IDC Data: Legal Tech Investment Crucial for Revenue & Efficiency
New research has unveiled the significant financial and operational strain placed on businesses by under-resourced corporate legal departments, highlighting an urgent imperative for leaders to optimize their legal functions and unlock substantial revenue. A recent study by the International Data Corporation (IDC), sponsored by LawVu and published in May 2025, quantifies the widespread impact of “legal friction”—the operational drag caused by fragmented workflows and inefficient processes that undermines productivity and overall business performance.
The study, which surveyed 358 legal and business leaders across the United States, the United Kingdom, and Australia, translates long-felt frustrations into hard numbers. Over two-thirds of business leaders reported delayed or lost revenue directly attributable to inefficient or ineffective legal processes, citing impacts such as slow sales cycles, delayed product launches, stalled marketing approvals, and extended hiring cycles. Legal professionals echoed this sentiment, with 60 percent acknowledging that their organizations were experiencing similar revenue setbacks due to inefficiencies. The data further revealed that respondents collectively estimate 11 percent of their annual business revenue is lost or delayed due to legal friction. For mid-to-large sized organizations, this can amount to a staggering sum, potentially reaching up to USD $141 million or GBP £106 million annually for businesses with mean revenues exceeding USD $1 billion.
Beyond direct revenue loss, the research uncovered other significant hidden costs. One in six legal tasks is outsourced due to a lack of internal team bandwidth, representing a potential avoidable spend of USD $310,000 or GBP £233,000 per year. Furthermore, for a typical legal team of five, nearly a full day each week is consumed by administrative or inefficient workflow tasks. This translates to an estimated USD $300,000 or GBP £226,000 per year in time that could otherwise be redirected toward higher-value, strategic work. These figures, even when considered modestly, underscore a profound opportunity for organizations to recoup revenue and boost productivity through targeted investments in tools designed to mitigate legal friction. As IDC noted, “These issues are a stark reminder of how underinvested, under-resourced, and unprepared legal departments are to meet growing, increasingly complex business demands.”
The study also shed light on the pervasive friction in daily interactions between legal departments and the wider business. Business leaders frequently cited limited visibility into legal workflows, fragmented communication, and outdated tools as ongoing frustrations. A significant 73 percent agreed that legal functions lacked the necessary automation and modern processes to support future demand, leading 70 percent to admit bypassing legal altogether—a workaround that introduces unnecessary risk and undermines compliance efforts. Legal teams, in turn, experience a similar array of inefficiencies, with scattered communication, repetitive interactions, and a lack of self-service tools dragging them into a cycle of inefficiency. A striking 83 percent of legal respondents reported that administrative work routinely impedes their strategic priorities, indicating that the function is often trapped in a reactive mode. This situation becomes increasingly perilous as business demands for speed and scale intensify.
Despite these challenges, there is a clear recognition of the value in eliminating legal friction. The research found that nearly 99 percent of business leaders who have adopted legal technology reported that it helped them better achieve business objectives. Similarly, 99 percent of legal professionals indicated that technology improved their internal reputation, while 88 percent confirmed it enhanced their ability to scale operations. However, a critical hurdle remains: the adoption of core legal technology is remarkably low, with fewer than 30 percent of respondents having implemented solutions such as intake systems, matter management, or enterprise legal management (ELM) platforms, despite these tools directly addressing many of the reported friction points.
Crucially, the research also offered a warning: technology alone is not a panacea. The study highlighted that “disparate systems or technology that is not fit for purpose can cause additional friction.” In fact, 41 percent of business leaders identified multiple and disconnected systems as a key source of friction in their interactions with legal. This reinforces IDC’s strong recommendation for consolidated legal tech platforms. Legal teams utilizing unified systems reported a 13 percent boost in productivity and cost savings, attributed to reduced administration, lower external counsel spend, and streamlined contracting. They also benefited from faster, more consistent service and an improved internal reputation. Notably, 90 percent of business leaders affirmed that unified legal platforms helped them achieve strategic goals and collaborate more effectively.
Consolidated platforms offer another critical advantage: the ability to capture and analyze legal data, which is essential for improving efficiency, reducing costs, and accelerating decision-making. Unfortunately, many enterprises face significant challenges in this area. According to IDC, 38 percent of business leaders cited a lack of data to measure performance as a major pain point when collaborating with their legal teams, a finding not surprising given that only 41 percent of legal respondents claimed to have access to comprehensive data for effective team evaluation. Without centralized data management, legal teams struggle to measure performance, make informed decisions, and demonstrate their value, further contributing to legal friction and hindering compliance, process optimization, and timely responses to legal requests. Addressing these data challenges is paramount for in-house legal teams to enhance their overall effectiveness.
The IDC findings present a powerful opportunity for legal leaders. By quantifying both the substantial cost of legal friction and the clear benefits of eliminating it, the research provides a credible foundation for reframing the legal function. No longer merely a perceived source of inefficiency, legal teams can now be recognized as a proven force multiplier—a proactive, tech-enabled driver of business performance. As IDC succinctly concludes, “At the end of the day, investments in modern, operationally-excellent legal teams should be considered a business imperative – not just a legal one.”