MIDSIZE LAW FIRM SURVEY RESULTS. ALA Business of Law Conference
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1 MIDSIZE LAW FIRM SURVEY RESULTS ALA Business of Law Conference
2 BACKGROUND AND METHODOLOGY Methodology An online survey was fielded at the ALA conference in May and later to a portion of the ALA member list Headquarters location Key topics addressed in the survey included: Firm strategy Client strategy Firm performance Rates strategy A total of 52 participants from midsize firms completed the survey Participants represented law firms from all major regions of the United States Southwest 8% West 23% Southeast 17% Northeast 17 Midwest 35%
3 KEY THEMES Firms remain focused on Business Development; but data indicates they may be competing with the wrong competitor Firms think alternative fee arrangements will continue to grow into the future; but majority of revenue is not currently being driven by these types of contracts Firm efficiency is something that has grown in importance, and firms are looking at where and how they should invest in new technology to achieve increased effectiveness
4 BUSINESS DEVELOPMENT
5 BUSINESS DEVELOPMENT IS THE KEY FOCUS FOR FIRMS Top three current initiatives with greatest impact on your firm Improving business development 72% Retaining qualified talent to someday succeed current leadership Controlling costs 40% 36% Finding effective, experienced associates Leveraging technology to ensure efficient practice of law Recruiting effective partners Leveraging technology to ensure efficient firm management Ensuring consistent services across locations Enhancing management practices Developing new services Leveraging technology investments that have already been made 26% 24% 22% 16% 14% 14% 14% 12% Finding effective first year associates Developing new expertise 6% 4%
6 LEGAL DEMAND GROWTH Y/Y% Change 9% 6% Credit Crisis 3% 0% -3% -6% Rough timeline of US Recession -9% Q1 ' Q1 ' Q1 ' Q1 ' Q1 ' Q1 ' Q1 ' Q1 '14 2 Note: All timekeepers billable time type
7 REGIONAL POWERHOUSE AND SIMILAR SIZED FIRMS ARE PERCEIVED AS THE COMPETITION Most often compete against (n=47) Small law firms (fewer than 30 attorneys) 2% Firms similar in size to yours 43% AMLAW 200 Firms 17% Regional powerhouse firms 38%
8 1H 2014 V 1H 2013 ALL SEGMENTS REVENUE GROWTH 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% All Segments AmLaw 100 AmLaw Second 100 Mid Size 1H'14 v 1H'13 1H'13 v 1H'12 Note: All timekeepers billable time
9 HOW DO LAW FIRMS SUCCEED? Law firms that are winning business have been able to define their value by focusing on client needs and directly addressing pain points. Unique Client Value Improved Client Satisfaction Increased Productivity Proactively Manage Risk Deeper Knowledge of Client s Business Better Communication Greater Predictability
10 AFA S AND BILLING
11 DOWNWARD FEE PRESSURES IMPACT FIRMS THE MOST Top three items with greatest impact on your firm Changing legal fee structure 56% Talent management of associates 50% Competing on price 42% Rising costs 38% Increasing information management challenges 34% Talent management of partners 26% Client in-sourcing 22% Increasing budgeting and project management challenges 20% Outsourcing / Rise of alternative providers 12%
12 THE PRESENT AND FUTURE OF AFAS Percent of matters handled with AFAs Expected use of AFAs next 5 years 26-50% 4% Decrease 6% 11-25% 23% 0% 15% Stay the Same 42% Increase 52% 1-10% 58%
13 FIRM EFFICIENCY AND TECHNOLOGY
14 FIRMS WANT TO GROW, EFFICIENTLY Top three most important strategic objectives for your firm Growing while maintaining quality 64% Winning new business based on your firm's value 62% Growing while becoming more efficient 58% Growing select practices 38% Enhancing your reputation among domestic corporations 34% Being considered the best of the best 30% Enhancing your reputation among global corporations 8% Growing internationally 6%
15 IMPROVED EFFICIENCY WAS A POSITIVE FACTOR IN 2013 Top three positive factors for 2013 firm performance Won new business based on our firm's value Focused on becoming more efficient 43% 45% Focused on growing select practices 38% Grew while maintaining quality Expense management Invested in our infrastructure 28% 30% 32% Enhanced our reputation among domestic corporations 23% Talent management Made greater use of client teams More effective partnering w/clients on matter management 15% 15% 15% Enhanced our reputation among global corporations 11% Changed our lawyer/partner structure 6%
16 IMPROVED EFFICIENCY IS IMPORTANT FOR FUTURE GROWTH Three most important opportunities to drive growth in 2014 Win new business based on our firm's value Focus on growing select practices 49% 53% Focus on becoming more efficient 43% Grow while maintaining quality Invest in our infrastructure 32% 30% Enhance our reputation among domestic corporations Make greater use of client teams Talent management Change our lawyer/partner structure Become more effective partnering with clients on matter mgmt Expense management 21% 17% 13% 13% 13% 11% Enhance our reputation among global corporations 6%
17 ADOPTION OF TECHNOLOGY IS THE MOST COMMON EFFICIENCY LEVER PULLED Changes made to increase efficiency of lawyers past 2 years Adopted new technology 84% Changed staffing ratios 44% Pushed work to staff with lower billable rates 30% Mapped and refined practice workflows 14% Other (Please specify) 6%
18 TECHNOLOGY IS MOST LIKELY TO SEE HIGHER INVESTMENT Change in investment Lower Remain the Same Higher Technology 4% 28% 68% Business Development 52% 48% Professional Development 6% 66% 28% Back office tools 8% 74% 18%
19 TOP TECHNOLOGICAL TOOLS Technology investments can directly lead to helping your firm becoming more efficient, produce profitable AFAs and find new opportunities for business Top Technology Purchases Desktop Hardware Laptops/notebooks Storage and networks What percentage of your attorneys use tablets in their day-to-day work? % 2% None 15% Most Popular Technology Purchases Virtualization Tablets iphones 51-75% 5% 26-50% 14% 1-25% 65% * Data taken from the 2013 ILTA Legal Purchasing Trends Survey
20 20 PUTTING INTO PRACTICE Here are three examples of what forward thinking firms are doing to implement new technology and capitalize on efficiency within their firms. Damon Morey an 85 attorney firm located in Buffalo invested in an IPads for their attorneys. The gift was messaged as not only a thank you for hard work, but a way to help them be more responsive to their clients. The big unveiling to attorneys actually garnered local media attention and resulted in free publicity for the firm. Levenfeld Pearlstein, a 67 attorney firm based out of Chicago, hired a Manager of Process Improvement, whose primary purpose to is to work directly with practice groups, find inefficiencies and create new processes that resolve issues identified. Valorem is a litigation boutique firm with offices in Chicago and Silicon Valley. Approx. 85% of this firms revenue comes from AFA arrangements and they have implemented extensive payment related options like holdbacks and a value adjustment to keep their clients coming back for repeat matters.
21 THOMSON REUTERS CAN HELP FIRMS GROW, PRACTICE & MANAGE
22 QUESTIONS?
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