In 2024, AI adoption in legal departments increased by over 60%, but many teams still struggle to prove the tools are delivering value.
Without a clear ROI, it becomes difficult to justify the cost, plan future investments, or show legal’s impact on the business.
Open, a leading neo-banking platform, used SpotDraft to cut contract approval times by 90%. By automating clause management and reducing manual coordination, they sped up due diligence during investment rounds. They also reduced reliance on external counsel and saved significant internal effort.
Tracking real outcomes helped Open understand what changed, what improved, and where to invest further.
This article breaks down how in-house legal teams can apply the same approach using real metrics to track performance and make smarter decisions.
Understanding ROI of AI in legal tech
“The first thing is to make sure you delve deeper into the business and the product. And then understand the strategic initiatives for the business. What is the business trying to accomplish? What are their goals, objectives over the next two quarters, four quarters, or six quarters? You can then focus your efforts and energies on ensuring that you're helping move the company forward with those objectives and goals.”
~ Adam Glick, ex-Head of Legal, Intercom
Cultivating Meaningful Connections for In-House Legal Success
In 2024, 85% of companies reported progress in their AI strategies, with nearly half experiencing positive ROI from these investments.
For in-house legal teams, ROI of AI is measured by how effectively a tool enhances output, reduces costs, and supports faster decisions relative to its implementation and maintenance costs.
Key components of AI ROI in legal tech:
- Cost reduction: AI tools decrease reliance on external counsel by automating tasks such as due diligence, contract analysis, and document review
- Time savings: Tasks like contract review, clause extraction, and legal research are completed in minutes instead of hours
- Improved accuracy: AI powered tools minimizes human errors, especially in contract review and legal research.
- Faster decision-making: AI surfaces relevant insights and risks more quickly, aiding legal teams in prompt business responses.
- Enhanced internal service and client satisfaction: Business units receive faster, clearer answers, improving the legal department's reputation within the company.
Also read: Legal AI: SpotDraft's Vision for 2025
ROI is calculated by dividing the net profit or savings from the investment by the initial cost, then multiplying by 100 to get a ROI percentage.
ROI = (Net Financial Benefits / Investment Cost) x 100
If AI saves 20 hours a week for a legal team valued at $150/hour, that’s $156,000 saved annually. If the AI platform costs $30,000, ROI is 420%
Also read: Evaluating the ROI of Contract Management Software: A Comprehensive Guide
Why measuring the ROI of AI in legal tech is essential
Source: https://roiinstitutecanada.com/roi-methodology/
“It’s not going to be AI replacing lawyers. It’s going to be lawyers working with AI replacing lawyers who don’t work with AI.”
~Erik Brynjolfsson
Director, DigEconLab
For in-house legal teams, adopting AI tools is a strategic move aimed at enhancing efficiency and reducing costs. However, without measuring the return on investment (ROI), it's challenging to assess the actual value these tools bring to the organization.
Key reasons to measure ROI
#1 It helps justify AI-related expenses
Measuring ROI allows legal teams to show which AI implementations deliver real savings or improvements. This evidence is essential when requesting budget or defending current spend.
#2 It improves future investment decisions
ROI data shows which tools are worth continuing and which ones are not delivering value. This helps teams invest in the right legal technology and avoid waste.
#3 It shows leadership how legal drives value
“I built trust with quantitative, factual reporting to Finance, Strategy, and the CEO, as well as working hard and proving my value, while owning my seat at the table. Doing that requires an enormous amount of effort. It’s important to have a vision and go to your business leaders with the metrics showing how they align with the business strategy.”
~ David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders
ROI connects legal work to business outcomes. When you can show time saved, risk avoided, or faster deal closures, leadership is more likely to support legal operations.
#4 It increases adoption across the legal team
When legal professionals see measurable improvements from AI tools, they are more likely to embrace and utilize them fully.
#5 It supports long-term planning and strategy
Tracking ROI over time informs better forecasting, budgeting, and setting of key performance indicators (KPIs) for legal operations.
Also read: 4 Crucial Contract Management KPIs to Track for Legal Success
Legal teams often face challenges that go beyond tracking time saved or money spent. Even when a tool works well, proving its exact contribution can be a complicated task.
Challenges in measuring ROI of AI in legal tech
Even when an AI tool is working well, showing its exact value can be difficult. In-house legal teams face several roadblocks when trying to measure real returns.
#1 It is difficult to measure intangible benefits
AI tools improve accuracy, consistency, and internal communication. These benefits are real, but they don’t always show up as immediate savings or revenue. Client trust and reduced risk are harder to quantify, even though they matter in the long term.
#2 AI outcomes are often shared across departments
AI tools are often used across legal, procurement, finance, and compliance. When multiple teams rely on the same system, it becomes harder to isolate how much of the value is created by or for legal.
#3 It takes time for ROI to show up
AI investments may not deliver results in the first few weeks. It may take months before the team adjusts workflows, builds adoption, and begins to see measurable gains. Leadership may overlook these delayed outcomes if they expect fast results.
#4 Productivity gains are hard to verify
Time saved is one of the most common ROI claims, but it’s rarely tracked in a structured way. Without benchmarks or usage data, it’s difficult to prove whether AI tools are making lawyers more efficient or just shifting tasks around.
#5 AI impact often overlaps with other factors
Positive results may come from improved training, new policies, or better team structure. Unless legal teams set up controlled tracking from the start, it’s hard to say what portion of the outcome came from AI alone.
Challenges aside, ROI can be measured if the focus is on outcomes that legal teams can clearly track and report. The goal is not to capture everything, but to measure what matters to business performance.
How to measure ROI of AI in legal tech
Tracking ROI starts with defining what success looks like for your legal team. These are the most reliable ways to measure whether your AI tool is delivering value.
#1 Measure time and cost savings from routine work automation
Start by listing the tasks your AI tool now handles. These may include legal document review, redlining, data extraction, or invoice checks. Estimate the hours saved per week by the team.
Multiply the saved hours by the hourly cost of internal resources. This gives a clear estimate of cost savings. You can use this to calculate return on investment over the year.
Also read: Contract Management Automation: Best Practices + Tools
#2 Track improvements in accuracy and reduction in errors
Look at how the tool reduces risks and errors. This could be fewer missed clauses, fewer billing mistakes, or improved compliance. Use historical data to compare how often these errors occurred before and after implementation.
This is especially useful for risk reporting, audit responses, and internal reviews.
#3 Gather feedback from internal business teams
Legal teams do not work in isolation. Ask teams in sales, finance, procurement, or HR if they notice improvements after the AI tool is introduced. Focus on clarity of advice, speed of response, and reduction in follow-ups.
If other teams report better outcomes, that is a strong signal that the tool is delivering value beyond legal.
#4 Monitor legal’s impact on business outcomes
Track metrics like contract cycle time, renewal completion rate, or number of escalations. If legal is reviewing faster or flagging fewer issues, it affects deal speed, cash flow, and risk exposure.
You can also look at whether legal becomes less of a bottleneck in processes that depend on fast decisions.
Also read: 4 Contract Management Performance Metrics to Measure Success
The benefits of measuring ROI in legal AI
ROI data helps legal teams move from reactive to strategic. It connects tools to outcomes and gives legal a seat at the table in budget and planning conversations.
#1 It supports better investment decisions
When you measure results, you stop relying on assumptions. ROI helps identify which tools are worth scaling and which are not delivering. This avoids waste and builds a case for future tech investments.
PNC Bank used LegalVIEW BillAnalyzer to improve billing compliance. By tracking the tool’s effect on invoice review accuracy and law firm performance, they were able to quantify its success and justify continued investment.
#2 It helps optimize legal resources
When legal knows where the return is highest, it can reallocate time, people, and budget accordingly. ROI tracking shows where AI has replaced manual work and where effort is still needed.
For in-house teams managing flat budgets, this helps reduce unnecessary outsourcing and puts internal time to better use.
#3 It strengthens legal’s role in the business
Data-backed results make it easier to show how legal contributes to company-wide performance. When the legal team can tie its tools to speed, accuracy, and cost savings, leadership takes notice.
This builds trust and gives legal more input in cross-functional planning, especially when tech or budget conversations come up.
Also read: How Legal Teams Should Calculate and Showcase ROI
Having established the benefits of measuring ROI in legal AI, it's essential to consider the tools that facilitate this process.
Tools to measure the ROI of AI in legal tech
Measuring ROI effectively requires tools that provide clear insights into performance metrics and facilitate feedback collection.
#1 Utilize analytics platforms and performance dashboards
Implementing analytics platforms allows legal teams to track key performance indicators such as contract turnaround times, error rates, and cost savings. These dashboards provide a visual representation of data, making it easier to identify trends and areas for improvement.
Also read: Introducing Contract Analytics on SpotDraft
#2 Implement feedback mechanisms and benchmarking tools
Regular feedback from internal stakeholders helps assess the effectiveness of AI tools. Benchmarking tools enable legal teams to compare their performance against legal industry standards, providing context to ROI metrics.
#3 Leverage specialized contract management solutions
“Done right, CLM can generate massive ROI. But please, please talk to someone before jumping in head-first. Many companies will try to sell you just tech, or just people, or something else alone. But what’s really needed is a well-tuned mix. That’s the secret to success. The first step is to figure out what works for you. When you get the mix right, that’s when you’ll really see the results.”
~ Craig Conte, Lead Partner Legal Operate - Deloitte Legal
Contract Management ROI: Tools, Process, People, all of the above?
Platforms like SpotDraft offer features tailored for legal teams, including custom dashboards that capture contract insights and demonstrate the legal team's impact on business outcomes. These tools streamline contract processes and also provide data that supports ROI analysis.
Also read: Contract Management Dashboard: A Comprehensive Guide
Get real legal AI ROI with SpotDraft
AI tools can improve legal efficiency, reduce costs, and support faster decisions. But without measuring ROI, it's hard to prove their value or improve what matters.
Tracking ROI helps legal teams make better investment decisions, use resources more effectively, and show leadership how legal contributes to business goals.
SpotDraft helps legal teams manage contracts and measure their performance with clear, actionable data. It makes it easier to track what improves, where delays happen, and how legal drives outcomes.
If you want to see how it works in your setup, book a demo now.
