When someone refers to “licensed” software it excludes software that it bought outright. That probably doesn’t happen much with law departments, but the term “commercial software” has broader, and more accurate coverage.
In pursuit of clearer terminology, it may be more precise to refer to “home-grown software” rather than “customized.” Home-grown sounds pejorative, but it gets to the root of the idea: a company plants and cultivates the software itself.
Many law departments make changes to packages that they license (commercially-available software) Changes range from minor modifications of field names to wholesale engrafting of new code. A term that suggests the first, tweaks and revisions of implementation, is “configuration.” A department configures its e-billing system according to the rules of invoice review the department chooses.
Those small adjustments should not be referred to as “customization.” Customization should be reserved for new code written and new capabilities provided. These several definitions help clarify how we think about software capabilities.