market outlook and client service review 2015

THE BTI MARKET OUTLOOK AND

CLIENT SERVICE REVIEW 2015MICHAEL B. RYNOWECER, PRESIDENTJANUARY 15, 201512:00 PM–1:15 PM EST

The State of the Industry

$10.5

$14.3

$0

$45

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

THE ONLY WAY TO GROW IS AT SOMEONE ELSE’S EXPENSE1

Millions

2001 Law firms capture 42%

of total spending on legal services

Average dollars to internal legal departments

Average dollars to outside counsel

© 2015 The BTI Consulting Group Wellesley, MA 02481 www.bticonsulting.comQuestions? Contact Michael B. Rynowecer, President, The BTI Consulting Group +1.617.439.0333 [email protected]


$10.5

$20.8

$14.3

$12.1

$0

$45

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Millions

2001–2008 Spending with law firms DOUBLES:

Getting into law was the best decision you ever made!



$10.5

$18.5

$14.3

$9.6

$0

$45

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Millions

2009 Financial CrisisMarket collapses



$10.5

$18.5$19.8

$14.3

$9.6

$12.9

$0

$45

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Millions

2012 Legal market sees signs of recovery, but

dollars going to law firms stay low



$10.5

$18.5$19.8 $20.0

$14.3

$9.6

$12.9$14.6

$0

$45

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Millions2014

No incremental market dollars to law firms—if your

firm isn’t growing, it’s shrinking



Corporate counsel are building larger, more capable in-house teams

• Hiring partners from law firms

• Ex-managing partners are new GCs

• Gained comfort in handling work in-house

• Ongoing experience driving efficiency− Better value internally because

law firms haven't changed fast enough

INTERNAL LEGAL DEPARTMENTS ARE NOW BETTER EQUIPPED TO HANDLE WORK IN-HOUSE AND

MANAGE LAW FIRMS

2

$28.4

$40.9

$0

$45

2005 2014

Internal Legal Department Spending, in Billions



FEWER OPPORTUNITIES TO LAND ON A CLIENT’S LAW FIRM ROSTER,

BUT MORE OPPORTUNITIES PER CLIENT

3

2

7

27

0

45

Primary Secondary All Others

Number of law firms



FEWER OPPORTUNITIES TO LAND ON A CLIENT’S LAW FIRM ROSTER,

BUT MORE OPPORTUNITIES PER CLIENT

3

2

7

27

0

45

Primary Secondary All Others

2012 2013 2014

Number of law firms

2014The typical company has dropped

18 law firms since 2012


OVERLOOK

2 Essential Elements of Organic Growth

MARKET

OPPORTUNITIES

CLIENT

OPPORTUNITIES

BOOM

PRACTICES

GROWTH

INDUSTRIES

EMERGING

PRACTICES

CAPTURING MORE

WORK

OUTPERFORM

COMPETITORS

EVERY SINGLE DAY

PROTECT

CLIENT BASE



MARKET

OPPORTUNITIES

BOOM

PRACTICES

GROWTH

INDUSTRIES

EMERGING

PRACTICES


55.8%52.7% 51.4% 50.0% 48.9%

31.2%33.4%

35.5%39.5% 40.4%

0%

75%

2010 2011 2012 2013 2014

Fortune 1000 Global 500

Many Fortune 1000 Cut Back, While Global Companies

Funnel Dollars into US Outside Counsel Market

Share of US Legal Market for Outside Counsel Spending


ROUTINE RATES

TACTICAL PRACTICES PRIORITY PRACTICES

= $1 Billion Market Opportunity

PREMIUM RATES

OPPORTUNISTIC PRACTICES

Litigation

Bet-the-Company LitigationReal Estate

Environmental

Class Actions

CORNERSTONE PRACTICES

GR

OW

THP

RO

SPEC

TS

HIGHER

GROWTH

NEGATIVE

GROWTH

RELATIVE RATES

1.0% AVERAGE GROWTH

IP LitigationM&A Regulatory

Employment

Corporate

IP

Tax

Investigations

BankruptcyRestructuring

Securities

Cybersecurity and Data Privacy

The 2015 Legal Market Outlook

Media and Technology


ROUTINE RATES



PREMIUM RATES


Litigation


Environmental

Class Actions


GR

OW

THP

RO

SPEC

TS

HIGHER

GROWTH

NEGATIVE

GROWTH

RELATIVE RATES

1.0% AVERAGE GROWTH


Employment

Corporate

IP

Tax

Investigations


Securities


The Good News…



ROUTINE RATES



PREMIUM RATES


Litigation


Environmental

Class Actions


GR

OW

THP

RO

SPEC

TS

HIGHER

GROWTH

NEGATIVE

GROWTH

RELATIVE RATES

1.0% AVERAGE GROWTH


Employment

Corporate

IP

Tax

Investigations


Securities


Major Spending and Volume Shifts to Note



$21.5$20.9 $20.6 $20.2 $20.2

242234 234

303311

150

350

$10

$30

2011 2012 2013 2014 2015(Projected)

Litigation Spending Total Matters

Litigation Spending Is Down, but…

Volume Is Up—And Rising Offering More Opportunity

Billions Matters


BTI Opportunity Zone

Industry Groups

BTI Opportunity Zone

Practice Areas

Banking

Chemicals

Consumer Goods/Retail Trade

Energy

Financial Services

Health Care

High Tech

Insurance

Investment Banking

Manufacturing/Industrial Mfg.

Pharmaceuticals

Professional Services

Transportation/Utilities

Wholesale/Agricultural

Pressure Point Market Neutral

Source: BTI Legal Spending Outlook 2015: Changes, Trends and Opportunities for Law Firms


Breadth of Opportunity (Annual Number of Matters)

Depth of Opportunity(Annual Billings

per Matter)

FOCUSED OPPORTUNITIES TROPHY PRACTICES

SELECTED OPPORTUNITIES SUBSTANTIAL WINS

FEWER MATTERS MORE MATTERS

LOWERANNUAL FEES

HIGHERANNUAL FEES

Drones

White Collar Crime

Trade Secrets

Mining

Shale Oil & Gas

Genetically Modified Organisms

Patent Monetization

Antitrust/Competition

FoodCyber Security

Chemical Exposure Mass Torts

Global Regulatory

Biotech Mass TortsDNA Based Drugs

Water

Insurance Disaster Recovery

Naturally Occurring Organisms

Private Company M&A

For Your Eyes Only

BTI’s Practice Predictions…Opportunities Beyond 2015



CLIENT

OPPORTUNITIESCAPTURING MORE

WORK

OUTPERFORM

COMPETITORS

EVERY SINGLE DAY

PROTECT

CLIENT BASE


Do Clients Think Your Performance Is Better than

Everyone Else?

CLIENT

OPPORTUNITIES

OUTPERFORM COMPETITORS

EVERY SINGLE DAY


Only Corporate Counsel Can

Be the True Judge of Your Performance

BTI CLIENT SERVICE 3030 law firms

BTI CLIENT SERVICE

A-TEAM HONOREES307 law firms

OTHER CORE FIRMS

NOT RECOGNIZED FOR SERVICE313 law firms


How To Get on BTI’s Client Service A-Team List

COMMITMENT TO HELP

QUALITY PRODUCTS

DEALS WITH UNEXPECTED CHANGES

HANDLES PROBLEMS

CLIENT FOCUS

KEEPS CLIENTS INFORMED

MEETS CORE SCOPE

PROVIDES VALUE

FOR THE DOLLAR

UNPROMPTED COMMUNICATION

ADVISING ON BUSINESS ISSUES

REGIONAL REPUTATION

BRINGS TOGETHER

NATIONAL RESOURCES

INNOVATIVE APPROACH

BREADTH OF SERVICES

ANTICIPATES THE CLIENT’S NEEDS

LEGAL SKILLS

UNDERSTANDS THE CLIENT’S BUSINESS

RELATIONSHIP BUILDERS

BUSINESS MAGNETS PRICE OF ADMISSION

RELATIONSHIP BLISS

HIGHER IMPORTANCELOWER IMPORTANCE

LO

WD

IFFEREN

TIA

TIO

NH

IGH

DIF

FEREN

TIA

TIO

N


Corporate Counsel Identify The Firms Best Serving Them

1 SKADDEN 16 BAKER & MCKENZIE

2 JONES DAY 17 BRYAN CAVE

3 SIDLEY AUSTIN 18 SEYFARTH SHAW

4 MORGAN LEWIS 19 MORRISON & FOERSTER

5 THOMPSON HINE 20 MCGUIREWOODS

6 KIRKLAND & ELLIS 21 GREENBERG TRAURIG

7 FAEGRE BAKER DANIELS 22 NORTON ROSE FULBRIGHT

8 K&L GATES 23 DLA PIPER

9 GIBSON, DUNN & CRUTCHER 24 ARNOLD & PORTER

10 LATHAM & WATKINS 25 HOGAN LOVELLS

11 REED SMITH 26 ORRICK, HERRINGTON & SUTCLIFFE

12 FOLEY & LARDNER 27 HOLLAND & KNIGHT

13 MAYER BROWN 28 BAKERHOSTETLER

14 LITTLER MENDELSON 29 MCDERMOTT WILL & EMERY

15 ALSTON & BIRD 30 JACKSON LEWIS

RANK FIRM SCORE

311.96

266.67

247.23

227.65

211.10

196.25

179.29

174.06

167.06

165.85

162.85

162.83

156.80

152.02

147.51

146.80

145.69

143.71

138.06

135.58

131.21

129.39

129.21

126.67

108.53

107.43

106.26

103.88

103.01

102.66


What We Always Hear from Skeptics…

SO…..CLEARLY CLIENT SERVICE ISN’T EVERYTHING, OTHERWISE

THESE FIRMS WOULD GET ALL THE WORK. RIGHT?

1. LAW FIRMS HAVE TO PURSUE AND DEVELOP THE WORK

2. CLIENTS SEE CAPACITY ISSUES


Every Firm Has an Achilles’ Heel,

What Are Clients Saying Is Yours?

LIMITED DEPTH AND BREADTH50.1%

DECLINING VALUE22.0%

CLIENT FOCUS LAGS OTHERS13.8%


THESE TRENDS MATTER

CYBER SECURITY IS EXPLODING

New dollars, head hunting (for clients—and attorneys), industry shake-up1

THE VICE GRIP ON OUTSIDE COUNSEL IS SOFTENING

Even if just a bit2

GLOBAL COMPANIES ARE BRINGING BIG BUCKS

Will add $1 billion to the market in 20153

FOOD AND AGRICULTURE COMPANIES IN THE LITIGATION HOT SEAT

Spending 3 times more than organizations in other industries4

HEALTH CARE WORK—AND SPENDING—IS SOARING

Every practice will reap the benefits5

CLIENT EXPECTATIONS ARE SKY-HIGH AND CLIMBING

Fewer firms will pass muster to capture newly available business development opportunities6


CRAFT A CUSTOMIZED PACKAGE OF YOUR FIRM’S SERVICES TO OFFER—FROM A

SINGLE POINT OF CONTACT—FOR GLOBAL COMPANIES BASED OUTSIDE THE US2


3 RECOMMENDATIONS

FIND THE PARTNERS WHO WILL INTRODUCE ONE NEW PARTNER IN A PRACTICE

MEANINGFUL TO YOUR TOP 25 CLIENTS—REWARD AND OVER-CELEBRATE THESE

ACHIEVEMENTS

1

ALLOCATE 30% OF YOUR BD BUDGET TO NO MORE THAN 2 GROWTH

OPPORTUNITIES AND KILL OTHER LESS ATTRACTIVE OPPORTUNITIES3

OVERLOOK

Strategic Insight:Changes,

Opportunities,Threats

Corporate Counsel Needs:Now and How They

Will Change

Expectationsfor Relationships

Drivers BehindClient Satisfactionand Client Service

RESULTS HOW OUR CLIENTS BENEFIT

Higher Profits

ImprovedClient Service

30 Years’Experience and Insight

Analysis

Market and Financial of 200-Plus Law Firms

Structured Trend

In-Depth Interviews

4,000 Corporate Counsel

250Major Law Firm

Leadership Partners

More than 200 Top Business Executives of Fortune 1000 and

Large CompaniesHigher Growth

ImprovedRetention

Strategicand

TacticalAnalysis

The BTI Approach


market outlook and client service review 2015

Law

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law firms havent

law firms doubles

law firmsif

clients law firm roster

law firms exmanaging

industry fewer opportunities