Investing in legal technology is one of the best things you can do to improve operations, streamline workflows and increase your billable hours, but it comes at a price. You want to ensure that your investment aligns with your needs and goals as well as delivers a notable ROI.
In this article, we’ll discuss several things your Apple-using law firm should consider as you evaluate potential technology solutions. Specifically, we’ll look at factors like:
- Where to start when choosing a new legal technology
- How to budget for a tech investment and assess its ROI
- Ways legal technology streamlines a law firm’s operations and increases profit margins
- Tips for setting stakeholder expectations when investing in legal tech
- What to know about developing a tech maintenance budget
If you have questions about legal tech solutions or what to look for when investing in one, get in touch with our team at Honeycrisp to schedule a free consultation.
Where to Start When Choosing New Legal Technology
Selecting the right legal technology is a critical decision that influences your law firm’s productivity, client satisfaction and overall success. Going through the process will be a significant undertaking but breaking it down step-by-step will ease some of the burden, so too will leaning on a tech partner for support.
As you get started, it’s worth remembering that technology on its own will not solve all your problems. It’s a tool, and as with any tool, you need the right one for the job. Before you even begin your search, you need to take these steps:
- Define the problem first, then find a solution – With technology, there is no one-size-fits-all solution. What works for the law firm down the street might not work for you. Although Apple-using law firms are at an advantage when it comes to technology’s capabilities, the tools you’re using should still be customized to your firm’s unique needs. As you define your problem, gather data and information from your team. Once armed with this information, you can move forward towards finding a solution that will effectively resolve your problems.
- Establish budget parameters – Determine how much your firm is willing to invest in legal technology solutions. New technology and system upgrades come at a cost and one that’s generally a large, upfront outlay followed by recouping that investment over time. We’ll discuss more about budgeting for technology expenditures in just a minute.
- Take advantage of trial periods and demos – Test-driving a new legal tech is one of the best ways to assess its fit with your firm. Do you like the interface? Is it easy to navigate or more complicated than it needs to be? You want a solution that maximizes productivity, not hinders it. Now is the time to nit-pick its features and functionality.
Balancing Cost and Returns When Investing in Legal Tech
Investing in legal technology can significantly enhance a law firm’s efficiency and competitiveness. And while keeping up with the latest and greatest is not necessarily a do-or-die situation (though it’s almost that dire), working with slow or outdated technology can indeed have major ramifications for your business.
One big hurdle for many law firms is swallowing the price tag that comes with new technologies. The outlay is nothing to sneeze at, so you want to be sure you’ll recoup your investment over time. Looking at ROI can be one way to strike the right balance between cost and value.
Assessing the ROI of a Tech Investment
Assessing value will be uniquely tied to your goals and solutions, but it should be loosely related to some key categories, including:
- Profitability – How will the new technology reduce costs or increase revenue
- Capacity – How will new technology enable you to take on and support more work?
- Satisfaction – How will legal tech improve your staff and clients’ experience with the firm?
You should already have good working data that you can use to evaluate a baseline for these categories. Remember that even if you’re somewhat satisfied with your current metrics, technology is constantly evolving. It’s important to plan for the future.
How to Budget for a Legal Tech Investment
Budgeting for a new legal tech investment requires data-driven analysis and careful planning to ensure a smooth implementation without putting excessive financial strain on your law firm. Here are several factors to consider as you evaluate technology options and how they fit within your budget parameters.
Defining Your Budget
The very first stop when embarking on a new tech investment journey is your budget. There’s no chicken-or-egg debate here – the budget comes first. Legal tech comes in all kinds of shiny colors, but the one you reach for must realistically match your financial statements (and also your needs – for more on that, check out this post.
One of the benefits of budget planning is that numbers strip away any emotion from the process. As you analyze your firm’s financial health, identify how much you can allocate to legal technology without compromising day-to-day operations. Your budget analysis should include a look at the following:
- Upfront investment outlay
- Training costs
- Implementation expenses
- Ongoing tech support
- Security costs
- Maintenance and future upgrades
Each vendor may price their services slightly differently, so be sure you have a clear understanding of what is and isn’t included in the prices you are quoted so you can effectively compare products and services. And don’t forget to budget for maintenance!
Budgeting for tech maintenance often gets short shrift in many law firms, but it shouldn’t. While less glamorous than a new investment, maintenance still packs a major punch in terms of operational performance. It’s also one of the best ways to ensure you get the most out of your legal tech investment.
How to Create an Accurate Tech Maintenance Budget
To plan for the future, it’s helpful to look at the past. Here are some things to consider as you create a tech maintenance budget for your law firm.
- Historical data: Evaluate your past spend on maintenance-related items. Have the majority of those costs been reactive expenses versus proactive maintenance expenses? Be critical with your analysis. The better your data, the more accurately you can plan a future budget.
- Establish a reserve fund: Like any healthy budget, you should set money aside for emergencies. Maintenance won’t prevent everything, so planning for the unexpected will make those emergencies easier to swallow.
- Cover all tech categories: Some tech expenses can get overlooked when planning a maintenance budget, especially one-off costs like licensing costs, processing fees or procurement costs. Make sure all spending in the tech category is included in your budget forecast.
Lastly, with any budget, it’s critical to be in alignment with your firm’s priorities. From a tech perspective, that means understanding which technology is essential to your staff’s day-to-day work and which is merely important. Knowing how these items fall within the hierarchy of budget planning will help you most accurately plan your budget.
Leveraging Technology to Boost Operations
Attorneys the world over feel the pressure of boosting their billable hours. Finding that magic bullet to enable them to most efficiently manage operations while increasingly taking on more clients continues to elude most law firms.
But it shouldn’t.
Technology makes it possible for law firms of all sizes to level the playing field and grow their revenue and margins without sacrificing precious time.
There are many ways to leverage technology at your law firm. In terms of operations, one tool that’s gaining a lot of traction among a subset of tech-savvy lawyers is Notion. This app-based solution is completely customizable and popular in part because it has so many capabilities all in one tool, including the ability to serve as your law firm’s operating system. For more about using Notion at your law firm, check out this guide.
Increasing Your Profit Margins with Technology
Your firm will be most profitable when you can reduce expenses and boost revenue. And while revenue is important, maintaining – and increasing – your profit margin is necessary for long-term success.
The right technology solution should offer a healthy return on investment and help you automate more processes so you can save time and money. With fewer expenses and more streamlined processes in place, you can grow your bottom line.
Here are a few ways new legal technology should help you reduce costs so you can increase your profit margin.
- Automate as much as you can – There are countless processes you can easily automate in a law firm on Macs. As you decide which to start with, think through your firm’s daily operations and consider which workflow processes are most frequently performed. Start with low-hanging fruit like automating your new client intake process and work through where else you can gain efficiencies by automating repetitive processes. As a bonus, automation also offers peace of mind. Your staff only has so much mental bandwidth. The act of having to remember to do a 5-minute task is probably more costly than the 5 minutes itself.
- Outsource services like IT – You will make the most efficient use of your budget when you’re only paying for the services you really need. Paying full-time staff to do a part-time job is unnecessary overhead. Moreover, you can tap into a full team of experts when you hire out your IT services rather than relying on a leaner in-house staff.
- Track everything – Data is your friend. You should know how every billable hour is being spent. If you don’t like what you see, set new goals to change them. For some tools to help you track time efficiently, check out these resources.
As you consider areas to trim expenses and look for opportunities to increase revenue, evaluate your current technology. Our team at Honeycrisp can help.
Tips for Setting Stakeholder Expectations When Investing in Legal Tech
Setting clear and realistic stakeholder expectations is crucial when investing in legal technology. You need to be able to demonstrate its value in relation to cost and have a clear purpose when starting your search.
In terms of buy-in from your stakeholders, increasingly the ask is not so much related to why your firm should invest in technology (that much is clear). Rather, it’s being able to clearly define which products you should invest in among the sea of solutions and demonstrate how they will solve problems or create new opportunities.
Don’t be surprised if you experience some pushback from other attorneys or stakeholders when you begin pursuing a new legal tech solution. There can be a steep cost to new technology, so their concerns are likely warranted. Be intentional with your search process and follow these suggestions to ensure a smooth implementation.
- Involve stakeholders from the beginning – There should be a strong business case for investing in new technology. Involve your partners early as you define your core problems and identify areas of opportunity that new legal tech could solve. When everyone’s input is accounted for early, you’ll gain a clearer understanding of the specific needs of the firm.
- Focus on the benefits – When all stakeholders see are dollar signs, the benefits need to shine even brighter. You need to be specific, upfront and repetitive about how the technology will impact every aspect of the business. For example, maybe the new technology means attorneys can now take vacations because the data is in the system, that’s a message worth shouting from rooftops. Whatever change you implement will come with numerous benefits, but to make the change stick, you need to tout those selling points loudly, clearly and frequently to motivate attorneys to change.
- Remain transparent – Be open about the selection criteria and involve stakeholders in product demonstrations and trials. It’s also to establish realistic implementation timelines and communicate updates frequently.
In today’s tech landscape, stakeholders don’t necessarily need to be convinced about why the firm should invest in technology. What they do need to be convinced of is why the firm should invest in a given product or service. Involving key players early and focusing on the benefits and outcomes can help the entire process go more smoothly. To learn more about legal technology solutions for your law firm, contact our team at Honeycrisp.
