Market Outlook and Client Service Review 2015

THE BTI MARKET OUTLOOK AND
CLIENT SERVICE REVIEW 2015
MICHAEL B. RYNOWECER, PRESIDENT
JANUARY 15, 2015
12:00 PM–1:15 PM EST

The State of the Industry
$10.5
$14.3
$0
$45
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
THE ONLY WAY TO GROW IS AT SOMEONE ELSE’S EXPENSE1
Millions
2001
Law firms capture 42%
of total spending on
legal services
Average dollars to internal
legal departments
Average dollars to
outside counsel
© 2015 The BTI Consulting Group Wellesley, MA 02481 www.bticonsulting.com
Questions? Contact Michael B. Rynowecer, President, The BTI Consulting Group +1.617.439.0333 mrynowecer@bticonsulting.com

$10.5
$20.8
$14.3
$12.1
$0
$45
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Millions
2001–2008
Spending with law firms DOUBLES:
Getting into law was the best decision you ever made!

$10.5
$18.5
$14.3
$9.6
$0
$45
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Millions
2009 Financial Crisis
Market collapses

$10.5
$18.5
$19.8
$14.3
$9.6
$12.9
$0
$45
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Millions
2012
Legal market sees signs of recovery, but
dollars going to law firms stay low

$10.5
$18.5
$19.8 $20.0
$14.3
$9.6
$12.9
$14.6
$0
$45
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Millions
2014
No incremental market
dollars to law firms—if your
firm isn’t growing, it’s
shrinking

Corporate counsel are building larger,
more capable in-house teams
• Hiring partners from law firms
• Ex-managing partners are new GCs
• Gained comfort in handling work in-house
• Ongoing experience driving efficiency
− Better value internally because
law firms haven't changed fast enough
INTERNAL LEGAL DEPARTMENTS ARE NOW BETTER EQUIPPED TO HANDLE WORK IN-HOUSE AND
MANAGE LAW FIRMS
2
$28.4
$40.9
$0
$45
2005 2014
Internal Legal Department Spending, in Billions

FEWER OPPORTUNITIES TO LAND ON A CLIENT’S LAW FIRM ROSTER,
BUT MORE OPPORTUNITIES PER CLIENT
3
2
7
27
0
45
Primary Secondary All Others
Number of law firms

FEWER OPPORTUNITIES TO LAND ON A CLIENT’S LAW FIRM ROSTER,
BUT MORE OPPORTUNITIES PER CLIENT
3
2
7
27
0
45
Primary Secondary All Others
2012 2013 2014
Number of law firms
2014
The typical company has dropped
18 law firms since 2012

2 Essential Elements of Organic Growth
MARKET
OPPORTUNITIES
CLIENT
OPPORTUNITIES
BOOM
PRACTICES
GROWTH
INDUSTRIES
EMERGING
PRACTICES
CAPTURING MORE
WORK
OUTPERFORM
COMPETITORS
EVERY SINGLE DAY
PROTECT
CLIENT BASE

MARKET
OPPORTUNITIES
BOOM
PRACTICES
GROWTH
INDUSTRIES
EMERGING
PRACTICES

55.8%
52.7% 51.4% 50.0% 48.9%
31.2%
33.4%
35.5%
39.5% 40.4%
0%
75%
2010 2011 2012 2013 2014
Fortune 1000 Global 500
Many Fortune 1000 Cut Back, While Global Companies
Funnel Dollars into US Outside Counsel Market
Share of US Legal Market for Outside Counsel Spending

ROUTINE RATES
TACTICAL PRACTICES PRIORITY PRACTICES
= $1 Billion Market Opportunity
PREMIUM RATES
OPPORTUNISTIC PRACTICES
Litigation
Bet-the-Company
LitigationReal Estate
Environmental
Class Actions
CORNERSTONE PRACTICES
GROWTHPROSPECTS
HIGHER
GROWTH
NEGATIVE
GROWTH
RELATIVE RATES
1.0% AVERAGE GROWTH
IP LitigationM&A
Regulatory
Employment
Corporate
IP
Tax
Investigations
Bankruptcy
Restructuring
Securities
Cybersecurity and
Data Privacy
The 2015 Legal Market Outlook
Media and
Technology

ROUTINE RATES
PREMIUM RATES
Litigation
Bet-the-Company
Environmental
Class Actions
GROWTHPROSPECTS
HIGHER
GROWTH
NEGATIVE
GROWTH
RELATIVE RATES
1.0% AVERAGE GROWTH
IP LitigationM&A
Regulatory
Employment
Corporate
IP
Tax
Investigations
Bankruptcy
Restructuring
Securities
Cybersecurity and
Data Privacy
The Good News…
Media and
Technology

ROUTINE RATES
PREMIUM RATES
Litigation
Bet-the-Company
Environmental
Class Actions
GROWTHPROSPECTS
HIGHER
GROWTH
NEGATIVE
GROWTH
RELATIVE RATES
1.0% AVERAGE GROWTH
IP LitigationM&A
Regulatory
Employment
Corporate
IP
Tax
Investigations
Bankruptcy
Restructuring
Securities
Cybersecurity and
Data Privacy
Major Spending and Volume Shifts to Note
Media and
Technology

$21.5
$20.9 $20.6 $20.2 $20.2
242
234 234
303
311
150
350
$10
$30
2011 2012 2013 2014 2015
(Projected)
Litigation Spending Total Matters
Litigation Spending Is Down, but…
Volume Is Up—And Rising Offering More Opportunity
Billions Matters

BTI Opportunity Zone
Industry Groups
BTI Opportunity Zone
Practice Areas
Banking
Chemicals
Consumer Goods/Retail Trade
Energy
Financial Services
Health Care
High Tech
Insurance
Investment Banking
Manufacturing/Industrial Mfg.
Pharmaceuticals
Professional Services
Transportation/Utilities
Wholesale/Agricultural
Pressure Point Market Neutral
Source: BTI Legal Spending Outlook 2015: Changes, Trends and Opportunities for Law Firms

Breadth of Opportunity
(Annual Number of Matters)
Depth of
Opportunity
(Annual Billings
per Matter)
FOCUSED OPPORTUNITIES TROPHY PRACTICES
SELECTED OPPORTUNITIES SUBSTANTIAL WINS
FEWER MATTERS MORE MATTERS
LOWER
ANNUAL FEES
HIGHER
ANNUAL FEES
Drones
White Collar Crime
Trade Secrets
Mining
Shale Oil & Gas
Genetically Modified Organisms
Patent Monetization
Antitrust/Competition
Food
Cyber Security
Chemical Exposure Mass Torts
Global Regulatory
Biotech Mass Torts
DNA Based Drugs
Water
Insurance Disaster Recovery
Naturally Occurring Organisms
Private Company M&A
For Your Eyes Only
BTI’s Practice Predictions…Opportunities Beyond 2015

CLIENT
OPPORTUNITIES
CAPTURING MORE
WORK
OUTPERFORM
COMPETITORS
EVERY SINGLE DAY
PROTECT
CLIENT BASE

Do Clients Think Your Performance Is Better than
Everyone Else?
CLIENT
OPPORTUNITIES
OUTPERFORM COMPETITORS
EVERY SINGLE DAY

Only Corporate Counsel Can
Be the True Judge of Your Performance
BTI CLIENT SERVICE 30
30 law firms
BTI CLIENT SERVICE
A-TEAM HONOREES
307 law firms
OTHER CORE FIRMS
NOT RECOGNIZED FOR SERVICE
313 law firms

How To Get on BTI’s Client Service A-Team List
COMMITMENT TO HELP
QUALITY PRODUCTS
DEALS WITH UNEXPECTED CHANGES
HANDLES PROBLEMS
CLIENT FOCUS
KEEPS CLIENTS INFORMED
MEETS CORE SCOPE
PROVIDES VALUE
FOR THE DOLLAR
UNPROMPTED COMMUNICATION
ADVISING ON BUSINESS ISSUES
REGIONAL REPUTATION
BRINGS TOGETHER
NATIONAL RESOURCES
INNOVATIVE APPROACH
BREADTH OF SERVICES
ANTICIPATES THE CLIENT’S NEEDS
LEGAL SKILLS
UNDERSTANDS THE CLIENT’S BUSINESS
RELATIONSHIP BUILDERS
BUSINESS MAGNETS PRICE OF ADMISSION
RELATIONSHIP BLISS
HIGHER IMPORTANCELOWER IMPORTANCE
LOWDIFFERENTIATIONHIGHDIFFERENTIATION

Corporate Counsel Identify The Firms Best Serving Them
1 SKADDEN 16 BAKER & MCKENZIE
2 JONES DAY 17 BRYAN CAVE
3 SIDLEY AUSTIN 18 SEYFARTH SHAW
4 MORGAN LEWIS 19 MORRISON & FOERSTER
5 THOMPSON HINE 20 MCGUIREWOODS
6 KIRKLAND & ELLIS 21 GREENBERG TRAURIG
7 FAEGRE BAKER DANIELS 22 NORTON ROSE FULBRIGHT
8 K&L GATES 23 DLA PIPER
9 GIBSON, DUNN & CRUTCHER 24 ARNOLD & PORTER
10 LATHAM & WATKINS 25 HOGAN LOVELLS
11 REED SMITH 26 ORRICK, HERRINGTON & SUTCLIFFE
12 FOLEY & LARDNER 27 HOLLAND & KNIGHT
13 MAYER BROWN 28 BAKERHOSTETLER
14 LITTLER MENDELSON 29 MCDERMOTT WILL & EMERY
15 ALSTON & BIRD 30 JACKSON LEWIS
RANK FIRM SCORE
311.96
266.67
247.23
227.65
211.10
196.25
179.29
174.06
167.06
165.85
162.85
162.83
156.80
152.02
147.51
146.80
145.69
143.71
138.06
135.58
131.21
129.39
129.21
126.67
108.53
107.43
106.26
103.88
103.01
102.66

What We Always Hear from Skeptics…
SO…..CLEARLY CLIENT SERVICE ISN’T EVERYTHING, OTHERWISE
THESE FIRMS WOULD GET ALL THE WORK. RIGHT?
1. LAW FIRMS HAVE TO PURSUE AND DEVELOP THE WORK
2. CLIENTS SEE CAPACITY ISSUES

Every Firm Has an Achilles’ Heel,
What Are Clients Saying Is Yours?
LIMITED DEPTH AND BREADTH
50.1%
DECLINING VALUE
22.0%
CLIENT FOCUS LAGS OTHERS
13.8%

THESE TRENDS MATTER
CYBER SECURITY IS EXPLODING
New dollars, head hunting (for clients—and attorneys), industry shake-up
1
THE VICE GRIP ON OUTSIDE COUNSEL IS SOFTENING
Even if just a bit
2
GLOBAL COMPANIES ARE BRINGING BIG BUCKS
Will add $1 billion to the market in 2015
3
FOOD AND AGRICULTURE COMPANIES IN THE LITIGATION HOT SEAT
Spending 3 times more than organizations in other industries
4
HEALTH CARE WORK—AND SPENDING—IS SOARING
Every practice will reap the benefits
5
CLIENT EXPECTATIONS ARE SKY-HIGH AND CLIMBING
Fewer firms will pass muster to capture newly available business development opportunities
6

CRAFT A CUSTOMIZED PACKAGE OF YOUR FIRM’S SERVICES TO OFFER—FROM A
SINGLE POINT OF CONTACT—FOR GLOBAL COMPANIES BASED OUTSIDE THE US
2
3 RECOMMENDATIONS
FIND THE PARTNERS WHO WILL INTRODUCE ONE NEW PARTNER IN A PRACTICE
MEANINGFUL TO YOUR TOP 25 CLIENTS—REWARD AND OVER-CELEBRATE THESE
ACHIEVEMENTS
1
ALLOCATE 30% OF YOUR BD BUDGET TO NO MORE THAN 2 GROWTH
OPPORTUNITIES AND KILL OTHER LESS ATTRACTIVE OPPORTUNITIES
3

Strategic Insight:
Changes,
Opportunities,
Threats
Corporate Counsel Needs:
Now and How They
Will Change
Expectations
for Relationships
Drivers Behind
Client Satisfaction
and Client Service
RESULTS HOW OUR CLIENTS
BENEFIT
Higher Profits
Improved
Client Service
30 Years’
Experience and Insight
Analysis
Market and Financial
of 200-Plus Law Firms
Structured Trend
In-Depth Interviews
4,000
Corporate Counsel
250
Major Law Firm
Leadership Partners
More than 200 Top
Business Executives
of Fortune 1000 and
Large Companies
Higher Growth
Improved
Retention
Strategic
and
Tactical
Analysis
The BTI Approach

Market Outlook and Client Service Review 2015

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Market Outlook and Client Service Review 2015