Supply Chain and Demand

March 17, 2019

Received wisdom has long had it that legal lags behind other industry sectors when it comes to modernising operations for the business world as they find it today. From clunky websites and stilted social media to those persistently opaque pricing structures, perception is that partners have typically been dragged kicking and screaming into cash and energy investments that threaten to transform the customer experience. However, ‘customer service’ isn’t the only respect in which law firms might have something to learn from the retail industry’s pressure to adapt fast or fail. Ahmed Shaaban, managing director of Fulcrum Global Technologies, says: “Organisations’ supply chains are now broadly automated across the board. A large retailer or telecoms provider will have prime suppliers for their materials, equipment or furniture – and the replenishment of those services will be automated. “Scan the box’s barcode, and the replacement is being reordered. They build in contract reviews and quality-improvement criteria – and pricing can be scaled in line with the contractual obligations and benefits that flow to both parties.” But when it comes to businesses securing legal services, he says, this dynamic doesn’t apply – and it should. “A large multinational will easily spend a billion dollars on legal services. They want buying opportunities for that budget – fixed and other alternative fee arrangements, but also significant discounts from preferred suppliers. And they want automation to power the predictability of those types of opportunities.” At the same time, he explains, companies that are busy globalising their business need the same relationships globally. “Time was that local divisions would employ local suppliers – but if a large digital business sues today, it has to sue in 22 countries. It’s simply too slow and risky to work with multiple firms, and not have the same supply chain demands and transparency in play whichever way you turn.”

Profit and Cost

This is the background building behind the rise of enterprise resource planning (ERP) in legal, with Norton Rose Fulbright the latest to go live on their investment in SAP this month (November 2017). Fulcrum Global Technologies partners with SAP to manage the transition of this new world of automation into the legal market – but capabilities are tailored to the practice management needs of law firms specifically. Shaaban explains: “We spoke to the legal operations leader of one Fortune 50 company that’s considering condensing relationships with 550 firms to just 20 or 30.” Spending the same amount on fewer firms means clients can negotiate a discount, but the appeal to each firm still “far outweighs any growing pains associated with moving to a more automated approach.” With such clearly cost-conscious clients, however, firms also need to find new efficiencies to protect their profit margins. He continues: “It isn’t cost-effective to have different arrangements for each office or country in the network. Standardising an operational area such as billing not only helps firms to manage their clients’ demands more directly – it also means that they can share internal management information more directly.” And the individual lawyer doesn’t need to think about any of this. “Using SAP, a timekeeper in any part of the world can enter time and go about their business as usual. The system can automatically handle the billing, allocation, reporting, and even cash collection,” he says. Of course, both shared efficiencies and greater transparency should also help impress clients which are – after all – still parting with considerable sums for uncertain outcomes. “Firms must focus on more efficient management information because they’re squeezed by clients on price. But they also need to be more responsive – for example, reverting about a project or problem faster,” explains Shaaban. “Complex client fee arrangements – where matters are carefully priced in line with multiple phases – can also benefit from more visibility, which helps those clients to track, manage and contain their costs.”

Going Gradual

Fulcrum is well placed to comment on what firms’ corporate clients want from more automated practice management – because it’s collaborating with them on process optimisation as well. In addition to integrating its software, Shaaban is collaborating with some prominent members and closely following the work of the Corporate Legal Operations Consortium (CLOC) to automate a set of new process standards. “Our technology’s in-memory computing allows us to pick up on certain trends and behaviours that would support the maintenance of these standards, says Shaaban. “The fact that companies are coming together as joint member associations will also transform the industry over the next five years.” However, this isn’t to say that law firms necessarily need to change everything about their practice management at once. It goes without saying that a system overhaul of these dimensions is a serious investment of management time, as well as money. Fulcrum’s Pro Series, qualified by SAP, is extensive – but businesses may choose to prioritise one area, and capture efficiency gains there, before proceeding to the next levels. “You absolutely can bite off as much as you can first chew,” says Shaaban. “For a firm such as Norton Rose Fulbright – several firms that really needed to be brought together – it makes a lot of sense to manage change just once.” However, with SAP also going into 50- or 100-people UK companies, that won’t be the same situation for everyone that might benefit. The most popular in the series are probably matter management and time entry, he says. “Firms no longer have the luxury of charging ‘X’ by the hour plus expenses. They need to give their clients upfront estimates based on the available information – for example, a fixed fee unless something goes to court, at which point there’s another arrangement. “A lawyer may not be a mathematician, but they do need to be able to cost-effectively model something like that quite quickly – and then return to it, with appropriate modifications, for a referral.” SAP enables people to create templates for such scenarios in the matter management system. It can also factor in the cost implications of resourcing decisions. “You can even integrate matter management with HR systems to improve the assignment of work – perhaps even giving new people a chance at a piece of work, which also helps with performance management and career progression objectives. “And time entry functionality can be a particular issue because consolidating firms are often running on different systems – which means they can’t get the same depth of analytics in reporting. “I’d describe those as popular because there’s a degree of choice,” he continues. But then there’s another category that’s more “coerced by the way the industry is moving.” Under pressure from that lack of supply-chain management mentality, this includes the central financial management system. “Operating as a single firm financially is becoming an important value while most of the industry’s systems are quite outdated to that end,” says Shaaban. “The other area I’d call core is reporting. In a world of internet-enabled mobile devices, we’re used to information and analytics coming very quickly, and we’re very short on patience. It’s no longer enough to chase down data for a client from wherever it resides. You need reporting that’s more aggressive as well as accurate, which you can quickly push out to a timely dashboard or portal.”

Cloud and Clear Process

One area of firm management that’s certainly core is cybersecurity protection. “Whether it’s nation state hacking or catching a virus, everyone’s worried about their exposure to cyberattack,” says Shaaban. “It’s causing many firms to evaluate what they have, and possibly move toward something more state-of-the-art where they identify insufficient support. “Fulcrum has a specialised legal industry focused partnership with IBM, leveraging its Bluemix, SoftLayer and Watson global platform, and others, to host data and their applications with enterprise-class managed services, in an advanced and secure cloud environment, should they choose. They can rid themselves of their hardware – subscribe and have done with it.” Over half of firms today express strong interest in the cloud storage option, he says, whether that’s a fully private cloud or the multi-tenant option. But one thing that can’t be switched on and left is change management of people in the process. “We have to be a true partner of clients, and as partners you end up embracing each other’s problems,” he says. “Local offices will have their own requirements – working times, taxes, and of course languages – but as an integrator we also need to help the business embrace the vision of one set of rules for all. That’s a big lift, especially at the same time as firms are merging, consolidating and growing – and still learning to work together.” So, Shaaban’s team has also developed a framework for change management and comms on an SAP project. Firms can tailor the plan to the subtleties of their cultures, he says. But SAP’s insistence on points of process helps ensure not only the meeting of key project milestones, but also the minimising of inevitable manual inefficiencies. “As firms evolve by joining up their multiple systems, you find some things are stitched or glued together with individuals’ actions – and that’s expensive to do and undo,” says Shaaban. SAP’s simplification to a system offering “a single version of the truth” is therefore joined by its “Centre of Excellence” approach for application lifecycle management over time, he says. A small core of functional and technical experts, empowered with a set of tools and best-practice process documentation, serves to ensure a firm’s new ERP system continues to deliver benefits in a more efficient world.

Ahmed Shaaban, managing director of Fulcrum Global Technologies says it’s time for firms to adopt their rightful place in their clients’ supply chains

Check out Martin Telfer’s Why ERP Really Matters or Is the Era of ERP for Law Firms Finally Here for more information about technology-driven change.