1. Maximising Client Base Value WORLD SERVICES GROUP GILES RUBENS STOCKHOLM 7 JUNE 2010

2. 2243194 © Hildebrandt Baker Robbins 2010 2 Presentation Why should we be bothered? How are we doing? What are others doing? What are the obstacles? Why does it fail?

3. Why should we be bothered? Key clients tend to be extremely valuable –c. 50 clients typically generate 50% of income in ‘mature’ firms –many firms have moved beyond 80 : 20 rule Increasing numbers of panels being established –reducing number of law firms instructed –seeking firms who can advise across multiple practices Clients expectations rising... relentlessly –can only meet with a managed approach 2243194 © Hildebrandt Baker Robbins 2010 3

4. Continuously increasing client expectations 4 Hygiene Factors Client Expectations Client knowledge Technical expertise Responsiveness Commerciality / solution focused Cost efficiency Sector knowledge Team work & integration Consistency and commitment Brand reassurance Knowledge transfer Potential Differentiators 2243194 © Hildebrandt Baker Robbins 2010

5. How are we doing? Key client management questionnaire sent out to all European members Not a complete response – but good representation of member firms –some relatively large in size; some very small –some from mature legal markets; others from less so Some questionnaires completed in full; some partially completed –confidentiality concerns –accessibility of required information Insightful feedback elicited 2243194 © Hildebrandt Baker Robbins 2010 5

6. Importance of key clients Overall high dependence on key clients –no discernible change even in challenging market Reliance varies according to market and size of firm In main 10-20 clients of each firm generating 1%+ of total firm fees –within CEE c.8+ clients each generating 2.5%+ of total revenue –compared with c.2 clients in Western Europe Some members hugely dependent on small number of clients 6 Top Clients as % of Total Revenue Larger/more advanced markets (typically €10m - €100m fees) Smaller/less advanced/emerging markets (typically < €10m fees) Top 2025%-40%*c.50%+ Top 5035%-55%65%+ 2243194 © Hildebrandt Baker Robbins 2010 *one outlier

7. Volume of small clients Typically 20%-35% of clients generating less than €1k Representing a low level of total revenue But requiring partner input and management time –opportunity cost? –likelihood of these clients growing significantly? –clients the firm wants to attract? Total number of clients declined over last 3 years for many firms –due to ‘culling’ of smaller/non strategic clients? –or loss? 7 2243194 © Hildebrandt Baker Robbins 2010

8. Loyalty of key clients High levels of loyalty from key clients across all respondents –50%+ of current top 50 clients were top 50 clients in each of the two previous years Some ‘outliers’ whereby only c. 25% of clients were top 50 in the previous years –likely that these firms more transactional in focus 2243194 © Hildebrandt Baker Robbins 2010 8

9. Focus on key client partners Most clients adopting a CRM approach –having key client partners most widespread initiative Most common key client partner responsibilities: –ensuring client satisfaction / quality control –developing and broadening relationship –co-ordinating activity across firm –ensuring allocation of work to appropriate resource –maximising profitability of client 9 ApproachUse Client relationship partners Client development plans Periodic management reviews of client progress Client targets and objectives 2243194 © Hildebrandt Baker Robbins 2010

10. Some significant CRM successes... A number of efforts / approaches adopted –greater focus on capturing client needs / expectations –development of client plans –introducing other partners to clients –having internal meetings to monitor progress –aligning partner appraisals and remuneration Resulting in: –new clients / increased revenue –greater cross-selling / development of cross-practice approach –improved identification of client needs and actions to deliver –better flow of information and communication between practices –greater understanding of CRM partners’ role and expectations –more ‘team’ oriented approach 10 2243194 © Hildebrandt Baker Robbins 2010

11. ... But much still to be achieved Sense that greater success held back by: –client partner being resistant to opening up relationship –inappropriate partner ‘in charge’ of relationship –partners having limited insight into client needs –lack of co-ordination / communication within firm –lack of consistency in approach and quality across firm –insufficient time spent on CRM activities – e.g. too busy to cross- sell or service another partner’s client effectively –limited follow through on required actions –varied partner buy-in and commitment to approach –quality of internal data 11 2243194 © Hildebrandt Baker Robbins 2010

12. Supporting initiatives CRM applications adopted by two-thirds (typically larger members) –recognition of benefits central source for all data assists co-ordination of effort and resource –but also key challenges quality of data / discipline of data input not utilised effectively by partners and lawyers lack of integration with other systems (e.g. accounting/billing) Established marketing function in almost all firms –in larger firms greater focus on business development –in smaller firms greater focus on communications materials –resource often more focused on existing clients (rather than new client development) 12 2243194 © Hildebrandt Baker Robbins 2010

13. Supporting initiatives Most firms have undertaken at least one formal client survey in past 5 years –recognition of benefits feedback on loyalty, service quality and competitive environment opportunities to identify new business identification of differences in approach between practices provides insight to improve performance strengthens relationship –but key challenges in undertaking articulated ensuring selection of appropriate clients to survey acceptance by partners of feedback implementation of actions required following feedback 13 2243194 © Hildebrandt Baker Robbins 2010

14. Cultural shift from ‘My’ to ‘Firm’ clients Focus on best Firm (not individual) can deliver Aligned compensation Highly supported and primary focus of Management Senior level non-lawyer support and championing Shifting role of lead partner from ‘Gatekeeper’ to ‘Enabler’ What are others doing? Systematic data gathering and analysis Client surveys CRM software Managed key client programme Firmwide key client service delivery protocols Managed ‘pitch’ process 14 Process Behavioural 2243194 © Hildebrandt Baker Robbins 2010

15. What are the obstacles? 2243194 © Hildebrandt Baker Robbins 2010 15 Client Firm Partner

16. Why does it fail? Time, effort and resource underestimated Technology seen as a panacea Compensation approach not aligned Partners uncommitted / not fully supportive Client Partner responsibilities / accountabilities unclear Client teams function ineffectively Lack of Senior Management support Piece-meal rather than holistic approach Too much expected too quickly ‘Inside-out’ rather than ‘Outside-in’ perspective 2243194 © Hildebrandt Baker Robbins 2010 16