Client expectations and feature requirements for their law firm are higher than ever before. Technologies that allow clients to “self-help” on tasks traditionally executed by their lawyers, or modern communication technology like website chat, video conferencing, and online portals are no longer just a way to differentiate, they might actually be necessary to secure or retain an account.
Investing in and implementing technologies that monitor progress and budgets, improve your knowledge management system, use AI or predictive coding to review documents, and/or help you better manage projects or provide e-learning, can not only make your lawyers more productive, but studies have shown these investments result in better financial performance. After the introduction of eDiscovery many years ago, AI is now transforming how law firms provide legal services when it comes to reviewing litigation, expertise automation, legal research, contract analytics, contract and litigation document creation, and predictive analytics. According to the American Bar Association, “Lawyers of the future will not need to be able to “code,” but they will need an intimate and continuing understanding of how to identify and use AI solutions to meet their clients’ needs.”
Of course, all these investments also come at a cost, and as the executive leader in your firm, it’s up to you and your technology leader to determine if the return on investment is worth it. The ability to make a strong business case for legal technology investments is a key skill for technology leaders. But that’s only half the equation—as the executive leader, you also need to know what questions to ask in order to get at the less tangible aspects of ROI. Here are a few questions to get you started:
1. What can we use to measure quantitative ROI?
In asking this question, you’re essentially assessing whether or not your CIO is taking ROI seriously. You’re probably being pitched an investment with good quantitative ROI if they say they’ll be measuring the cost of the technology investment over the monetary value of the benefits during the number of years they believe the technology will be effective, taking into consideration the probability of success. If they can “show their work” quantitatively, you can be assured that you have an IT department leader who has the best interests of the law firm in mind and has thoughtfully considered the return on investment before coming to you with the request.
2. How will we measure qualitative ROI?
Qualitative or soft ROI are the benefits of technology that can be more challenging to quantify but have high impact on your law firm. They can include:
- Improving operations
- Boosting employee morale
- Enhancing employee retention
- Serving as a recruiting tool
- Making your attorneys or Legal IT team more effective
- Enhancing your customer or client experience
- Making you more competitive in the marketplace
The more boxes you check when running through the list, the better ROI you’re likely to get from the technology investment. However, if your CIO is claiming the technology will benefit one or more of these areas, it’s a good idea to ask them how they plan on measuring that benefit. How will effectiveness be measured? How will the client experience be improved, and is there a way to prove it via surveys or other methods? What is the data or evidence your CIO is using to assert that these qualitative measurements of ROI will likely be achieved through this technology investment?
3. How much time will it save us?
As the executive leader of a law firm, we know you’ll never underestimate the value of time. A technology investment might be able to make your files more accessible or increase download speeds from the cloud. It could protect you from server downtime or help your litigation support team search files faster. Whatever the technology implementation may be, asking your law firm’s technology leader how much time it will save your lawyers or other team members is a great way to identify ROI upfront. For best practice, use time-tracking to actually measure the time savings of the technology investment. That way, if a partner or member from the executive committee questions the value of that technology, you and your technology leader have data to back you up.
4. How much money will it save us?
Of equal importance is whether or not it will save your law firm money, and if so, when. Technology always costs money, especially if you are doing a firm-wide implementation. You’ll want to know the cost versus benefit upfront. But you’re also asking your information technology leader if it will save the firm money in the long term, and if so, how much money over how long of a term. With efficiency at top value at law firms, time is money for your lawyers, so be sure to include any time they save in your cost analysis.
5. When would you anticipate seeing ROI? or How long can I expect it to be before we see ROI on this technology?
Some ROI might be evident immediately, but most often it will take some time before the effects of the technology implementation are realized. Asking this question simply gets you and your CTO or IT Director on the same page and may give you an outline of the project timeline as well. By gaining at least a vague picture of the kind of ROI your technology leader expects, you are able to make a more informed decision. Agreeing on a timeline for results has the added benefit of being able to set expectations for the whole executive committee, and if necessary, gives you a message to communicate to lawyers who might complain that it seems like a waste of money.
6. What’s the risk associated with this technology implementation?
Any new technology comes with some amount of risk associated with it, but planning well can significantly help mitigate the risk. If you’re hit with a crisis unexpectedly, you’ll lose dollars and time trying to fix it. The answer to this question will help you be aware of the risks upfront and plan for ways to avoid them. It also provides you with an appropriate counterbalance to the benefits of the suggested technology investment, which you can calculate into your ROI analysis.
7. Are there other technology investments that are a higher priority?
While this question doesn’t have direct bearing on ROI, technology moves at such a fast pace that it’s important to evaluate which technologies need to be implemented when. Most likely your technology leader has a whole string of technologies they want to implement, with strong cases for the benefits of each for the law firm. A good technology leader will be able to prioritize effectively to make the most of your resources. Hearing about the other technologies on the docket also helps you speak to the priorities of the law firm if your technology leader has not already been a part of those discussions.
Whether your technology leader is pitching an investment in AI, security, or knowledge management, their ability to explain the value of the proposed technology is essential. Asking these tangible questions about the return on investment is your first step toward your decision on implementing a new technology for your firm. With these 7 questions in mind, you’re bound to make the right choice, and because you’re meeting client demand, you’ll benefit from the efficiency, cost savings, and soft ROI that legal technology can bring to your law firm.
If you’d like more advice on analyzing the ROI of technology or are looking for a new CIO, CKO, or IT Director to join your team, contact us today.