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How to Maximize Legal Tech ROI: A Practical Guide for Legal Teams

May 30, 2025 • Legal • 11 minutes
Written by Ben Thomas

In today’s economic climate, legal teams face unprecedented pressure to justify every dollar spent. According to IBM’s 2024 CFO Study, 65% of finance leaders are feeling pressure to accelerate ROI across their organization’s technology portfolio. For legal departments historically viewed as cost centers, this scrutiny is particularly intense.

Yet the opportunity is substantial. The legal technology market has reached $31.59 billion in 2024, with Gartner projecting that in-house legal tech spending will reach 12% of budgets by 2025—up from just 3.9% in 2020. This dramatic increase reflects a fundamental shift: legal technology is no longer a luxury but a strategic necessity.

The challenge? Many legal teams struggle to demonstrate concrete returns on their technology investments. Whether you’re implementing contract management software, AI-powered legal research tools, or comprehensive legal operations platforms, proving ROI is essential for securing budget and maintaining C-suite support.

This guide provides a practical framework for calculating, maximizing, and communicating the value of your legal tech investments.

The evolving landscape of legal technology investment

A strategic shift in spending priorities

Legal departments are undergoing a fundamental transformation. According to Axiom’s 2025 In-House Legal Budgeting Report, 61% of general counsels expect budget growth in 2025, with technology investments taking priority. As Jane Stahl, General Counsel at Shaw Industries, explains: “While legal spend is increasing, the efficiency and quality of that spend are improving, thanks to the addition of legal operations.”

This shift reflects broader market dynamics. Thomson Reuters Institute research shows that law firms’ tech spending experienced its fastest real growth in Q1 2024 since at least 2014, driven largely by AI and automation investments.

The AI factor accelerating change

The rise of generative AI has fundamentally altered ROI calculations. U.S. Legal Support’s 2024 survey reveals that 25.92% of law firms now use AI for legal research, document management, and predictive analysis—a 21.98% increase year-over-year. This rapid adoption reflects AI’s ability to deliver immediate, measurable returns.

“The fact that it continues to do more of what we need with each passing year is a testament to how you get innovation right!” notes Glyn Morris, Projects Partner at Higgs LLP, whose firm saved 400+ monthly billable hours using AI-powered legal tech.

Understanding the true cost of inaction

Before calculating potential returns, consider what not investing in legal technology costs your organization.

The hidden price of manual processes

SimpleLegal research indicates that the American Bar Association found roughly 21% of attorneys engage in bill padding—overcharging to compensate for time spent on non-billable work. Without automated enforcement and tracking, these costs compound silently.

Consider these statistics:

Hidden Cost CategoryAnnual ImpactExample
Billing errors$50,000-$200,000Uncaught overbilling, incorrect rates
Missed renewals$100,000+Auto-renewed contracts at unfavorable terms
Compliance failures$250,000+Regulatory fines, audit findings
Lost productivity600+ hoursManual data entry, document search
Revenue leakage9% of annual revenuePoor contract management

Risk exposure without proper systems

“Legal tech investments can become sunken costs for GCs who fail to consider the risks involved and the true needs of their department,” warns Exigent Group’s analysis. However, the risks of maintaining status quo often outweigh implementation challenges.

As Paul Goydan, Managing Partner at Boston Consulting Group, observes: “This is a holistic cost challenge—one that’s built up over five years of very rapid adjustments that companies have had to make.”

A practical framework for calculating legal tech ROI

The fundamental ROI formula

Lawcadia provides a clear framework for calculating legal tech returns:

ROI = [(Total Benefits – Total Costs) / Total Costs] × 100

For example, if a legal team saves 10 hours weekly at $200/hour:

  • Total Annual Benefits: 10 hours × $200 × 52 weeks = $104,000
  • Software Cost: $20,000
  • Net Profit: $104,000 – $20,000 = $84,000
  • ROI: 420% or 4.2x return

Quantifying hard benefits

Time savings calculation

Let’s use a real-world example from contract lifecycle management software implementation:

Before automation:

  • NDAs: 30 minutes each
  • Annual volume: 1,300 contracts
  • Total time: 650 hours

After automation:

  • NDAs: 2 minutes each
  • Annual volume: 1,300 contracts
  • Total time: 43 hours
  • Time saved: 607 hours annually

At $200/hour, this represents $121,400 in recoverable time—time that can be redirected to strategic initiatives rather than administrative tasks.

Cost reduction metrics

Thomson Reuters research on litigation technology ROI demonstrates that legal drafting technology alone can save significant hours weekly. When multiplied across a team and calculated at billable rates, the impact becomes substantial.

Consider implementing contract automation software that reduces contract creation time by 90%. For a team processing 100 contracts monthly, this translates to:

MetricManual ProcessAutomated ProcessSavings
Time per contract2 hours12 minutes1.8 hours
Monthly time200 hours20 hours180 hours
Annual cost (@$200/hr)$480,000$48,000$432,000
Error rate15%2%87% reduction

Measuring soft benefits

While harder to quantify, soft benefits often provide equal or greater value:

Risk mitigation: Contract analytics software can identify problematic clauses before they become litigation issues. One avoided lawsuit can justify years of software investment.

Improved compliance: With contract compliance management software, teams can track obligations automatically, reducing regulatory exposure.

Strategic insights: Modern platforms provide data on spending patterns, vendor performance, and negotiation outcomes—intelligence that drives better business decisions.

Employee satisfaction: Reducing manual work improves morale and retention. As one Reddit user shared on r/legaltech: “Our team’s overtime dropped 40% after implementing CLM. People actually enjoy their jobs again.”

Building an irresistible business case

Start with CFO priorities

According to CFO.com, cost management remains a top 2024 priority, with executives seeking “holistic cost challenges” solutions. Frame your legal tech investment within this context.

Anna Lozynski, former General Counsel at L’Oréal, advises: “Address the question of ‘How will spending money make money’ for the entire organisation, not just legal.”

Leverage peer benchmarking

The 2024 State of the Corporate Law Department Report reveals that 52% of corporate GCs view technology and automation as playing a significant role in cost recovery. Use industry data to demonstrate you’re not asking for bleeding-edge experiments but proven solutions.

Create a phased implementation plan

Rather than requesting a massive budget for enterprise-wide deployment, propose a pilot program:

  1. Phase 1 (Months 1-3): Implement contract repository software for a single department
  2. Phase 2 (Months 4-6): Expand to include automated workflows
  3. Phase 3 (Months 7-12): Full deployment with advanced analytics

This approach reduces risk and allows for course corrections based on early results.

Maximizing ROI through strategic implementation

Focus on high-volume, low-complexity work first

Start with processes that offer quick wins. NDAs, employment agreements, and vendor contracts typically provide the highest initial ROI due to their volume and standardization.

A procurement contract management software implementation focusing solely on vendor agreements can often pay for itself within months through improved terms and consolidated spend.

Ensure proper change management

Checkbox.ai’s research emphasizes that successful implementation requires more than technology—it demands organizational change.

Key success factors include:

  • Executive sponsorship from both legal and finance
  • Clear communication of benefits to all stakeholders
  • Comprehensive training programs
  • Regular success story sharing

Integrate with existing systems

Standalone solutions rarely deliver maximum ROI. Ensure your legal tech integrates with:

  • Financial systems for automated billing
  • CRM platforms for client data
  • Document management systems
  • Communication tools

This integration eliminates duplicate data entry and creates the “single source of truth” that drives efficiency.

Real-world ROI success stories

Healthcare sector transformation

Healthcare organizations using specialized contract management software report significant returns. One health system reduced contract processing time by 75% while improving compliance scores—critical in a heavily regulated industry.

Legal department efficiency gains

When evaluating legal contract management software, consider this feedback from a Fortune 500 legal operations manager: “We went from a 6-week contract cycle to 3 days. The ROI calculation was simple—we could handle 3x the volume with the same headcount.”

Financial services precision

One investment firm reported on G2’s contract management reviews: “Our ROI exceeded 500% in year one, primarily through avoided auto-renewals and better rate negotiations. The pricing was reasonable, and implementation took just days, not months.”

Common ROI calculation mistakes to avoid

Underestimating total costs

Beyond licensing fees, consider:

  • Implementation time and resources
  • Training requirements
  • Integration expenses
  • Ongoing maintenance
  • Change management efforts

Overlooking opportunity costs

The time saved isn’t just about efficiency—it’s about what else becomes possible. As InvestCEE Advisors notes: “The value of that time saved should also be included in the ‘opportunity cost’ of not investing in legal tech.”

Focusing solely on cost reduction

While cost savings matter, revenue enhancement through faster contract cycles, improved terms, and reduced revenue leakage often provides greater returns.

Measuring and communicating ongoing success

Establish baseline metrics

Before implementation, document:

  • Current process times
  • Error rates
  • Cost per contract
  • Compliance scores
  • Customer satisfaction

Track leading indicators

Monitor early warning signs of success:

  • User adoption rates
  • Feature utilization
  • Support ticket volume
  • Process completion times

Create executive dashboards

Develop visual representations of ROI that resonate with C-suite priorities:

  • Cost savings trends
  • Risk reduction metrics
  • Efficiency improvements
  • Strategic value creation

The path forward: Making ROI a reality

Legal technology ROI isn’t theoretical—it’s achievable with the right approach. Modern solutions like the best contract lifecycle management software can deliver returns within months, not years.

The key is starting with a clear understanding of your current costs, setting realistic goals, and choosing solutions that align with your organization’s specific needs. Whether you’re ready for a comprehensive platform or want to explore options with a contract management software demo, the path to positive ROI begins with taking action.

As the legal technology market continues its rapid growth, the question isn’t whether to invest—it’s how quickly you can start capturing returns. With 61% of GCs expecting budget increases focused on technology, now is the time to build your business case and join the transformation.

FAQs

What’s a realistic ROI expectation for legal technology investments?

Most organizations see 200-400% ROI within 12-18 months of implementation. High-volume processes like contract creation and review often deliver returns within 3-6 months. According to Lawcadia’s analysis, some teams achieve 420% ROI through time savings alone, not counting risk mitigation and quality improvements.

How do I calculate ROI when benefits are difficult to quantify?

Focus on proxy metrics that CFOs understand. For risk mitigation, calculate the cost of one avoided lawsuit or compliance violation. For improved employee satisfaction, use retention rates and recruitment cost savings. Capterra’s ROI assessment tool suggests measuring time saved, internal impact, growth resources, and consequences avoided.

What are the biggest mistakes when presenting legal tech ROI to finance?

The most common mistakes include focusing only on legal department benefits rather than enterprise-wide impact, failing to account for implementation costs, and presenting theoretical rather than proven returns. As Exigent Group warns, miscalculating the productivity delta between current operations and proposed solutions undermines credibility.

Should we start with a pilot program or full implementation?

Pilot programs reduce risk and allow for ROI validation before major investment. Start with high-volume, standardized processes where benefits are easily measured. Once you demonstrate success, expansion becomes easier to justify. Modern platforms with rapid implementation timelines make pilots particularly attractive.

How long before we see positive returns on legal tech investments?

Timeline varies by solution complexity and scope. Simple implementations like document automation can show returns within 60-90 days. Comprehensive platforms typically demonstrate positive ROI within 6-12 months. Thomson Reuters research shows that focused implementations targeting specific pain points achieve faster returns than enterprise-wide deployments.

Bibliography

About the author

Ben Thomas

Content Manager at Concord

Ben Thomas, Content Manager at Concord, brings 14+ years of experience in crafting technical articles and planning impactful digital strategies. His content expertise is grounded in his previous role as Senior Content Strategist at BTA, where he managed a global creative team and spearheaded omnichannel brand campaigns. Previously, his tenure as Senior Technical Editor at Pool & Spa News honed his skills in trade journalism and industry trend analysis. Ben's proficiency in competitor research, content planning, and inbound marketing makes him a pivotal figure in Concord's content department.

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