By Matt Vaughan, LawVu.
New research reveals the financial and operational costs associated with under-resourced corporate legal departments, highlighting an urgent opportunity for both legal and business leaders to unlock revenue with a better resourced and optimized legal function.
The findings are both confronting and catalytic.
A recent study by the International Data Corporation (IDC)*, sponsored by LawVu, quantifies the impact of ‘legal friction’: the operational drag caused by fragmented workflows and inefficient processes which reduces productivity and undermines overall business performance.
Capturing the experiences of 358 legal and business leaders across the US, UK, and Australia, the research – published in May 2025 – translates into hard numbers what legal teams and their stakeholders have long felt.
Over two-thirds of business leaders surveyed by IDC report delayed or lost revenue as a result of inefficient or ineffective legal processes, including slow sales cycles and product launches, stalled marketing approvals, and longer hiring cycles.
Legal respondents acknowledge this too, with 60 percent in agreement that their organizations are experiencing lost or delayed revenue due to legal inefficiencies. But what the data reveals next is even more confronting:
Overall, respondents estimate that 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 up to USD $141 million/ GBP £106 million annually**.
The research also reveals that one in six legal tasks are outsourced due to lack of team bandwidth, representing a potential USD $310,000/ GBP £233,000 per year in spend that could be avoidable. And for a legal team of five, almost a full day every week is spent on administrative or inefficient workflow tasks, equating to USD $300,000/ GBP £226,000 per year (at benchmarked hourly rates) that could be redirected toward higher-value work.
While the impact may vary across organizations, even a modest version of these numbers signals an opportunity to recoup revenue and increase productivity by investing in tools aimed at reducing legal friction.
‘These issues are a stark reminder of how underinvested, under-resourced, and unprepared legal departments are to meet growing, increasingly complex business demands.’ – IDC
Another key finding reveals the volume of friction occurring in interactions between legal and the business, and how that daily friction impacts the bigger picture.
Business leaders cite limited visibility into legal workflows, fragmented communication, and outdated tools as ongoing frustrations. 73 percent agree legal lacks the automation and modern processes needed to support future demand. 70 percent admit to bypassing legal altogether, a workaround that invites unnecessary risk and undermines compliance efforts.
It comes as no surprise that legal teams experience an analogous set of inefficiencies and frustrations when it comes to business interactions. Scattered communication, repetitive interactions with the business, and a lack of self-service tools are dragging legal functions into a cycle of inefficiency. 83 percent of legal respondents say administrative work routinely gets in the way of strategic priorities – a signal that the function is stuck in a reactive cycle.
Without change, legal teams risk falling further behind – just as demand for speed and scale from the business intensifies.
But it’s not all doom and gloom; both legal leaders and business stakeholders see the value of eliminating legal friction.
Nearly 99 percent of business leaders who have adopted legal technology say it has helped them better achieve business objectives. Similarly, 99 percent of legal professionals say it has improved their internal reputation, while 88 percent confirm that technology has increased their ability to scale operations.
But here’s the problem: adoption of core legal tech remains low. Fewer than 30 percent of respondents have implemented tools like intake systems, matter management, or enterprise legal management (ELM) platforms – even though these solutions directly address many of the points of friction reported by both groups.
However, tech should be approached with caution. As the research states: ‘Technology alone is not a sufficient answer… disparate systems or technology that is not fit for purpose can cause additional friction.‘
While the research confirms that legal technology is widely seen as a catalyst for better business outcomes, it also surfaces a critical warning: fragmented, piecemeal tools can introduce new inefficiencies and deepen the silos they aim to solve.
In fact, 41 percent of business leaders point to multiple and disparate systems as a key source of friction in their interactions with legal, according to IDC.
IDC reinforces the case for consolidated platforms in legal tech.
Legal teams using consolidated systems report a 13 percent boost in productivity and cost savings, thanks to reduced admin, lower external counsel spend, and streamlined contracting. They also benefit from faster, more consistent service and improved internal reputation. Notably, 90 percent of business leaders say unified legal platforms help them achieve strategic goals and collaborate more effectively.
But the advantages of a consolidated legal tech platform don’t end there. Consolidated platforms make it easier to capture and analyze legal data which can be used to improve efficiency, reduce costs, and accelerate decision-making.
Unfortunately, a significant portion of enterprises face challenges in this area. According to IDC, 38 percent of business leaders cited a lack of data to measure performance as a cause of major pain point when working with their legal team. This was not surprising as only 41 percent of legal respondents claimed to have access to comprehensive data to evaluate their teams effectively.
The research goes on to reveal that without centralized data management, legal teams struggle to measure performance, make informed decisions, and show their value. This contributes to legal friction, hindering compliance efforts, process optimization, and the ability to respond to legal requests in a timely way. Addressing these data challenges is essential if in-house legal teams are to reduce friction and enhance their overall effectiveness.
The takeaway is clear: Legal leaders now have a powerful opportunity.
By quantifying both the cost of legal friction and the benefits of eliminating it, IDC’s findings give legal leaders a credible basis to reframe their function and to do so with urgency. Shedding the perception that they are a source of inefficiency and lost revenue, legal teams can instead gain recognition as a proven force multiplier – a proactive and tech-enabled driver of business performance.
‘At the end of the day, investments in modern, operationally-excellent legal teams should be considered a business imperative – not just a legal one.’ – IDC
Click here to access the IDC study
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*Source: IDC White Paper, sponsored by LawVu, Legal Friction: The Real Cost to Your Business, #AP15041X, April 2025
**Businesses surveyed with mean revenue of over USD $1 billion/ GBP £750,000 per annum.
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About the Author:
Matt Vaughan, EVP Partnerships, LawVu and Former Xero GC. He established and led a globally distributed team at Xero as General Counsel and Company Secretary. Matt has more recently advised a number of globally focused venture-backed technology companies (including Carta, Pushpay, and Passport Labs) on a variety of commercial and legal issues. He now takes responsibility for corporate development and strategic partnerships at LawVu.
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[ This is a sponsored thought leadership article for Artificial Lawyer by LawVu. ]
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