I recently wrote about how I’d go about selecting a cloud-based practice management system. I mentioned—positively—Clio, MyCase, and Rocket Matter. I based my selection process on market share data coming from an American Bar Association survey.

One can argue that comparing the market share of competing products isn’t a very good way to make a purchasing decision. One might argue that feature sets or customer service makes for a better comparison. It’s my contention, however, that the threshold test needs to be the financial stability of the vendor. We need some assurance that the company will be around years from now and that our data will be safe. Customer base size has to serve as a proxy measurement for financial stability when the vendors don’t release their financial information.

Should We Consider Other Criteria?

After posting my last article, I was promptly contacted by representatives of MyCase and Rocket Matter. In both cases, the interaction was impressively pleasant (in light of the fact that I had recommended their competitor over them). The representatives of both companies were concerned about my recommendation and wanted to inform me of the flaws in my rationale. Interestingly, I didn’t receive any communication from any of the other vendors in our space, and I wasn’t surprised since I think most of these companies are way out to lunch and disconnected from our market.

Both Rocket Matter and MyCase made strong arguments about the likely longevity of their companies. They explained why they’ll survive and thrive. MyCase explained that it has been acquired and is now funded by a large, successful business with a proven track record. Rocket Matter explained that customer base isn’t always a good metric when heavy discounts are being offered and when one vendor has high expenses due to an extraordinarily large team. Nonetheless, I worry about the long-term viability of all of these vendors and want to pick the winner when I make a suggestion for storing your data and managing your practice.

Trust, But Verify Your Vendors

I’m not the only one worrying about how to vet these vendors and how to pick one over the other. Bob Ambrogi gave a talk at this week’s Clio Cloud Conference on how to select your cloud provider (reported on by Sam Glover at Lawyerist). Bob’s first suggestion was “Do your due diligence on the company,” and I agree with him. That should be the first thing you do before committing your data to any service providers. You need to check them out. Realistically, however, doing due diligence on these small, private companies is challenging, if not impossible. There’s little information to review when it comes to assessing the likelihood of their thriving over the long term.

When I was comparing cloud providers, I took advice from Ronald Reagan (who I wasn’t a particularly big fan of when he was President) to heart. I decided to “trust, but verify.” That’s what I did when I picked Salesforce as my practice management system. Using public records, I was able to review the financials for the company. Salesforce is making money: lots and lots of money. A quick search on Google Finance gave me more information about Salesforce than I could begin to absorb. Salesforce is clearly a thriving, profitable, sustainable business. The numbers tell the story.

I’ve tried to do the same sort of research on MyCase, Rocket Matter, and Clio. They aren’t public companies, so their numbers aren’t public, and they don’t make much data available to us. They keep their information private. To me, it seems like something is wrong with their expectation that we’ll trust them with our financial data, our clients’ financial data, and every record we need to stay in business when they won’t tell us what’s going on with their businesses.

I agree with Ambrogi that we should be doing our due diligence. Basic due diligence requires a review of the financials. Realistically, however, that’s not something we can do right now, and we’re stuck with data from sources like the American Bar Association, which I referenced in my earlier article.

A Call to Action for Cloud Providers

Today, I call on these cloud providers to release detailed financials either to us or to some independent third-party rating service. We need more information so we can be confident that our data is in good hands, is well managed, and is safe from the disaster of a cloud provider shutting down unexpectedly. Of course, my asking them to release their data won’t have much impact. However, as a purchaser or prospective purchaser of one of these products, you have leverage. It’s time to use it. One of these vendors will start revealing its data, and the others will be forced to follow. We have some power in this situation, and we should exploit it.

Many of the big cloud providers—Salesforce, Oracle, Amazon, Dropbox, etc.—make a great deal of data known. We need to be informed so we can be comfortable with our decisions. At a minimum, we need to know how many customers these companies are serving and what they’re really paying. Ideally, we’d be told the valuation of the company and see detailed financials. The more information we can get, the better for us as we make decisions that affect our clients. Personally, I’d favor the thriving company willing to be more transparent. The bar associations around the country have advised us to do our due diligence. Come on, cloud providers. Will you help us out?