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www.altmanweil.com
Striking the Right Balance:
Client Service and Profitability
Strategic Considerations
Presented by:
Ward Bower
Altman Weil, Inc.
World Services Group
North American Regional Meeting
February 10, 2012
www.altmanweil.com
The “New Normal”
• No/Slow Growth Economy—legal and other
• Clients more valuable than ever
• Vulnerable to competitor marketing
• Supply/Demand
• Buyers‘ market
• Price staffing, strategy
• ―Convergence‖ Movement
• Reconsolidation
• Management, control
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Classic Law Firm Strategy
• What? Practice Mix
• Who? Targeted Markets
• Where? Geography
• How?
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2011 Altman Weil CLO Survey October 2011
• 176 Law Departments
• 1 to 100+ In-House Lawyers
• Two-thirds Public; One-quarter
Private
• Budgets: $1 Million - $50 Million+
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CLO Survey
• #1 priority: controlling costs
• But 38% plan increase in-house lawyers in 2012
• 45% increased outside budget 2010-2011
• Only 15% plan increased use of OC in 2012
• #1 selection criteria: spend time to know our business
• #2 selection criteria: recommendations and reputation
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CLO Survey
• 60% designate in-house relationship
manager with outside counsel
• 79% discuss staffing with outside counsel
• 90% want new matter budgets
• 34% evaluate outside counsel (17%
communicate results)
• 77% recommend outside counsel to
colleagues
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CLO Survey
• 67% have outside counsel panels
(convergence)
• 42% encourage price competition via
panels
• 58% encourage collaboration on efficiency
with panel members
• 84% used AFAs—14% of fees paid
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Strategic Implications
• Position for convergence, panels
• Multiple jurisdictions; networks? WSG?
• Full range of service
• But avoid ―client capture‖
• Partnering program
• Client teams/relationship managers
• CLE
• Joint staffing
• Secondments
• Reverse seminars
Results. Value. Dykema.
www.dykema.com
California | Illinois | Michigan | North Carolina | Texas | Washington, D.C.
Striking the Right Balance
Client Value / Firm Profitability
12
Client‘s Changing Perspective
Legal fees are no longer sacrosanct
General Counsel under their own pressure to reduce cost and demonstrate
value their own value internally
Demanding that their outside law firms provide similar or better quality at
lower cost
They expect firms to become more efficient and/or accept lower profit
margins
ACC Value Challenge offers pragmatic advice
13
ACC Value Challenge – 51 Propositions
Grouped under Seven (7) Categories
Matter Management and Efficiency – 8
Client Service and Value – 10
Understanding of In-House Functions and Needs – 10
Client Teams, Client Focus – 6
Fee Structures – 5
Professional Development – 5
Technology and Library – 7
Note that only 5 of the 51 propositions relate to rates
Value is defined by the ACC as more than just cost
Send me an e-mail if you have not seen and I will send a copy
14
Case Study –
IP Prosecution
Light Sigma Study Revealed
After years of client pressure for better value, realization had dropped to 77%
and profit margin to 40% - before partner compensation
Work processes and staffing varied widely by client and supervising lawyer
Very Little Use of ‗Prior Work Product‘
Staff changeover occurred frequently
Process flow was linear – tasks that could overlap did not
Lack of document assembly in-spite of repetitive nature of work and
documents
24
Concluding Remarks
Areas of Perceived Client Value
1. Matter Management and Efficiency
2. Client Service and Value
3. Understanding of In-House Functions and Needs
4. Client Teams, Client Focus
5. Fee Structures
6. Professional Development
7. Technology and Library