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Costs, Benefits, Price and ROI for Automation Projects

Posted by Gene Turner on 06-Feb-2024 08:30:00

Manager presenting budget to marketing people


A common concern we hear when talking to prospective clients about legal automation is that they haven't got a budget, and they don't think they can get one.

Often, however, this is before we have discussed the size and cost of the problem or the opportunity to be addressed and the expected benefits, and therefore, it needs more context before a price can be agreed and a budget could be obtained.

What should you do before worrying about price and budget for an automation project?

I am always happy to talk to people about the context before getting into the details of designing a solution and working out a price because often the existing process is so expensive and the opportunities for improvement are so great that there really should be no net cost for the solution and it can start paying for itself immediately. You need to understand these first.

In my view, the best order to look at things is:

Being clear about the scope. 

Are we talking about a task within a process (for example, drafting a contract where the current time may be hours and we might get time down to minutes), or the overall contracting process (which may take weeks but it could be possible to get it down to days)?

Even if you're mainly thinking about a  particular part of the process (perhaps the contract drafting), it can be beneficial to consider the broader process too, as that could be where 1 + 1 + 1 can combine to equal 10 by taking out all the delays that exist between individual parts of a process and avoiding duplication and re-work.

With greater organisational impact able to be demonstrated, it can be easier to get others excited.  The project can still be delivered in phases with off-ramps to manage costs and risks.

The full cost of the current situation

Usually this is not well understood as there is often a lack of visibility.  This is particularly the case with an overall process, which may span multiple teams, but is often the case even for tasks within a process, where there is limited data.

Is the problem big enough to be worth addressing? Is the problem actually bigger than you thought? 

The expected benefits that will come from the improvements, and the value of those

Again, this is usually not well understood, as most legal teams have limited knowledge of what's possible even in the legal operations and technology space.  Across the business process, there will be many benefits that the legal team may not know about.

Can the project make enough impact to be worthwhile and prioritised?  How will you quantify the financial value of those benefits? 

Sometimes it can be helpful to set an ambitious target that would be sufficient if achieved, and ask if and how that could be delivered. 

A fair price for those benefits that is good for both the customer and the supplier, and will deliver a strong ROI for both. 

Often, when looked at closely, the true costs of the current situation and the value of the expected benefits are so high that when the solution is implemented, it should generate benefits that significantly exceed any costs for design, building, and ongoing support and there is ample room for everyone to do well.

As an example, we recently saw that one of our customers is saving $400 per contract they are generating with a solution we built, with $90,000 of savings YTD.

Another of our customers had such success with a solution we deployed that they are recovering their investment in only two or three transactions after reducing the amounts they need to pay external lawyers.

One of our customers in the construction space made improvements across their contracting process, particularly using digital forms and signing to rapidly finalise negotiations with subcontractors. They saw contracting times reduce from weeks to days. 

These are fantastic returns on investment for the customer, and were good projects for us too, but that can only be determined, and the projects only get the green light to begin with, by knowing what the initial position was. 

Recommendations for 2024

My suggestion for 2024 would be that there is value in taking a more open and curious approach to what might be possible.  It will be more than you think.

A good partner can help you to work out your current costs, what an ideal solution could look like (with different options, and perhaps delivery phases), and the value of expected benefits for each option.  Suppliers see what is possible across multiple customers in an industry, and across multiple industries. 

Against that context, it should be easier for both customer and supplier to agree on an option and a price that is good for each of them, and which creates the right incentives for longer term support and innovation. 

If your CFO is looking for cost savings, as they probably are, it makes sense to take a little time to explore how much you can deliver them with high certainty, while also achieving your own goals. 

If you could get $4 back for each $1 you spend, year after year, with material productivity and other ongoing benefits for the organisation, wouldn't you be able to get budget? 

For more insights on how to implement a successful legal automation project, ensuring success and avoiding the key mistakes most lawyers make, see our Lawyers Guide to Implementing Successful Legal automation.  

If you'd like to talk about your current situation and what options may be available, please get in touch. Alongside our trusted partners, we help people at all ends of the spectrum from getting the most out of the M365 tools you're already paying for, through to some of the most advanced solutions available. 

Topics: Legal Technology, In-House Legal, Document Assembly, Law Firm Management, Compliance, Legal Automation, Matter Management, Legal Operations, Contract Management, Law Firm Profitability

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