Measurements of Market Sentiment Russell Schmidt Consultant +1 - PowerPoint PPT Presentation

Peer Reporting: Measurements of Market Sentiment Russell Schmidt Consultant +1 651-848-3646 russell.schmidt@thomsonreuters.com November 2013

Overview • Open Forum • Executive Reporting • Rates • Productivity & Expenses • Staffing • Conclusions 2

High Level Reporting Recovering or in a slump?

Economic State Expectation of Downturn as Expectation of Extent of Economic Downturn Permanent Change 54% 39% Yes 54% No 46% 8% 0% 0% ( n=13 ) Already 1 year 2 years 3 years Entering a ( n=13 ) recovering new normal The economy will revive from the recent economic downturn eventually, but will the client revert to historical ways? Survey Commentary: “I actually don't think it's an economic down turn but clients getting smarter in how they will engage in legal services in the future. It's now the norm! “The days of super profits for law firms are over! Sophisticated clients… are aware of law firm profitability… Clients who are more willing to accept an 80% solution (or less) rather than the traditional 100% water-tight solution “ Q1 The AU legal market is currently experiencing an economic down turn. Do you feel this is a permanent change or not? How long do you believe this will last? 4

Website Add On Feature: Dashboard Reporting 5

Key Performance Measures: By Segment My Firm 4% 2% Y/Y % Change 0% -2% -4% -6% -8% Demand Billed Rates Fees Billed Leverage Hours per Lawyer Q1'14 v Q1'13 Last 12 Months Peers 4% 2% Y/Y % Change Flat 0% -2% -4% -6% -8% Demand Billed Rates Fees Billed Leverage Hours per Lawyer Q1'14 v Q1'13 Last 12 Months All fee earners; AU offices only

Rates Rate Analysis and Planning Tools

Rate Progression for Top 10% of Partners Standard $725 $700 $675 $650 $625 $600 $575 $550 $525 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 '10 '11 '12 '13 Billed $675 $650 $625 10% $600 $575 $550 $525 $500 $475 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 '10 '11 '12 '13 My Firm Peers

Billed Rate by Title and Tenure YTD’14 750 700 650 600 550 500 450 400 350 300 250 200 Partner Experience in Years Sr Associate Class in Years My Firm Peers

Website Add On Feature: Heat Maps 10

Productivity Costs and Efficiency

Firm Strategic Objectives % Agree - Top 3 Box on an 8 Point Scale 88.3% Focus on becoming more efficient Win new business based on our firm's value 84.1% Enhance our reputation among domestic Firms tend to put more focus 83.3% corporations on domestic objectives than global/international Focus on and grow select practices 82.5% Be considered the best of the best 80.8% Make changes to our lawyer/partner 72.5% structure Invest in our infrastructure 65.0% Enhance our reputation among global 64.1% corporations ( n=15 ) Q3 What is your strategy for dealing with the current market? Please rate how much you agree or disagree whether each of the following statements is a strategic objective of your firm. 12

Indirect Expenses per Lawyer Growth Expenses My Firm $17,500 10% $15,000 5% $12,500 0% $10,000 $7,500 -5% $5,000 -10% $2,500 -40% $0 -15% Staff Occupancy Office Tech Taxes Marketing Library Benefits Outside Recruiting Comp Services Peers $17,500 10% $15,000 5% $12,500 0% $10,000 $7,500 -5% -28% $5,000 -10% $2,500 19% -51% $0 -15% Staff Occupancy Office Tech Taxes Marketing Library Benefits Outside Recruiting Comp Services YTD y/y % change

U.S. Replenishment Ratio: All Segments 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 '08 '09 '10 '11 '12 '13 Associate Equity Partner Non-Equity Partner Of Counsel Staff Attorney

Website Exports for Granularity 1,400 Sydney – Dispute Resolution 1,350 1,300 1,250 Hours Worked 1,200 1,150 1,100 1,050 1,000 950 900 850 800 Sr Associate Class in Years Partner Experience in Years My Firm Peers

Practice Group Dashboards: Corporate M&A YTD’14 v YTD’13 8.0% Growth Rate 4.0% 0.0% -4.0% -8.0% Demand Worked Fees Productivity Lawyer Rates Worked Growth Billed Rates $490 $475 $460 $445 $430 $415 $400 $385 Q2 ' Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 10 '11 '12 '13 My Firm Regional Peers National Peers

Custom Revenue Reporting For My Peers REVENUE GROWTH $50 6% 4% $40 2% My Firm Millions 0% $30 -2% -4% $20 -6% -8% $10 -10% $0 -12% YTD y/y % Chg

Conclusions Are you Prepared?

“Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice and discipline.” - Source: Jim Collins

Questions?