1. 2012 Redwood Analytics® User Conference Analysis. Insight. Action. Benchmarking Making Sense of Market Data Chris Burgess Consultant, Redwood Analytics

2. 2012 Redwood Analytics® User Conference Analysis. Insight. Action. Agenda The Role of Benchmarking Types of Benchmarking Lexis Firm Insight Q&A

3. 2 What is Benchmarking? Benchmarking is the process of comparing the cost, time or quality of what one organization does against what another organization does.

4. 3 Why is Benchmarking Important? The legal industry is consolidating and becoming increasingly competitive Law firms are being run more like businesses, making more use of financial data and other operating metrics A good fact base can help to gain consensus around important decisions Benchmarking helps to blend the art and science of running a successful law firm

5. 4 The Role of Benchmarking Provides the opportunity to truly measure performance: in terms of the outcome in terms of the underlying activities that drive results Benchmarking is diagnostic and leads to day-to- day operational usage This is what partners want to know

6. 2012 Redwood Analytics® User Conference Analysis. Insight. Action. Types of Benchmarking

7. 6 Internal How do I compare to myself? Business intelligence External How do I compare to the market? Lexis Firm Insight Benchmarking surveys

8. 7 Internal Benchmarking Internal comparison is a key to identifying opportunities and best practices Clients / Attorneys / Departments / Everything Setting firm standards will allow easy identification of opportunities

9. 8 Internal Benchmarking Discounting Rates Inventory

10. 9 Internal Benchmarking Discounts by Department in the Rolling 12 Month Period

11. 10 Internal Benchmarking: Partner Rates

12. 11 External Benchmarking Benchmarking must be timely, relevant and reliable Normalization of the data Definition of terms Comparing performance against similar firms can indicate areas of opportunity

13. 12 External Benchmarking Good benchmarking should be objective based Ask: What are my long term goals? How do I compare against my competition? How do I compare against those I aspire to be like? Am I small-law and want to be mid-law? Am I mid-law and want to be large law? Am I big but want to be bigger? What actions can I take based upon what I have learned?

14. 13 External Benchmarking Firm-to-firm comparability is a complicated issue What metrics are comparable? Hours Rates Realizations Speeds Leverage What should you not compare? Profitability—Cost related items Dimensional—Geography, Size, Practice

15. 14 External Benchmarking: Rates Example: Rates An external benchmarking review of rates can give you an idea of how to price yourself in the market Benchmarking is evidence to show what is being charged by similar firms It can act as ammunition against those who resist change

16. 15 Benchmarking: opportunity valuation Benchmarking should be used to identify opportunities How do we put a dollar value on the impact of our recommendations? Which opportunities do we pursue first? Where am I now? Where do I want to be?

17. 16 Opportunity Valuation

18. 2012 Redwood Analytics® User Conference Analysis. Insight. Action. Lexis Firm Insight

19. 18 Lexis Firm Insight Simplified mapping and interface Data pulls directly from participating firms, does not rely on surveys Display measures at title, class year and practice group level Regions broken down by state and major cities Allows for comparison by size and practice group

20. 19 Lexis Firm Insight Client Investment

21. 20 Lexis Firm Insight Partner Hours Non Partner Hours

22. 21 Lexis Firm Insight

23. 22 Lexis Firm Insight How would your firm compare?

24. 23 Lexis Firm Insight

25. 24 Questions?