Transforming the business

With technology now playing such an important part in legal business processes, it is essential that finance directors understand and interact with the latest IT trends and developments.

By David Bason

It is widely recognised, if not often realised, that technology has the capacity to transform businesses. Deploying appropriate technology can improve the efficiency of processes; provide the ability to respond to customers demands quickly and effectively; and create an environment conducive to high employee productivity and retention. But this does not happen frequently or by accident. It requires clear strategic thinking, strong relationships between all parts of the business, determined business sponsors, a like-minded partner (rather than supplier) and, of course, a modicum of luck.
Not only is this also the case in a law firm, but the benefits can be realised in spades!
Many of the fundamentals of a legal practice remain as they always have, with technology just speeding up an inefficient or outdated process. It is very common for the systems approach to be fragmented with applications developed as point solutions with various parts of a firm operating on similar yet differing systems.
It is the responsibility of the person in charge of IT to challenge this and, in most cases, radically alter the approach to system specification, selection and implementation. They need to have the vision to align future technology with the firm’s business strategy.
The foundation for this vision in a law firm is the practice management system (PMS). Our PMS is rapidly approaching its tenth birthday but unlike a ten-year-old human who is in the throws of youth with the majority of its life ahead, it is more like an ageing dog (the human equivalent of 70 years). Although a close member of the family, its future existence needs to be seriously considered. But I am aware that some firms have core systems approaching 15-20 years old.
That is not to say just because it is old it needs to be replaced (which is a relief for those of us who can remember the ZX 81). It is the case, however, that a company is likely to have grown during those years – new ways of working will have been established, new customers will have ever increasing demands for information and the firm may not operate in the same markets as it once did. The increasing demand for online access across the web and visibility of information in real time through a variety of mobile media will not have been on the list of functional requirements during system selection.

What is a practice management system?
The PMS is seen as the core system in a traditional law firm. However, this is probably a misnomer. Although it sits at the heart of the firm it is focused more on time recording and billing rather than the support of a process or the management of the firm overall. In fact when you look in detail at what is claimed to be a sophisticated PMS system it is in fact no more than a limited finance system with a few other bolt-on features.
This is one of the reasons why a law firm can have a plethora of other systems in addition to the PMS. These include case management, time recording, purchasing, bill production, HR and CRM systems. As a result considerable effort is required in attempting to integrate the variety of systems with diverse data standards and interfaces.
It is difficult to accurately define what a PMS is since suppliers will decide what constitutes their particular PMS and firms themselves have difficulty in clearly defining what they would like from a PMS. In consequence, the legal market consists of many software suppliers, some relatively small, who have made an excellent living on the back of this fragmented market.

What about ERP?
In the manufacturing sector there first came manufacturing resource planning (MRP) and then MRPII. Then came the enterprise-resource-planning system or ERP. This system was an attempt to look across a business and determine the resources required across the enterprise – from raw materials to manufacture new products through to the human resources necessary to run the processes.
The emphasis of an ERP system is on integration as standard. Information is entered once and is available wherever required. There would be only one source of a specific entity; for example, there would be only one customer record in the enterprise. A standard interface and consistent data standards are a given. Although this is a term common in many industries, it is still a new one to the legal sector. The likes of Oracle, SAP and the new 3E system from Thomson Elite, are all ERP systems.
This approach is often termed the single-system approach where one supplier provides the one entire solution rather than the best-of-breed approach where systems from a number of suppliers are integrated together. The distinction between these two approaches is rapidly becoming blurred. Single sourced systems often contain functional areas superior to best-of-breed systems and web services eases integration of the best of breed and can provide a common interface.

The approach
All this definition of systems is well and good, but it is not really providing a solution to the daily issues faced by the business. Fundamentally there is a business problem to be addressed and the users will not care whether it is PMS, ERP or some other three-letter acronym as long as the problem is solved. Also just looking at it as a system-replacement project will restrict the opportunity for process change and improvement.
It needs to be recognised as a business-change project and driven by the key business users along with the help of the IT director of course! Since this will be fundamental to the future of the firm, the CEO or managing partner may also want to show interest.
It starts with processes. How do you work and how do you want to work? How would practice areas and individuals be affected by these new ways of working? What constraints are there? What might you want to do in future?
It moves to defining requirements. What do you want the system to do? How do you want it to do it? What should it look and feel like? What might the customer want? What should we be looking for:

Meeting Solicitors Accounting Rules and other legislation;
Multi currency;
Credit management;
Bill production;
Purchase order management.

Then you can identify a system. What can it do and does it do it like you want to? How might you need to change rather than the system? How easily can it adapt to how the business might change? Can the supplier rise to the challenge and be a long term partner? You might also wish to consider the cost – and the benefits.
Last and definitely least you can then consider the technology platform – although this is one task you can leave to the techies.
I believe the secret to success in selecting and implementing a new core system for a legal firm is, in no particular order:

A clearly defined technical strategy demonstrably supporting the business aims;
The support of the CEO/managing partner;
The IT director and finance director having a close working relationship with both understanding the key drivers of the other;
The commitment and support of the other support functions;
Involvement of key partners in defining processes;
An understanding of process;
An understanding of the business.

What about the future?
A couple of large law firms have successfully implemented ERP systems and a number of medium-sized firms are now taking the strategic decision to move to an ERP system. A number of the smaller firms are extending their functionality. The move to a more sophisticated central system has started. Rather than worrying about integrating, IT departments can worry about exploiting and delivering value.
How will the smaller supplier compete with the deep pockets of the big boys who can invest as much in research and development as the entire turnover of some suppliers? There will always be opportunities for niche products but they will need to easily integrate with the major systems deployed. It will be interesting to see how this develops.
Law firms will continue to consolidate and merge. Those with flexible and adaptable systems will have a greater chance of success and survival.
The threat of new entrants looms ever larger with the likelihood of competition only increasing in the legal marketplace. Organisations with sophisticated and comprehensive systems will be able to offer effective, efficient and low-cost processes, which will help them gain competitive advantage in this new landscape.
Fundamentally these types of core systems will enable a firm to change as the market changes. As Darwin observes: “It is not the strongest of the species which survives… it is the one most adaptable to change.”

David Bason is IS director at Shoosmiths. He can be contacted at david.bason@shoosmiths.co.uk