Legal Tech: Establishing, Collecting, and Analyzing Metrics for Success
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As legal tech vendors, we’re often asked, “What’s the ROI on your software?” Our response is familiar to lawyers and legal professionals: It depends ... on which benefits you care most about. Firms could measure the success of new legal tech implementation in various ways, including cost savings from operational expenses or efficiency increases, risk reduction, client satisfaction, and improved win rates. However, in practice, only a small number of firms are tracking the types of metrics that measure legal tech returns.
In Bloomberg's recent legal Ops and Tech Survey, only 29% measured the cost of legal tech. And other important metrics were tracked even less frequently:
Given that law firms generally adopt legal tech to make themselves more productive and effective, there are some basic metrics they can use to evaluate their success. In this article, we will share strategies to help your law firm start measuring legal tech impact and make decisions backed by data.
Legal tech utilization
The first, and arguably most important, metric is utilization: Is your team using the technology that your firm has invested in? While many firms could answer this question anecdotally, data can tell the full story.
When implementing a new piece of legal tech, setting goals for adoption is key. Measuring adoption provides a foundation for subsequent metrics because you can’t evaluate value without understanding use. In addition to overall adoption rates, tracking the use of specific features designed to address known challenges is also helpful. For instance, how many paralegals are using the transcript management tool within your case management platform? How many members of your litigation team use the chronology tool?
User engagement data is often available to the tool’s administrators. In addition, you can work with your vendor to explore additional options to measure use. Then, turn those stats into action items and goals such as:
Using these, you can measure the success of your implementation process and assess use over time.
Once you are tracking who is using what software, and for what purposes, you will know whether your implementation is working as expected or if you need to resume training to increase adoption. With this information, you can begin tracking the next metric that will help assess ROI: time spent on tasks.
Time spent on tasks
Firms don’t need to reinvent the wheel to collect more data. For example, nearly every firm tracks billable hours by attorney. Most firms can take this a step further, using the same tools or tracking system to segment billable hours into time spent on specific tasks. Using this information, you can track how adoption of a new solution impacts productivity and client satisfaction.
Tracking task-specific time helps identify whether legal tech is making a measurable difference. For example, a new transcript management tool could improve searchability, reducing the time required to find key information. It may automate event extraction to make timeline creation and identifying contested facts faster. By monitoring how many hours are dedicated to transcript-related tasks, you can calculate how much time—and money—your firm saves after implementing a new transcript management tool.
Instead of using anecdotal evidence — “it seems like this task is getting easier for the paralegal team” — collection of these metrics gives law firms actionable data. And if your law firm has hard data on your increased efficiency and effectiveness, that’s a major proof point for clients when presenting the value your firm delivers, helping you win more business.
Time spent on matters
Once you’ve gathered task-level data, aggregate it to understand time spent on entire matters. This allows you to determine which clients’ matters are more profitable and how efficient your team is across different types of work. If your firm offers alternative fee arrangements, historical data on time spent per matter is essential to accurately estimate the number of lawyer hours required, allowing you to set fees confidently.
Calculating ROI by matter can also give your firm important data about the cost of legal technology that can be passed on to your clients. Traditionally, law firms have absorbed the cost of technology, but as they adopt solutions that increase lawyer efficiency and deliver better client outcomes, firms are using legal tech cost recovery models to make innovation investments more sustainable. Firms that can show concrete data about increased efficiency are more likely to convince clients that it’s worth their money to pay for a portion of legal tech costs.
Overall success
When defining overall success metrics, consider what’s most important to your firm. Beyond overall revenue growth, is your firm most interested in recouping the cost of legal tech investment? Or is your firm more interested in reducing the time spent on specific client matters in order to make alternative fee arrangements more profitable over time?
Ultimately, collecting the right metrics provides transparency into how legal tech is improving your firm’s operations—and helping your clients. It’s not just about adopting technology but about using it effectively to increase both client value and profitability.
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