The high cost of free stuff – document management edition

The cost of starting a new law firm has steadily dropped in the last several years. Several high-cost requirements for firms, such as an in-house law library and legal research, storage, teleconferencing and document production, have been greatly reduced if not totally eliminated by advances in technology. Both hardware and software costs have plummeted, making stocking a fully-functioning law office a reasonable expense, rather than a cost-prohibitive investment. Along with reduction in cost has been the blending of software intended for business with that intended for personal use.

Why wouldn’t the same software that you use to store your family photos also keep your business documents safe?

This is also a great marketing technique. First, you get consumers comfortable with a product in the home, and then they will start using it at work. Since businesses are more likely to spend money, if you add some additional features, you cnan charge extra for them. “Freemium” is the term that has been invented to describe this policy: software that is initially free, but you must pay extra for certain features or usability. Now you have a companies that are trying to cater to both the home and business worlds, which have very different needs, requirements and workflows. For example, a company that builds a product with the home user in mind rarely needs to worry about complex regulatory environments such as HIPAA Compliance, Sarbanes Oxley or the guidelines of a state bar’s ethics opinion.

Since most fermium software starts off as free for use, companies work on ways to reduce costs involved in a Software as a Service (SaaS) model. That means less for updates, security and server infrastructure. Since families rarely add and remove members at the rate that businesses do, they also don’t have the security features that businesses have come to expect.

HIPAA, or the Health Insurance Portability and Accountability Act was passed in 1996 to help protect patient’s private medical information. In years since, provisions have been added to provide for online cloud storage. If you are going to store medical records in the cloud, you must sign a BAA (Business Associate Agreement) with your provider, and most have breach notifications. These notifications went into effect on March 26, 2013. If you are storing a client’s medical records in the freemium version of many well-known services, you are a committing a violation of federal law. Recently, some companies have added HIPAA compliance, but that is only for their high-end business customers.

Financial Advisors have their own set of regulations, mainly requirements dictated by the SEC, FINRA and other government agencies, which state how long records must be kept and has storage requirements like WORM (Write Once Read Many) and stringent auditing requirements. None of the freemium companies support all of these requirements, because they are complex and don’t cater to their consumer target market.

Additionally, consumer protection laws exist in 47 out of 50 states. These laws require notification to an individual, and probably an Attorney General if sensitive personal information is leaked or breached. Some states allow for private causes of action and treble damages if the personal information leaked leads to loss, such as in the case of identity theft. The required investigations can be extremely expensive and time consuming, to say nothing of the reputational damage to an attorney or firm due to a leak. A freemium level of security is fine for storing family photos, home videos, music or e-books, but when extremely sensitive private information is on the line a security-first footing is important.

Lawyers will have the easiest time getting away with the freemium services because the ABA and State Bar Associations are intentionally vague. They state that you should take reasonable steps to make sure the data is secure but don’t really define what those are. The larger problem that occurs is the actual control of the client data, meaning once you share data through the services, it’s hard to get it back from a disgruntled employee. Therefore, many legal technology experts also recommend adding a third-party security products to help secure the device. This hodgepodge solution will work, but is not ideal, and the more moving parts a system has, the more likely something can go wrong.

Freemium products rarely have technical support numbers. They usually have an email address or a twitter handle. If you are going to use email for support, typical response time is at least 24 hours and can be longer. That is understandable when trying to find a lasagna recipe, but not when try to find a PowerPoint for a meeting you have in one hour, or if a judge has requested an important document and you find your password is locked out. Manpower and overhead for things like customer care, help lines and tech support cost money, a corner freemium services often cut, and something in which professional products and services invest a great deal.

It’s difficult to resist the allure of free as a sticker price, particularly in a market where lawyers are forced to work longer and leaner. What is the best value overall when you take into account all of a lawyer’s needed features and security. Software that is designed to be easy to use and access can’t simply add professional grade controls and protection as aftermarket bolt-on extras. Freemium isn’t a good deal when you have to pay more to make the product useable in a high-stakes professional environment. When that happens, ‘freemium’ is another term for ‘bait and switch.’

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