Mmm...I wonder

Interrogating the ROI of legal technology

One thing that can stop law firms from adopting and benefitting from modern legal technology is a lack of understanding of the degree of return on investment it delivers, and the true impact it can have on firm performance and profitability. In this blog, we discuss some ideas on how to assess ROI – and why it matters.

Many law firms that adopt legal technology don’t measure their return on investment (ROI).[1] They feel, rather than know, that the technology is bringing benefits. But that’s not ideal, because, as the old adage puts it: “you can’t manage what you don’t measure”. Or put it another way, if you don’t quantify and understand ROI, you can neither optimise what you’ve got, nor make informed decisions about future investment. Which is why it’s important to measure ROI. But how?

How to measure ROI

A rudimentary way to measure ROI, without getting into the weeds, is to look at the ratio of spend on new systems to increased revenue. This is crude because of the variables: revenue can clearly be impacted by myriad other factors. But it’s a start. Plus, did you know that the ROI for technology investments generally falls between 47% and 87%?[2] That gives you an idea of what it’s reasonable to look for.

The alternative, which achieves more accurate results, is to look at individual solutions and work out their impact using available measures. Using this approach ROI can be usefully assessed under four headings: time saving, increased efficiency, costs saving and morale boosting.

Time saving

It’s usually clear how much each lawyer’s time is worth. The hourly rate of support staff is not too hard to work out, either. To calculate ROI on technology that claims to save time is then a simple matter of doing your sums. For example, if you’re looking at PCMS software, one task might be that it automatically generates ‘next steps’ letters. So, you must determine the time taken to produce these letters manually and multiply that by the number of letters sent in a typical month x 12. You then monetise the time using the calculated hourly rate. Remember to factor in the time that would have been taken to search for and find information in separate systems, which will increase the more systems there are. You need to repeat the exercise for each task handled by the PCMS from client onboarding to billing, to calculate the system’s overall contribution.

Time recording

And while we’re talking about time, technology that captures time is in a sub-category of its own. The aim will likely be to make the process of time logging quicker, so fee earners will be saving time using a slicker process. But in addition, the firm should be comparing before and after data to identify how much “new time” is captured. New time typically comprises small increments that lawyers didn’t bother to log before because the process was too arduous for small amounts. Or because, when time recording was done retrospectively, small increments just got forgotten. The aim of a system like Carpe Diem is to make time recording so easy and accessible that it gets done seamlessly, contemporaneously and often. This results in appreciable amounts of “new time”, which mount up.

Increased efficiency

Another contributor to ROI is increased efficiency. This can be understood as “doing more with less”, so the ROI calculation is often about “the road not travelled”. In other words, by implementing a given technology, has the firm been able to NOT increase headcount as the workload increased, or have you achieved more revenue with the same amount of resource?

Cost saving

Cost saving is another contributor to ROI. Naturally, there’s a cost to introducing new technology that must be factored into the ROI calculation. But don’t forget the cost savings. For example, by adopting a cloud-based document management system, the firm will save money on the costs of on-prem hardware that would otherwise have been required. It’s quite possible that a saving has been made by not hiring additional IT specialists that would have managed your inhouse provision. And it’s quite likely that the firm is making substantial savings by handing the responsibility for securing client data to a cloud service provider. There are big cost savings to be made, over and above efficiency gains.

Morale boosting

Next comes “morale boosting” which can be understood as the feelgood factor that derives from working with efficient modern systems that strip out tedious, repetitive and non-value-adding tasks. This is harder to calculate – but it’s a case of asking how influential technology has been in attracting and retaining both staff and clients. Remember that clients may well have chosen to come to your firm, or to remain, because they feel good about the technology you have that secures their data, or lets them collaborate on their documents, or gives access to real-time billing information. Staff, particularly younger legal talent, will be more attracted to work/stay at firms with better technology. Given the pressure on recruitment, and its costs, it’s part of the return when you invest in technology.

Actionable information

And finally, when the firm has gone to the trouble of calculating ROI, you should have gained actionable information. For instance, if ROI is lower than expected, it’s worth asking why. It may be that the processes surrounding some new technology need to be reconfigured; or that the technology itself needs to be tweaked: maybe workflows need to be revisited because of more remote working? It may also be that the technology is just fine, but that the rate of adoption is poor, perhaps because of a lack of training, or of ongoing support. Both of which can be remedied.

Conversely, the measurement of ROI might lead to a big revelation of how much value is being delivered. You’ll then be able to make a stronger case for more investment in technology solutions that will help the firm thrive even more going forward.


[1] In 2018, LexisNexis found that 74% of mid-sized firms in the UK didn’t measure the ROI of technology investments, see:


Advanced has over 30 years’ experience in technical systems development. We provide legal software solutions to more than 5,000 law firms and barristers’ chambers, and more than 50,000 users. Our legal customers depend on our solutions to support their business aims and processes every day. Our legal-centric software includes integrated chambers and practice case management systems, process workflows, time recording, Cloud forms, Cloud dictation and digital document bundle production. Many of our customers also rely on our business solutions to manage their core business processes such as HR, payroll, finance, spend management and IT services. Our goal is to enable our customers to drive efficiencies, savings and growth opportunities. We do this by providing right-first-time software solutions that evolve with the changing needs of their business and the environment they operate in. When it comes to legal – we’re in your corner.