Many lawyers will agree that time is money.
Whether you measure by the billable hour, capacity to serve clients, or achieve a work/life balance, driving profitability is a critical objective that law firms seek to achieve. Legal information systems, like case management and accounting programs, are instrumental in this capacity.
There are multiple solutions on the market, which makes it challenging for lawyers to establish their best course-of-action when selecting a provider. However, it is crucial to understand that information technology is not developed equally, particularly in the area of producing a return on your investment (ROI).
Considering that saving time and reducing costs are the top-cited reasons for adopting legal technology, it is essential to ensure they are genuinely facilitating the results your firm needs.
How to Calculate the ROI of Your Law Firms’ Technology
Your firm’s technology is an investment in the future of your practice, and there are several key factors to consider when you evaluate legal technology and the ROI for your firm. However, predicting the future requires attorneys to start by looking toward the past.
Implementation Costs
Before committing to a single provider, you must first consider how much of your resources it will take to turn a profit on newly deployed systems. Account for the vendor’s costs, including licensing, installation, and ongoing maintenance, as well as the investment in training attorneys and support staff members.
Calculating Efficiencies
Once you have implemented a system, your next step is recording and calculating the time and money saved to ensure that you are receiving an adequate ROI. There is a simple calculation that your firm can use to measure impact.
In this formula, you must know a few variables to calculate the efficiencies achieved as a percentage:
Time to perform the task before implementation / Time to perform the task after implementation = ROI
You can then use your results to evaluate your ROI by comparing them below:
- If your ROI is below 1: The technology is creating inefficiencies.
- If your ROI is 1: The technology did not change
- If Your ROI is above 1: The technology is creating efficiencies.
If you are not achieving the results for which you were hoping, it is time to address the core issue. Not obtaining a return on your investment could stem from multiple sources not necessarily related to the system’s ability to stand up to the task, such as user knowledge and training.
The Bottom Line
Technology carries numerous benefits to lawyers, including handing cases more efficiently and managing the firm more effectively. However, it is vital that you take a careful approach to any new system you elect to deploy since costs can quickly mount, even if you are not using it.
Work with a provider who prices its services and applications transparently so that you can evaluate its genuine value. Upon making a decision, perform due diligence further by ensuring that you are maximizing and the benefits of its use.
Contact Rapid Funds About Maximizing Your Law Firm’s ROI
If you are looking for additional methods for boosting your law firm’s financial flexibility, consider discussing post-settlement funding options with the team at RapidFunds. Contact us using the form below for more information or submit your application today.