Financial Education Through Software

Clients should always be a lawyer's first priority. While in the midst of juggling multiple cases, supervising other attorneys and the required reporting that comes along with the practice of law, it's a challenge for many lawyers to find the time to understand the financial side of their practices. At Orrick, Herrington & Sutcliffe, LLP, a 150-year-old global law firm with over 1,000 lawyers and another 1,000 staff, financial education has become a priority. When our lawyers became better equipped to understand the economics of their practices, our firm was able to sustain growth and increase efficiency as well as improve client service across the board.

Our Challenge

Our journey to improve financial education at Orrick began in 2010 when we brought in our current Chief Financial Officer (CFO), who had 30 years of non-law firm business experience and created detailed P&Ls for our practice groups and divisions. In late 2011, after my arrival at Orrick, we realized the technology we were leveraging needed a facelift. With 23 global locations, we were processing massive amounts of data from lawyers, project managers and staff in multiple countries that sit across a variety of industry areas. Our team of financial managers and analysts spent about 70% to 80% of their time trying to just access this data, 20% to 30% on reporting, and very little to no time on data analysis.

Our “days in inventory” statistic provides a good example of the amount of data we were processing and the difficulty we had identifying intersections across this data with our old financial management system.

To begin, the old process was contained in a single Excel workbook, with each tab in the workbook serving a specific function. Sample descriptions of a few tabs are listed below to demonstrate the immense amounts of data these Excel workbooks housed.

• Tab 1: Ran a query for Billing Attorney Revenue, by office and department and month, for a 24-month period.
• Tab 2: Ran a query for Billing Attorney Work in Progress (WIP), by office and department and month, for a 24-month period.
• Tab 3: Ran a query for Billing Attorney Accounts Receivable (AR), by office and department and month, for a 24-month period.
• Tab 4: Combined the three sets of data into one sheet, with each type of data labeled accurately.
• Tab 5: Summarized the data by department and period with a pivot table. Note: If we wanted to look at combinations of departments (like a Business Unit), we had to add a formula to sum discrete departments into the appropriate Business Units.
• Tab 6: Summarized the data by office and period with a pivot table. Note: If we wanted to look at combinations of offices (like a region), we had to add a formula to sum discrete offices into the appropriate region.

There were a few drawbacks to this process. In order to analyze any intersection between the data, we had to apply a filter to one of the pivot tables. For example, if we wanted to know the cash days for our San Francisco Public Finance department, we had to apply the San Francisco filter to the department pivot table to get all departments in San Francisco. After all of the extra data this generated, only one of them would be what we needed ' Public Finance.

Additionally, every time period had its own file, which meant to access information about a previous period, we would have to open that period's file separately. Furthermore, since the data is stored by Billing Attorney, we also have Billing Attorney cash days. There was no file in place, however, to calculate Timekeeper cash days, even though our planning software calculates cash days on a working timekeeper basis.

This situation translated to minimal interaction between the financial and legal sides of our business. With the finance team consumed with generating necessary reports, we were unable to leverage the data Orrick was collecting to help our lawyers understand the financial implications of their work.

Finding a Unified Solution

Over a period of six months, we evaluated our current IT landscape and specific needs for a new platform. Working with consulting firm Column5, we selected SAP Business Planning and Consolidation (SAP BPC) to help streamline planning, budgeting, forecasting and reporting activities.

The primary objective of the first phase of the project was to integrate the key financial planning and reporting processes into SAP's Planning and Consolidation (BPC) versus being handled through Microsoft Excel spreadsheets and Access databases. The project was focused on Reporting and Analytics through BPC. In August 2012, we went live with new software. We noticed a night and day difference in our productivity: With instant access to refreshed data, we were immediately able to address some of our pain points, such as generating reports across multiple dimensions and drilling down into data from a single source. My team at Orrick became more nimble and efficient in generating reports, and we have transitioned almost 100% of our month-end close financial reports to BPC, while freeing up time to provide more analytics to the management team for timely decision-making and action.

After streamlining reporting needs, we realized it was time to increase our analytics capabilities. Working with Column5, we developed our own proprietary solution running on SAP BPC, customized for the firm's specific legal and financial analysis needs. With this integrated solution, we have been able to automate a significant portion of the reporting and planning processes, empower the finance team to write the vast majority of the reports versus having IT support teams write reports, and improve the data flow across Orrick's data sources to allow for more frequent data refreshes in an automated fashion. Instead of simply pushing reports, our team is able to analyze this new data and make projections for Orrick's financial future across the board.

More specifically, with BPC, we created a report that uses the methodology consistent with our planning software. Now, we can quickly see any intersection across offices and practice groups. We can switch periods in one file and not have to worry about archiving a file for every new month. With a couple of clicks, we can switch between Billing Attorney and Timekeeper. We can even make selections in other dimensions in the cube that we never previously considered.

For the first time, we can easily see what the cash days are for an individual. By using local members in BPC, there is no risk of a pivot table shifting; formulas looking at the incorrect range, or the range shifting from month-to-month. Once the report has been built and tested and we are confident that it works properly, we have ready access to accurate data.

Implementation

We were able to implement SAP BPC within budget and scope. As a result of wanting to avoid scope creep or uncontrolled changes, we were very specific about our requirements in the design phase. I highly recommend this for any company looking for business planning and consolidation software: It is important to dedicate a good amount of time on the design phase, as it pays off in the long run in terms of project scope, budget and timing.

Business Benefits

One and one half years after our initial implementation, the greatest benefit we've achieved through SAP BPC is cross-practice education. Our finance team is able to support Orrick's lawyers with real-time data that is easy to understand, helping the firm to better align planning with strategic goals. Regardless of the level of experience, every lawyer at Orrick understands how his or her work for each client matter impacts the firm's bottom line. Ultimately, we've found that educating our lawyers with information from the financial side of the business is necessary to success. With insight into the cost of resources used in generating revenue and the impact of inventory and cash cycles and other levers, our lawyers are better equipped to understand their contribution to the firm's bottom line and to achieve sustainable growth for the firm as a whole.

From intuitive interfaces to legal consolidation functionality, SAP BPC includes a variety of features that support the needs of our firm. The next possible phase for Orrick is to deploy the SAP BPC planning capability, which would provide us with the ability to handle top-down and bottom-up budgeting, align our firm-wide business unit and practice group targets with existing budgets, and provide us with “what-if” analysis and scenario planning capability, allowing us to prepare for and analyze potential outcomes of our financial decisions. All of these features would support our ability to increase both the efficiency and accuracy of our financial activities.

Fernando Schreiner is Director, Financial Planning and Analysis, Orrick, Herrington & Sutcliffe LLP. He has managed the financial planning and analysis team at Orrick for two and a half years. Previously he worked for Hewlett-Packard for 17 years in many different finance roles, most recently as the head of the Corporate Financial Planning and Analysis Group. The views and opinions expressed in the article are of the author and not Orrick.

Clients should always be a lawyer's first priority. While in the midst of juggling multiple cases, supervising other attorneys and the required reporting that comes along with the practice of law, it's a challenge for many lawyers to find the time to understand the financial side of their practices. At Orrick, Herrington & Sutcliffe, LLP, a 150-year-old global law firm with over 1,000 lawyers and another 1,000 staff, financial education has become a priority. When our lawyers became better equipped to understand the economics of their practices, our firm was able to sustain growth and increase efficiency as well as improve client service across the board.

Our Challenge

Our journey to improve financial education at Orrick began in 2010 when we brought in our current Chief Financial Officer (CFO), who had 30 years of non-law firm business experience and created detailed P&Ls for our practice groups and divisions. In late 2011, after my arrival at Orrick, we realized the technology we were leveraging needed a facelift. With 23 global locations, we were processing massive amounts of data from lawyers, project managers and staff in multiple countries that sit across a variety of industry areas. Our team of financial managers and analysts spent about 70% to 80% of their time trying to just access this data, 20% to 30% on reporting, and very little to no time on data analysis.

Our “days in inventory” statistic provides a good example of the amount of data we were processing and the difficulty we had identifying intersections across this data with our old financial management system.

To begin, the old process was contained in a single Excel workbook, with each tab in the workbook serving a specific function. Sample descriptions of a few tabs are listed below to demonstrate the immense amounts of data these Excel workbooks housed.

• Tab 1: Ran a query for Billing Attorney Revenue, by office and department and month, for a 24-month period.
• Tab 2: Ran a query for Billing Attorney Work in Progress (WIP), by office and department and month, for a 24-month period.
• Tab 3: Ran a query for Billing Attorney Accounts Receivable (AR), by office and department and month, for a 24-month period.
• Tab 4: Combined the three sets of data into one sheet, with each type of data labeled accurately.
• Tab 5: Summarized the data by department and period with a pivot table. Note: If we wanted to look at combinations of departments (like a Business Unit), we had to add a formula to sum discrete departments into the appropriate Business Units.
• Tab 6: Summarized the data by office and period with a pivot table. Note: If we wanted to look at combinations of offices (like a region), we had to add a formula to sum discrete offices into the appropriate region.

There were a few drawbacks to this process. In order to analyze any intersection between the data, we had to apply a filter to one of the pivot tables. For example, if we wanted to know the cash days for our San Francisco Public Finance department, we had to apply the San Francisco filter to the department pivot table to get all departments in San Francisco. After all of the extra data this generated, only one of them would be what we needed ' Public Finance.

Additionally, every time period had its own file, which meant to access information about a previous period, we would have to open that period's file separately. Furthermore, since the data is stored by Billing Attorney, we also have Billing Attorney cash days. There was no file in place, however, to calculate Timekeeper cash days, even though our planning software calculates cash days on a working timekeeper basis.

This situation translated to minimal interaction between the financial and legal sides of our business. With the finance team consumed with generating necessary reports, we were unable to leverage the data Orrick was collecting to help our lawyers understand the financial implications of their work.

Finding a Unified Solution

Over a period of six months, we evaluated our current IT landscape and specific needs for a new platform. Working with consulting firm Column5, we selected SAP Business Planning and Consolidation (SAP BPC) to help streamline planning, budgeting, forecasting and reporting activities.

The primary objective of the first phase of the project was to integrate the key financial planning and reporting processes into SAP's Planning and Consolidation (BPC) versus being handled through Microsoft Excel spreadsheets and Access databases. The project was focused on Reporting and Analytics through BPC. In August 2012, we went live with new software. We noticed a night and day difference in our productivity: With instant access to refreshed data, we were immediately able to address some of our pain points, such as generating reports across multiple dimensions and drilling down into data from a single source. My team at Orrick became more nimble and efficient in generating reports, and we have transitioned almost 100% of our month-end close financial reports to BPC, while freeing up time to provide more analytics to the management team for timely decision-making and action.

After streamlining reporting needs, we realized it was time to increase our analytics capabilities. Working with Column5, we developed our own proprietary solution running on SAP BPC, customized for the firm's specific legal and financial analysis needs. With this integrated solution, we have been able to automate a significant portion of the reporting and planning processes, empower the finance team to write the vast majority of the reports versus having IT support teams write reports, and improve the data flow across Orrick's data sources to allow for more frequent data refreshes in an automated fashion. Instead of simply pushing reports, our team is able to analyze this new data and make projections for Orrick's financial future across the board.

More specifically, with BPC, we created a report that uses the methodology consistent with our planning software. Now, we can quickly see any intersection across offices and practice groups. We can switch periods in one file and not have to worry about archiving a file for every new month. With a couple of clicks, we can switch between Billing Attorney and Timekeeper. We can even make selections in other dimensions in the cube that we never previously considered.

For the first time, we can easily see what the cash days are for an individual. By using local members in BPC, there is no risk of a pivot table shifting; formulas looking at the incorrect range, or the range shifting from month-to-month. Once the report has been built and tested and we are confident that it works properly, we have ready access to accurate data.

Implementation

We were able to implement SAP BPC within budget and scope. As a result of wanting to avoid scope creep or uncontrolled changes, we were very specific about our requirements in the design phase. I highly recommend this for any company looking for business planning and consolidation software: It is important to dedicate a good amount of time on the design phase, as it pays off in the long run in terms of project scope, budget and timing.

Business Benefits

One and one half years after our initial implementation, the greatest benefit we've achieved through SAP BPC is cross-practice education. Our finance team is able to support Orrick's lawyers with real-time data that is easy to understand, helping the firm to better align planning with strategic goals. Regardless of the level of experience, every lawyer at Orrick understands how his or her work for each client matter impacts the firm's bottom line. Ultimately, we've found that educating our lawyers with information from the financial side of the business is necessary to success. With insight into the cost of resources used in generating revenue and the impact of inventory and cash cycles and other levers, our lawyers are better equipped to understand their contribution to the firm's bottom line and to achieve sustainable growth for the firm as a whole.

From intuitive interfaces to legal consolidation functionality, SAP BPC includes a variety of features that support the needs of our firm. The next possible phase for Orrick is to deploy the SAP BPC planning capability, which would provide us with the ability to handle top-down and bottom-up budgeting, align our firm-wide business unit and practice group targets with existing budgets, and provide us with “what-if” analysis and scenario planning capability, allowing us to prepare for and analyze potential outcomes of our financial decisions. All of these features would support our ability to increase both the efficiency and accuracy of our financial activities.

Fernando Schreiner is Director, Financial Planning and Analysis, Orrick, Herrington & Sutcliffe LLP. He has managed the financial planning and analysis team at Orrick for two and a half years. Previously he worked for Hewlett-Packard for 17 years in many different finance roles, most recently as the head of the Corporate Financial Planning and Analysis Group. The views and opinions expressed in the article are of the author and not Orrick.