Template:Legaltech as rent-seeking
Legaltech addresses inefficiencies which manifest themselves as negative annuities: ongoing costs and resource drains for quotidian tasks with minimal value. Its business model is therefiore predicated on the vendor earning not just a fee, but an annuity. The rationale is this:
If customers have an ongoing cost of ten, they will be prepared to pay me an ongoing cost of two to remove it.
Mathematically, unimpeachable logic.
But there is a paradox here: If your legaltech solution itself generates ongoing labour, soaking up costs and resources to keep working, such that that two represents an honest margin on that ongoing work, then itis not legaltech but something else. This is more like process-reengineering coupled with outsourcing.[1] That is not legaltech. That is management consultancy.
If your solution really is legaltech: if everything needed to remove the customer’s ongoing cost of ten is done upon implementation then, once the customer has paid for that implementation, why should it pay any more to operate the machine? Why should there be an ongoing marginal cost per unit?
Here there is no longer an ongoing cost of ten: the customer’s problem is solved. The machine costs nothing[2]. The customer’s question is now: what on earth am I paying this ongoing running cost for?
- ↑ Outsourcing has its own hidden costs and shortcomings, of course.
- ↑ As good as nothing. Electricity, processing power. But the customer does not need to rent these from you.