Software Procurement Best Practices: An Interview with Appara COO Kurt McFee

5 min read

Here’s what Appara’s Chief Operating Officer has to say about legal software procurement.

Legal software procurement can be a challenge. From the process of selecting a vendor, to understanding your contractual rights and responsibilities, to dealing with pricing structures and more, there’s no shortage of pitfalls along the way that can cause headaches for even the most experienced lawyer or paralegal. That’s why it’s important to have a clear software procurement roadmap before you sign any contracts – a roadmap that shows you the right questions to ask and any hidden issues you need to be aware of.

Kurt McFee, Appara’s Chief Operating Officer, has seen firsthand what happens when companies take shortcuts in software procurement. He cautions that law firms must take due care and diligence in selecting software, and there are several important principles to follow when choosing a vendor.

Involve the Right People Early

“The first problem I see organizations run into is they don’t evaluate their software with their internal expertise,” McFee says. “They don’t bring in the correct experts within their organization to evaluate the software. So, for instance, sometimes it’ll be a lawyer evaluating the software instead of a law clerk or paralegal. The lawyer may be the decision-maker, but they’re probably not the person who’s using the software.”

McFee says the user must be included in the decision-making process, as it’s the end user who is best positioned to evaluate usability and functionality. 

Understand the Pricing Model

McFee also notes that firms must also be on the lookout for predatory pricing arrangements:

“Oftentimes, firms won’t understand how the pricing structure works. Sometimes there are upfront or hidden fees; you have to review the pricing structure in depth.”

Finally, McFee explains that firms must have a clear understanding of the rights afforded to them under the software’s licensing agreement. Do you have the right to your own data? Will your service provider charge you a data extraction fee if you decide to leave? Is your data being stored in Canada? Is the provider ISO compliant?

“From a procurement standpoint, it’s the complexity of the agreement that becomes a problem,” McFee notes. “People can get hung up on things like liability and outages.”

McFee says that assessing software vendors’ terms is all about the reasonability test. For instance, it’s important to ensure that any escalations are handled by a support team, not just an individual. When it comes to pricing structures, law firms should be careful about paying upfront fees.

“If you’ve signed up for something where you’re paying a per-month fee, you may not have the transactions to justify the fee,” McFee explains. “Sometimes you can end up paying for transactions you don’t even use, and you can’t disburse them back. It may seem wiser to pay a flat fee upfront, but if your discount is based on a monthly minimum volume that you never hit, then you’re paying more per month than you would on a pay-as-you-go model.”

McFee says the pay-as-you-go model, like the one Appara uses, is a winning choice for law firms. With pay-as-you-go pricing, law firms only pay for the services they use.

Know Your Contractual Rights

McFee also cautions law firms against locking themselves into a long contract with upfront costs. While it’s understandable to want to have price certainty, firms must be aware of their rights under a long contract. Do you have the right to terminate at your convenience? What happens if the provider stops meeting your customer service needs, or they don’t build out the product roadmap you need?

“The problem with upfront costs is that it’s more difficult to bill that cost back to clients,” McFee notes. “The law firm usually ends up eating that cost as a firm because it’s not being billed properly by the provider, so it’s not as easy to track and it’s not auditable.”

Contracts can also be a challenge. What happens if the provider decides to increase its fees mid-contract? Can you break the contract in such an event?

“Some providers will lock you into a long contract and take advantage of it by doing incremental fee increases,” McFee says. “One of the nice things about Appara is that it’s a one-year contract that autorenews on a month-to-month basis.”

McFee says understanding your right to termination is essential. Are you able to terminate at your convenience? Are there penalties associated with breaking the contract early? And what opportunity cost is associated with staying in a long contract?

“The opportunity cost is that you could end up paying way more than you thought you would,” McFee notes. “When you lock yourself into a longer contract, you may think you’re getting price certainty, but you need to be careful about the providers’ ability to increase the price without notice.”

Have the Right People Review Contracts

McFee says that law firms looking for new software should be thorough in their efforts:

“Have the right people be part of those calls. Get on a trial period where you can try the software before you commit. Make sure you review your contractual rights. And get to know who your vendor is – get references. Change management is hard, and the last thing you want to do is partner with a vendor that doesn’t offer the support your team needs.”

Oftentimes, firms will only have their legal department review a contract; McFee says that ideally, business leaders at the firm should also be involved in contract review. One particular issue to look out for: Assignment clauses.

“Make sure your contract has the ability to be assigned,” McFee explains. “Lots of companies get bought and sold, and assignment clauses can be problematic. Sometimes you can’t assign a vendor contract without consent, which can be a pain. Make sure you have the right to assign the contract to future successors of the company.”

Adopting new software can be a struggle, but with the right software procurement roadmap, your team can find and implement emerging software solutions with ease.

Is your firm looking for AI-enabled records management and document automation software? Look no further. Book a demo to unlock your FREE trial of Appara today.