Legal Gone Flat:What It Means for KM

Tom Baldwin

Chief Knowledge Officer

For Today

Globalization

Mergers

Convergence

Cost Predictability

Winning

Managing

Clients get bigger, more power

Pfizer buys Wyeth: 64.5B

Merck buys Schering Plough: 46B

Wells and Wachovia merge

BofA and Merrill Lynch merge

5% of corporations, control more than half of the $100 billion U.S. corporate legal services market

80% of the market is controlled by a mere 200 GCs

Global 500: 2010 vs. 2005

U.S. leads, but is down to 139 companies from 176

Japan remains flat with 71

U.K. down to 30 spots vs. 35

Australia remains flat with 8

China continues its march with 46 companies, vs. just 16

Corporate globalization means law firm globalization

The Competitive Landscape

It‟s not bad, it‟s worse than we thought

Larger, more demanding clients

- Super Convergence (30% 2006, 56% 2009)

- „Purchasing‟ now driving it

- Efficiency is now front and center

Larger, more global firms

The Competitive Landscape

“General counsel, you hold the purse strings.

Go for it.” - Sept 20th Corporate Counsel article

- “(firms) still managed to increase prices 70% in

the ten years leading up to the recession of

2008, compared with a rise in non-legal business

costs of 20% during that same period. It's a

disconnect that's alarming to CFOs and

increasingly difficult for general counsel to

explain”

BTI 2011 Survey of Corporate Legal Spending

2011 spend remains below 2006 levels

Obtaining “value” is now the second most important goal

Corporate counsel need law firms that are focused on achieving the client‟s businessgoals in the most efficient way possible

Cost Containment & Predictability

AFA

Fair Market Value

Finance & Procurement Management

Convergence to Leverage Price

Electronic Billing and Audits

Increased Use Of: Outsourcing, Staff Attorneys and

In-house Resources

??Online Reverse Auctions??

Cost Containment: Reverse Auctions

Pricing Tactic Spooks Lawyers

August 2, 2011

By Patrick G. Lee

Cost Containment Timeline

Law Firms Respond

Firms get bigger, more globalFirms get bigger, more global

44 completed mergers in 2010 and 44 announced mergers

YTD 2011

Done Deals

Hogan Lovells: 2,000 lawyers

Norton Rose: 1,800 lawyers

SNR Dentons: 1,400 lawyers

Squire Sanders and Hammonds: 1,300 lawyers

In the works?

Blake Dawson / Ashurst

Mallesons Stephen Jaques / King & Wood

Norton Rose / Fulbright Jaworski

Growth in Global 50 Firms

2000: 821 lawyers / 6 countries

2005: 1108 lawyers / 8 countries

2010: 1288 lawyers / 10 countries

2017 Projection:

- Global 50 will be reduced to Global 20 with average of 2150

lawyers in 17 countries / across all continents

- Erosion of middle market, regional, firms

- Local boutiques continue to prosper

Does this feel any different that accounting or

consulting firms?

Enough Already, What Does This

Mean?

How we win business is changing

How we manage business is changing

The best thing that ever happened to KM, was

the economy taking a nose dive

Getting New Business is a New Business

Old relationship may not be enough

- Firm mergers bring new relationships to other firms

- Cost pressure

- Corporate mergers bring new relationships to the GCs

What Are Clients Looking For?

Project Management

Efficiency

Legal skills are somewhat assumed

What does your firm do to stand out from the

crowd?

Where do KM Opportunities Exist?

Process Mapping/Process

Improvement(the „cog‟)

Pricing

Project Management

(the „cog‟)

Richard Susskind’s Cog

Trusted Advisor:

- Subject matter expert

Enhanced Practitioner:

- Think PSL

Process manager:

- Process deconstruction

- Project management

Routine workers:

- In-house review (discovery, due diligence)

- Staff attorneys

The Role of the Process Manager

“Who, in the future, will take on the responsibility for legal process

management (process analysis and project management)?

This is a fascinating question, upon which the future health of

the legal profession may in part depend.”

The Benefits of LPM – A Win for Both

Clients and Law Firms

For Clients

Increase client satisfaction

Improve client communications

Enhance predictability –

Deliver what the client wants

on budget, on time, no

surprises

Create greater efficiencies

Enhance quality of the work

For the Firm

Increase client satisfaction

Improve efficiency

*Improved Realization*

Improve risk management

Attract new business

Ensure greater consistency

across offices

*Often billable*

Project Management

Many consultants pontificate that these must

be lawyers

Transitioning hard-core PMs can fail

Susskind suggests “imaginative” lawyers

might find this a unique career path

Many firms have tried training lawyers, but..

And… they pay for themselves

Process Mapping?

- Susskind suggests we learn from Industry

- Capture of current-state processes, including

Tasks

Roles

Time

Know-how (precedents, forms & guidance)

- Refinement of processes for enhanced efficiency

and service

- The map itself can be an academic exercise…

Process Mapping + ouRSite

Once folded into ouRSite, a process map now

becomes an actionable list of tasks

Task based know-how is integrated

Our team, and clients, can see the status of a given

matter:

- How we are progressing against the budget

- Who‟s assigned to each task

- What tasks are completed/outstanding

Let‟s take a look….

Once a task is opened, guidance on

how to complete the task is shown

Any model forms needed to

complete the task are just one

click away.

All of the tasks from the process map now

become measurable tasks in ouRSite

Not only do we display the budget for the matter against WIP, but we also display that figure

against how many tasks have been completed for the matter.

These two figures together provide context to the overall progress of the matter.

We can track this level of detail

for the entire matter, or individual

phases.

Pricing

How do you price something?

- Start by knowing your costs (current data is lacking)

- Codes (matter classification & time entry taxonomy)

After Action Review

- How did our end result match up to our original price?

- Could we have staffed it differently?

- Did we use technology to automate?

- Did we manage it well enough?

- These aren‟t just finance questions…

Conclusion

„Traditional‟ KM is being repurposed

Many opportunities abound

Getting in tune with your firm‟s business

issues and strategy – you‟ll find a sweet spot