Sixth Annual Salary Survey
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1 Sixth Annual Salary Survey Advisory Services & Market Research The Cowen Group East 43 Street, Suite 66 New York () 66 5 Released 8 January
2 Market Assessment: Law Firm Litigation Support Executive Summary With our sixth annual Salary Report, The Cowen Group has focused on helping executives gain better insight into the human capital costs of running a litigation support department. In, we asked firm leaders to share department headcount, compensation, billable hours, and billable rates. For the first time, we have attempted to size the marketplace, contextualize the ratio of salary to revenue, and help firm leadership gain clarity about their competitive future. was a pivotal year for executives who are managing litigation support departments at major law firms. A handful of firms purchased next generation technologies and invested in new talent to support and operate these systems. ediscovery Practice Groups converged with litigation support departments, causing firms to invest in attorneys to manage technologists, cases, and client relationships. Some law firms struggled with how to offer competitive, value added support by evaluating widely varying service models and alternate billing arrangements. Our Market Landscape and Salary Survey show Directors, Firm-wide Managers, and ediscovery Practice Group Heads have assumed elevated executive leadership roles managing departments that spend millions of dollars on salaries alone, and in return realizing comparable revenue. In, law firms employed approximately,6 litigation support and ediscovery professionals, spending million on salaries and realizing 75 million in hourly revenue. 57% of firms anticipate adding staff in, creating 375 positions a market growth rate of 3.7%. Analyst 44% of firms are hiring new positions in Specialist 38% of firms are hiring 85 new positions in Project Regional Firm-wide Firm-wide Manager Manager Manager Director 9% of firms are hiring 65 new positions in of firms are hiring 5 new positions in 7% of firms are hiring 5-7 new positions in 8% of firms are hiring 5-7 new positions in * Firm hiring includes both new positions created and the replacement of talent in existing roles.
3 Market Assessment: Law Firm Litigation Support Conservatively assuming that salaries will remain flat in, this new headcount will require an additional 4 million in salaries a.% growth in market spend. However, with this new headcount, firms will realize an additional 6 million in hourly revenue a growth in market revenue. In actuality, both numbers will likely be higher as nearly all firms project that salaries, billable hours, and billable rates will increase across all positions in. H/C Projected Growth Low Salary "Buy" Billed Bill Rate High Price Hours Low High Analysts, 7% 5, 84, 85,,6 5 5 Specialists 8 % 7, 5, 9,, 35 5 Project Managers 4 76, 65, 7,, Regional Co-ordinators 8% 9, 65, 3, Firm-wide Managers 95, 4, 6, Firm-wide Directors 8 % 75, 4, 8, * "Buy" Price is the current price to quickly recruit an professional away from an established position. There are four key factors driving this growth: Workload is increasing exponentially. 86% of firms reported that their litigation support caseload increased in, while 9 of firms reported that ESI volume on the average case has increased as well. More cases and more work per case continues to drive demand for litigation support and ediscovery services. Hiring is concentrated in positions that are relatively highly billable and low cost Analysts, Specialists, and Project Managers. In, Analysts billed an average of 6 hours at 6 an hour, Specialists billed hours at 85 an hour, and Project Managers billed an average of 5 hours at an hour. Highly profitable firms are making larger investments in headcount. The top of firms accounted for 6 of revenue in, will add 4 of new positions and generate 68% of the new revenue in. Select firms are making significant and meaningful investments in modernizing and revitalizing their departments, turning cost centers into revenue generators. - Our respondents represent a cross-section of the industry, employing between 3 and 35 litigation support professionals. We calculated growth trends for five different department size categories (-5, 6-, -, -3, 3+) and used this weighted average to estimate an aggregate market size and growth rate for headcount, salary spend, and revenue. These numbers do not include paralegals. While we continue to see an evolving trend of litigation paralegals reporting to litigation support departments in select firms, the responses we received on paralegal staff and salaries were too inconsistent to report accurately.
4 Salary and Headcount Influencers: Client Sophistication and Revenue Models Sophisticated corporations continue to invest in ediscovery capabilities, records management, and service provider relationships, creating a new client landscape for law firm ediscovery and litigation support departments. Evolving client expectations require law firms to provide elevated levels of strategic, tactical, and operational competencies all with direct implications on their hiring needs. Discussions at our Leadership Roundtable Series highlighted differences between strategic investments and incremental hiring. Some firms break even on their litigation support operations, offering services as a value-add to clients, while a number of firms are driving revenue by investing in people, process, and technology. In our Models and Structures survey, we asked law firms to describe their corporate clients' relative sophistication in ediscovery and litigation support matters. In our Models and Structures survey, we asked each firm if its ediscovery/litigation support department was a cost center, a profit center, or if it were operated to break even. Market Assessment: Law Firm Litigation Support Sophisticated Emerging 3 Unsophisticated Data from TCG's Models and Structures Survey. Snapshot is available online at < Cost Center 4% Break-Even 6% Profit Center 36% Hybrid Model 34% Data from TCG's Models and Structures Survey. Snapshot is available online at < 3
5 Salary and Headcount Influencers: Workload Profile "In-house" Case Size percent of firms said their case loads have increased in < GB - 5 GB 5 - GB > GB 8% % 39% 95 percent of firms said the ESI volume discovered on the average case increased in. Models and Structures Survey: Insourcing vs. Outsourcing ediscovery Market Assessment: Law Firm Litigation Support Growing data volumes and caseloads are putting pressure on the ability of law Þrms to meet the demands of "bread and butter" cases, forcing Þrm leadership to make complex and wide-ranging decisions about the competencies a Þrm will own, and which they will outsource to service providers. Cases Outsourced Most Many Some Few None Collection & Preservation Early Case Assessment Data Processing Document Review Data Storage & Hosting Production Consulting Project Management Vendor Management None Few Some Many Most From TCG's Models and Structures Survey, available upon request. Snapshot is available online at < Cases Insourced 4
6 Market Size: Talent Headcount,6 Headcount,975 Total Growth 3.% Market Assessment: Law Firm Litigation Support Δ I n d i v i d u a l L i t i g a t i o n S u p p o r t E m p l o y e e s ( a t R e p r e s e n t a t i v e F i r m s )
7 Market Size: Salary Spend Salary Spend million Salary Spend 4 million Total Growth.% Market Assessment: Law Firm Litigation Support Δ ,65,3,53,6,685,85,95, , ,48, ,85,55,53,74,97,85,345,98 T h o u s a n d s o f D o l l a r s ( a t R e p r e s e n t a t i v e F i r m s ) 6
8 Market Size: Realized Revenue Revenue 75 million Revenue 535 million Total Growth Market Assessment: Law Firm Litigation Support Δ ,57,6,36,8,34,376,5,69 3,37 7, ,8,4,4,36,8,34,47,6 3,94 5,79 8,39 53,6,494,938,647,34,7,56,683 3,63 3,58 5,785 9,6 5,346 T h o u s a n d s o f D o l l a r s ( a t R e p r e s e n t a t i v e F i r m s ) 7
9 Law Firm Billing Practices: ediscovery Services Models and Structures Survey: Billing Trends Hourly Code Per Per Flat No Based GB Doc Fee Charge Other Market Assessment: Law Firm Litigation Support Collection/Preservation 56% 33% Early Case Assessment 7% 9% Data Processing 56% 3% 6% Document Review 79% 9% Client Data Storage 6% 6% 47% 9% Production 77% 7% 9% Internal Consulting 86% Client Consulting 9% Project Management 88% Vendor Management 88% From TCG's Models and Structures Survey, available upon request. Snapshot is available online at < 8
10 Role Assessment: Headcount,, & Billing Expectations The next section of our report explores headcount, compensation, billable hours and billable revenue by position. Our survey does not account for varying role definition, and certain titles particularly the Specialist/Sr. Analyst role encompass wide-ranging responsibilities, authority, and salary. In an effort to help provide clarity into these issues, we present descriptive statistics for salary and billable rates. When considering this information, we encourage readers to be conscious of factors such as seniority, geography, overtime exemptions, bonus structure, caseload, client expectations, and individual responsibilities. 9
11 Firm-wide Directors of Litigation Support Head Count Average Head Count The market employed 8 individuals in this role in. Compensation Historical Trends In, firms 8% 9 % 5-7 market-wide new positions in head count Keep current staffing levels head count Compensation Projection , 78, 4,, Data from 7 to indicates mean ( ) average only. In total, firms spend.7 million on director salaries in. 4, 3, 3, 83, 75, 35, 78% Keep the Same Billable Hours Average Hours Billed in 5 In, firms 77% 3% % hours billed Keep current hours billed hours billed Billing Total Market Billing in Billing rates in Total Revenue In, firms 77% 3% No Change Total Spend 6,, 6,, 7,, 37,,
12 Firm-wide Litigation Support Managers Head Count Average Head Count The market employed individuals in this role in. Compensation Historical Trends In, firms 7% 93% % 5-7 market-wide new positions in head count Keep current staffing levels head count Compensation Projection , 7, 55, 4, Data from 7 to indicates mean ( ) average only. In total, firms spend 33, on manager salaries in. 4, 5, 38, 6, 95, 46, 8 Keep the Same Billable Hours Average Hours Billed in 575 In, firms 7% 63% hours billed Keep current hours billed hours billed Billing Total Market Billing in Billing rates in Total Revenue In, firms 8% No Change Total Spend NaN NaN NaN NaN
13 Regional ediscovery Coordinators Head Count Average Head Count 5 The market employed individuals in this role in. Compensation Historical Trends In, firms 78% % 5 market-wide new positions in head count Keep current staffing levels head count Compensation Projection , 38, 5,, Data from 7 to indicates mean ( ) average only. In total, firms spend.7 million on Regional Manager salaries in. Billable Hours 65, 3, 5,, 9, 3, 7% 9% Keep the Same Average Hours Billed in 6 In, firms % hours billed Keep current hours billed hours billed Billing Total Market Billing in Billing rates in Total Revenue In, firms No Change Total Spend,,,,,7, 5,,
14 Litigation Support Project Managers Head Count Average Head Count 5 The market employed 4 individuals in this role in. Compensation Historical Trends In, firms 9% 7% % 65 market-wide new positions in head count ( 3) Keep current staffing levels head count Compensation Projection ,5,, 9, Data from 7 to indicates mean ( ) average only. In total, firms spend 5.3 million on Project Manager salaries in. Billable Hours 65,,, 85, 76, 7, 77% 3% Keep the Same Average Hours Billed in 5 In, firms 36% 64% % hours billed Keep current hours billed hours billed Billing Total Market Billing in Billing rates in Total Revenue In, firms 7% % No Change Total Spend 83,, 9,, 53,, 58,, 3
15 Litigation Support Specialists Head Count Average Head Count 5 The market employed 8 individuals in this role in. Compensation Historical Trends In, firms 38% 6 % 85 market-wide new positions in head count ( 3) Keep current staffing levels head count Compensation Projection , 9, 93, 8, Data from 7 to indicates mean ( ) average only. In total, firms spend 3.3 million on Specialist salaries in. 5, 9,75 75,5 7,5 7, 83,5 9% % Keep the Same Billable Hours Average Hours Billed in In, firms % hours billed Keep current hours billed hours billed Billing Total Market Billing in Billing rates in Total Revenue In, firms 4 58% No Change Total Spend 5,,,, 33,, 4,, 4
16 Litigation Support Analysts Head Count Average Head Count 3 3 In, firms 44% 54% The market employed, individuals in % this role in. market-wide new positions in head count (, Avg ) Keep current staffing levels head count Compensation Historical Trends Compensation Projection , 67,5 68,5 6, Data from 7 to indicates mean ( ) average only. In total, firms spend 4.9 million on Analyst salaries in. 84, 75, 67, 65, 5, 68, 88% Keep the Same Billable Hours Average Hours Billed in 6 In, firms 36% 64% % hours billed Keep current hours billed hours billed Billing Total Market Billing in Billing rates in Total Revenue In, firms 43% 57% No Change Total Spend 5,, 7,, 4,9, 5,7, 5
17 Respondent Profile We surveyed firms Participant Titles Headquarters* AmLaw Ranking 8 CKO CIO Director Manager 9 of participants are the heads of their respective departments. 5 New York San Francisco Los Angeles Atlanta Boston Chicago Columbus Pittsburgh Philadelphia Columbia Dallas Washington, DC Top 5 5 to to Other Market Assessment: Law Firm Litigation Support * Some respondents' firms operate offices distributed across the United States, and therefore have no headquarters. 6
18 About The Cowen Group The Cowen Group is the premier provider of staffing and recruiting for ediscovery, Legal Technology, Litigation Support, and Information Governance professionals. Our clients nationwide and throughout Europe include 85 of the AmLaw as well as 5 Fortune 5 companies and some of the most prominent vendors and providers in the legal services industry. To support our clients in their personal and professional growth, The Cowen Group hosts over 5 executive peer micro-events nationally. These thought leadership workshops are designed to bring together Legalists, Technologists, Consultants and Executives in a roundtable environment to accelerate their advancement in this rapidly evolving space. Networking and collaborating with the right peers and professionals elevates the careers of the talent we represent and offers The Cowen Group unparalleled insight into the trends and market forces that are shaping our industry. The Cowen Group East 43 Street, Suite 66 New York, New York 7 () 66 5 info@cowengroup.com TCG Advisory Services () surveys@cowengroup.com 7
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