Buy or Build? Decoding the Legal Tech Dilemma
My name is Alex Zilberman, and I’m the CEO and co-founder of Chamelio, a legal tech startup dedicated to transforming how in-house legal professionals operate. I founded Chamelio with two exceptional partners: Gil Banyas, our COO and former General Counsel of Oosto (previously Anyvision), and Gal Lellouche, our CTO and former Senior Director of AI at Sage.
Prior to Chamelio, I served as VP of Partnerships at a fintech company, growing with the company from a private startup to a successful public offering. Before that, I was COO and co-founder of a computer vision company that has raised over $200 million to date. It was during that venture that I first collaborated with Gil, our current COO.
In November 2022, the launch of GPT-3.5 sparked a revolution in the traditionally conservative legal world. This breakthrough eliminated the need for hard-coding every input, opening up new possibilities for innovation. Over the past two years, we, along with countless others globally, have been exploring the potential of generative AI tools. The impact has been profound, with some professions facing obsolescence and others undergoing drastic transformations. The legal field is at the forefront of this change.
While AI has opened countless doors for innovation in legal tech, it also presents a critical choice for in-house teams: invest in ready-made solutions or venture into building custom tools tailored to their unique needs?
Legal Tech: Buy vs. Build
AI tools are great at pretending to know everything. Big tech companies like OpenAI, Anthropic, and Google love to show off how much their AI can do. When you try these AI systems, they often give impressive answers.
But we shouldn’t be too quick to believe everything AI says. These systems have been trained to sound smart and confident, but they don’t always know as much as they seem to. This is important to remember when we talk about buying or building legal tech software. It’s easy to think that building your own solution might be simple, but that’s not always true.
Let’s look at what’s involved in buying tech and then compare it to building it yourself. After that, we’ll weigh the good and bad points of each option and wrap up with some things to think about.
Buying Software: What’s Involved
When legal teams decide to buy software, they usually follow these steps:
- Figure out what they need
- Look at what’s available
- Try out different options
- Talk about prices and features
- Set up the chosen software
- Get help from the vendor when needed
Building Software: What It Takes
If a team wants to make their own software, they typically need to:
- Decide exactly what they want the software to do
- Get people to work on it
- Design and create the software
- Test it to make sure it works well
- Start using it in the legal department
- Keep improving it and fixing problems – All the time
Comparing the Two Options
Here’s a simple comparison of buying versus building:
The Reality Check
Building your own legal tech might sound good, especially when AI makes complex tasks look easy. But it’s important to think about:
- What you’re good at: Legal teams know law, not software. Making good software is often harder than it looks.
- Time and effort: Creating and maintaining software takes a lot of work and special skills that most legal teams don’t have.
- Hidden expenses: While it might seem cheaper at first, keeping the software up-to-date can cost a lot over time.
- Keeping up with changes: Technology changes fast, and homemade solutions can quickly become outdated.
- Following the rules: Making sure your software meets all legal and security standards can be tricky and time-consuming.
Finding a Middle Ground
For most legal teams, the best choice is to find a company that sells software that can be customized but is also quick to set up. Look for a vendor that offers:
- Software that works well right away
- The ability to change some parts to fit your needs
- Quick setup, ideally in weeks, not months
- Ongoing help and updates
- Experience working with other legal teams
By choosing a good vendor, legal teams can get software that fits their needs without the hassle of building it themselves.
In the end, while building your own legal tech might seem tempting, it’s important to be cognizant of the risks. The challenges of making and maintaining software often outweigh the benefits of having a fully custom solution. By picking a flexible, responsive vendor, legal teams can get the customization they need without the headaches of building software themselves. This way, they can focus on practicing law and giving legal advice.
Pick a vendor that understands the problem, uses cutting-edge technology to solve it, and allows you to try before you buy, don’t dive head-first into an unknown adventure, see if it works for your use cases first.
