How to spend your IT and legal tech budget to maximise ROI

The average IT spend for SME law firms is 6.5% of revenue (including both legal tech and IT staff) according to LPM’s 2023 Frontiers report. Rupert Collins-White, co-CEO of LPM, shared how this could be holding smaller firms back, “the data for IT spend is really widespread, some are only spending 1-3%. The median average is actually 5%, which is not a lot when revenue is low, so that could be holding the smaller firms back. Especially when the average includes employees, it’s not going to be able to buy you a lot.”

However, 61% of law firm leaders predict spend will rise over the next 12 months as many believe that technology is a key enabler for growth and necessary for boosting efficiency. Almost half of law firm leaders (45%) said building a more agile and digital-first culture was their strategic priority, which aligns with the increased planned tech spend.

But, securing buy-in for tech investments is a widely acknowledged barrier across the sector. In the report, Peter Carr, head of IT at Fisher Jones Greenwood pointed out: “Conveying the benefit can be a challenge in the first instance, while realising ROI during and after implementation of a new tool is another.”

With intentions high but appetite cautious, how can SMEs ensure they’re maximising ROI on their software investments to make sure the money they do spend is returning financial and business benefits?

Two considerations for maximising your legal tech spend

When investing in legal tech, always consider:

• whether the solution aligns with your business strategy
• how you’ll ensure that your team fully utilises the legal tech tools

Align tech spend with your business strategy

Sarah Charlton, CEO of SME firm Eaton-Evans & Morris, advises that firms consider how a new piece of software will help them achieve their business objectives: “Ensure the products you choose suit your business’s direction. Be focused on what you want to achieve and only procure solutions that are useful”.

Tools that align with your long-term plans and can continue to support you – rather than just fix an immediate problem – will increase the ROI you can achieve.

Ensure firm-wide utilisation

Getting the most from your investments starts with ensuring your team are fully utilising the features and functionality available to them. Sarah says that “a lot of firms buy the product, pass it to the team, but don’t engage with them. Then, half the product isn’t being used and staff naturally find work arounds.”

Engaging the team in the purchasing and implementation of new software is crucial for maximising ROI. Training needs to be prioritised so employees feel confident and empowered by the tools to perform their best.

Involving and effectively communicating with your team about new tech tools and digital-first initiatives also improves employee satisfaction. Adopting tools that reduces administration burden enables employees to perform their best and focus on their clients. A win-win for employees, the clients, and the firm.

How a legal operations role can help you maximise ROI from your IT budget

Diluting responsibilities between billable client work and operational duties is a losing battle – billable client work is always the priority; operational efficiency and tech utilisation is then left behind. That’s when managing partners begin to question the value of the digital investments.

Sean Stuttaford, chief operating officer of Thompson Smith and Puxon, sees the COO role as “supporting and reinforcing existing leadership structure, fostering team cohesion, financial management, and guiding strategic decision-making. A COO can contribute significantly to the firm’s resilience and agility, empowering it to adapt and respond swiftly to industry changes and advancements in technology.”

The legal operations role is a prime position to hire a non-lawyer leadership role, as Sean explains: “It put me in a unique position to utilise my extensive IT background to streamline operations, integrate technological solutions and optimise business processes, enhancing the firm’s efficiency and overall performance dramatically.”

Taking inspiration from outside the legal sector to utilise technology and optimise operations can help to accelerate change and growth.  This is because your clients don’t compare your services to other legal firms (because they have rarely experienced another), but to other brands and industries where they’ve experienced an exceptional service. Moving your benchmarks and inspiration provides a fresh perspective on improving performance and ROI on investments.

Maximise ROI on your IT spend by investing in the right team

Ultimately, investing in legal tech requires the right person to strategise, purchase, implement, and continuously optimise. A digital-first culture and achieving an ROI on your IT spend is more then just a particular technology product or software – it’s ultimately about people.

Building the right culture within your firm, hiring someone whose priority it is to review operations and tech, and to ensure users of the system are well trained will set you up for long-term success. You’ll not only achieve better return on your investments but will feel the benefit in the quality of service you can provide, as well as employee satisfaction and retention.