Australasian law firms are planning a multi-pronged attack to ensure they are ready for a digital, divergent and differentiated future—but many have a long way to go, according to the preliminary findings of research conducted by the Australasian Legal Practice Management Association (ALPMA) and LexisNexis.
The ALPMA/LexisNexis Preparing Australasian Law Firms for A Digital, Divergent, Differentiated Future research, to be launched at the 2015 ALPMA Summit on the Gold Coast in September, provides a compelling insight into the strategies Australasian firms are adopting in order to respond to the changing legal landscape and position their firms for future success.
“Firms are facing real challenges in addressing internal factors such as operational efficiency and technological improvements,” said Mr Andrew Barnes, ALPMA President and CFO of the Lantern Legal Group (which includes Sladen Legal and Harwood Andrews).
“Externally, the rapidly changing environment presents a challenge for law firms to differentiate themselves and win new business," he said.
Most firms will tackle these challenges within constraints of the partnership model, with only 13% planning to shift to a corporate-style leadership model, he said.
“Worryingly, 34% of law firms are operating without any kind of strategic plan, with most (66%) assessing themselves as either unprepared or only beginning to prepare for the future,” said Mr James Parker, Executive Director Management, LexisNexis.
The ALPMA/LexisNexis research highlights eight key strategies that many Australasian law firms plan to implement over the next three years:
1. Grow Target Markets
In a bid to grow and win new business, most firms (54%) will increase the number of target markets they address, and increase their geographic footprint (44%).
“This is an interesting approach in an already-crowded market,” Mr Barnes said. “Only 7% of firms say they'll reduce their target markets, however it is often a sign of strategic discipline when a firm decides to narrow its focus on a smaller group of promising markets and clients.”
2. Expand Service Offerings
Many firms will expand their service offerings over the next three years, with 39% offering new legal services to market and nearly a third looking at introducing online service offerings.
“It is encouraging to see firms starting to examine different methods in delivering legal services, like online, particularly given the growing success of disruptors in this space,” Mr Parker said.
However, few firms (12%) think they are currently well positioned to embrace new ways of delivering legal services, Mr Parker said.
3. Implement New Pricing Models
“The move away from the billable hour is firmly underway with 45% of firms intending to offer more services on a fixed-fee basis,” Mr Barnes said.
Nearly a quarter of firms (23%) will offer more services using value-based pricing as well, he said.
“This is a real sign that the industry is listening to customer demand for better value from their lawyers,” he said.
4. Improve Workflow and Processes
Most firms (67%) are strongly focused on investing in improving workflow and internal processes, document management (50%) and practice management systems (50%).
“As firms look at their structure, business processes and technology, one eye has to be on how they will differentiate themselves from the rest of the market,” Mr Parker said.
Mr Parker said that there was a plethora of technology either already in-market or coming to market designed to optimise and automate various stages of legal service delivery.
“63% of firms are looking at Precedent Management in their legal service offerings and a small percentage of firms (9%) are actively planning to leverage artificial intelligence, over the next three years,” he said.
5. Adopt Flexible Working Practices
Firms are also open to innovation in their resourcing strategies, with 49% planning to adopt more flexible working practices.
"Hopefully we are starting to realise the benefits of a flexible work force," Mr Barnes said. “Some firms are already doing this extremely well.”
“Flexible working practices should no longer be a hand brake on advancement, particularly for lawyers returning after maternity leave.”
6. Focus on Business Development
“Law firms are becoming increasingly mature in their approach to business development, with 41% of firms planning to provide sales training to partners and lawyers, and 1% investing in professional business development resources,” Mr Parker said.
This recognises the fact that business development success is not some natural gift but a skill that needs to be taught, practiced and refined, he said.
7. Ramp-up Digital Investment
Most firms (59%) also expect to significantly ramp up their digital presence, investing in their on-line presence, social media and digital lead generation strategies.
“This result probably reflects the low baseline that many firms are starting from in terms of their current online presence,” Mr Barnes said.
Firms also plan to expand their client referral networks (48%), a tried and true method of generating new business for law firms, he said.
8. Extend Strategic Relationships
Firms will also expand their strategic relationships, choosing to collaborate with professional services firms (50%) and other non-legal businesses (41%)—over other law firms (26%).
A broad range of law firms (147) from across Australia and New Zealand participated in the research, sharing their plans for the markets they serve, their resourcing mix, marketing and business development strategies, internal systems and processes, legal services delivery model and strategic relationships over the next three years.
Key findings from the final report will be available from the LexisNexis stand at the 2015 ALPMA Summit from 9 to 11 September.