Comparing the Cost of SaaS LPM Tools to Conventional: The Metrics That Matter

So, how many of you maintain a law library in your practice?  You know, the digests and volumes of caselaw and annotated statutory codes with the annual pocket parts that always slip out and of course, those loose-leaf reporters where you need to unscrew the metal binder clasp with a coin, then fumble around to slip dozens of flimsy sheets off of the metal stem and insert the updated replacements.

Probably not many.  My guess is that rather than buy all of those books and own them outright without any further costs (except de minimis updating fees),  instead, you fork out anywhere between $30 and $300/month for commercial legal research services so that you can access a library online. But horrors!  Doesn’t that mean that over a lifetime of use, you’ll wind up paying far more for legal research – thousands and thousands of dollars – than you would if you invested in a good set of law books?

Seriously, few of us flinch at the cost of commercialized legal research and willingly pay more on on an ongoing basis for its convenience and ease of use.  So why then, are so many lawyers and technology experts so quick to dismiss software as a service (SaaS) practice management tools because they believe that the ongoing subscription fees cost more in the long run than a one time investment in a desktop based practice management tool that the user owns outright after purchase?

Some may argue that my comparison isn’t fair because computerized research tools offer added functionality, notably, the ability to run searches that casebooks and statutes don’t entirely replicate (unless you remember how to use those digests from legal research in law school).  But SaaS tools offer added functionality which well justifies the ongoing fees.   As Larry Port at Rocketmatter pointed out, SaaS systems are simple enough to use that lawyers can replace costly IT support, a point echoed in this ABA piece.  Systems like  Clio, which offers a client portal feature spares lawyers several hours a week fielding client requests for updates by enabling clients access their files themselves.  In fact, I’d go so far as to say that SaaS systems can eliminate the importance of (if not entirely need for) physical office space by making it easier for lawyers to run a practice completely online (as with VLOTech) or to work in a multi-person practice with each lawyer or virtual assistant in accessing common client matters and administrivia through the SaaS programs, but working from separate locations, including home.

Simply comparing the cost of SaaS versus desktop tools isn’t accurate because from a pure cost perspective, a $600 deskbased practice management tool will beat out a $50/month SaaS tool by year two.   The better metric is the cost of the SaaS tool versus the deskbased practice management tool plus the cost of IT support and extra billable hours responding to client requests and even the cost of office rent.  Lawyers are already adept at making this type of externalities-based comparison when it comes to legal research tools.  There’s no reason why they should evaluate practice management systems  any differently.

Update (3/5/09 – 9:30EST) In response to comment, yes, one can still work outside of an office or at home with conventional tools on a laptop.  However, what if a lawyer has a virtual assistant or a clerk?  They are going to need some mechanism to be able to access your desktop system remotely.  But you do make a point that perhaps SaaS tools do not fully replace rental costs, nor should they for lawyers who still prefer face to face contact with clients in an office.  This is also important.  As for law libraries being free, there are also many SaaS products that are free (Google apps and others) but  they are not always convenient because they weren’t designed specifically for lawyers.  Personally, I am a fan of the law library for research but recognize that many are not.