2017 Thomson Reuters Legal Executive Institute Annual ... · Introduction Background and Objectives • The Thomson Reuters Legal Executive Institute hosts the annual Marketing Partner

COMPANY CONFIDENTIAL

2017 Thomson Reuters Legal Executive Institute Annual Marketing and Business Development Benchmarking Survey

Introduction

Background and Objectives

• The Thomson Reuters Legal Executive Institute hosts the annual Marketing

Partner Forum, which targets legal marketing and business development

professionals. As part of this forum, a presentation is given showing legal

industry trends for marketing (MKTG) and business development (BD).

Methodology and Respondents

• An online survey was conducted in November 2016. Respondents included

marketing and/or business development leaders primarily from medium and

large firms.

• Most respondents had senior roles, reported to the managing

partner/chairman or COO, and earned $100K to $350K.

• For their participation, respondents will receive a copy of the presentation.

COMPANY CONFIDENTIAL 2

Industry Context


-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Q1

'07

2 3 4 Q1

'08

2 3 4 Q1

'09

2 3 4 Q1

'10

2 3 4 Q1

'11

2 3 4 Q1

'12

2 3 4 Q1

'13

2 3 4 Q1

'14

2 3 4 Q1

'15

2 3 4 Q1

'16

2 3Oct+

Nov

Y/Y Change

Demand for Law Firm Services

All timekeepers

Billable time type; non-contingent matters Source: Thomson Reuters Peer Monitor

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Q1'07

2 3 4 Q1'08

2 3 4 Q1'09

2 3 4 Q1'10

2 3 4 Q1'11

2 3 4 Q1'12

2 3 4 Q1'13

2 3 4 Q1'14

2 3 4 Q1'15

2 3 4 Q1'16

2 3Oct+Nov

Y/Y Change

Litigation Transactional

Demand for Law Firm Services: Litigation vs. Transactional

All timekeepers


$300

$325

$350

$375

$400

$425

$450

$475

$500

$525

Q1'07

2 3 4 Q1'08

2 3 4 Q1'09

2 3 4 Q1'10

2 3 4 Q1'11

2 3 4 Q1'12

2 3 4 Q1'13

2 3 4 Q1'14

2 3 4 Q1'15

2 3 4 Q1'16

2 3Oct+Nov

Standard Worked Billed Collected

Hourly Rates

Lawyers


80%

81%

82%

83%

84%

85%

86%

87%

88%

89%

90%

91%

92%

93%

94%

95%

Q1'07

2 3 4 Q1'08

2 3 4 Q1'09

2 3 4 Q1'10

2 3 4 Q1'11

2 3 4 Q1'12

2 3 4 Q1'13

2 3 4 Q1'14

2 3 4 Q1'15

2 3 4 Q1'16

2 3Oct+Nov

Am Law 100 Am Law Second 100 Midsize

Lawyers

Billable time type; non-contingent matters

Realization (Standard Value)

Source: Thomson Reuters Peer Monitor

Realization (Worked Value)

85%

86%

87%

88%

89%

90%

91%

92%

93%

94%

95%

Q1'07

2 3 4 Q1'08

2 3 4 Q1'09

2 3 4 Q1'10

2 3 4 Q1'11

2 3 4 Q1'12

2 3 4 Q1'13

2 3 4 Q1'14

2 3 4 Q1'15

2 3 4 Q1'16

2 3Oct+Nov

Collected v Worked (Negotiated)

Lawyers only, billable time type Source: Thomson Reuters Peer Monitor

2.0

2.1

2.2

2.3

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

FTE Demand

Leverage Ratio (Lawyer to Equity Partner)

*Only 11 months (through November)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

Associates (Yr 1-2) Associates (Yr 3 or more) Of Counsel Sr/Staff NEP

Leverage Composition (FTE)

*Only 11 months (through November)

30%

32%

34%

36%

38%

40%

42%

44%

46%

48%

50%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

All Segments

Profit Margin

*Rolling 12 months through Q3 2016

(i.e. Q4 2015-Q3 2016) Source: Thomson Reuters Peer Monitor

-4% -2% 0% 2% 4%

LawyerGrowth

Productivity

WorkedRates

Demand

FeesWorked

Y/Y Change YTD Nov ’16 v YTD Nov ’15

Am Law 100 Am Law Second 100 Midsize

Key Metrics by Segment

All timekeepers


Organization and Support


MKTG and BD functions remain largely combined and centrally located


10%

90%

MKTG and BD structurally distinct departments?

Yes No

50%

18%

8%

24%

MKTG and BD centralized?

All in one location >50% in one location

25%-50% in one location <25% in any one location

MKTG and BD budgets have increased, but fewer will increase in 2017


8%

5%

8%

3%

42%

34%

18%

32%

24%

26%

2016 to 2017

2015 to 2016

Marketing & Business Development Budget Changes: Prior Year and Planned

Decrease 10% or more Decrease <10% Stay the same Increase <10% Increase 10% or more

2.5 %: Avg. % of firm gross revenue spent on MKTG and BD

A majority of firms have or plan to have client teams


26%

29%

45%

Firm has client team program?

Yes No, but plan to implement No, don't plan to implement

MKTG and BD professionals feel that their function is viewed as very important by their firms

32%

34%

37%

42%

47%

47%

50%

53%

58%

58%

61%

66%

79%

90%

Implementing efficiencies through PI and PM

Recruiting effective first year associates

Developing new services

Developing new expertise

Ensuring consistent services across locations

Recruiting effective experienced associates

Enhancing management practices

Establishing innovative pricing approaches

Leveraging technology

Controlling costs

Succession planning

Retaining qualified talent to someday succeed current leadership

Recruiting effective partners

Improving business development

% indicated important initiative in their firm (9 or 10 on a 10 point scale)


Lawyer engagement is the biggest challenge for MKTG and BD

5%

8%

16%

47%

Lack of resources

Internal firm change

External market change

Lack of lawyer engagement

Greatest business development challenge


8%

8%

16%

18%

26%

Lack of technology-tooladoption

External market change

Internal firm change

Lack of resources

Lack of lawyer engagement

Greatest marketing challenge

Website development and public relations are commonly outsourced MKTG and BD functions

3%

3%

13%

13%

13%

53%

84%

None

Sales prospecting

Competitive intelligence research and reports

Business intelligence research and reports

Website day-to-day maintenance and updating

Public relations

Website development

Outsourced MKTG and BD functions


Measuring Effectiveness


Volume of activity, additional business and new clients are how most measure effectiveness of MKTG/BD


16%

24%

47%

47%

58%

Other

We don't measure it

Number of new clients

Increase in business from existing clients

Marketing and business developmentactivities (RFPs, etc)

How MKTG/BD effectiveness is measured

Few explicitly measure ROI


26%

74%

Measure MKTG/BD ROI

Yes

No

•Growth of top line through cross selling and number of new clients

•Point system based on attorney effort and brand impact of each activity •Track revenue related to any marketing or business development-related activity

•Revenue generated as well as new contacts

•Scorecard that includes a variety of factors

What they measure?

Some MKTG/BD activities use a high share of budget for perceived low effectiveness

18%

21%

40%

21%

26%

16%

42%

55%

5%

50%

61%

42%

74%

26%

3%

3%

4%

4%

6%

7%

7%

13%

15%

16%

9%

10%

10%

18%

Social media

Sales/BD coaching

Client interview program

Key client teams

Training for MarketingBD

CRM & data management

Business & competitve int.

Client education

Advertising

Public relations

Prospective client visits

Web strategy & presence

Existing client visits

Sponsorships


Marketing / Business

Development Activity

Avg % of

Budget Spent % Very Effective

Competitive Advantage


Most firms have defined their competitive advantage

82%

18%

Partners in firm have defined its competitive advantage?

Yes

No


MKTG/BD departments play a strong role in defining and communicating the firm’s competitive advantage


50%

50%

55%

63%

84%

Research competitors to identify their relativestrengths and weaknesses

Advise management on how to develop asharper competitive advantage

Lead/facilitate discussions on competitiveadfvantage with partners

Define the firm's distinct competitive advantage

Communicate the firm's distinct competitiveadvantage externally

Marketing/BD departments role in defining &

communicating competitive advantage

Specialization was the most frequently cited source of competitive advantage

13%

16%

21%

26%

53%

Value

Experience

Client Focus / Relationship

Quality / Premium

Specialization / Expertise

Source of Competitive Advantage


Pricing and Efficiency


Pricing professionals and financial analysts are the most common resources for AFA construction


32%

18% 13%

8%

5%

24%

Provide support for developing AFAs

Pricing Professionals

Financial Analysts

Practice Management Professionals

Nobody

Marketing/BD

Other

Firms have a broad range of revenue derived from AFAs

5%

40%

13%

8%

8%

18%

8%

We have no AFAs

Don't know

21-30%

16-20%

11-15%

6-10%

1-5%

% of firm revenue derived from AFAs


Most firms anticipate an increase in firm revenue from AFAs


2% 32% 50% 16%

Anticipated change in % of firm revenue from AFAs over next 5 years

Decrease somewhat Remain the same Increase somewhat Increase significantly

Most firms have not implemented efficiency programs


29%

29%

42%

Firm embraced legal process improvement?

Yes, implemented a formal process improvementprogram

No, not implemented a formal program, butintend to do so

No, not implemented a formal program and nointention of doing so

32%

26%

42%

Firm embraced legal project management?

Yes, implemented a formal approach for legalproject management

No, not implemented a formal approach , butintend to do so

No, not implemented a formal approach, and nointention of doing so

Summary

• Adaptation is the theme of the day; evolve or face extinction

• Current environment characterized by:

– Flat demand

– Declining productivity

– Eroding realization

– Modest expense growth

– Increasing cost of leverage

• Only factor driving positive revenue growth is ongoing ability to raise

hourly billing rates (and that is at risk)

• Increasing segmentation of firm financial performance requires

strategic contemplation of differentiation

• Law firm view of competitive advantage can be simplistic and may

fall short of the standard criteria: unique, sustainable and valued


Actions

• Focus on connecting client needs and perceptions of value with firm

capabilities and deliverables

• Encourage firm leaders to make difficult decisions in the allocation of

resources and positioning of the firm (strategic prioritization)

• Advocate for spending decisions that are better aligned with actual

business-development effectiveness

• Identify ways to create a sense of urgency and achieve ownership

and buy-in (lawyer engagement continues to be a challenge

• Encourage the Marketing and BD Team leader to survey the

partnership to better align activities to strategy and expectations


Appendix


Most firms are collecting company, industry and competitive data


63%

68%

74%

79%

Pricing

Competitive

Industry

Company

External Data Collected & Analyzed

Business Development/Marketing usually has responsibility for lawyer BD training and coaching


50%

45%

5%

Responsible for lawyer business development training and coaching and

client team training

BOTH Professional Development andBusiness Development/Marketing

Business Development/Marketing

Practice Group Managers

110

120

130

140

150

Q1'07

2 3 4 Q1'08

2 3 4 Q1'09

2 3 4 Q1'10

2 3 4 Q1'11

2 3 4 Q1'12

2 3 4 Q1'13

2 3 4 Q1'14

2 3 4 Q1'15

2 3 4 Q1'16

2 3Oct+Nov

Ho

urs

pe

r M

on

th

All Lawyers

Billable Hours Worked per Lawyer

Lawyers


70

80

90

100

110

120

130

140

150

Q1'07

2 3 4 Q1'08

2 3 4 Q1'09

2 3 4 Q1'10

2 3 4 Q1'11

2 3 4 Q1'12

2 3 4 Q1'13

2 3 4 Q1'14

2 3 4 Q1'15

2 3 4 Q1'16

2 3Oct+Nov

Ho

urs

pe

r M

on

th

Equity Partners Non-Equity PartnersAssociates Of CounselSr/Staff Counsel All Lawyers

Billable Hours Worked per Lawyer by Category

Lawyers


-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Q1

'07

2 3 4 Q1

'08

2 3 4 Q1

'09

2 3 4 Q1

'10

2 3 4 Q1

'11

2 3 4 Q1

'12

2 3 4 Q1

'13

2 3 4 Q1

'14

2 3 4 Q1

'15

2 3 4 Q1

'16

2 3

Rolling 12-Month

Y/Y Change

Direct Overhead

Law Firm Expense

Source: Thomson Reuters Peer Monitor

40

45

50

55

60

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Da

ys

Avg Collection Speed Avg Billing Speed

Billing and Collection Cycles

Billable time type; non-contingent

matters

*Only 11 months (through November) Source: Thomson Reuters Peer Monitor

Respondent Profile


The majority of respondents were from larger firms (150+ attorneys)


21%

24%

29%

26%

30-79

80-149

150-499

500 ormore

Number of Attorneys

Most respondents had senior roles, reported to the managing partner/chairman or COO, were experienced and earned $100K to $350K


23%

13%

24%

40%

Other MKTG or BD role

Most senior BD officer

Most senior MKTG officer

Most senior MKTG and BDofficer

Position

8%

34%

24%

34%

Less than one year

1-2 years

3-4 years

5 or more years

Years in Role

11%

5%

13%

37%

34%

Other

MKTG and/or BDpartner/committee

CMO

COO

MNG Partner/Chairman ormost senior lawyer

Report to:

16%

16%

68%

$500K to $750K

$350K to $500K

$100K to $350K

Total Compensation

Career path perceptions are mixed

21%

29%

21%

29%

13%

45%

29%

13%

Extremely Limited

Somewhat Limited

Somewhat Defined

Well Defined

Marketingstaff

CMO role


Career Path

Access to conferences and associations are the most common professional development opportunities


11%

55%

66%

92%

95%

University courses

In-house training courses

Coaching/mentoring

Access to marketing associations

Access to conferences

Professional development opportunities provided for BD and MKTG professionals

MKTG and BD FTEs have increased in the past year

8.1

9.0

12 months ago

Currently

Marketing & Business Development FTEs


Client service is the most common way firms seek to differentiate themselves

5%

11%

18%

21%

32%

Geography

Brand/Prestige

Industry expertise

Practice-area specialization

Client service

Primary Way Firm Differentiates Itself


Documents

2017 Thomson Reuters Legal Executive Institute Annual ... · Introduction Background and Objectives • The Thomson Reuters Legal Executive Institute hosts the annual Marketing Partner