Flexible lawyering key to firm survival, expert says

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As Australian firms continue to grapple with strategies to stay ahead of the evolving legal landscape, the UK legal market sits streaks ahead, having adapted to the NewLaw threats of utilisation and head count.

Jarred Hardman, founder of Crowd & Co, ventured to the UK to find out how the Aussie legal market compares.  In the UK, he said, recruiters are now including a section for contract lawyers in salary surveys, and he thinks Australia will follow suit.

“Within the legal community, the concept of being a contract lawyer is actually a chosen career path now; it’s not looked down upon as though they are second-rate lawyers,” Hardman told Australasian Lawyer.

“You start to see a really strong trend that this is permanent and an accepted way of being a lawyer.”

In Australia, 74% firms are still struggling to keep staff fully utilised: it was the top challenge listed by law firms in the Commonwealth Bank legal market pulse survey back in February of this year.

“To maintain profitability when there is price pressure, you have to start to have a look at how either you can increase utilisation, reduce your staff or change your staffing strategy to take advantage of contract lawyers and to have a flexible labour force,” Hardman said.

While utilisation and head count appear to be the major drivers for firms looking to maximise profitability, Hardman said it’s a bad situation for the new generation of graduates, who are no longer looking to stay at a firm for life as they once did.

“More and more people are looking for flexibility,” he said.

“You’ve got a new era of lawyers who are now looking at their options.”

The path to partnership is not what is once was, he said.

Compared to the UK, the economic environment has been more stable so the necessity for the legal industry to be early adaptors of NewLaw offerings wasn’t there.  But now, Hardman said, the industry is looking more and more competitive.

The 2015 law firms survey by PwC in the UK, said that firms who can successfully implement a variable cost base will have a significant competitive advantage:

“Firms are starting to adopt diverse organisational structures alongside the traditional pyramid model, using paralegals and technology to drive more efficient delivery and flexible lawyer to shift the cost base from fixed to variable.  Greater use of contract lawyers, both internally and as a client service, is allowing firms to flex fee earner numbers according to activity levels; this will over significant competitive advantage to those firms who are able to implement the model successfully,” the report said.

Hardman said that Australian firms are aware that the industry needs to evolve and with MinterEllison having launched ‘Flex’ and AdventBalance merging with Lawyers On Demand, flexible lawyering is dominating the evolution.

“What we need to do, as an industry, is remove the noise and stop bundling every “new” model into the NewLaw definition,” Hardman said.

“[In the UK] NewLaw is now a part of the legal eco-system and understood by the market, both lawyers looking for an alternative career path, law firms and corporations looking for a way to better manage utilisation and tight legal budgets.”
 

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