1. Legal Management Resources LLC The Current Law Firm Landscape ACC Northeast Law Firm Briefing Session May 19, 2015 James W. Jones

2. Legal Management Resources LLC Impact of the Economic Downturn Since 2008, the global market for law firm services has been locked in an economic downturn that has profoundly impacted both the nature and intensity of competition. The impact can be graphically seen in all of the key indicators of law firm performance – including demand growth, productivity, rate increases, realization, expense management, and profitability.

3. Legal Management Resources LLC Demand Growth for U.S. Law Firm Services Source: Thomson Reuters Peer Monitor

4. Legal Management Resources LLC Productivity (Billable Hours per Lawyer) Source: Thomson Reuters Peer Monitor

5. Legal Management Resources LLC Rate Progression Source: Thomson Reuters Peer Monitor

6. Legal Management Resources LLC Collection Realization against Standard Rates Source: Thomson Reuters Peer Monitor

7. Legal Management Resources LLC Expense Management Source: Thomson Reuters Peer Monitor

8. Legal Management Resources LLC Profits per Partner Source: Thomson Reuters Peer Monitor 0.8%/Year 2.3%/Year 1.4%/Year 0.2%/Year

9. Legal Management Resources LLC Longer Term Market Trends The economic downturn experienced in the legal market over the past six years has been exacerbated by other macro forces that were beginning to impact the market in significant ways even before All of these forces have combined to cause significant shifts in the nature of competition in the legal market.

10. Legal Management Resources LLC Combination of Contributing Factors and Proximate Cause Economic Downturn Drive toward Commoditi- zation Availability of Information Emergence of New Service Providers Growth of Enabling Technology Unsustainable Economic Model Changing Client Expectations/ Behaviors

11. Legal Management Resources LLC The Result? Arguably, the perfect storm......and a tipping point.

12. Legal Management Resources LLC Shifts in the Nature of Competition Shift to a buyer’s market for legal services for the foreseeable future. Clients now defining what constitutes “value” in the market. New focus on efficiency, predictability, and cost effectiveness in the delivery of legal services. Will require a paradigm shift in the mindset of law firms and their partners.

13. Legal Management Resources LLC Shifts in the Nature of Competition (cont.) Shift to a much more competitive market for the foreseeable future – one in which supply exceeds demand. In a limited demand market, one firm can win only if another loses. While growth in demand for legal services will increase over time, a more competitive market is likely to remain. Will also require a paradigm shift in the mindset of law firms and their partners.

14. Legal Management Resources LLC Adjusting to New Realities We are seeing a fundamental and long-term shift in the nature of competition in the legal market. The “good old days” are not coming back. While we will ultimately see a rebalancing of supply and demand, we are not likely to see a return to a “sellers’ market” for legal services. To be successful going forward, firms and lawyers must adjust to a new reality in which clients set the rules, and competitive decisions (in most matters) are based on efficiency, predictability, and cost effectiveness in the delivery of legal services. In this environment, clear strategic focus is more important than ever before.

15. Legal Management Resources LLC New Realities Require a Broader Strategic Focus Client Model Clients Markets Practices Service Delivery Model Pricing Models Work Processes Technology Infrastructure Talent Model Managing Legal Talent Training and Development Partnering and Outsourcing Core Strategy

16. Legal Management Resources LLC Flexibility Is the Key to Success To be successful, firms will need to be flexible in responding to new client demands and expectations, especially around issues like – Budgeting and cost projections, Pricing models, Scoping of work, Defining expected levels of effort, Staffing and leverage options, Partnering with other service providers (including other law firms and clients themselves), Managing lawyers and other professionals, and Maintaining transparency with clients. One size no longer fits all.

17. Legal Management Resources LLC Thank You! jim@legalmanagementresources.com