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NEW YORK — Over the past decade, law firms’ investment in technology has only continued to increase. In fact, year-over-year (YOY) investment in technology has regularly outpaced inflation at law firms, including 7.6% YOY investment growth in 2024 that far outpaced the 2.6% inflation rate, according to metrics from the Thomson Reuters Institute’s most recentLaw Firm Financial Indexreport.

However, there is a difference between simply throwing money at technology and fully integrating it into a firm’s strategic plan. To hear panelists atevent tell it, firms are fully aware of the difference. “Tech investments are and always should be increasing,” says Elaine Dick, Knowledge Management & Data Services Manager at BakerHostetler. “But what’s a bit more important with that increase is having it adapt with what’s happening with technology.”

The key comes in finding how to manage those budgets in a rapidly advancing technological world.

The trade-offs for new tech investment

Don Sternfeld, Chief Innovation Officer at Steptoe, joked that his firm chair “has never walked in and said ‘Sternfeld, you’ve got an unlimited budget’” — but that’s the common dilemma at today’s firms. “The challenge that we have is, if we want to make those significant investments and meet firm goals for profitability, how do we minimize or at least contain the ones that are required to keep our lights on?”

Sternfeld says that since arriving at the firm, he’s aimed to engage in zero-sum budgeting — making sure that income minus expenses always equals zero. “Our role is, at the end of the day, to maximize firm and partner profitability,” he explains. “Where are the tradeoffs?” There is no usual place, he adds, but in practice a firm tech leader may find them within other technologies or other functional areas, or by simply finding more efficient ways to operate within the organization.

Kathleen Orr, Global Head of Practice Innovation at Orrick, Herrington & Sutcliffe, adds that she aims to achieve this budget balance by directly tying technology priorities to strategic areas of the firm. Or simply put another way, if there’s a practice area that’s growing, they probably are a better candidate for technology investment. It seems simple, she notes, but some firms do not keep an eye on growth when determining tech investment. “I would underscore how important it is to understand those priorities, to have those conversations,” Orr says.

Maximizing attorney engagement is key to getting the most out of more expensive tech investments, and that gives small and midsize law firms the ability to compete across the board because of advanced tech tools and services.

At Orrick, Orr says that she has a set of standard questions that allows apples-to-apples comparisons of tech priorities: What is the use case for this? Who has the use case for this? Does the firm already have something that does this? “So, it’s not just up to me to check the box and say, ‘Yup, that looks great!’” she explains. “We have a process.”

Sometimes, however, a more hands-on approach is preferred. Dick at BakerHostetler says her team has instituted the cleverly named Bake-Offs by putting two pieces of technology head-to-head in limited trials for a select group of interested attorneys. In this way, rather than relying on a vendor’s perception of how a technology would work, the firm’s attorneys can provide feedback directly — before the firm makes a large-scale investment.

“If it doesn’t work in an attorney’s process, there’s no point in buying it,” Dick explains. “Bake-Offs lets the ROI be driven by the business or the attorneys that would be utilizing it, or the attorney that specifically asked for it.”

The people behind the metrics

BakerHostetler’s Bake-Offs also illustrate one of the panel’s crucial points: Not all metrics merely lead back to dollars and cents. “Attorneys are artists, not machines,” notes Martin Kilmer, Chief Operating Officer at Gravis Law. “You have to convince them that it will benefit the product that they are creating.”

To that end, when analyzing technology metrics, one of the first measurements that Kilmer turns to is user adoption. “Your development road map has to address pain points,” he explains. “The metric you have to utilize is adoption, and if you’re not getting that, it will fall flat on its face.”

This is also why Kilmer said his firm commits to ongoing training. Especially at a smaller firm, maximizing attorney engagement is key to getting the most out of more expensive tech investments, he says, adding that small and midsize law firms now have the ability to compete across the board because of advanced tech tools and services.

However, that means that the tech function needs to have regular conversations with attorneys to determine what they actually need and how those needs may change over time. “I’m convinced that three-quarters of my attorneys have no idea the power they have in their hands right now,” Kilmer adds.

Similarly, Orr said she runs into three common pitfalls with tech adoption. First, is that tech is an easy sell… but “you need people that were involved in the selection of the tool to help you sell it.” Second, is that if you build it, they will come… but “you have to tell people things many, many times, and you have to tell them how it will benefit them.” And third, is that with tech, you can fix it and forget it.

“You really need to be thoughtful at the start about how you’re going to define success,” Orr adds.

The ultimate judges of success

Ultimately, as the attorneys are the end arbiters of this technology, they will largely judge its success or failure. That means getting attorneys on board with tech adoption from the beginning and integrating them into the metrics collection process is crucial. And while this can be easier said than done, having attorney champions can help, Sternfeld says.

“They need to know, ‘What’s in it for me?’ It’s all about organizational change management,” he explains. “And the best people to tell them what’s in it for them, is that other lawyer. They won’t listen to my emails, but they’ll listen to their peer in that meeting who says, ‘Oh, this is something out there.’”

By providing the tech platform and the metrics to prove its worth, the tech function and attorneys can become partners in the success of any tech adoption. “At the end of the day, the innovation that our clients really want is brilliant legal practice,” Sternfeld says, adding that the tech function’s role in law firms will become “how can you give tools that let [lawyers] be the best and get rid of the noise.”

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