Norton Rose Fulbright has become the fourth international law firm to sign up with SAP and the first to adopt a single, unified global practice management system at a base overall project cost to the firm of an eye watering £75m.
The 3,800-lawyer firm has, like Baker & McKenzie and most recently K&L Gates, engaged Fulcrum Global Technologies as the system integrator, advising on the design, build and implementation of SAP S/4HANA Digital Core. Accenture has been advising NRF on the project, which in SAP terms has completed its Blueprint and is now in Realisation, using the full suite of Fulcrum products.
Fulcrum was the saviour of Baker’s SAP implementation, which after an expensive aborted first attempt to install the enterprise resource planning system, went live in December 2014, using Fulcrum’s Pro Billing for Legal, which is configured for the legal industry and provides flexible billing options.
Nonetheless, the decision by NRF to proceed with SAP is mind blowing, in terms of the costs out the door; the amount of work and global buy-in needed for a successful conversion; and the potential risks involved, not least for the individuals who spearhead the project.
Linklaters was the first international law firm to implement SAP in 2003 in a project reported to cost north of £30m and which saw the firm unable to bill its clients for a period of time thanks to serious teething problems.
Incidentally, the Magic Circle giant doesn’t use SAP for workforce scheduling, timesheets or CRM, where it is a LexisNexis client, but other than that its solution covers all practice management and is consistent globally.
Baker, even after its successful conversion to SAP, saw a drop in revenue and profits, which it attributed in large part to the new system.
While there is undoubtedly growing support for the argument that major league global law firms have outgrown the capabilities of traditional legal software suppliers, the trend towards investing in technology that directly benefits the client makes it harder to justify spending over a quarter of your profit on background plumbing.
As one IT director of a major international law firm delicately puts it: “That’s a fuck load of money and a ridiculous amount in today’s world. The problem they are trying to solve is worth about £30m in terms of how much I would have spent.
“The people who spend their money on providing new and clever ways to serve the clients will be the real winners. This will be a noose around Norton Rose Fulbright’s neck.”
The consultant adds: “Firms like Herbert Smith Freehills are spending a tenth of that and spending the rest on data analytics, legal project management, data scientists and technology that focusses on the client, not on getting money out of them.”
However, Fulcrum continues its focus on helping clients to assimilate artificial intelligence into their legal processes and striking a more optimistic note, one global CIO says: “It could make a lot of sense, not least in terms of integration with end-clients. I’m very keen to see how this bold initiative plays out.”
NRF, which as a Swiss Verein transformed from a top-ten-wannabe (it was in the top 20) to a global giant through a series of mergers between 2010 and 2013, is comprised of five profit centres or subsidiaries across the UK, US, Australia, Canada and South Africa, none of which talk properly to each other on a systemic level.
Global CEO Peter Martyr and the team that successfully led the move to become one of the largest firms in the world had always intended to build a global platform first and then rationalise it. At is stands, NRF is unable to pass on to its clients the benefits of its global network and lacks the agility to deal with the complex fee arrangements now expected by clients.
Fulcrum’s Chicago managing director and founding member Ahmed Shaaban told Legal IT Insider: “Clients are quite innovative in the fee arrangements they request and the law firm’s system has to be able to handle them. At many firms, including Baker, clients are also demanding transparency of certain types of interim data such as WIP, without waiting weeks for the information to be formalized in an invoice. Now that information can be readily available in one place.”
NRF first started to flirt with the idea of SAP in 2014, after Mark Whitley joined from BT Operate to initiate change and the firm launched Project 2020.
The 60+ office firm was in something between a rock and a hard place in terms of how to rise to the challenge of addressing the inefficiencies and lack of cohesion – there is no question that bespoke legal ERP systems start to struggle with the global tax arrangements of firms of NRF’s size.
SAP + Fulcrum gives firms one version of the truth and in turn that benefits clients that want real-time billing information and fee arrangements.
Shaaban says: “Say I’m a partner in the US and you’re in the UK, and we both perform work for the same client on the same matter. How much can we use automation to support the billing and management of that matter so the client can be served promptly with information and billing that is flexible and accommodating to the various fee arrangements they demand, taking into account global considerations like multiple currencies, taxes, languages, statutory reporting and e-billing formats? Fulcrum has built a solution on the world’s largest business software platform, SAP HANA, because that platform is state of the art, handles these types of challenges with ease and is used by banks, governments, and Fortune 1000 companies that require scale and performance.”
There is no question that the solution, when it is in and up and running, works. Baker’s COO Craig Courter, speaking to Legal IT Insider about SAP earlier in the year said: “It is running well and gives us an amazing advantage with its rock solid performance.” In August, Baker announced a rise in global revenues of 8% in constant currency to $2.62bn. Net profit grew by 14%.
However, Baker’s key lesson in SAP Mark II, aside from the fact that it needed Fulcrum’s legal understanding and wrapper, was that you can’t make SAP fit the firm, you need to make the firm fit SAP.
NRF’s U.S. firm is extremely independent and the challenge ahead in persuading them and the global network to comply is immense. South Africa, which is set up as a company, is understood to be sticking with Aderant Expert.
Shaaban is confident. He says: “Half the challenge for a law firm is to understand what is involved in these types of projects – so much so that if they aren’t ready, or prepared, to manage the significant internal changes to handle the breadth of the project, we prefer not to engage and indeed we’ve declined to move ahead in the past.”
Only when – if – NRF pulls off its switch to SAP will it silence the doubters, with the roll out planned for Q4 of 2017.
Until then, NRF has just given every IT director in the country carte blanche to go cap in hand to their management and ask for a significant uplift to their IT investment.
This article first appeared in the September Legal IT Insider newsletter