A recent ³ÉÈËÓ°Òô survey, Escaping the legal labyrinth, explores attitudes towards legal tech and asked in-house counsel about the the barriers they face when adopting legal tech. It should come as no surprise that 61% of 200+ legal counsel responding to the survey cited ‘lack of budget’ as the main barrier, followed by lack of understanding and lack of time. Indeed, financial pressures and constraints are a common barrier for in-house teams across sectors – only one in five (20%) respondents thought that their tech budget would increase in the next year.
Cost constraints may not be easy to overcome. Especially in competitive environments, especially in economically challenging situations, especially in companies that are focused on financial sustainability. But the business case for legal tech is evident, and it is the responsibility of in-house teams, and particularly in-house leaders, to make a convincing commercial case for legal tech.
In this article, I am going to examine the commercial case for legal tech investment, drawing attention to the various benefits that legal tech brings. I will also look at why lawyers are prioritising value for money over cost when it comes to investing in legal tech – focusing on return on investment (ROI) – and why that is likely to continue in the future.
Legal tech is, even now, too often considered a nice-to-have, something businesses adopt in prosperous times but non-essential. This is despite the fact that the business case for legal tech is clear.
As demonstrated in the ³ÉÈËÓ°Òô in-house technology survey and shown in various , , streamlines processes, frees up time, and . Legal tech also enhances recruitment, improves staff retention, and generally boosts productivity. Perhaps most importantly, legal tech can actually reduce costs and alleviate financial pressures across organisations. In a recent blog, my colleague looked at how automating tasks would reduce in-house reliance on law firms, which could cut costs significantly. The case for legal tech could hardly be clearer.
Given that budgetary constraints are the top barrier to legal tech, according to many in-house lawyers, heads of legal teams looking to make investments need to focus on demonstrating how the right investment in legal tech will in fact alleviate budgetary constraints and raise the profitability of the legal team.
There has definitely been movement in the right direction. Tech adoption is becoming a greater expectation in businesses, as shown in the survey. The focus is no longer on quick and cheap solutions, but on options that provide the greatest ROI.
Lawyers are increasingly focused on ROI when it comes to legal tech investment. Consider, for example, that costs were cited as only the fourth most important factor in our survey when choosing a legal tech vendor, as shown in the graph below.
Saving time, ease of use, and a focus on meeting business requirements all rank as higher priorities than the cost of the tech.
In-house lawyers are increasingly looking for value for money and being able to demonstrate stronger ROI, rather than simply opting for the cheapest vendor. Adopting legal tech has thus become a carefully considered process, requiring attention, time, and expertise. That is a positive development, as too often in-house teams have opted for quick legal tech solutions and have been disappointed with the results, which can lead to a wider dissatisfaction with legal tech as a solution.
The need for expertise means that more than half of respondents to our survey believe they will hire more non-legal roles in the next few years, such as data analysts and operations roles. The demand for tech skills is expected to increase most sharply, with 82% of in-house lawyers agreed this will increase.
Providing value for money and ensuring high ROI is the single most important when deciding to invest in legal tech. depends on various factors: understanding your present business situation, understanding the commercial goals of the organisation, and showing how the legal tech can augment your current situation to meet commercial goals. Having the right legal metrics and analytics in place is key.
In-house teams should make that case as specifically as possible, showing exactly what the legal tech can achieve, how it can be achieved, how much it will cost, how much (labour, time, money, etc) it will save, and any other efficiencies it will bring. In-house lawyers can also address any risks and demonstrate the ways in which they’d mitigate such risks.
Such a , with a focus on demonstrating the legal team’s value to the business, would prove difficult to ignore. In-house leaders can help drive legal tech by showcasing the myriad benefits, focussing on providing a substantial ROI, and ultimately how it will enable them to provide even greater value to their organisations.
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