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The world of international business has become more challenging. Trade disputes, tariffs, rising nationalism and Brexit now point to a shift from globalisation to economic fragmentation. As a result, businesses in many cases have to localise their presence in order to establish themselves in markets they wish to do business in.
The Global Business Complexity Index ranks jurisdictions around the world in terms of how difficult they are to operate in. It highlights what to expect from different countries across a range of business requirements including legal, compliance, accounting, tax and employment rules.
Complexity is not a reason to avoid investing. It is a factor which must be managed. With the right local knowledge and preparation, good companies can thrive anywhere.
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Mergers and acquisitions (M&A) are a critical enabler of strategy for many companies seeking to grow market share, acquire new technologies, or capture the advantages of scale. Unfortunately, M&A are a risky proposition, with more than half failing to create the value promised. Evidence suggests that the cost of complexity added by M&A frequently out paces any value created. This presentation delivered by Chris Seifert at the Chief Strategy Officer Conference, examines how a select few companies have been able to defy conventional wisdom, turning M&A into a strategic weapon, by systematically eliminating non-value added complexity in their day-to-day operations. - See more at: http://theinnovationenterprise.com/summits/chief-strategy-officer-summit-new-york-2014/schedule#sthash.0cmEWQTm.dpuf
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TEXT:Rittenberg, Johnstone, and Gramling, Auditing – A Business Risk
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edition
PLEASE DO NOT PURCHASE THE INTERNATIONAL EDITION
COURSE DESCRIPTION:
This course is the second in a two course sequence. It contains lectures on auditing procedures (compliance and substantive) for cash, receivables, inventory, payables, long-term debt, equity balances and related income statement accounts. Topics also include writing of auditor's reports, including special reports, and review/compilation reports in accordance with AICPA standards.
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D. RESEARCH PAPER ( CLO 6) due on or before Saturday of the 4th week, 11:00 PM PT
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OTHER COURSE REQUIREMENTS AND INFORMATION:
PROFESSIONAL ASSOCIATIONS:
American Institute of CPA’s
Institute of Internal Auditors
California State Society of CPA’s (CALCPA.org)
Institute of Management Accountants
WEB SITES:
Directory of acctg. Web site resources:
http://www.rutgers.edu/accounting/raw
Financial Accounting Standards Board (FASB):
http://www.fasb.org
Government Accounting Standards Board (GASB):
http:/.
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RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
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Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
India Orthopedic Devices Market: Unlocking Growth Secrets, Trends and Develop...Kumar Satyam
According to TechSci Research report, “India Orthopedic Devices Market -Industry Size, Share, Trends, Competition Forecast & Opportunities, 2030”, the India Orthopedic Devices Market stood at USD 1,280.54 Million in 2024 and is anticipated to grow with a CAGR of 7.84% in the forecast period, 2026-2030F. The India Orthopedic Devices Market is being driven by several factors. The most prominent ones include an increase in the elderly population, who are more prone to orthopedic conditions such as osteoporosis and arthritis. Moreover, the rise in sports injuries and road accidents are also contributing to the demand for orthopedic devices. Advances in technology and the introduction of innovative implants and prosthetics have further propelled the market growth. Additionally, government initiatives aimed at improving healthcare infrastructure and the increasing prevalence of lifestyle diseases have led to an upward trend in orthopedic surgeries, thereby fueling the market demand for these devices.
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Trends in the legal profession globally
1. Trends in the Legal Profession Globally
John Colvin
May 1996
2. Contents – Market Issues
• Market trends - globalisation
• Trans Atlantic mergers
• Threat of accounting firms
• Growth areas
• Future of mid-sized firms
• Growth in tender process
2
3. Contents – Commercial Issues
• Financial drivers in a law firm
• Various models
• Partner compensation models
• Organisation structures
• Measurement systems
3
4. Implications for Law Firms
• Globalisation
• Threat of accounting firms
• Technological threats and opportunities
• Growth areas
• Growth in tender process
• Commercial issues
• Partner compensation
4
5. Market Trends – Globalisation
• The legal profession has been globalising at a steady pace over the past five years.
• The focus of international expansion has been Asia, and in particular the legal work
surrounding:
• equity and debt raisings in the US/UK capital markets,
• the major infrastructure projects in most Asian countries,
• and the privatisation of utilities throughout the region.
5
6. Market Trends - Globalisation
• There are two models of international expansion being implemented by the NY/London firms:
• small representative offices practicing US/UK law, supported by associations with major local
firms
• significant local offices staffed by local lawyers, plus a critical mass of UK/US lawyers on
secondment, practicing either UK/US law, or in some cases both areas of law.
6
7. Globalisation Models
7
US/UK Law Small Branch Office
Table 1 US/UK Law Plus Local Office Plus Local Associations Not Globalised
Los Angeles Gibson, Dunn & Crutcher Pilsbury Madison & Sutro
Latham & Watkins
O'Melveny & Myers
Sheppard Mullin, Richter & Hampton
Cooley & Godward
New York Skadden, Arps Sullivan & Cromwell
White & Case Davis Polk & Wardwell
Morgan Lewis & Bockius
Rogers & Wells
London Clifford Chance Allen & Overy Dibb Lupton Broomhead
Linklater & Paines Lavell White Durrant Masons
Freshfields Ashurst Morris Crisp
Herbert Smith Denton Hall
8. Trans – Atlantic Mergers
There has been much press speculation over the past few years about a major US and UK firm
merging. The most common rumour surrounds Davis Polk and Freshfields, with both denying the
idea strenuously.
The reason why this speculation exists centres around:
• the gradual globalisation of the legal profession
• the eventual power of the accountancy firms who already have powerful global networks
• the globalisation of most of the world's industry, and the consequent growing need for
international legal capability; and
• the economic need to pool the investment funds required to build a global network.
8
9. Trans – Atlantic Mergers
• Most people think that a major merger is inevitable, and virtually everyone believes that the
major players have merger contingency plans.
• However, it is expected that this process will start with a second tier firm in New York merging
with a second tier firm in London before the turn of the century.
• This will start an explosion of mergers over a five-year period.
9
10. Threat of Accounting Firms
• Arthur Anderson and KPMG are already major forces in the European legal market.
• These two plus Price Waterhouse and Coopers and Lybrand are expected to launch a major drive
into the UK legal market in the next few years.
• They are also expected to do the same in the US, when legislation is passed which will allow
accountants to enter this market.
• Everyone we spoke to felt that the accountants will first of all capture the corporate middle
market over the next ten years or so. From there they will attack the top end of the market.
10
11. In Australia
• The accountants are already well advanced in building their legal practices beyond the tax area.
• In this process, the accountants will do great damage to the mid-sized regional players, many of
whom will collapse or get merged in with the accountancy firms, or bigger law firms.
• They will do damage also to the middle market businesses of the major law firms.
11
12. Growth Areas
• Project finance focusing on infrastructure projects in Asia for the major New York and London
firms
• The industry sectors of telco carriers, multi-media and content providers mainly in Los Angeles
and London
• IP litigation almost totally in US
• IP/patent work mainly in Los Angeles
12
13. Growth Areas – Los Angeles
13
Table 2 IP/ IP/Patent IT/Out- High Tech MultiMedia/ Project M&A Infrastruct.
Patents Litigation Sourcing Companies Telecoms/ Finance Power,
Media Water Asia
Los Angeles
Pillsbury, Madison & Sutro 3 3 3 3
Latham & Watkins 3 3
O'Melveny & Myers 3 3 3 3 3
Gibson, Dunn & Crutcher 3 3 3 3
Sheppard, Mullin, Richter & Hampton 3 3
Cooley & Godward 3
14. Growth Areas – New York
14
Table 2 IP/ IP/Patent IT/ Out- High Tech MultiMedia/ Project M&A Infrastructure
Patents Litigation Sourcing Companies Telecoms/ Finance Power,
Media Water Asia
New York
Sullivan & Cromwell 3 3
Davis, Polk & Wardwell 3
Skadden, Arps, Slate, Meagher & Flom 3 3
Morgan Lewis & Bockius 3 3 3
White & Case 3
Rogers & Wells 3 3 3
15. Growth Areas – London
15
IP/ IP/Patent IT/ Out- High Tech MultiMedia/ Project M&A Infrastructure
Table 2 Patents Litigation SourcIng Companies Telecoms/ Finance Power,
Media Water Asia
London
Clifford Chance 3 3 3 3
Linklaters & Paines 3 3
Freshfields 3 3 3
Allen & Overy 3 3
Lovell White Durrant 3 3 3
Herbert Smith 3 3 3 3 3
Denton Hall 3 3 3
16. Future of Mid-Sized Firms
• The future of mid-sized firms is difficult
• There is no doubt that there will be a steady consolidation over the next five to ten years at the
top end of the legal profession
• This is the history of all global service industries, whether the service area is accounting,
consulting, actuarial or advertising. The big will get bigger
16
17. Future of Mid-Sized Firms
• The accountancy firms will take over the corporate middle market during the next few years, and
technology will replace a lot of the commodity work that is left.
• The only place left for medium-sized firms is a very specialised niche position or positions.
17
18. Growth by Lateral Recruitment
• Nowhere in the world has there been a successful merger of two major national firms.
Virtually all the firms that have grown steadily and continuously over the past 20 years have
done so through lateral recruitment.
• The firms which most spring to mind are:
• Skadden Arps, Slate, Meagher & Flom – now the world's biggest law firm, and also one
of the most remunerative
• Latham & Watkins – now California's biggest law firm
• Rogers & Wells
18
19. Growth in Tender Process
• Virtually everybody commented that over the past five years there has been a steady increase in
the number of beauty parades required for specific project work (e.g. major litigations).
• Indeed, most major project work is now subject to the tender process across the world. This
situation applies to even the best of the firms.
• As a consequence, most firms are grappling with trying to improve the sales skills of the
Partners.
19
20. Growth in Tender Process
• In addition to this, relationship work is increasingly being put to tender as well.
• Major corporates are starting to apply the same processes to law firms as has been common
place for some time for accountants, bankers, consultants and so on.
• It is now clear that the legal profession is fast becoming as competitive as any other professional
services area.
• Globalisation is now fueling this competition with the top American firms holding a significant
advantage over the rest of the world with much superior management and business systems.
20
21. Financial Performance Drivers in a Law Firm
• Leverage
• Utilisation
• Charge out rate
• Overhead rate
Another way of saying this is:
• Leverage
• Margin
21
22. Financial Performance Drivers in a Law Firm
• Leverage = Lawyers (excl Partners)/Partners
• Utilisation = Billed hours/1800
• 1800 = (260 week days-20 AL-10 PH-5 SL)*8
• Charge out rate = ave blended charge out rate for all professional staff
• Overhead rate = all expenses, except legal staff salaries, as a % of revenue
22
23. Financial Performance Drivers in a Law Firm
• A convenient way of expressing all of these variables in one index is:
Profitability Index = Leverage x Margin
• Another way of looking at these drivers is:
Internal factors : Utilisation, overhead rate
External factors : Leverage, charge out rate
23
24. Profitability Index versus Average Partner Compensation
24
Table 3 Profitability Index versus Average Partner
Compensation
Piper Alderman
BDW
Pilsbury
Latham O`Melveny
Gibson Dunn
Sheppard Mullin
Cooley Godward
Sull & Cro
Davis P
Skadden
Morgan Lewis
White & Case
Roger & Wells
Clifford Ch
LinklatersFreshfields
Allen & Overy
Lovell White
Herbert Smith
Ashurst
Dibb Lupton
Denton Hall
Masons
0
200
400
600
800
1000
1200
0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
Profitability Index = Leverage x Margin
AverageCompensationper
EquityPartner$000
25. Different Models of Leverage & Margin Exist
25
Table 4 Different models of Leverage & Margin
exist
Piper Alderman
BDW
Pilsbury
Latham
O`Melveny
Gibson Dunn
Sheppard Mullin
Cooley Godward
Sull & Cro
Davis P
Skadden
Morgan Lewis
White & Case
Roger & Wells
Clifford Ch
Linklaters
Freshfields
Allen & Overy
Lovell White
Herbert Smith
Ashurst
Dibb Lupton
Denton Hall
Masons
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
20% 25% 30% 35% 40% 45% 50%
Margin %
Leverage
26. Relationship between Compensation per Partner and Leverage
26
Table 5 Relationship between Compensation per
Partner & Leverage
Piper Alderman
Masons
Denton Hall
Dibb Lupton
Ashurst
Herbert Smith
Lovell White
Allen & Overy
Freshfields
Linklaters
Clifford Ch
Roger+Wells White & Case
Morgan Lewis
Skadden
Davis P
Sull & Cro
Cooley Godward
Sheppard Mullin
Gibson Dunn
O`Melveny
Latham
Pilsbury
BDW
0
200
400
600
800
1000
1200
0.50 1.50 2.50 3.50 4.50 5.50
Leverage
AverageCompensationper
EquityPartner$000
27. Relationship between Revenue per Partner and Leverage
27
Table 6 Relationship between Revenue per Partner &
Leverage
BDWPilsbury
Latham O`Melveny
Gibson Dunn
Sheppard Mullin Cooley Godward
Sull & Cro
Davis P
Skadden
Morgan Lewis
White & Case
Roger & Wells
Clifford Ch
Linklaters
Freshfields
Allen & Overy
Lovell White
Herbert Smith
Ashurst
Dibb Lupton
Denton Hall
Masons
Piper Alderman
0
500
1000
1500
2000
2500
3000
0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00
Leverage
RevenueperEquityPartner
$000
28. Relationship Between Average Compensation and Margin
28
Table 7 Relationship between Average
Compensation & Margin
BDW
Pilsbury
Latham
O`Melveny
Gibson Dunn
Sheppard Mullin
Cooley Godward
Sull & Cro
Davis P
Skadden
Morgan Lewis
White & Case
Roger & Wells
Clifford Ch
Linklaters
Freshfields
Allen & Overy
Lovell White
Herbert Smith
Ashurst
Dibb Lupton
Denton Hall
Masons
Piper Alderman
0
200
400
600
800
1000
1200
20% 25% 30% 35% 40% 45% 50%
Margin %
AverageCompensationper
EquityPartner$000
29. Relationship Between Compensation and Utilisation
29
Table 8 Relationship between Compensation &
Utilisation
BDW
Pilsbury
Latham
O`Melveny
Gibson Dunn
Sheppard Mullin
Cooley Godward
Sull & Cro
Davis P
Skadden
Morgan Lewis
White & Case
Roger & Wells
Clifford Ch
Linklaters
Freshfields
Allen & Overy
Lovell WhiteHerbert Smith
Ashurst
Dibb Lupton
Denton Hall
Masons
Piper Alderman
0
200
400
600
800
1000
1200
50% 60% 70% 80% 90% 100% 110% 120%
Utilisation %
AverageCompensationper
EquityPartner$000
30. Utilisation
When you adjust utilisation for leverage for the top London and
New York firms, you get the following picture:
New York
Sullivan & Cromwell 111% x 3.5 = 3.90
Davis Polk 108% x 3.81 = 4.10
Skadden Arps 108% x 4.40 = 4.75
London
Clifford Chance 67% x 4.50 = 3.02
Linklaters 65% x 4.18 = 2.72
Freshfields 58% x 4.01 = 2.32
Allen & Overy 69% x 3.84 = 2.65
30
31. Utilisation
• So it is clear from this analysis, that the New York firms are much more productive in
converting available capacity into billable hours.
• In fact, the Americans are roughly 60% more efficient in converting lawyer hours into billable
hours than their English equivalents.
• This more than compensates for the higher charge out rates of the English firms, and is the
major reason why compensation in the best New York firms far exceeds most of the English
firms.
31
32. Relationship between Revenue per Partner and Utilisation
32
Table 9 Relationship between Revenue per Partner
& Utilisation
BDW
Pilsbury Latham
O`Melveny
Gibson Dunn
Sheppard Mullin
Cooley Godward
Sull & Cro
Davis P
Skadden
Morgan Lewis
White & Case
Roger & Wells
Clifford Ch
Linklaters
Freshfields Allen & Overy
Lovell White
Herbert Smith
Ashurst
Dibb Lupton
Denton Hall
Masons
Piper Alderman
0
500
1000
1500
2000
2500
3000
50% 60% 70% 80% 90% 100% 110% 120%
Utilisation %
RevenueperEquityPartner
$000
33. Relationship Between Margin and Overheads
33
Table 10 Relationship between Margin & Overheads
BDWPilsbury
Latham O`Melveny
Gibson Dunn
Sheppard Mullin
Cooley Godward
Sull & Cro
Davis P
Skadden
Morgan Lewis
White & Case
Roger & Wells
Clifford Ch
Linklaters
Freshfields
Allen & Overy
Lovell White
Herbert Smith
Ashurst
Dibb Lupton
Denton Hall
Masons
Piper Alderman
20%
25%
30%
35%
40%
45%
50%
25% 30% 35% 40% 45% 50% 55% 60%
Overheads / Revenue %
Margin%
34. Categories of Firm Partner Compensation
Traditional Lock-Step Modified/Managed Lock-Step Meritocracy
Los Angeles Pillsbury Madison & Sutro
Latham & Watkins
O'Melveny & Myers
Gibson, Dunn & Crutcher
Sheppard, Mullin, Richter & Hampton
Cooley & Godward
New York Davis Polk & Wardwell Sullivan & Cromwell
Skadden, Arps, Slate, Meaghar & Flom
Morgan Lewis & Bockius
White & Case
Rogers & Wells
London Clifford Chance Allen & Overy Dibb Lupton Broomhead
Linklaters & Paines Ashurst Morris Crisp Denton Hall
Freshfields Masons
Lovell White Durrant
Herbert Smith
34
35. Details of Compensation Systems
There are various meritocracy models with the main features being:
• Points system with a 3-4 times multiple from top to bottom
• Often nearly automatic progression for the first four to five years
• This is followed by progression based on performance
• People can freeze or regress in these systems
• In addition, there is a bonus scheme to reward excellent performance in the year just gone
• Usually there is a Compensation Committee which is separate from the Executive Committee,
which administers unit progression and bonus allocation
• Many of these systems are administered in secret
35
36. Lawyer Compensation
The average compensation per lawyer in the various cities we visited is:
Average Compensation Compensation Adjusted
per Lawyer ($000) for COL ($000)
Los Angeles
Tier 1 firms 105 83
Tier 2 firms 75 60
New York
Tier 1 firms 145 101
Tier 2 firms 105 73
London
Tier 1 firms 110 86
Tier 2 firms 90 70
Tier 3 firms 80 63
36
37. Organisation Structures
• The most common organisation structures are:
• the traditional practice groups
• supported by specialist industry groups
• Virtually all the major firms had:
• lead partners to manage the key clients and key relationships
• partners managing the work on a day-to-day basis
• Our current thinking of evolving to national practice groups, supported by specialist industry
groups, with partners managing our key clients is consistent with this
37
38. Measurement Systems
• Most of the firms we saw had fairly basic systems to measure partner and lawyer performance
• However, two firms (Latham & Watkins and Rogers & Wells) which have significantly re-
engineered themselves over the past five to ten years, credit their measurement systems as
being an important ingredient to their improved performance
38
39. Implications – Globalisation
Findings
• The legal profession has been globalising at a steady pace over the past five years.
• At the centre of this are the major New York and London firms.
• This pace is expected to quicken in the future.
• The focus is in infrastructure projects in Asia.
Implications
• How do you defend your local market against major UK/US firms building strong networks in the
region, and attacking your market from this base?
• Do you need to consider some sort of merger or strategic alliance in the future?
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40. Implications – Threat of Accounting Firms
Findings
• The accounting firms will capture a large part of the corporate middle market over the next
decade.
• From there they will attack the top end market.
• 20 years from now they will be major players in the legal profession world-wide.
Implications
• How do you defend your business which currently is in the corporate middle market or lower?
• How do you grow your share of the business in the top companies in Adelaide?
40
41. Implications – Technology Threats/ Opportunities
Findings
• There is a very large latent market for law firms that can use technology to support commodity
product areas at low cost and high service.
Implications
• Is this a market you wish to pursue?
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42. Implications – Growth Areas
Findings
Growth areas around the world are:
• Project finance focusing in on infrastructure projects in Asia
• Telcos, multi-media and content providers
• IP litigation
• IP/patent work
Implications
• Are these growth areas relevant to your business?
• If so, do you need to do anything additional to capture a bigger share of these developments?
42
43. Implications – Growth in Tender Process
Findings
There is increased competition for both:
• Project work
• Relationship business
Implications
• Do you need to improve your client and bid management capabilities?
43
44. Implications – Partner Compensation
Findings
• The traditional lock-step system has been replaced everywhere except the major London firms
by either a meritocracy or modified/managed lock-step system.
Implications
• Does this matter for you?
44
45. Implications – Organisation Structures
Findings
• The most common structure is the traditional practice groups supported by specialist industry
groups, with lead partners responsible for major clients.
Implications
• Is your thinking consistent with this model?
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46. Implications – Measurement Systems
Findings
• Most firms have basic systems for measuring partner and lawyer performance. Many firms rely
significantly on the subjective judgements of performance by a group of senior partners.
• Two firms (Latham & Watkins and Rogers & Wells) attribute part of their growth in
performance over recent years to the implementation of a more sophisticated measurement
system.
Implications
• Look carefully at what you can learn from these two firms.
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47. Contact Details
47
John Colvin
Principal
E: jcolvin@johncolvin.com.au
M: +61 409 183 174
S: +61 2 8823 3485
Level 36, Governor Phillip Tower
1 Farrer Place, Sydney NSW 2000, Australia
Sian O’Shaughnessy
Research Analyst
E: sian@johncolvin.com.au
D: +61 2 8823 3485
Level 36, Governor Phillip Tower
1 Farrer Place, Sydney NSW 2000, Australia
Sandra Heinig
Senior Associate
E: sh@johncolvin.com.au
M: +61 416 731 897
S: +61 2 8823 3485
D: +61 2 8823 3487
Level 36, Governor Phillip Tower
1 Farrer Place, Sydney NSW 2000, Australia