A recent ILTACON panel suggests that $5 billion has been invested in legal technology in the past few years.
– Artificial Lawyer
Legal departments and general counsel understand the usefulness of legal tech, and how it is a necessary part of their operations and processes. Interestingly, legal tech experts state that the goal of legal tech solutions is providing legal departments and their organizations with business value, rather than legal value. With legal tech, legal departments can automate tasks, and get error-free contract reviews which translate to quicker deliveries, increased revenues, and most of all – better productivity.
Legal tech offers quantitative value by saving legal departments time and money, while increasing efficiency. Stakeholders and investors may wonder whether the same legal tech offers any ROI or value to organizations. In this article, we highlight the business value legal tech offers, and how legal departments and companies can calculate its ROI.
Investing in Legal Tech
According to Gartner, legal technology spend will account for 12% of in-house budgets by 2025. The pandemic was a catalyst in driving legal tech use, as legal departments and general counsel embraced these tech-powered legal solutions for their business.
New strides in technology allow for faster and better legal tech implementation at legal departments. These legal tech solutions include contract lifecycle management (CLM), litigation support, and AI-powered predictive analytics, to name a few.
Measuring Legal Tech ROI
A Financial Times article states that “investors are waking up to the potential rewards from tech that makes a lawyer’s life easier, whether that is e-signature tools or software to draft and review contracts”. Investors and organizations understand the surge in legal tech implementation post pandemic, and the benefits it offers.
Before they invest in legal tech, however, organizations want to identify if it’s the right fit, and if it can offer a quantified return on investment. The value that legal tech provides needs to benefit both legal departments, and their investors’ money.
Potential ROI on Legal Tech
- Revenue generation
- Time saved
- Speed of deployment
- Time to value
Identifying the benefits and value that legal tech can bring to an organization is the first step to calculating its ROI.
Calculating Legal Tech ROI
In 2021, the ROI per dollar invested in legal tech equaled $4.61. Legal tech experts predict that this legal tech ROI per dollar will balloon to $6.31 by 2027, says a Statista report. By calculating the ROI on legal tech, legal departments and stakeholders can visualize the financial benefits.
Calculating the ROI impacts business decision making, allowing legal departments and investors to understand which tech is delivering value consistently, and which processes may need to be evaluated for usefulness – and potentially replaced. This offers future options for fine-tuning business budgets with a focus on legal spend and maximizing efficiency. Legal departments can calculate their legal tech’s ROI with this nifty calculator by Della Legal!