埃森哲：Lower TCO SAP on the Microsoft PlatformAn Insight into Legal Market ProfitabilityReport Extract Cap Gemini Ernst & YoungStrategic Research Group ? CGE&Y 2002October 2002Key Research FindingsUK legal firms are switching their concentration from growth to profitability1. This mean there is a need to focus on cost structure and pyramid.Cultural barriers are the biggest obstacle to implementing such changes. Market share comparison of the UK and US legal marketSource: “UK Market Sub-Group Economics and Deals Profile”, Hildebrandt International, 2002; “The Legal Business 100”, Legal Business, 2002.Source: “AM Law 100”, The American Lawyer, July 2002.a. “United StatesLegal Services”, Datamonitor, 2002. b. Freshfields Bruckhaus Deringer.c. UK Legal Services Market, Euromonitor 2001OVERVIEW OF THE UK AND US LEGAL SERVICES MARKETSLargest Six Firms Market Share of the Legal Business 100, 2001UK Legal Business 100 Market Value = ?8.5bnUK Legal Services Market Value = ?8.9bncClifford ChanceFreshfields BDbLinklatersAllen & OveryLovellsRest94 law firms account for 58% of the marketSlaughter & MayThere was no change in the top 10 firms between 2000 and 2001Largest Five Firms Market Share of the AM Law 100, 2001Skadden, Arps, Slate, Meagher, FlomBaker & McKenzieJones, Day, Reavis & PogueLatham & WatkinsSidley Austin Brown & WoodRestAM Law 100 Market Value = $35.1bnUS Legal Services Market Value = $162bnbThe largest five players account for 4% of the total marketDuring 2001, the gross fees of the AM Law 100 grew 10% compared to 2.5% growth in the legal services marketExcluding the largest five, US law firms are typically larger in revenues and more profitable than UK firmsGross Fees (?bn) and PEP (?000) for Law Firms in the UK and USab, 2001Average Profitability per Equity Partner, PEP, ?000Cumulative Gross Fees, ?bnSource: “The Legal Business 100”, Legal Business, 2002; “AM Law 100”, The American Lawyer, July 2002; US Census Bureau; UK National Statistics.a. Exchange Rate taken 31/12/00 when $1= ?0.6699. B. US profitability (PEP) is from 2000; 2001 PEP is due to be published Q4 2002; so far only gross fees have been published.The US market can support a greater number of larger firmsfirms can manage their profitability by pulling appropriate performance levers.OVERVIEW OF THE UK AND US LEGAL SERVICES MARKETSUS legal services firms outside the top 100 account for two-thirds of the overall legal services market valueUK and US average spend per head of the population on legal services is ?140 and ?250 respectivelyLaw Firms Gross FeesUKUSLaw Firms PEPUK Law FirmsUS Law FirmsbHowever, there is weak correlation between the size of a US firm and its profitabilitySource: “AM Law 100”, The American Lawyer, July 2001.Note: Data is from 2000; 2001 global results are due to be published Q4 2002. To date, the full UK results and US revenues only for 2001 have been published. a. By revenues.Profits per Equity Partner ($000) vs. Gross Fees ($m) for Largest 50 US Law Firmsa, 2000OVERVIEW OF THE UK AND US LEGAL SERVICES MARKETSAverage Profits per Equity Partner (PEP) ($000)Gross Fees ($m)Growth in size is not necessarily accompanied by growth in profitability.UK origin firmsUS origin firmsFirms are experimenting with emerging partnership models driven by legislation changes and recent eventsUK: LLPs introducedGeneral PartnershipsProfit shared between partnersAll employees engage in a single commercial discipline e.g. lawAll partners liable for damages sought against the firmMulti-disciplinary PartnershipsKey Difference:Firms offer a diversified service, e.g. accountancy and lawLimited Liability PartnershipsKey Difference:Only the firms assets are liable, not a partners personal assets for damages sought against the firmAugNovMarNov200020012002American Bar and UK Law Society favour MDPsUK Law Society to speed up MDPsUK office of fair trading gives green light to MDPsEnron collapseDutch rule against MDPs Collapse of Andersen throws future of MDPs into doubtWithers London (City) becomes an LLPLegislation:Events:Law Firms:Accountants can employ up to 50% non-accountantsSource: Reuters Business Briefings; .internationallawoffice3, 26/6/02; “New York Gives Green Light to MDPs”, International Law Office, 15/8/01.We believe it likely that current concerns for partner liability will encourage UK law firms to convert to LLPs.Some Definitions1,000 UK LLPs registeredRecent Legislation Changes, Events and Adoptions of New Partnership ModelAugMDPs are not yet permitted in UK. Firms can form “linked partnerships” with firms in other industries though these are uncommonLLPs can be either single or multi-disciplinaryOVERVIEW OF THE UK AND US LEGAL SERVICES MARKETSMany states,