Presentation by Tom Baldwin, Chief Knowledge Officer at Reed Smith

1. Legal Gone Flat:
What It Means for KM
Tom Baldwin
Chief Knowledge Officer

2. For Today
 Globalization
 Mergers
 Convergence
 Cost Predictability
 Winning
 Managing

3. 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

4. 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

5. 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

6. 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”

7. 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 business
goals in the most efficient way
possible

8. 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??

9. Cost Containment: Reverse Auctions
Pricing Tactic Spooks Lawyers
August 2, 2011
By Patrick G. Lee

10. Cost Containment Timeline

11. Law Firms Respond

12. Firms 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

13. 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?

14. 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

15. 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

16. What Are Clients Looking For?
 Project Management
 Efficiency
 Legal skills are somewhat assumed
 What does your firm do to stand out from the
crowd?

17. Where do KM Opportunities Exist?
Process
Project Mapping/
Management Process
(the „cog‟) Improvement
(the „cog‟)
Pricing

18. 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

19. 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.”

20. The Benefits of LPM – A Win for Both
Clients and Law Firms
For Clients For the Firm
 Increase client satisfaction  Increase client satisfaction
 Improve client communications  Improve efficiency
 Enhance predictability – *Improved Realization*
Deliver what the client wants  Improve risk management
on budget, on time, no
surprises  Attract new business
 Create greater efficiencies  Ensure greater consistency
across offices
 Enhance quality of the work
*Often billable*

21. 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

22. 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…

23. 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….

24. Once a task is opened, guidance on
how to complete the task is shown
All of the tasks from the process map now
become measurable tasks in ouRSite
Any model forms needed to
complete the task are just one
click away.

25. We can track this level of detail
for the entire matter, or individual
phases.
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.

26. 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…

27. 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