The Lives of Lawyers: Using Digital Return on Investment to Calculate Your Technology's Effectiveness

Return on Investment, usually abbreviated as ROI, is a metric used to evaluate the forecasted profitability on a given investment. In other words, ROI measures the gains or losses on an investment relative to the amount of money invested. Before any serious investment opportunity is even considered, ROI is usually a starting point. At its most basic level, one option to calculate the return on investment is the following: ROI = (Gain from Investment – Cost of Investment)/Cost of Investment You don’t need to be a mathematician or quantum physicist to use this formula; and, in fact, lawyers should seek to use this metric when evaluating the effectiveness of their technology. Below, I will show you an example of how Digital ROI can be used in practice.

Case in Point: How to Use Digital ROI

Andrew is the Managing Partner of a mid-sized law firm. On Andrew’s practice team, you can find four paralegals, two assistants, and eight attorneys. Lately, paralegals have needed to execute administrative tasks to help the two assistants. Moreover, both the paralegals and assistants have had to work extra hours, sometimes at the expense of family time. Their daily administrative tasks include everything from billing clients, follow-up on emails, and updating clients’ information. During a recent Legal Hackers Meetup, Andrew heard about a practice management software that could streamline his administrative tasks, while reducing costs. Andrew proceeds to research the software and, as most of us do, he went straight to the pricing plans. Andrew notices that this specific legal practice management software has a basic (free) version and a premium version. The premium version has two pricing plans. The monthly subscription is $115. However, if you select the annual subscription, the software charges $100 per month. Andrew is eager to implement a modern tool to reduce overhead costs and help his firm become more efficient. However, he decides to use the basic version, for the moment, until he has experimented with the platform. Instead of making a hasty decision, Andrew considers that the right approach is to test the tool before opting in for a paid version. After “playing around” for two weeks with the platform, Andrew has realized that the legal practice management software has made him more efficient in his practice, and he has noticed a significant reduction of stress around the office. Furthermore, Andrew has noticed that he can automize certain tasks he had previously constantly assigned to his secretaries and paralegals. After weighing all the benefits, Andrew believes the implementation of the legal practice management software will enhance his practice while reducing costs internally and potentially for the client. Instead of spending time on administrative tasks that may or may not be billable, Andrew can focus on complex substantive issues, as well as reduce the workload of his secretaries and paralegals Following some basic calculations, Andrew decides that the annual plan is the way to go. In the end, it comes down to a total price of $1,000 per year. Andrew, as a good corporate lawyer, has some knowledge of finances. Just for the sake of it, Andrew decides to calculate his ROI. Andrew will invest a total of $1,000 annually for the software. On the other hand, Andrew has been paying $5,000 (annually) in extra hours for the execution of administrative tasks. Andrew believes the implementation of the software will translate into a benefit (gain) of $5,000, since he will not be paying for the extra hours of work. Consequently, Andrew’s ROI would look like this: ($5,000-$1,000)/($1,000) = 400% While a 400% ROI may sound outlandish; if you ask me, this figure is plausible. In the end, the implementation of the right technological solution provides for cost minimization and profit margin maximization. Moreover, if you consider the intangibles that the investment brought Andrew (e.g. reduction of stress), this investment is a bargain. This example is helpful to visualize the bigger picture. Several steps are needed for a positive return on investment, whether you are a solo practitioner or practicing in a larger firm.

Steps to Determine Your Digital ROI

  1. Be honest. Before implementing a digital solution or legal tech tool, you need to make a conscious assessment of your goals, your behavior, and where it makes sense to implement digital solutions. For example, you should have honest conversations with your team about which tasks they hate. That doesn’t mean they are bad employees. Sometimes those negative feelings imply something bigger: tedious and boring tasks that feel like they should be automated probably should be. Self-appraisal is hard. It is normal to avoid this type of rigorous assessment. However, before undertaking a new investment for a digital solution, you have to be honest with yourself and your team. If you don’t know yourself or your team, you cannot correctly assess what are the real needs and digital tools that are needed. With clear collaboration, each team member will understand the objectives, aligning goals across the firm.
  2. Be pragmatic. You might think that digital transformation or legal innovation is about complex or expensive technologies. However, this approach is incorrect. Before deciding to invest in a digital solution, you have to understand one premise: legal innovation is about changing the mindset, as well as the organizational culture, before deciding to implement a legal tech solution. What the team envisions to be the future of the organization should drive the use of technology, not the other way around. Digital transformation is not about technology it’s about optimization. Furthermore, it is not only about new software that makes everything faster and easier. We are also talking about a crucial change in the company’s culture. Exercise pragmatism. The implementation of a digital tool is not only about the technology. It is about changing your identity and culture to achieve clear business results. Investing in your team is just as important as investing in technology.
  3. Do your research. Many attorneys don’t take the time to research legal technology. However, before deciding to invest in a digital solution, it’s important to do some research and learn about the tools that are available in the market. That means you’ll have to do your homework and learn as much as you can about the different legal tech tools that can tackle your problem. Just like Warren Buffet said, “Never invest in a business you can’t understand.”Look at this research process as a part of an investor’s due diligence. I know many lawyers will relate. To minimize the risk, you must run a thorough research on the company in which you are planning to invest. After you do your research, you’ll be able to assess which solution is worth investing in.
  4. Don’t be afraid to experiment. Investing in a digital solution or legal tech tool is a lot like shopping for a car. While you could base a decision solely on technical information that is gathered from your research, it’s also important to consider how the ride feels on the road, how it responds to different weather conditions, and whether the color of the interior will camouflage cat hair. Many legal tech tools provide demos or basic (free) versions, which will allow you to experiment with these platforms. Experimentation is one of the most important steps before deciding to take on an investment. You should have a baseline understanding of the tool and how it might impact your practice before making a financial investment.
  5. Ask questions. Litigators are taught how to ask questions as an essential part of their training, but this skill is applicable well beyond the courtroom. Inquiring is a uniquely powerful tool to find the best tools or “top of the class” legal technologies. Start by asking other practitioners which legal tools they use. Through these questions, you can mitigate business risk by uncovering unforeseen pitfalls. You should also make inquires to the company or representatives of the digital solution. Albert Einstein famously said, “Question everything.” You should do the same for every legal tech solution you are looking to implement. You should ask all the questions that you genuinely have, which should ideally be based on the prior research and experimentation you had done. Questions and thoughtful answers will provide you with more information to undertake an informed investment decision.
  6. Don’t forget about implementation. Implementation is the culmination of all your work in executing and investment and requires careful attention to detail. For a successful implementation, you will need to coordinate with your team. Likewise, you will need to do periodic reviews about the success of the digital solution. Implementation requires coordination with your team, and it will require you to communicate effectively. Ensure that your team has been trained in the use of the new legal tech tool and that the transition to the tool from old workflows is manageable. Finally, for a smooth implementation, you will need to be committed to the solution and accept responsibility for the decision.

Enjoy the Return on Investment

Investing in legal technology involves seeking to achieve a concrete goal while overcoming barriers. The stages for a successful return on your investment include the identification of the problem, structuring the problem, looking for solutions, testing the solutions and implement the solution of choice. Keeping up with all the legal tech tools may seem like a hassle, but these technologies can simplify your practice. The essence of a good legal practitioner is to create an efficient practice to provide better service to the client. The revolutions that will surface in years to come will continue to make profound changes in the legal practice. However, to have a successful return on your digital investment, you will need some persistence, help, and preparation.


  • Mauricio Duarte

    Mauricio Duarte is an International Associate at A2J Tech Store with a J.D. from Universidad Francisco Marroquin (Guatemala) and an LL.M in U.S. Law from University of St. Thomas (Minnesota).