PracticeEvolve is a practice management software provider with users in Australia and New Zealand, as well as Ireland and the UK. The Australian market, Santos said, has more of an “openness to try new things” compared to some of its global counterparts.

“What allows for more innovation in Australia is a somewhat easier-to-understand regulation and less complexity in terms of partners that you work with. If you think about the UK, not only in isolation but the UK as when it was part of the EU and within Brexit, there are so many jurisdictions and so many regulations that you have to abide by. Number two, because the history in the UK is so big and diverse, [it has] been exposed to a lot of situations. A lot of things went wrong in the UK before,” he said.

“When you talk about professional damage insurance, for example, which is a massive thing in the UK, it is really expensive to run a law firm and be insured for the services that you actually provide. So, in the UK, there are very few sole practitioners or small law firms. So, for law firms [that] actually have a commercial power and are able to offer the services that they want to offer to the spectrum they want to offer, they need to join up with different parties with that, add the complexity of this consensus buying or consensus adopting of technology. With Australia, it is a more open approach because there is less complexity.”

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Up until 10 years ago, Santos added, there wasn’t an “external recognition” that the legal industry needed to jump into tech.

“We’ve got a very archaic process and a very archaic structure where the technology can really cause an impact. So, what we’ve observed is that in the last 10 years, the amount of external funding coming into legal tech has been greater than ever. And we talk about the projections for the next, 10 years or so, and it’s just growing exponentially. So, what happens here is that whilst you’ve got external funding and you’ve got external ideas and concepts being brought into legal, there is also a lack of understanding of how law firms actually operate and what the legal services are,” he said.

“Having worked for VC-backed companies in the past as well, these external investors don’t have an understanding of what the intricacies of servicing a law firm could be. Simple things like your trust accounting versus your office accounting, and the regulations that you have to abide by. So, there’s an expectation that ‘it’s easy, let’s just throw a lot of technology into this and we’ll make their lives much better’. But there is a lack of understanding.”

Additionally, firms occasionally “pile” on tech without taking a step back and properly mapping out a plan – something Bullion said was especially important in the current market.

“You suddenly see law firms with maybe five, six, seven, eight different bits of technology, and there’s a lot of crossover between the technologies. So, you know, one piece can be done by another piece – and [firms] get themselves really confused and bogged down. And I think a lot of that then sort of holds the law firms back,” he said.

“And it’s just really about finding time to take a step back and talk to a partner, to a trusted partner or advisor in the market who can really give them that advice and really help them map their stacks out.”

Taking a step back can also help firms evaluate their costs properly, particularly when comparing the item cost to the process cost.

“Without actually understanding how much is x actually costing in terms of the process, does this rely on a greater manual input? Does this interrupt the whole partners of a law firm when you’ve got a question rather than specifically a group of people? So, there’s no right or wrong here because every single law firm I’ve experienced that I’ve worked with, and these are in the thousands, they are different, they’re unique in their own ways and unique in their own challenges, not the personalities, but specifically the challenges and the history behind it,” Santos said.

“So, I don’t think, in general, when these heads of departments or managing partners are looking at costs that they are expanding the view to understand how much that technology is costing beyond the invoice and the process around it. When looking at the total cost of a tax stack, it can’t be looked at in isolation as just the item costs. You have to consider the whole process cost and opportunity cost of actually doing that.”

The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full conversation with Gab Santos and Adam Bullion, click below: