How to Calculate ROI for Legal Document Automation Solutions

Technology is at the forefront of everything today.

Even legal documents can be automated now, and repetitive tasks can be eliminated adeptly, reducing issues like information redundancy and lack of consistency.

Calculate ROI for Legal Document Automation Solutions

While there are numerous benefits to legal document automation software, you may be wondering how its benefits can be legitimately measured.

Why should you invest in such automation software? For that, let’s look into the ROI of automation solutions.

What Is ROI?

Return on investment (ROI) is a performance metric that measures efficiency and the amount you get from your investment.

It considers both the gain, benefit, and cost of investment.

ROI can be calculated by dividing the net profit/savings by the initial cost and then multiplying by 100 to calculate the percentage.

Below are some steps to calculate ROI.:

Identify Key Objectives

Start by defining the specific goals and objectives you aim to achieve with document automation.

Your goal can be reducing manual workload, minimizing errors, improving turnaround times, or enhancing client satisfaction.

Clearly articulating your objectives and aspirations will guide the ROI calculation process.

Estimate Initial Costs

Determining the upfront costs associated with implementing the legal document automation tools is core to ROI calculations.

Estimate all initial costs, such as purchasing the software, hardware or infrastructure updates, licensing, subscription fees, etc.

Estimate Benefits

The next step is to acknowledge all the benefits of legal technology.

These can include time savings on repetitive tasks, reduced manual errors, improved client satisfaction, organizational capacity, and enhanced data security.

For instance, consider the time-saving with an automated solution; the time spent on manual document creation is way more than the time spent on an automated solution.

If this benefit can be measured in monetary terms, the ROI can be meaningful.

Reconsidering the above example, if an automated technology saves you 10 additional hours per week, how can that translate to dollars?

Here’s the idea: think about what you’d typically do with that extra time.

Maybe you’d take on more client work (let’s say that bills at $200 an hour).

In that case, the benefit of the time saved is the money you’d earn; $2,000 per week in this example.

Not everything is about cash, and some benefits are harder to put a price tag on.

Maybe you’ll use the saved time to speed up some internal projects.

It’s still valuable, but there’s no direct income involved.

The key is to open both the financial gains and the non-financial benefits.

That way, everyone understands the whole picture of how your investment is paying off.

Legal Document Automation Solutions

Calculate Net Profit

Net profits can be calculated using this formula:

Net Profit/Savings = Total Benefits – Total Costs

Calculate ROI

Once you’ve figured out the time saved and its value in dollars (like our $2000 per week example), you can use a simple formula (mentioned above for ROI) to see how well your investment is doing (ROI).

This looks at your profit compared to what you sent upfront.

Here’s how it works:

  1. Total benefits: Multiply the number of hours saved each week by the hourly value and by the number of weeks in a year (usually 52)
  2. Net profit: Subtract the total cost of the investment from the total benefits you calculated.

For example, if the software saved you $104,000 annually and cost $20,000, your ROI would be a whopping 420%!

That means you got back $4.20 for every %1 you invented (that’s the multiplier way of saying it).

This shows a super profitable investment.


ROI calculations can justify investing in tech.

They can demonstrate the concrete benefits of investment and reveal if the technology is aligned with the firm’s strategic goals.

In essence, they make decision-making straightforward.

Chelsea Wilson

About Chelsea Wilson

Chelsea Wilson is the Community Relations Manager for Washington University School of Law’s distance learning LLM degree program, which provides foreign trained attorneys with the opportunity to earn a Master of Laws degree from a top-tier American university from anywhere in the world.

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