Five key metrics to help you assess the benefits of technology.
Demonstrate the value
After years of caution, legal tech is growing. Reluctance and doubt are subsiding, being replaced by a willingness to embrace and invest in technology.
Adoption is finally on the rise, and will only continue to increase in the coming years. A recent survey shows that GCs expect their legal departments to be using some degree of legal technology every day by 2026.
Despite this, 97% of GCs say they are struggling to secure investment in legal tech. As a senior in-house lawyer you know that now is the right time to enjoy the benefits that technology delivers, yet building a business case for legal tech remains a challenge.
The sure-fire way to get the board’s interest is to demonstrate your likely ROI. Investing in a tool to placate overworked lawyers is, unfortunately, unlikely to attract much interest. But emphasise the measurable value to the business as a whole, and the C-Suite will sit up and take notice.
Even better, a concerted focus on ROI will also help you to choose the right solution from all the vendors operating in the market space. That is because not all legal tech is created equal – some will deliver greater value, faster.
We know that you may be stepping out of your comfort zone when debating the ROI of technology, so here are a few metrics to look out for.
Primary ROI metrics
The whole point of ROI is that it should be measurable. Furthermore, they should be directly linked to improved performance, whether for the legal team or the wider business.
Vanity metrics – those that seem impressive at first glance but actually offer little tangible value – should be ignored. We suggest you focus on the following:
1. Deal velocity
Time is one of the most important considerations for in-house counsel. You know that time kills deals, and the longer it takes to move from first draft to signature, the more likely it is that the deal will collapse. Stakeholders will lose patience or move on, a competitor will undercut the deal, confidence will falter, and so on. You need to move at a pace that the business requires, without compromising quality or accuracy.
The good news is that speed is the most obvious benefit delivered by a Contract Acceleration Platform, and it is one that can be easily measured in two separate ways.
Turnaround time
Firstly, there is the time it takes to receive the reviewed contract back from legal. Ask a lawyer how long it takes to review a simple NDA and you might be told 30 minutes. Ask a salesperson the same question and they might say a couple of weeks. That is simply down to workload. The lawyer might not be able to tackle the contract for days or weeks due to the pile of paperwork already on their desk. With legal tech powering automated initial contract reviews, week-long delays can be removed. No matter how busy the lawyer is, technology can undertake a contract review with no delay.
Review time
Secondly, that 30-minute actual review time could be reduced by up to 95% with the aid of legal tech. The computing power offered by technology just works faster than a human can. When you think about the possibilities to scale that up for large volumes of contracts or more complex negotiations it becomes easy to see how you can save hours of tedious, manual grind every single day.
2. Efficiency
With technology boosting speed, efficiency is naturally a beneficiary. There is a relatively simple metric that we can use to measure efficiency in the legal team: the number of contracts signed per lawyer per month.
This calculation demonstrates how technology can overcome one of legal’s biggest challenges – getting more contractual work done and better serving the business without adding to headcount.
3. Adoption
Even the best technology will fail to deliver ROI if your team does not use the systems you have invested in. Encouraging usage and adoption is essential if the potential benefits are to be realised.
Again, adoption is a measurable figure when you have the right solution. Look for technology that offers a dashboard view of who has logged in and how many contracts each user has uploaded. You can quickly measure adoption and calculate where there is room for improvement.
It is also scalable: the more active users you have, the better your returns will be.
4. Accuracy
This is often the real litmus test for contract review technology. There is little point in spending money on tools that deliver automation and speed but at the cost of accuracy. As a lawyer this is simply not acceptable. You naturally want to take control of contract reviews and ensure that nothing is overlooked.
ThoughtRiver is built to identify risk just as you would. ThoughtRiver’s AI combines your company’s bespoke contracting policies as defined in your digitised risk playbook, with an understanding of how you have historically approached risk. Risks are then measured and flagged for your attention as necessary.
ThoughtRiver regularly scores around the 90% mark in terms of accuracy, and that is because we always err on the side of caution. If there is any doubt, we want to give you, the lawyer, complete control over what steps to take next, so potential risk is flagged for your attention.
We call this “attentive AI”, and it is designed to deliver false positives rather than false negatives. Straight forward contracts with no risk identified will sail through the ThoughtRiver platform, while any traces of doubt will be surfaced for a human lawyer to make the final decision.
5. Outsourcing costs
As the work builds up in your legal team, it is usual to outsource immediate requirements to third parties. This is especially common towards the end of a sales cycle when deals need to be rushed through to help sales meet its targets.
With legal tech taking care of contract reviews and boosting deal velocity, there is no longer a requirement to outsource. Thanks to automated technology, work can be completed in-house.
Measuring ROI here is as easy as monitoring outsourced costs and calculating the reduction that should follow the implementation of technology such as ThoughtRiver.
Secondary benefits
Not all benefits are as easy to measure. ‘Softer’ benefits can be difficult to quantify, yet are just as valuable. For example:
1. More time for higher-value strategic work
How often does your GC have capacity to offer proactive strategic advice in the boardroom? With legal tech removing the drudgery of manual work, senior lawyers have more time to dedicate to higher-value, strategic tasks.
2. Be more data-driven
ThoughtRiver digitises contracts at the point of review, creating a data asset that is ripe for analysis and discovery. This allows the legal team to identify ways to improve how negotiations are conducted. For example, what are the common causes of delays? Which parts of the digital playbook are at odds with how negotiations are conducted in the ‘real world’? Where can we raise prices or renegotiate terms?
Uncovering this information manually via paper contracts is a slow, expensive, and cumbersome process. With a digital contract, data analysis is fast and efficient.
3. Quality of life
We know manual contract reviews are your bread and butter, but they can be tedious – especially when conducted manually. It is one of the main reasons why we started ThoughtRiver – to help you remove the manual grind from your day-to-day lives and be a better, happier lawyer.
4. Improve legal’s reputation
When you demonstrate a forward-thinking, data-driven approach, you build confidence in the legal team and put the department at the centre of the company. Rather than being blamed for delays, legal can actually power growth.
Using metrics and statistics to illustrate the value of legal tech to your executives will help make the business case far more powerful. In fact, with the right numbers supporting your cause, the business case can become undeniable. Download our eGuide to see how other GCs have successfully presented the case for legal tech, and discover how you can do the same.
