Vertical or Horizontal Case Management Software

The Horizontal Hang-Up: Why is Tesla Ditching Salesforce?

Recently Tesla began the process of ditching Salesforce, explaining they needed a "less cumbersome" way to manage their connection with customers.

With unique requirements, culture, and structure, they wanted a vertical CRM that was designed from the ground up for their needs. Salesforce proudly proclaims they can provide CRM for "everybody". When something is built for "everybody", it doesn't work for anybody long-term. As Tesla's decision suggests, this 'one-size-fits-all' design brings enormous additional costs to specialized industries.

At the same time, a [survey of developers] found a large majority of developers who had previously used Salesforce did not express an interest in using Salesforce in the future.

With these red flags accumulating, lawyers who rely on Salesforce may begin to worry. Some use Salesforce, or apps built off of it, to manage their relationships with clients. But hidden costs and difficulties with deployment have led many to other alternatives.

This white paper will explore some of their concerns, and analyze 12 ways that industry-specific CRM solutions can bring better returns and improve service to clients.

Breadth vs. Depth: What are Horizontal and Vertical CRM?

Currently, over 77% of all law firms (and 100% of the biggest firms) use Client Relationship Management (CRM) software. That number is growing, as lawyers learn how automated systems can help them find new leads to convert them into clients. Read more here on What is the difference between case management and CRMs.

Horizontal CRM

Horizontal CRM is designed to serve salespeople from any industry. They are also called 'generic' or 'industry-agnostic.' They are designed around the standardized sales cycle, but sometimes can be altered to fit other needs. The most famous horizontal CRM currently on the market is Salesforce.

Vertical CRM

Vertical CRM is designed around a specific industry. They are built for the needs and in the language of that industry. For lawyers, this means a CRM that's designed not for sales, but for legal intake and case management.

Rather than being constrained within a smaller platform and less popular programming language, vertical CRM is able to harness the power of the world's leading cloud computing platforms, such as AWS. AWS is used by some of the largest and most powerful entities, from Netflix to NASA.

Pseudo-vertical CRM

There also exist 'pseudo-vertical' CRM systems, which are industry-targeted apps built on top of a horizontal CRM like Salesforce. These include Litify, CoCounsel, and OnePlace. As vertical CRM has grown in popularity, these pseudo-verticals aim to retake market share. However, they fail to address many of the problems of horizontal CRM, as will be discussed below.

Moving to a new platform can require a great deal of time and money. Along with the tremendous potential for improvement through technology, firms and legal departments must be aware of these hidden costs before choosing their CRM.

12 Hidden Costs of Horizontal CRM

Any time a new management system or software is brought into a business, there are costs to consider that go beyond the subscription prices. Someone will need to customize the system to fit the firm's needs. It will take time and resources to migrate data into the system—and the team will need to be fully trained to use the new technology. There are more or less efficient ways to do these tasks, but there is no way to completely avoid them.

For lawyers, there are additional costs that can accrue when they invest in technology that wasn’t originally built for legal practice. As one industry white paper put it, sometimes “customers find out when it is too late—after a two or three-year contract has already been signed—that additional costs apply.” Here are some of those costs:

1. DEVELOPER DREAD

A large majority of Salesforce developers (70%) did not express an interest in continuing to use Salesforce.

They cite bugs, limits, bad deployment, random changes to metadata names, and “documentation with enough mystery to be a detective novel,” as one developer put it. The survey found more developers expressed an interest in continuing to develop on a mainframe than on Salesforce.

In 2020 the best developers have a lot of options. They are heavily recruited and very well compensated. Developers care a lot about what platforms they work in because they are investing their livelihoods, their time, and their talents to those platforms. If a developer picks the wrong platform to make her career, the lost time and opportunity costs are nearly immeasurable.

So devs care, a lot, about which coding platforms they work on. This means that the best way to see where tech is headed is to watch where developers are going. What coding stacks do they like the most? Which platforms and environments attract the hottest and best talent? One easy answer that we often hear: Not Salesforce.

The Stack Overflow Developer Survey looks at the platform preferences of around 100,000 developers around the world. Stack Overflow consistently rates Salesforce high on its list of “dreaded” platforms to work with.

The benefit of a system like Salesforce is that it is accessible to coders with less skill and experience because many choices have already been made by the platform itself. Because products don’t have to be built from the ground up, this can mean they get to market faster, but the trade-off is often short-lived.

SHOULD LEGAL CRMS OPERATE OUT OF SALESFORCE OR AWS?

Sources: Stack Overflow Developer Survey Results 2018, Amazon’s $18 billion cloud business..., Companies Using Salesforce.com CRM, Annual Revenue of Amazon Web Services from 2013 to 2019, Salesforce.com’s Revenue from 2010 to 2019, Salesforce FY-2019 Annual Report.

That’s because it comes with drawbacks—the biggest one being that within Salesforce, developer choices are always limited to what Salesforce allows. This often sends experienced developers to other languages and platforms, like AWS.

AWS is consistently rated highly in the Stack Overflow surveys. In the same survey where developers “dread” Salesforce, they consistently list AWS as among the most loved platforms. 25% of all professional developers are already adept at AWS, and it’s listed as the 2nd most desired skill set. On the other hand, Salesforce is used by only 2.3% of professional developers).

Lawyers aren’t software developers, so this might seem irrelevant. But ‘developer dread’ is a red flag in determining which programs will continue to grow and progress—and which are liable to stagnation. Platforms that frustrate developers won’t be able to keep up with the ones that developers love.

2. IMPLEMENTATION

Implementation costs include the time and resources needed to configure, customize, and train users on the new system. All new technology has implementation costs—but horizontal CRM costs can be extremely high.

Because the processes are designed for different industries, they require extensive customization before they can fit legal needs. The ABA’s 2019 TechReport warns about using CRM that wasn’t built for lawyers. They write:

“While it is possible to customize most CRMs to a specific business’s needs, complex CRM software programs can take years to design and implement, and they still have the associated switching costs of time and retraining employees as other software programs.”NOVEMBER 06, 2019 | TECHREPORT 2019

CRM options such as Salesforce are better understood as a set of tools, rather than a product. Salesforce consultant Sam Dorman warns that organizations need to understand this before buying into the system. Too many don’t realize that they are actually paying for a set of tools that they can use to build their CRM. “It’s not something that’s been purpose-built around a specific set of business processes,” he quotes a consultant as reporting. This is particularly true for law offices. To reach the point where they have a product they can actually use, Dorman notes, they will also have to pay someone to build it.

Estimates for these costs depend on several factors. According to a report, Salesforce ContactMonkey - a Salesforce integration app - has estimated implementation costs at anywhere from $5,000 to well over $80,000.

However, these numbers are for businesses, which apps it hosts. The Ackert Advisory study on the actual platform warned: "The vast majority of CRM platforms entail costly purchases of CRM for legal use as well as the training needed to use it correctly. When fully implemented, combined costs can swell to well over six figures."

This is what caused the ABA 2019 TechReport to conclude that sales-oriented CRM often "lacks customization for small and medium firms who cannot afford to reprogram the standard CRM."

3. DEVELOPERS AND ADMINISTRATORS

IT costs don't end with implementation. Another hidden cost for sales-oriented CRM is the ongoing salary for developers and administrators. These are people who can continue to develop your system, manage the data, and address user requests.

These costs aren't optional. The non-profit Salesforce consultants at Bigger Boat have stated that they "ALWAYS recommend that organizations have a designated database administrator. In fact, we feel so strongly about it that we don't start a project unless the organization commits to finding (and allowing time for) someone to fulfill that role."

Software consultant Seth Davis notes:

"Many companies try and wedge in a java or .net programmer and tell them to code up Salesforce. To build and operate only to find that they cannot do the work. To apps or integration in Salesforce at a deeper technical level, you need to have experienced certified Salesforce personnel on your team."

Davis insists that these should be developers, which command an average yearly salary of $116,628. Others try to make do with administrators, who can only make smaller changes within the system. But the average salary for U.S.-based Salesforce admins is still a hefty $88,867 a year.

These payroll expenses will never disappear and are likely to only increase with time.

An additional consideration with horizontal CRM is that many legal users complain that the company’s own support staff aren’t aware of the needs, language, and priorities for legal professionals. This can add frustration to the support process.

4. ADDITIONAL APPS TO MANAGE LEGAL PRACTICE

If lawyers choose a sales-oriented product for their CRM, they will likely need to purchase additional applications to manage other aspects of their legal practice.

While the intake process is similar to sales, the rest of legal practice is not. Many businesses can benefit from using tools like Salesforce to manage each aspect of their work - but we find that many lawyers cannot. In order to create a more integrated practice management system, they need to subscribe to other services.

There are several legal practice management apps built on the Salesforce platform, such as CoCounselor, Litify, and OnePlace. While these seem to be vertically oriented, they can’t escape many of the problems faced by horizontals. Because they are built on a system that is already costly, they can be among the more expensive practice management options. Further, venture partner Sean Jacobsohn warns that these apps are “subject to the pricing whims of Salesforce.”

When lawyers invest in apps that are built off of Salesforce, much of what they’re paying is just for Salesforce. Legal users worry that their money is going to a platform that doesn’t necessarily care about the success of this particular legal app, rather than going to the developers and managers who could improve and innovate the system. As consultant Seth Davis puts it, this gives developers “a learning curve around the Salesforce system, not the business.”

5. COST OF FEATURES THAT ARE IRRELEVANT TO LAWYERS

Software analysis site TrustRadius warns that horizontal CRM doesn’t “use the language of your industry, may not offer best practices/trainings catered towards your industry, and may not prioritize new features that are important to your industry over features that are important to other industries.”

A law office won’t ever mine a list of 20,000 leads to make outbound calls. It’s an ethics violation for lawyers to do things that salespeople routinely do, and which sales CRM tools are built to facilitate.

Analysts note that sales-oriented CRM is expensive because they come with a vast array of tools that are useful to salespeople. Although law offices won’t use these tools, they’ll still be paying for their use and development.

As legal marketing expert and attorney Andrew Cabasso put it:

“For lawyers, Salesforce is like the sports car of CRM: it’s expensive, it’s powerful, and you probably won’t get much use out of it day-to-day. There is also an industry built around setting up and consulting for implementing Salesforce. For most law firms, you probably don’t need that.”

Obviously, in a highly competitive market, lawyers can’t afford to pay for tools that they will never use. But the costs can be even more dire. These additional bells and whistles further complicate the software and can lead to lower engagement for legal users. Perhaps this is one reason for low engagement with these tools. The Ackert Advisory Legal Industry Report found that although 70% of lawyers have access to CRM tools, only one-third are actively using them.

One recurring complaint among Litify and Salesforce users is the limitation of document management options.

Most lawyers rely heavily on a folder structure to easily access their files. As Sam Glover with the Lawyerist writes “folders and subfolders are the easiest and most accessible way for lawyers to manage their paperless office. Throwing out the folder structure can lead to lost documents, wasted time searching for the right file, and increased stress.”

But users report that following this process in Litify or Salesforce can become complicated. Many are told they should tag each document rather than rely on a folder system, while others wind up buying additional apps and setting up extra integrations in order to store their files in their preferred filing system.

There are other document management products, such as Filevine, which enable both tagging and folder systems. This allows lawyers to tag any documents they wish to track, but also easily maintain their preferred folder and subfolder organizational system.

6. SUBSCRIPTION CREEP

Many of the biggest CRM companies have experienced significant subscription increases. “It’s brutal,” writes one Salesforce user.

Every year for 4 years I’ve been told that I MUST pay 7 percent more. So our fees have consistently grown each year. Although I like the product, I’m very concerned that they have me in the heart and will simply squeeze prices until I can’t afford it

Like many others, this user was beginning to build a new CRM as a safeguard against subscription creep.

A SaaS pricing expert adds “this does make my blood boil a bit. You’re going to raise prices 7% every year, for the exact same software that costs you like $0.06 a month to serve up to me?”

However, until last year, Salesforce had pricing protections in place to ensure that renewal increases couldn’t go above 7%. As of July 2019, those protections are gone. IT negotiation advisors Adam Mansfield writes

“Beside[s] the fact that the prior standard price protection was already not competitive or adequate, the fact that it is now worse is eye-opening and something that enterprise customers need to be aware of and need to address as part of any renewal negotiation or discussion they are having.”

The great danger of subscription creep is that users have already sunk tremendous resources into the CRM. After investing large amounts of time and money to set up the system, they often find it easier to pay exorbitant subscriptions rather than switch systems.

Seth Davis warns that “costs can quickly escalate out of control,” which can make CRM “an anchor instead of a rocket boost. Many times, the rising costs of additional but much needed capabilities causes subscription creep that the company is saddled with.”

In a take-down of their competitor Salesforce, Microsoft wrote: “customers face a hidden cost to user productivity and subscription costs if important functionality such as workflow, beyond a simplistic version of it, is required.” They enumerate a long list of essential functions that are only available at extra cost, including support from the company.

However, users of Microsoft Dynamics have themselves complained about its frequent, erratic changes to its pricing structure, which includes recent price increases greater than 10% for some of its users.

As SaaS offerings grow and develop, it is reasonable for the price to go up. But this increased cost should be associated with features that will actually benefit its users. Legal professionals who use a large, horizontal CRM worry that their new features are rarely relevant to legal practice management. That means the growing costs lead to an ever-diminishing ROI. With tools that are built specifically for legal use, new developments and increased costs are far more likely to be attached to improvements that will benefit legal users.

7. Broken Functionality Following Updates

As mentioned earlier, horizontal CRM requires a great deal of customization to be useful to lawyers. But this means that when Salesforce or the apps built on Salesforce.com update their programs, it can affect the customizations users have built. Some functionality may suddenly stop working. This will require additional work from hired developers. Consultant Seth Davis notes:

“For users on Salesforce, some functionality may break after Salesforce updates. Updates usually consist of large layout changes to the platform, causing problems to the businesses using it by making some important features now hard to find.”

Senior Salesforce developer Viktor Hardziayuk warns users to “stay super-attentive” to new functionality that is brought into the CRM, as these changes can easily lead to performance problems in the system.

8. Data Storage Limitations

Lawyers have higher storage needs than many other professionals. That means horizontal CRM often can’t provide them all the space they need.

Salesforce advocate Karina Dalhunova warns that “a considerable growth of Salesforce expenses may result from the data and storage limits” (emphasis in original). Salesforce did recently increase their storage capacity by tenfold, but Dalhunova notes this “still may be insufficient for an organization.” This requires users to purchase additional external databases and DMSs and find ways for them to integrate with Salesforce.

9. Lack of Collaboration

Research out of Harvard Business School has found that “the growing complexity and integrative nature of client issues” requires greater collaboration among lawyers than ever before.

This collaboration imperative extends to clients as well. That’s why the ABA notes that “attorneys are flocking to client portals.” These portals give clients easy access to their files and secure communication options with their legal team.

Legal professionals need CRM options that allow for a high level of collaboration. But many users of Salesforce and Litify are frustrated by the cumbersome process of adding guest users. Other options, like Filevine, will allow users to easily invite guests to collaborate on files and circle back later regarding whether they want to set up an additional license. This smooths the process of sharing files with those who need to see them.

10. Inefficiency of Using Multiple Systems

Law offices that rely on horizontal CRM typically use other systems to manage their practice. But this cobbled-together arrangement can introduce its own inefficiencies and opportunity costs. There are often hiccups in integration, repetitive data entry, and difficulties in training and keeping tabs on multiple systems.

Researchers have found that toggling between multiple apps is taking a toll on productivity. They measure that on average each worker wastes 32 days a year through this scattered attention. In addition to that, lawyers need to consider the costs of all these additional apps. Each additional tool brings its own subscription costs and administrative needs. Rather than paying piecemeal for each feature, lawyers can save substantially by buying one inclusive legal core.

The alternative is a CRM that is purpose-built. Document management tools, data analysis, deadlines, and the legal workflow aren’t “add ons” but are instead the core of the app. This creates a beginning-to-end operating core, which is far more efficient and cost-effective than stringing together several apps.

11. Limitations of the Platform Language

When buying into a horizontal CRM, firms report feeling saddled with a set of strict rules and limitations. Sales tech expert Sean Jacobsohn explains that Salesforce developers “are not in control of the platform and you might need to re-write parts of your application if Salesforce changes features or tightens security.”

This has also led users to complain that ‘pseudo-vertical’ apps built on a CRM like Salesforce have very little control over their design, technical priorities, or even pricing—as those decisions are largely made by Salesforce. Though the goal of a CRM is closer relationships, this can instead create an additional degree of separation between lawyers and their clients.

Consultant Seth Davis adds:

“There isn’t much customization for how Salesforce apps work and look. If you purchase a solution that is built on top of Salesforce, you are limited in your ability to customize how it will work as you now rely on Salesforce updates.”

Instead of a blank slate, Salesforce makes choices for their developers. Developers might not like those choices, but it’s the cost they pay to rent out someone else’s codebase.

12. Faster Obsolescence

Because data migration and implementation can be so costly, firms should seek out solutions that will last. As they consider a CRM, their greatest enemy is obsolescence.

This has led some experts to conclude that horizontal CRM is not useful for future-proofing a law practice. The 2019 ABA TechReport notes the danger that horizontal CRM will quickly grow out of date:

“While a practice management system has a tendency to introduce new features that are specific to law firms and which evolve over time, a customized CRM is a static product that would need to be further customized by the firm or an outside developer.”

Financial experts note that across all industries, vertical solutions are experiencing greater financial stability than horizontals. An extensive financial analysis by venture capital firm Bowery Capital determined “most vertical players are making money, while most horizontals are losing money.”

Sadly, by the time lawyers realize these constraints, they’ve often sunk tremendous costs into a system that won’t be able to keep up with new developments.

Depth Over Breadth

Due to the many hidden costs with large, industry-agnostic CRM, legal professionals should look to legal-specific vertical CRM solutions.

CRM can also be one part of a full legal operating core like Filevine. The benefits of this integrated solution include:

Reduced costs

Rather than paying for multiple apps working together, you only have to pay for one, which is tailored to your needs. You also don’t have to pay for a slew of sales tools that lawyers will never use. This, in turn, leads to a higher ROI.

Increased efficiency

Filevine has been shown to increase efficiency in firms by 67%. It does this through automating matter management and reducing the time lost to perpetual app-switching.

Faster training

Vertical CRM that is built for lawyers is more intuitive and easier for them to use. They don’t have to ‘translate’ the sales process into their own work while ignoring features they will never use. And most importantly, they only have to learn one system instead of being trained on several that are cobbled together.

Continuous improvement of the platform

Filevine is focused on the future of the legal practice. They invest their revenue back into developing the tools that will make lawyers’ lives better.

Decreased risk of information falling through the cracks

Switching between systems not only requires duplicate entry, but it also increases the chance that information will be lost. By keeping their data together on one centralized system, legal professionals can ensure that each team member is aware of the next steps.

Filevine’s CRM solutions offer additional advantages that might not be available through other legal practice management systems.

• Support answering every phone call. Filevine integrates seamlessly with the legal virtual receptionist service Ringbird, which greatly aids the intake process.
• Ability to communicate with clients on their own terms. Filevine includes a unique text-to-case-file feature, which allows team members to stay in close contact with clients or potential clients.
• Fast returns on contracts and signed documents. Seamless integration with VineSign facilitates rapid e-signatures.
• The long-term security of a top-rated platform. The system is built on AWS, which gives them complete freedom to build their system from the ground up, in the language and platform most respected by top developers.
• Speedy data entry. As a part of AWS, it also benefits from the accuracy and speed of Amazon Textract, which goes beyond Optical Character Recognition in extracting text from scanned or photographed documents. This removes hours of tedious data entry.
• Consistent updates and new feature releases provide users with continuous innovation.

Horizontal software can only go so far. Lawyers deserve CRM solutions that are built for their needs. The right vertical software and CRM will connect lawyers more profoundly with their clients, create deeper team collaboration, and offer firms continual growth and development.

If you have questions about how Filevine case management software can help your practice, visit us at www.filevine.com or email us at info@filevine.com.