legal departments will be reluctant to buy multiple kinds of software licenses for LegalTech tools if each is ensconced in its own silo of excellence, unable to properly communicate with the rest of the LegalTech ecosystem, and if people are unsure whether you can later transfer your data from one tool to the other. That way, the LegalTech transformation will soon stall.
Add to this the additional stress that new software tools exert on the people in any organisation, as they have to be trained, and then need to spend time dealing with new user experiences and the like.
Imagine that you have to do this 10 to 20 times at the same time to your colleagues just because you want to have a whole range of sparkling LegalTech power at the disposal of your organisation. Then this roll-out of LegalTech is unlikely to happen.
On a side note: I wonder what the poor silos did to lend their name to such bad habits?
A silo (paraphrasing Merriam Webster) is a tall cylinder (e.g. wood or concrete) usually sealed to exclude air and used for making and storing silage (i.e. fodder – such as hay or corn – which is converted into succulent feed for livestock through processes of anaerobic bacterial fermentation.)
So, when you are in agriculture and food production, silos are actually good and useful. It’s hard to understand why silo became a bad name in business when real silos are in fact actually working as intended.
A second side note: A silo can also be an underground structure for housing a guided missile. Let that sink in for a while.
> What do you think? Feel free to respond in the comment section below and join in the conversation.
Ultimately tech markets coalesce, rationalize, consolidate etc and the idea of an all-encompassing “legal suite” will get nearer. Just like SAP became the platform for the System of Record, Salesforce for CRM, Workday for HCM, one day there may be a single platform for all legal applications, certainly for back office functions but we are a long way from there. And even then, the SAPs of the world do not do everything and an ecosystem of accretive and additional apps builds up. As for the legal function, the staple has been CLM, but clearly CLM has not fulfilled its potential in and that is primarily because it has had a back office/repository centric perspective rather than a dynamic, flexible, front office focused one, which is what is needed in a modern procurement or legal department in a corporate. That is why DocuSign’s strategy around Systems of Agreement is so worthy and will be a major successor in the market in my opinion.
Silo is a pejorative term which does no justice to the key role that legal SI start-ups are doing to modernize in-house and law firms. It is on par with calling anything older than a few years, “legacy” applications. Rather insulting to those app vendors!
There will never be a single player that dominates and “silos” are eradicated. I would argue that disruptive technology generally appears as a “silo”, focused on singular use cases and then extends its functionality through innovation, acquisition or partnering.
That is not a negative but is the way progress is made.
David: you write: “one day there may be a single platform for all legal applications” – I sure do hope so, even if this seems to be far-fetched at this point in time. You may be right that it is unfair to call anything that is new and disruptive a silo. However, when you think of the people who are currently working in legal organizations, whose task it will be to deal with the plethora of new LegalTeck software, and who are already stressed out by the digital transformation that’s going on everywhere, you wonder A focus that is too narrow on single use cases will lead to low adoption of new LegalTech solutions.
David : There is no question that installing a multitude of disruptive off-the-shelf solutions can create cacaphony. One way to avoid this is to use AI solutions that rely on International Standards such as W3C, which ensures that you don’t create silos with every new application. A W3C-based solution guarantees that your data is interoperable and future-proof. In the field of Artificial Intelligence, new technologies pop-up everyday – one of the biggest challenges is being sure you can interconnect with future applications/technologies.
Aimee Potter @Viasema
I agree on the silo effect… However, the smart clients are looking at the data points underlying all those applications and create platforms to connect the data points but there is no magic solution to connect everything.
>>>> comment of Richard Mabey – CEO, Juro (sent via AL HQ)
“I’m more optimistic that well designed APIs will help to reduce the silo risk. Legal teams just need to factor this into their purchasing decision.
On a related note, do people think the scale of different roles performed by in house lawyers lends itself well to one massive bundled solution? I can see why Salesforce does for sales but in legal I’m not so sure…”
The great thing about all this tech in isolated silos is each one is carving its own niche. What may be a perfect fit for one firms partners, employees and processes may be a complete train-wreck for another.
I feel the tech industry (not necessarily within law) is currently going through a phase of moving away from suites that cover many needs to tech platforms that are spectacularly good at just one or few functions… LinkedIn released their top 25 start-up list today and it highlights just how popular the challenger start-ups are becoming. Even with the vast resources some of these companies have, it’s hard to get a reputation for everything and truly stay on top of the game. In fact, as some companies roll out more and more features, it can be detrimental to the core experiences and actually drive clients away.
What I feel the law industry is crying out for is Legal Tech regulation through the likes of the LSSA (to ensure data portability, stablity, security and integration between software) – perhaps an approach like Zapier is a long way off but would be ideal… I’m open to collaborating here.
One Law Firm recently asked us to collaborate with another tech vendor in order to automate some of their workflow. We’re now meeting regularly and taking the necessary steps to ensure this happens, with the aid of the firms IT team. Any legal tech company that wants to be taken seriously should be doing the same.
– Nick Watson, Ruby Datum
I dont think Legal Tech will produce or encourage silos. Silos are more an outcome of poor processes and disjointed business strategy rather than tech. In a recent LawTech London meet up several Lawyers called for collaboration amongst the Law Tech companies to enable more of a ‘solution’ (not end to end platform) and help ease procurement negotiations. Seems a sensible way to go…
Silos are created when the application in question was not designed to be enterprise grade. In the CLM space of old this is very clear, and Legal AI companies that started out without the Enterprise mindset will always fall into this.
An application designed correctly from the start will not fall into this, as it can grow with the use cases and needs of the customers.
So what we will see, and already are within some of our customers, is the platforms of legal AI expand into other use cases. For example we start in many companies with Legal or procurement, but then quickly move into Sales or Sales support. Or in some cases totally different locations like Medical.
This is not a new story, its been seen over and over again, but clearly learning from history is hard.
The race to get a new product as a start up is always off set against the needs of future design.
Standards are not always the answer, look at SOA, CMIS and many others that come post systems. in the case of CMIS, its still not widely used for system inseparability or silos, and that is over 8 years ago it was approved.
Are LegalTech services creating new data silos? Probably, if you look at the resulting sub-optimal user experience. But this a fair price to pay for having data processed, certified and stored on public infrastructures (blockchain, IPFS, …). This is how Bernstein.io is designed, and we think it makes, at least in the IP space where notarization and confidentiality are both very important.
The LegalTech industry will certainly mature and find better and easier ways to interconnect data from different services. But I am skeptical we will ever see an all-encompassing “legal suite”. Actually, I hope it will never come because of the obvious security risks.
Thank you, Tom!
Great discussion and important concepts are contained in this post and the string that follows. I agree with Tom that tech silos are counterproductive and contrary to the interests of lawyers and clients.
A similar dilemma has been created in medical technology where powerful data silos have been created over decades which are of little value to patients and the medical professionals that treat them. To the contrary, the med tech companies (research, insurance, diagnostic, treatment and recovery) have amassed enormous data silos which serve their own economic interests and are inaccessible to those who need access to critical data for quality care.
That is why DASH is being built and hopefully will be at MVP stage 1st Q 2019. (See dashforlaw.com) For the most part, robust API features will enable this combination of growing amounts of legal tech data to be exchanged in real time through a DASHboard which provides interoperability with the legal technology all users deem necessary to do their legal work as they need to service their clients and work with their teams. As Tom suggests, the goal of a single sign-on legal tech dashboard with instant access to all a lawyer’s tech tools and the data contained in them would be an enormous time and error saver worth working to create.
However, the confidentiality responsibilities of legal professionals require the highest level of data security and privacy. Advanced cybersecurity encryption measures and “anonymized” data repositories stripped of identifiable attributes can serve to manage this concern.
This journey to secured and anonymized shared data is not an easy one, but essential for the best interests of clients and the legal professionals that serve them.
Larry, you brought up the concern that’s on my mind: a one-stop dashboard sounds nice, but do we have security in place to protect such a trove of confidential information?