Metrics that Matter: A Law Firm Management Workshop

Transcription

1 Metrics that Matter: A Law Firm Management Workshop Dr. Evan Parker, LawyerMetrix Steven R. Petrie, Faegre Baker Daniels Jill S. Weber, Stinson Leonard Street

2 Agenda Case Study Overview (15 minutes) Small Group Strategy Discussion (20 minutes) Presentations to Full Group (25 minutes) Case Study Debrief (5 minutes) Key Metrics that Matter (15 minutes) 2

3 Case Study Overview 3

4 Your Fictional Firm Allen, Bardot & Cruz (ABC) AmLaw 100 Firm 700 lawyers/300 partners Los Angeles HQ 16 U.S. offices; 4 international offices Distinct Corporate, IP and Labor & Employment practices 20 other practices Your table represents the newly established Business Development Task Force Your goal: Develop a strategic action plan focusing on growing and/or developing profitable work for the firm. For example: Identify up to 3 clients for which the cross-selling opportunities are most promising Develop and justify an initiative focused on one or two key industries; and/or Develop and justify an initiative focused on one or two key practices. Your resources: Market- and firm-specific data to help you make better decisions 4

5 (1) Staffing (2) Financials (3) Focus (4) Diversity (5) Practice Groups Law Firm Benchmarking Data Attorney Headcount (Firmwide) Bottom 25% Middle 50% Top 25% Partner Headcount (Firmwide) Lateral Partner Plus Minus Leverage Orange dots reflect data for Allen, Bardot & Cruz Total Firm Revenue Revenue Per Lawyer Profits Per Partner Average Partner Compensation Geographic Concentration Practice Concentration Client Industry Concentration Attorneys of Color (Pecentage Share) Partners of Color (Percentage Share) Female Attorneys (Percentage Share) Female Partners (Percentage Share) Corporate Practice Headcount Litigation Practice Headcount IP Headcount 5 Source: LawyerMetrix Labor and Employment Headcount

6 Industry Sector Legal Market Data by Industry Sector: Los Angeles Metro Area Manufacturing and Production $1,225.6m Wholesale, Retail, and Service Industries $852.4m Technology Telecommunications and Media Finance Health Care and Life Sciences $616.4m $475.7m $445.8m $413.1m Insurance Real Estate Utilities Transportation Miscellaneous Energy $148.4m $120.1m $118.5m $101.9m $67.8m $25.8m Source: LawyerMetrix ,000 1,500 Total Spending on Outside Counsel ($ Millions) 6

7 Legal Market Data External Spending Index: Los Angeles Metro Area Real Estate Telecommunications and Media Wholesale, Retail, and Service Industries Technology Miscellaneous Manufacturing and Production Transportation Utilities Insurance Finance Health Care and Life Sciences Energy Spend Count $120m $476m $852m ,986 $616m 795 $68m 273 $1,226m 2,784 $102m $118m $148m 166 $446m $413m $26m 65 0 PAR 2 3 Source: LawyerMetrix 7

8 Practice Demand: Los Angeles Offices 8 Source: Peer Monitor All timekeepers. Billable time type; non-contingent matters Proportions are of LA Office locations demand tracked by Peer Monitor, not entire US market.

9 Key Clients: Los Angeles Office % of Fees by Practice Group Client Industry Fees Collected Margin % Realization % Leverage Corporate Litigation IP Employment Client 1 Energy 1,850,000 38% 83% % 0% 30% 30% Client 2 Technology 1,800,000 30% 75% % 0% 20% 0% Client 3 Real Estate 1,700,000 30% 80% % 80% 0% 0% Client 4 Telecomm 1,600,000 29% 87% % 0% 30% 50% Client 5 Energy 1,350,000 37% 84% % 10% 0% 30% Client 6 Manufacturing 1,300,000 18% 72% % 100% 0% 0% Client 7 Health Care 1,200,000 39% 90% % 30% 30% 30% Client 8 Health Care 1,000,000 37% 88% % 10% 0% 20% Client 9 Technology 900,000 28% 72% % 0% 0% 0% Client 10 Manufacturing 850,000 14% 70% % 20% 80% 0% Client 11 Real Estate 800,000 29% 81% % 90% 0% 10% Client 12 Telecomm 750,000 28% 88% % 20% 40% 10% * Leverage = non-partner timekeeper hours divided by partner hours 9 Source: AB&C Financials

10 Small Group Strategy Discussion 10

11 Small Group Strategy Discussion 1. Review the market and client data provided to you 2. Identify a group spokesperson who will provide a summary of your plan to the entire room. 3. Each group member shares his/her ideas about the potential strategy, primary areas of focus and tactical elements of the action plan. 4. Work within your group to mutually agree to your strategy, focus and 2-3 key tactics. 11

12 Presentations to Full Group 12

13 Presentations to Full Group 1. Explain your plan in brief where you will focus, what you will do and why. 2. Explain how the components of your plan were informed by and responsive to the market and client data. 3. Describe some likely obstacles/challenges for implementing your plan. 4. Provide ideas and examples about how you will overcome these obstacles/challenges. 5. Identify additional metrics/data you will need to implement your plan and measure success. 13

14 Case Study Debrief 14

15 Industry Analysis: Los Angeles Office Industry Fees Collected Market Size Market Index Margin % Realization % Leverage Practices/Client Energy 3,200,000 Small Low High Mid High 3.0 Health Care 2,200,000 Mid Low High High Mid 3.5 Manufacturing 2,150,000 Large Mid Low Low Mid 1.5 Real Estate 2,500,000 Small High Mid Mid Mid 2.0 Technology 2,700,000 Large Mid Mid Low High 1.5 Telecomm 2,350,000 Mid High Mid High Low Source: AB&C Financials

16 Key Metrics That Matter 16

17 Financial Metrics That Matter 1. Margin percentage vs. realization 2. Leverage Structural Working 3. Cross-serve and work transfer 17

18 Voice of the Client Metrics that Matter 1. Client feedback interview reports Objective Subjective 2. Client surveys 3. Net Promoter Score (NPS) 4. Market Research Chambers, Benchmark Litigation, others BTI Consulting, Acritas, others Corporate Legal Operations Consortium (CLOC) State of the Industry Survey 5. Case Studies DLA Piper Analytics: applying predictive analytics to a firm s data Subjective internal metrics (e.g., willing partners) 18

19 Market Metrics That Matter 1. The Focus Principle and Firm Concentration Metrics 2. Statistically-Derived Metrics (model-based, like regression) 1. Net Promoter Score Revisited 2. Understanding why as key to strategy development and replication 19

20 Questions? 20