The Total Economic Impact™ Of Thomson Reuters Legal Research Solutions
Cost Savings And Business Benefits Enabled By Thomson Reuters Legal Research Solutions
A Forrester Total Economic Impact™ Study Commissioned By Thomson Reuters, November 2024
Legal departments aiming to boost operational efficiency, cut costs, and achieve better legal outcomes often grapple with the demands of time-intensive research, dependence on costly outside counsel, and the ongoing challenge of staying updated with evolving regulations and laws. Legal research platforms serve as a critical resource in this pursuit and can boost productivity, streamline routine tasks, and reduce potential risks and costs associated with legal matters.
Thomson Reuters legal research solutions, featuring Westlaw Precision with CoCounsel and Practical Law Dynamic Tool Set with CoCounsel, offer a comprehensive solution tailored for modern legal professionals. These solutions combine authoritative legal research, practical insights, and advanced generative AI to streamline legal workflows. By reducing reliance on costly outside counsel, enhancing research efficiency, and supporting confident decision-making, Thomson Reuters legal research solutions empower legal teams to achieve greater productivity and improve legal outcomes.
Thomson Reuters commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Thomson Reuters legal research solutions.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Thomson Reuters legal research solutions on their organizations.
Return on investment (ROI)
110%
Net present value (NPV)
$497K
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four representatives with experience using Thomson Reuters legal research solutions. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that employs a 20-person in-house legal department.
Interviewees said that prior to using Thomson Reuters legal research solutions, their organizations struggled with inefficient legal research processes, overreliance on outside counsel, and difficulties staying up to date with relevant legal developments. These limitations led to increased costs related to outside counsel and legal research tools, reduced productivity, and elevated risks in legal proceedings.
After investing in Thomson Reuters legal research solutions, the interviewees reported significant improvements in research efficiency, reduced dependence on outside counsel, cost savings, and enhanced confidence in their legal work. Key results from the investment include time savings of up to 20%, cost reductions in outside counsel fees, and improved legal outcomes.
Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Increased productivity valued at $626,000. By utilizing Thomson Reuters legal research solutions, attorneys and legal support employees save up to 20% of their time on legal research and drafting tasks. For the 20-person legal team at the composite organization, this results in the reallocation of over 14,000 hours over three years to higher-value activities. The improved research efficiency translates into significant cost savings and improved legal output.
- Reduced outside counsel expenses by $233,000. The information, guidance, and tools provided by Thomson Reuters legal research solutions empower internal legal teams to handle more legal matters without external assistance and reduce the level at which outside counsel is engaged. By reducing the need to engage with outside counsel by just one out of five routine legal issues, the composite organization saves on substantial legal fees with features like multistate surveys and practical guidance on managing regulatory compliance.
- Reduced escalation of legal disputes and associated costs by $63,000. Thomson Reuters legal research solutions help the composite organization proactively address potential legal issues, resulting in the avoidance of certain disputes altogether. Additionally, when disputes arise, the legal team is better prepared, leading to quicker resolutions and less time and money spent on litigation.
- Elimination of redundant research resources saves $26,000. Transitioning from outdated legal research tools, individually purchased ad hoc resources, or physical legal libraries to Thomson Reuters legal research solutions allows the composite organization to eliminate costs associated with disjointed purchasing decisions and maintaining and updating hardcopy materials, such as case law, state and federal statutes, and administrative codes. The all-inclusive nature of the Thomson Reuters solution ensures that legal teams have access to the most current information without additional expenses.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
- Improved employee experience. Legal professionals value the time savings, ease of use, and comprehensive resources provided by the solution, leading to a better employee experience. The intuitive interface and practical tools also facilitates continuous learning and professional growth.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Subscription fees. The composite organization invests in legal research solutions licenses to support a legal team of 20 people. This cost includes access to all necessary features and content, ensuring that the team has the resources required for efficient legal operations and totals $445,000 over three years.
- Training and learning. While the solution is intuitive and many users are already familiar with the platform, some users participate in initial training sessions and ongoing education to maximize utilization of all relevant features. This cost totals just $6,000.
The representative interviews and financial analysis found that a composite organization experiences benefits of $949,000 over three years versus costs of $452,000, adding up to a net present value (NPV) of $497,000 and an ROI of 110%.
Key Statistics
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Return on investment (ROI)
110%
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Benefits PV
$949K
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Net present value (NPV)
$497K
Benefits (Three-Year)
Improved research efficiency Reduced reliance on outside counsel for routine legal issues Reduced costs from improved dispute management Reduced costs from legal research tool consolidation
TEI Framework And Methodology
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in Thomson Reuters legal research solutions.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Thomson Reuters legal research solutions can have on an organization.
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Due Diligence
Interviewed Thomson Reuters stakeholders and Forrester analysts to gather data relative to legal research solutions.
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Interviews
Interviewed four representatives at organizations using Thomson Reuters legal research solutions to obtain data about costs, benefits, and risks.
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Composite Organization
Designed a composite organization based on characteristics of the interviewees’ organizations.
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Financial Model Framework
Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
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Case Study
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Disclosures
Readers should be aware of the following:
This study is commissioned by Thomson Reuters and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in legal research solutions.
Thomson Reuters reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
Thomson Reuters provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Kris Peterson
Drivers leading to the legal research solutions investment
Interviews
| Role | Industry | Region | Legal Team |
|---|---|---|---|
| Law librarian | Insurance | Global; headquartered in North America | 200 |
| Corporate counsel | Consumer goods | Global; headquartered in North America | 120 |
| General counsel | Industry association | North America | 7 |
| Chief legal officer | Risk management | North America | 1 |
Key Challenges
Before implementing the Thomson Reuters legal research solutions, the interviewees’ organizations relied on a combination of traditional legal research tools, manual processes, and fragmented databases. These methods often involved significant time investment, reliance on print materials, and inconsistent access to the latest legal updates. For many interviewees’ companies, legal departments had limited internal resources that required costly external counsel or created bottlenecks in legal workflows. These inefficiencies and gaps in research capabilities led to struggles with common challenges, including:
- Inefficient legal research consuming excessive time. Legal professionals spent hours conducting manual research using outdated or less comprehensive resources. Interviewees mentioned “struggling with using [another solution]” and “spending hours pulling multistate research on my own.” The law librarian added, “Having an authoritative source for primary research is the most important use case.”
- High reliance on costly outside counsel for routine legal work. Interviewees discussed the difficulties small legal departments faced, including the urgency of being efficient with time spent on projects and the need to leverage value-added tools in the midst of budget cuts or downsizing. The interviewees’ organizations frequently turned to external legal firms for tasks that could potentially be handled in-house. Without an authoritative, comprehensive platform, teams preferred to maintain a high level of outreach to outside counsel, leading to increased costs. The chief legal officer said, “We didn’t have a budget to go out and have outside counsel do 50 state surveys on all the issues.”
Composite Organization
Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the four interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The composite organization is a North American-based company with a legal department consisting of 14 attorneys and six legal support professionals. Prior to adopting Thomson Reuters legal research solutions, the composite’s team relied on a mix of traditional methods, such as physical law books and journals and less comprehensive digital tools. The team frequently engaged with outside counsel for routine legal issues and spent a significant amount of time on manual research efforts and other tasks, limiting the team’s efficiency and increasing operational costs.
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Improved research efficiency | $198,360 | $255,360 | $312,360 | $766,080 | $626,049 |
| Btr | Reduced reliance on outside counsel for routine legal issues | $93,600 | $93,600 | $93,600 | $280,800 | $232,769 |
| Ctr | Reduced costs from improved dispute management | $25,500 | $25,500 | $25,500 | $76,500 | $63,415 |
| Dtr | Reduced costs from legal research tool consolidation | $10,625 | $10,625 | $10,625 | $31,875 | $26,423 |
| Total benefits (risk-adjusted) | $328,085 | $385,085 | $442,085 | $1,155,255 | $948,656 | |
Improved Research Efficiency
Evidence and data. Interviewees reported significant time savings in their legal research processes after adopting Thomson Reuters legal research solutions. Legal professionals experienced reductions in the time spent on research tasks due to the advanced search capabilities, comprehensive resources, and user-friendly interfaces of these tools.
- When asked about time saved, the corporate counsel in consumer goods estimated 10 to 20% and added: “It gives you confidence that you know what’s going on all the time. … You know you’re in tune with the changes and you know when it happens [and] I don’t have to go research it. [Thomson Reuters has] done the research.”
- The general counsel estimated that time saved from Thomson Reuters legal research solutions equates to at least two additional FTEs for their organization’s team of seven.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- Attorneys save an average of 3 hours per week in Year 1, increasing to 5 hours per week by Year 3.
- Paralegals and other legal support personnel save an average of 6 hours per week in Year 1, increasing to 8 hours per week by Year 3.
- The fully burdened hourly rate for attorneys is $90 and for paralegals/legal support specialists is $40.
- An 80% productivity recapture rate is applied to account for the portion of time savings that translates into additional productive work.
Risks. The value of this benefit can vary across organizations due to differences in:
- User adoption and proficiency.
- Complexity of legal work.
- The ability of organizations and individuals to redirect time savings to additional value-added work
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $626,000.
Improved Research Efficiency
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| A1 | Attorneys | Composite | 14 | 14 | 14 |
| A2 | Hours saved per attorney per week | Interviews | 3 | 4 | 5 |
| A3 | Fully burdened hourly rate for an attorney | Composite | $90 | $90 | $90 |
| A4 | Productivity recapture | TEI methodology | 80% | 80% | 80% |
| A5 | Subtotal: value of attorney time saved | A1*A2*50*A3*A4 | $151,200 | $201,600 | $252,000 |
| A6 | Paralegals and other legal support specialists | Composite | 6 | 6 | 6 |
| A7 | Hours saved per legal support employee per week | Interviews | 6 | 7 | 8 |
| A8 | Fully burdened hourly rate for a paralegal/legal support employee | Composite | $40 | $40 | $40 |
| A9 | Productivity recapture | TEI methodology | 80% | 80% | 80% |
| A10 | Subtotal: value of legal support employee time saved | A6*A7*50*A8*A9 | $57,600 | $67,200 | $76,800 |
| At | Improved research efficiency | A5+A10 | $208,800 | $268,800 | $328,800 |
| Risk adjustment | ↓5% | ||||
| Atr | Improved research efficiency (risk-adjusted) | $198,360 | $255,360 | $312,360 | |
| Three-year total: $766,080 | Three-year present value: $626,049 | ||||
Reduced Reliance On Outside Counsel For Routine Legal Issues
Evidence and data. Interviewees reported significant reductions in their organizations’ reliance on outside counsel for routine legal matters after adopting Thomson Reuters legal research solutions. The comprehensive resources and tools provided by Westlaw Precision with CoCounsel and Practical Law Dynamic Tool Set with CoCounsel enabled internal legal teams to handle more tasks in-house, leading to substantial cost savings.
- The corporate counsel in consumer goods said: “It allows us to do it in-house instead of paying outside counsel. … I would say, easily, the five of us reduce our outreach to outside counsel 20 times a month.”
- The chief legal officer in risk management said: “We did a lot of research on a successor liability issue. … I just went to [Westlaw Precision and Practical Law], researched those issues, put that those plans together, and was able to satisfy our capital providers as well as the acquired company because [they didn’t] give the those [representations] and warranties.”
- The chief legal officer continued: “It would be so cost prohibitive to have all this regulatory work farmed out. It just wouldn’t be worth it, but [Westlaw Precision and Practical Law] fill that.”
- The law librarian in insurance noted, “We’d come to [Westlaw Precision and Practical Law] before we go to outside counsel or check it against what outside counsel told us.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- Prior to the adoption of Thomson Reuters legal research solutions, the composite organization engages outside counsel for routine legal issues approximately 52 times per year (an average of once per week).
- After implementing Thomson Reuters legal research solutions, the organization reduces its reliance on outside counsel for routine matters by 20% annually.
- The average cost of a routine engagement with outside counsel is $10,000.
Risks. The value of this benefit can vary across organizations due to differences in:
- User adoption and proficiency.
- Complexity of legal work.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $233,000.
Reduced Reliance On Outside Counsel For Routine Legal Issues
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| B1 | Routine engagements with outside counsel prior to adopting Thomson Reuters legal research solutions | Composite | 52 | 52 | 52 |
| B2 | Reduced frequency of routine engagements with outside counsel | Interviews | 20% | 20% | 20% |
| B3 | Average cost of routine engagement with outside counsel | Interviews | $10,000 | $10,000 | $10,000 |
| Bt | Reduced reliance on outside counsel for routine legal issues | B1*B2*B3 | $104,000 | $104,000 | $104,000 |
| Risk adjustment | ↓10% | ||||
| Btr | Reduced reliance on outside counsel for routine legal issues (risk-adjusted) | $93,600 | $93,600 | $93,600 | |
| Three-year total: $280,800 | Three-year present value: $232,769 | ||||
Reduced Costs From Improved Dispute Management
Evidence and data. Interviewees indicated that the use of Thomson Reuters legal research solutions led to the improved management of escalated legal disputes that have proceeded into mediation, arbitration, or litigation. This resulted in reduced costs associated with outside counsel. By leveraging comprehensive legal research tools and practical guidance, legal teams at the interviewees’ organizations were better prepared to handle disputes internally or more efficiently manage them when outside counsel was necessary. Legal professionals reported that access to up-to-date, authoritative resources allowed them to develop stronger legal arguments and strategies. The enhanced legal resources offered by Thomson Reuters enabled in-house teams to achieve more favorable settlements and reduce the need for prolonged litigation. Improved internal capabilities led to a decrease in the assistance required from outside counsel, also reducing overall legal expenses.
- The chief legal officer said, “Internal issues or external issues come up, whether it’s actual litigation, arbitration, or mediation, and I think this solution helps avoid those completely or, if they do come up, mitigate the impact of them.”
- The corporate counsel in consumer goods said: “In at least 15% of the cases, I’m able to make a brief better. … We ended up getting a [favorable] judgment [in a matter in which] I’m not sure that if I didn’t have access to this [solution], we would have got there.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite organization encounters an average of four escalated legal disputes per year that require the involvement of outside counsel.
- The average cost for outside counsel assistance per dispute is $30,000.
- The tools and resources provided by legal research solutions reduce engagement scope with outside counsel and cut those costs by an average of 25% per dispute.
Risks. The value of this benefit can vary due to differences in:
- Dispute severity and frequency.
- Complexity of legal work.
- Effectiveness of internal legal team.
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $63,000.
Reduced Costs From Improved Dispute Management
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| C1 | Formal disputes requiring outside counsel assistance | Composite | 4 | 4 | 4 |
| C2 | Average outside counsel costs per dispute | Interviews | $30,000 | $30,000 | $30,000 |
| C3 | Reduction of outside counsel cost attributed to Thomson Reuters legal research solutions | Interviews | 25% | 25% | 25% |
| Ct | Reduced costs from improved dispute management | C1*C2*C3 | $30,000 | $30,000 | $30,000 |
| Risk adjustment | ↓15% | ||||
| Ctr | Reduced costs from improved dispute management (risk-adjusted) | $25,500 | $25,500 | $25,500 | |
| Three-year total: $76,500 | Three-year present value: $63,415 | ||||
Reduced Costs From Legal Research Tool Consolidation
Evidence and data. Interviewees highlighted cost savings achieved by consolidating legal research tools and resources after adopting Thomson Reuters legal research solutions. By reducing or eliminating disjointed, individual purchase decisions, redundant subscriptions or reference materials, and transitioning to a comprehensive platform, the interviewees’ organizations reduced their expenditures on legal research materials. In some cases, the reduction in legal research materials also led to a reduction in costs associated with maintaining physical libraries, including storage, updates, and administrative efforts.
- The law librarian in insurance explained: “After [the COVID-19 pandemic] happened, we went pretty much 100% electronic. ... We went through our entire print collection after COVID [and] canceled anything we could replicate on [Westlaw Precision and Practical Law]. … It saved us time and saved us money.”
- The corporate counsel in consumer goods said: “We slowly stopped updating the books, and now the books are gone. … We were probably spending $20,000 to $25,000 a year updating a huge library of books.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- Before adopting Thomson Reuters legal research solutions, the composite organization spent $50,000 annually on various legal research resources, including print materials and subscriptions to other digital platforms.
- By consolidating resources and eliminating redundant tools, the composite organization reduces expenditures by 25% annually.
Risks. This benefit can vary across organizations due to differences in:
- Level of adoption.
- Contractual obligations.
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $26,000.
Reduced Costs From Legal Research Tool Consolidation
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| D1 | Prior expenditures on legal research resources | Interviews | $50,000 | $50,000 | $50,000 |
| D2 | Reduction in expenditure with Thomson Reuters legal research solutions | Interviews | 25% | 25% | 25% |
| Dt | Reduced costs from legal research tool consolidation | D1*D2 | $12,500 | $12,500 | $12,500 |
| Risk adjustment | ↓15% | ||||
| Dtr | Reduced costs from legal research tool consolidation (risk-adjusted) | $10,625 | $10,625 | $10,625 | |
| Three-year total: $31,875 | Three-year present value: $26,423 | ||||
Unquantified Benefits
Interviewees mentioned the following additional benefit that their organizations experienced but were not able to quantify:
- Improved employee experience. Interviewees discussed how they and their teams value the ease of use, comprehensive resources, and intuitive interfaces provided by Thomson Reuters legal research solutions. They cited the time savings in day-to-day work, greater confidence in the work done in-house, and the ability to access these tools and resources wherever they may be working as contributing factors to an improved employee experience. The solution also facilitates continuous learning and professional development within the legal team. The law librarian said: “People love Practical Law. ... It’s one of the first things they ask about [when they join the team].” The corporate counsel added: “I don’t always trust [outside counsel’s] research. ... I look up every single case that they have in there to make sure that it’s being accurately quoted or cited.”
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement legal research solutions and later realize additional uses and business opportunities, including:
- Scalability to accommodate organizational growth and changing legal needs. Interviewees noted that the flexibility and scalability of Thomson Reuters legal research solutions allowed their organizations to easily accommodate growth and changes in their legal teams and organizational needs without significant additional investment. The solution easily scaled with their legal operations as they expanded or as their needs evolved. This flexibility enabled legal teams to add new users, access additional resources, or integrate new features as needed.
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Quantified cost data as applied to the composite
Total Costs
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Etr | Subscription costs | $0 | $171,000 | $179,550 | $188,528 | $539,078 | $445,487 |
| Ftr | Training and learning costs | $6,336 | $0 | $0 | $0 | $6,336 | $6,336 |
| Total costs (risk-adjusted) | $6,336 | $171,000 | $179,550 | $188,528 | $545,414 | $451,823 | |
Subscription Fees
Evidence and data. The interviewees noted their organizations paid subscription costs based on the number of users and configuration of the legal research solutions. Thomson Reuters provided pricing information corroborating cost data provided by the interviewees.
- Organizations with 16 to 20 users paid approximately $171,000 annually for the Thomson Reuters legal research solutions, which included the corporate multinational edition of Practical Law Dynamic Tool Set with CoCounsel and Westlaw Precision with CoCounsel.
- The legal research solutions agreement included a 5% annual increase in the subscription fees.
- Pricing may vary. Contact Thomson Reuters for additional details.
Modeling and assumptions. Forrester assumes the following to quantify this cost:
- The composite pays $171,000 in Year 1.
- This annual cost increases 5% per year.
Risks. No specific risks are noted. The cost of this solution will vary across organizations due to pricing differences in the Thomson Reuters legal research solutions configuration deployed and the number of subscriptions purchased.
Results. Forrester applied 0% risk adjustment to this cost, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $445,000.
Subscription Fees
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| E1 | Total annual subscription fees | Interviews | $171,000 | $179,550 | $188,528 | ||
| Et | Subscription fees | E1 | $0 | $171,000 | $179,550 | $188,528 | |
| Risk adjustment | 0% | ||||||
| Etr | Subscription fees | $0 | $171,000 | $179,550 | $188,528 | ||
| Three-year total: $539,078 | Three-year present value: $6,336 | ||||||
Training and Learning
Evidence and data. Interviewees indicated that while attorneys often required minimal training due to prior familiarity with legal research platforms, paralegals and other legal support specialists needed some training to become proficient with Thomson Reuters legal research solutions. This initial training ensured that all team members could effectively utilize the platform’s features.
- The corporate counsel in consumer goods reported, “Even some of the new features are intuitive, and Thomson Reuters does a nice job with their marketing and explaining of the new features.”
- The law librarian explained: “Most of the folks we work with have come in from firms or other legal departments and are already pretty well established in how to use it. … [The training resources are] there and they can [use them or just learn] on their own.”
Modeling and assumptions. Forrester assumes the following to quantify this cost:
- The composite organization has six paralegals or legal support specialists who require training on Thomson Reuters legal research solutions.
- Each legal support employee spends 24 hours on initial training and learning activities to become proficient with the platform.
- The fully burdened hourly rate for legal support employees is $40.
Risks. This cost can vary depending on:
- Variations in training needs due to legal support staff proficiency, familiarity, or turnover.
- Complexity of platform features deployed.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $6,000.
Training And Learning
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| F1 | Paralegals and other legal support specialists | Composite | 6 | |||
| F2 | Hours spent training and learning | Interviews | 24 | |||
| F3 | Fully burdened hourly rate for a legal support employee | Composite | $40 | |||
| Ft | Training and learning | F1*F2*F3 | $5,760 | $0 | $0 | $0 |
| Risk adjustment | ↑10% | |||||
| Ftr | Training and learning (risk-adjusted) | $6,336 | $0 | $0 | $0 | |
| Three-year total: $6,336 | Three-year present value: $6,336 | |||||
Consolidated Three-Year, Risk-Adjusted Metrics
Cash Flow Chart (Risk-Adjusted)
Total costs Total benefits Cumulative net benefits Initial Year 1 Year 2 Year 3-
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
Cash Flow Analysis (Risk-Adjusted Estimates)
| Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | ($6,336) | ($171,000) | ($179,550) | ($188,528) | ($545,414) | ($451,823) |
| Total benefits | $0 | $328,085 | $385,085 | $442,085 | $1,155,255 | $948,656 |
| Net benefits | ($6,336) | $157,085 | $205,535 | $253,557 | $609,841 | $496,833 |
| ROI | 110% | |||||
Appendix A: Total Economic Impact
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Total Economic Impact Approach
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Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
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Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
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Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
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Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
Appendix B: Endnotes
1 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
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