Douglas Simpson and Marc Lauritsen of Capstone Practice Systems have co-authored an article entitled Work Less, See More Success: Digging into Substantive Automation Systems for the April/May 2008 issue of Law Practice Technology. In that article we discuss how lawyers can audit existing documents or workflow, and measure return on investment.
We have prepared a spreadsheet that allows you to audit specific types of documents, perform calculations and analyze "what if" scenarios regarding the effect of automation, modified billing practices and marketing on the revenues and costs associated with practice areas.
The columns with gray headings in the spreadsheet allow you to calculate the average cost of preparing each document currently. The fee column should be the average cost that you charge for each document. In the Lwyr Rate and Staff Rate columns you should enter the effective hourly rate cost to the firm of the lawyers/staff, including proportionate amount of salary and a markup for overhead.
The green columns allow you to enter information about the projected costs and revenues for the automated versions of documents. Note that the volume of documents/year may increase because you will have greater capacity to handle more work with the same number of staff. You can try entering different volumes to see how that affects the ROI. You may also want to modify the Fee to reflect a value billing amount. The fee may even be lower, but you can still have a positive ROI if volume increases or costs are lower.
The columns with yellow headings allow you to enter information regarding the costs of automating the templates or workflow. The author costs will be either the amount that you pay to a third party developer or the cost of the time spent by internal developer/authors. In addition, lawyers or staff often have to spend time giving instructions or reviewing/testing the work, so that should be shown in the Staff Cost column. The amounts that should be entered in these colums should be the annual cost, so if the actual cost is $10,000 but it can be amortized over 4 years, then the annual cost would be $2,500.
The last two columns with blue headings automatically calculate the actual dollar return and the ROI as a percentage. You can try multiple scenarios in the previous columns to see how the ROI changes.
Please feel free to download the spreadsheet and use it. If you have any suggestions for refinement of this ROI calculator, please email me at
dougsimpson@backdraftsystems.com.