Making the business case for your legal technology investment

According to a report by the legal departments on the Move, digital budgets have increased by 23%. How can corporate legal departments provide a budget for their digital initiatives?

Times are changing and they are changing fast. The ongoing COVID-19 pandemic has changed the way in which corporate lawyers, like many other professions, can work effectively and benefit the organization. However, are all these changes reflected in the digital budgets of legal departments?

Nearly a quarter of legal departments have increased their digital budgets

According to a report by Volters Kluwer and the European Company Lawyers Association “Legal Departments in Motion”, 23% of legal departments have increased their digital budgets. It should be made clear that this increase should be seen as a permanent rather than a random increase in costs that has helped legal departments cope in the early stages of a pandemic.

Of those with increased digital budgets, 20% have a budget below € 25,000, 30% have a budget of € 25,000 to € 100,000, 9% have a budget of € 100,000 to € 250,000, and 5% of legal departments have budgets above. 250,000 euros. 36% do not have a specific digital budget, even if they can confirm that their real budget is higher than it was before the pandemic.

In this article, we explore how the legal department can make a business rationale for digital budgets and thus obtain the necessary budget for legal investment in technology.

Identify your squeaky wheel

The first step is to identify your pain points because it will help your stakeholders understand why it is important for the legal department to address this pain issue. Some examples of pain points include incurring costs associated with missing deadlines, losing deals because it takes weeks to sign, and not being able to respond effectively to business inquiries regarding contracts. The key here is to show how your pain point affects the business at each level. You can build a much stronger argument for your investment in legal technology if you have figures to support this.

Set metrics and KPIs

Stakeholders, especially the CFO, want there to be evidence that the digital budget will be put to good use. You should be able to demonstrate how you will measure whether you are achieving ROI.

How can you ensure that your digital budget provides a return on investment? Make sure it focuses around influencing the business or the outcome, not just what the legal department needs. The truth is that business leaders are most concerned about the impact on profits. For more tips on calculating your return on investment, check out our official document on how to prove the return on your investment in legal technology.

The role of Advocate General

The General Adviser plays a dual role in ensuring stakeholder participation in the digital budget. The Chief Legal Adviser should make sure that the legal team has support. On the other hand, the general counsel must make sure that business leaders support the digital budget, otherwise it will be difficult to achieve the goals in the roadmap of the legal department. In our article on creating a business case for contract management software, it is proposed to obtain the approval of stakeholders.

Want to know more about how legal departments plan to allocate their digital budgets to invest in legal technology? Detailed findings are available in the report “Legal Departments on the Move”, including which processes legal departments will improve most urgently, how the pandemic affected the work of legal departments and the role of digitalization in ESG issues.

Get your copy here.

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