Legal costs can significantly burden any organization’s bottom line, particularly the escalating expenses of outside counsel that make it difficult to see a clear return on investment from other IT projects. However, the long-term effectiveness of the legal team is critical to an organization’s success and should not be overlooked.

Investing in legal transformation can significantly reduce reliance on outside counsel, ultimately saving an organization money. With a more efficient and effective legal team in place, an organization can better manage risks, ensure strict compliance with the ever-evolving laws and regulations, safeguard intellectual property and assets, resolve disputes, and negotiate contracts, among other critical responsibilities. While the return on investment may not be immediately apparent, the long-term benefits of investing in digitalization can be substantial.

The catch-22 of business responding to costly outside counsel collaboration and constant “urgent” requests from the business can make the prospect of embarking on a legal transformation journey seem daunting. However, it is crucial to recognize that legal modernization is not a quick win but a long-term investment in the effectiveness of the legal team so that they can better serve the needs of the business.

While the prospect of legal digitalization may seem daunting, it need not be challenging or scary. By following a simple methodology, organizations can overcome the challenges associated with making a compelling business case for legal transformation.

The Unique Challenges of Legal Transformation in Today’s Digital Landscape

The legal industry operates within a highly regulated framework, making it challenging for companies to secure the necessary approval and funding for transformative projects. One of the primary reasons for this challenge is the lack of defined processes and procedures for accessing the knowledge pool of lawyers within an organization.

Legal teams often operate in a decentralized manner, which can make it difficult to leverage their expertise consistently and efficiently, leading to delays in decision-making and approval processes that ultimately hinder the success of transformation projects. Although lawyers are experts in the law, they may not necessarily possess the expertise in process improvement required to effectively implement digitization projects.

Furthermore, the high demand for lawyers exacerbates this issue; with limited resources, legal teams must prioritize their workload and triage based on business needs, which can be challenging when it comes to transformative projects that may not provide an immediate return on investment.

The legal industry is often viewed as a cost center, which can make securing funding for transformation projects difficult, particularly if they are not viewed as critical to the bottom line. This perception can lead to a lack of investment in legal technology and other initiatives that could streamline processes and improve efficiency, ultimately hindering the success of transformative projects.

Organizational decision-making can also be influenced by the loudest voice, resulting in resource allocation and prioritization that may not necessarily benefit the organization as a whole.

In-house legal departments must first recognize these dynamics to build a compelling business case for transformative projects that can secure the necessary funding.

How To Build a Compelling Business Case for Legal Transformation

Implementing new technology in a legal department can significantly improve efficiency and streamline operations, but building a compelling business case is essential for successful transformation. To achieve this, there are certain steps you can take.

The Importance of Quantifying Benefits with Metrics

One approach is to assign a task to a junior team member to gather data from a sample of team members about the challenges that can be resolved through the technology’s implementation.

For example, suppose the organization is transitioning from file shares and desktop-hoarded files. In that case, it is essential to quantify the benefits of this transition. A few key questions to ask include:

• How often are wrong versions of documents edited, and how much time does it take to rectify this issue?
• How much time is spent searching for documents or requesting information from colleagues, and how much of this time could be reduced through an integrated matter management system (which could reduce this time by 70-90%)?
• If a staff member leaves, how much additional time will their replacements require to handle active matters?
• Are there any contracts provided to the business that could be automated, and how much time is currently spent on gathering information to complete fairly generic contract templates?
• Do personal contacts from the business overload specific team members? If so, could a “Legal Front Door” system streamline the onboarding of internal matters, allowing for more efficient handling of such matters?

Asking these questions and gathering data from team members can help build a compelling business case for the implementation of technology in the legal department. The data collected can help quantify the amount of time and effort currently being expended on inefficient processes and provide insight into how technology can help reduce these costs and streamline operations.

Determine The Time and Cost Savings

It is also important to take into account the cost of “context switching,” which is crucial for legal departments when implementing new technology. Legal matters require deep concentration and creativity to find solutions and often require urgent resolution. Interruptions from internal customers who cannot wait for scheduled appointments can disrupt this process. Utilizing IT systems to minimize such interruptions should be factored in as well.

For instance, implementing a system that provides standardized guidance on accepting or rejecting contract terms based on a playbook can significantly speed up the signing of deals and bring in revenue faster. This could also eliminate one round of negotiation with outside counsel or other parties, saving valuable time. It is essential to quantify these savings in terms of time and cost.

Sending incorrect documents to outside counsel can result in wasted time and additional costs. These costs are not limited to internal expenses but can also include expenses incurred by outside counsel. Therefore, it is crucial to quantify the cost of such mistakes in terms of both time and money.

Using comparison software can significantly reduce the time spent comparing document revisions. For example, comparing revisions using Word may take 2 minutes, while using specialized software may take only 10 seconds. Although the savings may seem small, they can quickly add up over time, especially if this process is performed frequently.

There are many other metrics that legal departments can use to quantify the benefits of implementing new technology. Gathering this data can be simple and painless, and assigning this task to a junior team member can help them develop valuable research and communication skills while gaining a deeper understanding of the organization’s operations.

Calculating the cost of a particular process becomes simpler when an average per person and repetition are chosen. By multiplying these averages with the number of team members and their average salary, it becomes possible to estimate the total cost per year. This is an easy trick that can make it easier to determine the financial impact of a particular process.

The Costs of Implementing New Technology in a Legal Department

On the other side of the coin when it comes to implementing new technology in a legal department are the costs associated with it. Some of the significant costs associated with implementing new technology in a legal department include software costs, licenses, allocation of time for team members to become and be super users, training time for the new system, and implementation time.

The cost of software is one of the most significant costs when implementing new technology in a legal department. The cost can vary depending on the type of software and the size of the organization. A large law department may require more extensive and specialized software, which can be more expensive than software designed for smaller organizations. The software cost can add up quickly, especially if the organization needs multiple licenses.

In addition to software costs, licenses are another significant cost associated with implementing new technology. Most software requires licenses, which can be costly, especially for larger organizations. The cost of licenses must be factored into the total cost of ownership.

The allocation of time for team members to become and be super users is crucial to the success of the new technology. Team members will need to be trained on how to use the new technology and may require additional support in the initial stages of implementation. Allocating enough time for team members to become and be super users is crucial to ensure that the new technology is adopted effectively.

Training time for the new system is also an essential cost that needs to be considered. Proper training ensures that team members understand how to use the new technology and can apply it effectively in their work. This can be costly in terms of time and resources, and it is crucial to factor this into the total cost of ownership.

Finally, the implementation time is another crucial cost associated with implementing new technology in a legal department. Implementing new technology requires time and resources from all senior team members and those charged with the project’s success. This means that team members must take time away from their regular duties, which can impact productivity and the organization’s bottom line.

When making a case for implementing new technology in a legal department, it is crucial to determine the corporate standards for implementing IT systems. For instance, when implementing the CRM or ERP system, were all these one-time costs factored into the TCO (total cost of ownership), and were they borne by the business or IT? By following the same standards applied to other departments and projects, you can ensure that your business case is accurate and reasonable. Implementing new technology in a legal department can significantly improve efficiency and streamline operations, but it is essential to factor in its costs.

There are a variety of steps that in-house legal departments and general counsels can take when developing a compelling business case for legal transformation. The steps mentioned above are just a few worthwhile examples of how to approach this complex process.

Achieving Operational Efficiency and Delivering Value to the Organization

To succeed in securing funding for necessary changes, legal teams must build a solid business case by clearly defining the problem and solution, quantifying benefits with metrics, identifying the buyer, understanding the internal process, and meeting the criteria for approval. By following these steps, legal departments can effectively communicate the benefits of change to stakeholders and obtain the funding needed to implement necessary changes.

Doing so can help legal departments achieve their objectives, enhance their operational efficiency, and improve their ability to deliver value to the organization. Ultimately, by building a strong business case for necessary changes, legal departments can position themselves as strategic partners to the business and drive positive outcomes for the organization as a whole.

Take action today and discover how Altien Legal Matter Management can help you achieve a return on investment within just 12 months!

Contact us now to learn more about our innovative solutions and start experiencing the benefits for yourself.