Six Trends and the Legal Industry

Six trends and

the legal industry

Keith Lipman

CIO Dinner

Rosie O’Grady’s, NYC

Feb. 3, 2015

State of the legal market creates opportunity for change

Agenda

Introduction

Fundamental

Disruption in the

Legal Industry

Moving

forward

Prosperoware, what we do

State of the legal market

Client and firm challenges

and solutions

Technology

that

connects the

business

and practice

of law

• WorkSite add-ons

• SharePoint

• Information governance

• Electronic file (Matter Centricity)

• Remote access for email and DMS

• Legal Process Management

and Pricing

Areas of expertise

U.S. CUSTOMERS

40% are Prosperoware customers

U.S. CUSTOMERS

31% are Prosperoware customers

Total customers

200+

Four platforms,

four focus areas

Our WorkSite

add-ons improve

administration and

empower users

Enjoy secure email

management on

your mobile device

with the Zone Mail

app; Zone Remote

Access brings the

FileSite experience

to your web browser

Easily integrate your

DMS with your

SharePoint intranet

and extranet

Transform your

firm into a client-

focused business

through Legal

Process

Management

Six Trends That Are Changing an Industry

Horizontal Issues Vertical specific — Client Pressure

Cyber-Security Threat

(post Sony-Hack)Drop in

demand

Balance of

powerBig Data

Work

Anywhere

Fee

pressure

Horizontal Issues

• No longer if you are going to be

hacked, but when.

• It’s about risk mitigation, not stopping

attacks

• Vendors

• Fighting nation-states and criminals

– Theft

– Espionage

– Embarrassment

Cyber Security

Can a law firm

survive a Sony-style

hack?

Mitigating the Risk

• Faster transition to the “closed DMS”

– Impact to workflow

• Return of on-site consulting

• Closer monitoring by clients

Work anywhere

• Enable fluid “anywhere working”

• Balance security risk against working anywhere

• Support the four-device paradigm:

– Office computer/laptop

– Phone

– Tablet

– Home computer

Impact for the firms

• What is it?

– Ability to leverage advanced

mathematics against database,

email and documents

• The Result

– Better decision-making

– Reduced effort

Big Data

Implications to law firms

• Business of law

– Better staffing decisions

– Predictions on revenue

– Understanding profit centers

– Improving efficiency

• Practice of law

– Reduced eDiscovery costs

– Reduced due diligence costs

– Understanding difference

between contracts

• Our data is homogenous

• Industry has very poor metadata around matters

• To improve business of law, good matter metadata

is a requirement

– Matter type, sub-type, area of law, tags, industry, sector

Challenge for the Legal Industry

Vertical-Specific

Issues

Drop in demand

Client Pressure

Fee pressure Balance of power

Why is the legal industry in a state of disruption?

General CounselCFO

CEO

Board of Directors

Ability

to withstand

market

swings

How it used to be

“I don’t know,

every matter

is different.”

“I have a new matter

for you to handle,

however,

I need to know how

much it will cost me?

Demand for legal

services

in 2013 declined

slightly across the

industry

Growth in Demand for Legal Services

The birth

of NewLaw

Percentage Change in Legal Market Revenues vs. Inflation (1999–2013)

Source: U.S. Census Bureau Service Annual Survey and U.S. Bureau of Labor Statistics

What caused the clients to rebel?

According to a study by AdvanceLaw:

What firms GCs will use shifted

AMLAW 200 Law Firms

The New York elite

Which matters have

pricing pressure?

Company size matters

or

The amount of fee

pressure is tied to

the risk:

Clients are willing to

pay more for “bet

the business”

representation

Bet the Company

Mid-level Risk

Nuisance

• Lesson from Apple

From Bespoke to Commoditized

Source: Richard Susskind

Bespoke Standardized Systemized Packaged Commoditized

As clients become more aware of the cost of services,

bargaining power increases

• Free flow of pricing information

– Tymetrix Legal Analytics

– Internal matter management

– Number of times doing same type of matter

Pricing equilibrium

How are clients

applying pressure?

What does the pressure look like?

Alternative fee arrangements

• Fixed Fee

– Efficiency & results

• Hold Back / Success Fee

– Results first, efficiency second

• Portfolio

– Long term success and cost

management

• Blended Rate

– Pushing work down (Efficiency?)

• Fee Caps

– Hitting the caps first, concern

about efficiency after that

• Time and Material

– Results Focused

• Discounts

– No incentive

• Collars

– Efficiency, but minimum reward

• RFPs

• Procurement

• e‐Billing / Matter Management

– Data Analytics

• OGCs

• Rise of Law Department Operations Managers

Other client trends

Now that you got rid

of the secretaries,

there is a new question:

How efficient are you

with the technology of law?

Welcome to the test.

A new twist on client pressure

• To save money is No.1 goal

• Other concerns

• Quick resolution

• Specific outcome

• Cash flow management

• Predictability

• Certainty

• Precedent

• Efficiency

What do clients really want?

Inside

the law firms

Partners must shift how they work

From perfect service

• Price irrelevant

to client focus

• Price is key

• Move to a pool model with minimum staff

• Move support services to low-cost regions

• Outsource secretarial staff

• Cheaper real estate in cities

Cutting costs to the bone

Sheppard Mullin cut admin staff / Snell & Wilmer cut 40 admin staff / Nixon Peabody cut 38

• From:Any hour is a good hour

To: A profitable hour is a good hour

• From:Partner comp from origination and billed hours

To: Sales

Manage your matters

Quality of work

Shifts in measurement

The LPM Maturity ModelFive steps to transform your firm into a client-focused business

Thinking With A System Lens

• . Pricing workflow

and modeling

Pitching and proposal

generation

Monitoring and altering

of budget vs. actual

Pricing database –

good metadata

Task/project

management for lawyers

Experience and

availability management

Business intelligence

and prediction

Merging the business

and practice of law

Umbria

Pricing workflow

and modelingTask/project management for

lawyers

Pitching and proposal

generation

Experience and availability

management

Monitoring and altering of

budget vs. actualBusiness intelligence

and prediction

Pricing database –

good metadataMerging the business

and practice of law

Thank you