Are you interested in getting into the legal tech space because of the promising ROI? A shift is taking place in the legal industry, an evolution driven by advancements in technology. As of late, the spotlight has been on legal technology or ‘LegalTech’—a dynamic intersection of law and technology.

According to data from Crunchbase, the total global LegalTech funding reached $1.2 billion in 2022, highlighting the immense interest this sector has piqued amongst investors.

The primary tools of a lawyer decades ago were limited to law books, typewriters, and their oratory prowess. Today, however, the landscape is changing. The modern-day attorney is equipped with advanced software for case management, artificial intelligence (AI) for predictive legal outcomes, and machine learning (ML) to process vast amounts of legal data.

If you are looking for legal tech companies with a promising ROI, we suggest scrolling to the bottom of this page and seeing our “Investor Relations” page.

ROI Evaluation in Legal Technology

Investing in LegalTech is not merely a matter of being on the cutting edge. Rather, it’s a strategic move rooted in the tremendous ROI potential this sector offers. A study by BCG and Bucerius Law School projected that by 2025, LegalTech will constitute a $15.9 billion market.

One significant factor driving this promising ROI is the increased efficiency LegalTech offers. Artificial Intelligence and Machine Learning can help firms cut down the time spent on repetitive tasks like document review.

A study by McKinsey reveals that about 22% of a lawyer’s job and 35% of a law clerk’s job can be automated. This kind of automation can lead to cost savings and enhanced productivity, contributing directly to a firm’s bottom line.

Legal Technology’s Return on Investment

The increasing pressure for firms to digitize their operations presents an opportunity for LegalTech to step in. A recent Gartner survey indicated that 87% of senior business leaders view digitization as a company priority.

This number is even higher within the legal industry, where a shift towards digital case files, remote consultations, and online legal services is underway. As such, the demand for LegalTech solutions is expected to skyrocket, yielding potentially high ROI for those invested in the sector.

But the potential of LegalTech extends beyond sheer efficiency and digitalization. Innovative technologies, such as blockchain and smart contracts, are creating entirely new areas within the legal profession. For instance, a study by PwC found that 77% of businesses are anticipated to incorporate blockchain into their operations by the end of 2023.

Guide to Measuring Legal Tech Investments

As these technologies become more widespread, the demand for LegalTech solutions that can facilitate and manage these complex processes will inevitably rise.

Furthermore, LegalTech offers not only economic benefits but societal ones as well. Legal technology can democratize access to legal services, as it brings down the cost of these services and makes them more accessible to the public.

An American Bar Association report suggests that 80% of the civil legal needs of low-income individuals are not met, pointing to a significant market gap that LegalTech can address.

Legal Tech Shows Encouraging Potential

While the prospects seem promising, like any other investment, there are risks associated with investing in LegalTech. These include market uncertainty, technological changes, and regulatory considerations. Despite these challenges, however, the potential rewards appear to outweigh the risks.

The LegalTech sector offers a promising avenue for investors seeking high ROI. The rapidly growing market, coupled with the industry’s shift towards digitization and efficiency, makes a compelling case for investment.

With society moving towards more tech-integrated legal solutions, the LegalTech sector’s potential seems poised for exponential growth. As technology continues to transform the way legal services are delivered, those who invest in LegalTech today stand to reap the benefits tomorrow.

Legal Technology Offers Promising Returns on Investment

In the sphere of business operations, contemplating investment in legal tech infrastructure is a fundamental corporate decision, driven by a careful cost-benefit analysis. The proposed financial outlay and the expenditure of time devoted to refining the legal team’s skill set and systems must correlate with a satisfactory rate of return to vindicate such a commitment.

Conducting a return-on-investment (ROI) analysis is instrumental in bolstering such decisions, offering a quantitative and flexible approach that can be tailored to address various users and operational circumstances.

Gartner Research underlines the popularity of these value assessment methodologies among technology purchasers. This commentary aims to elucidate the key metrics that should influence ROI calculations for tech-enabled legal services, while also offering guidance on how to compute these crucial figures.

Maximizing ROI with Innovative Legal Tech Solutions

Legal Suite, known for its tailored solutions that boost the effectiveness, profitability, and output of both legal and business teams, often applies this ROI calculation framework. The use of a data-driven structure like this aids in articulating a solid business argument.

So, what’s the formula to measure ROI in the realm of legal tech? Well, the first piece of advice we can share is: don’t disregard the importance of user acceptance and the management of technology-related changes while calculating your ROI.

Before diving into the arithmetic of ROI, defining your expenditure and profits is vital. Initiate the process by obtaining quotations for the hardware and software. Keep a record of the time allocated to research and allot resources for showcasing the concept.

A consensus with the vendor regarding the resources and time needed for training, development, implementation, and ongoing management should be reached.

Potential fallouts of data loss

Beyond the hard costs, estimating the value of softer costs is also important. Consider factors such as the time wasted on error correction, the potential fallouts of data loss or non-compliance, the hours lost due to sluggish response times, and the resulting impact.

Setting baselines for resources and time is crucial. Invite users to exhibit their current task execution methods, or take a hands-on approach and document the process yourself, keeping track of seconds or minutes, mouse clicks, and screen transitions.

Assess the quality of the present output, noting any inaccuracies and the time needed to rectify them. Following this, examine the same procedure while using the proposed solution, counting screen transitions and clicks.

Assessing What to Estimate

A fundamental pointer to observe when computing ROI is the incorporation of value assigned to what is known as ‘soft costs.’ These costs are typically intangible but may significantly impact a business operation. Examples include the cost implications of employee sick leaves, failure to meet project deadlines, or contract amendments due to an overlooked error.

We ought to comprehend the distinction between “hard” and “soft” costs and the benefits they bring to the table.

Let’s delve into Cost Computation. Here, hard costs represent definite outlays that can be easily substantiated, while the calculation of soft costs can often be a convoluted affair, being more challenging to measure accurately.

For instance, hard costs often comprise elements like licensing fees and associated expenditures, time and resources allocated to researching vendors and products, proof of concept validation, employee training, developmental processes, implementation, and routine overheads like administration and ongoing help desk support.

Monitor email correspondence

Soft costs could encapsulate scenarios like company personnel making use of obsolete templates, legal professionals compelled to utilize Excel sheets to monitor email correspondence, time squandered in locating requisite documents, tracking of advice dispensed, and a host of wearisome tasks needed to produce a simple output.

The second phase involves the evaluation of the Benefits derived. Here too, we distinguish between hard and soft benefits.

Hard benefits may include improved productivity by reducing the time and resources needed to reach an objective, a diminished likelihood of errors, and less back-and-forth communication required to attain a desired result.

Legal Tech Promising ROI

Soft benefits, on the other hand, can lead to improved reputation and enhanced customer satisfaction, quicker and more agile responses, and less stress for employees as they can place increased trust in technology and work with heightened confidence.

Just like their cost counterparts, soft benefits are a crucial component of an accurate ROI assessment. For instance, reducing response times to a client’s requests could free up valuable time for practicing law, showcasing the profound impact of these seemingly intangible benefits.

We now turn our attention toward the Examination of Spreadsheet Values. It’s crucial to keep in mind that a multi-year ROI is typically more insightful.

The ROI in the initial year tends to be on the lower side due to the up-front costs associated with research, proof-of-concept testing, development, and early implementation stages. However, as these are one-time costs, the subsequent years don’t bear these expenses, leading to an escalation in ROI.

We hope that you get into the legal tech space because of the promising ROI. These companies need more investment!