Improving productivity and pricing is the top concern for small and regional law firms across Australasia, and an expert says if this is not alleviated, their viability will be under pressure.
The Australasian Legal Practice Management Association (ALPMA) has undertaken comprehensive research across Australia and New Zealand that analyses how small and regional firms are adapting to the changing legal landscape.
It reveals that such firms are feeling constrained in their ability to effectively respond to these changes.
Mary Hockaday, ALPMA’s national board member and national learning & development director, told Australasian Lawyer
that small and regional firms are struggling.
“The traditional pricing model is around billing clients for the time spent at the end of the matter, and clients are increasingly not happy with this approach,” she says. “Many of the small and regional firms know that they need to change their approach but need advice about the best way to do this.”
George Beaton, the executive chairman at Beaton Research + Consulting agrees and says the market is turning into one where the power is with the buyers.
Very few law firms of any size or level of sophistication are equipped to deal with these changing conditions, he said.
The ALPMA survey asked small and regional law firms to identify the areas they most needed assistance in order to adjust to the shifting market.
The top five areas of concern were:
1. Improving pricing and productivity (82%)
2. Best practice in workflows (80%)
3. Motivating and managing performance (78%)
4. Retaining talent and succession planning (77%)
5. Positioning and differentiating their practice (76%)
“Smaller firms can be more responsive more quickly and more innovatively… But if we look at the survey we undertook, we see failure to address these will have a serious impact on a firms viability. In effect what would happen is they will disappear or band together,” says Hockaday.
She says it’s important that small and regionals start to leverage technological opportunities in order to keep up with and get ahead of their larger competition.
Clients are increasingly looking online to find firms that offer the specialisations they need, she says, which means that the small and regionals also need to be very lear about their brand.
“Going online isn’t as expensive as it used to be. If we say, what can firms do? Well they need to be open to change and be able to seek advice and embrace the challenges… The biggest mistake that firms do is nothing.”
Previously, Australasian Lawyer
spoke to Warren Riddell, a corporate advisory expert and partner at Beaton Capital about what law firms – big and small - should be doing to remain relevant in the market.
Like Hockaday, Riddell agreed that highlighting specialisations is important for the survival of law firms in new market conditions.
He says being sure-footed in what firms want want to be seen as and known for is an absolute must, and part of this will stem from understanding demand drivers.
“Unless they restructure their cost base they will halve their profits within the next 10 years. It’s massive,” Riddell says.
And Hockaday says this is even more pertinent for the small and regional firms, who typically have far fewer resources than their larger counterparts.
She says they’re a vital segment of the market and we can’t afford to lose them.
“They are very important because they’re working in a demographic and providing a service to a huge number of clients who are possibly more price conscious than the corporate clients and larger law firms would have,” she says. “The other side of things too is that a lot of the larger and top tier firms don’t have the same service lines as the smaller and regional ones have, like family law, criminal law and conveyancing.”
ALPMA has launched a program called Leading Your Firm
in order to be part of the solution and provide small and regional firms with access to valuable information and experts that will help them adapt to market changes.
The program includes a series of five webinars and three live-streamed events that firms can attend online at one of 18 regional hubs across Australia and New Zealand.
“I think the focus is often around cities because there are great opportunities to network and connect, whereas we use technology and live streaming to connect with members who can’t come to these meetings,” says Hockaday. “The focus on this program is to deal with their particular requirements.”