What is the Australasian Legal Industry’s Blueprint for Change?

Preliminary findings from the 2016 ALPMA/InfoTrack ‘Adapting to the Changing Legal Landscape’ research

The Australasian legal profession is slow in adapting to the changing legal landscape, according to the new research conducted by the Australasian Legal Practice Management Association (ALPMA) and InfoTrack.

The research surveyed 163 firms across Australia and New Zealand in July.

Most respondents (74 per cent) believe the legal industry is reacting only when necessary, too slowly or failing to respond effectively to the external and internal factors transforming the sector.

To compound matters, close to half (46 percent) of Australian and New Zealand law firms do not have an effective firm-level blueprint to adapt to the changing legal landscape.

Sharing the preliminary findings 2016 ALPMA/InfoTrack Adapting to the Changing Legal Landscape ahead of their launch at the 2016 ALPMA Summit, ALPMA President Mr Andrew Barnes warned legal leaders not to be complacent about change.

“The one thing we can be sure of is that the change we have seen in the Australasian legal industry over the past five years will not abate,” he said.

“Change can test your mettle. If your firm is not already adapting to change or you are not thinking about how to compete in what is essentially a new playing field, your risk compounds over time.”

The report also highlights the key change challenges firms are facing across people, processes and technology domains and the progress of firm initiatives to address these challenges.

“We know for a fact that the legal fraternity is resistant to change but change it must. As my colleague and leading intellectual property lawyer Philip Argy says technology is putting the fun back into law. And he is right, technology has replaced much of the humdrum of legal work freeing up lawyers to do what they do best; giving advice that adds real value. Nor can the profession continue to ignore the fact that technology is making the delivery of legal advice significantly more efficient, effective and profitable,” points out InfoTrack chief executive John Ahern.

Managing people continues to present the biggest challenge for law firms to address, with only 5 percent of respondents reporting they have no people-related issues.

Succession planning was the most common ‘people-related’ issue for firms (nominated 42 percent of respondents) – with this particularly affecting small to medium sized firms, where 70 per cent nominated this as an issue.

“Succession planning has long been lurking on the horizon as a critical issue for law firms as baby boomers look to extract equity from their long-established practices. The changing landscape puts this firmly front of mind for many as the barriers to opening new firms disappear,” Mr Andrew Barnes said.

Despite this, only 14 percent of respondents have completed initiatives to address succession planning.

Other people-related challenges include performance management, recruitment and difficulties in retaining staff and supporting people with stress and mental health issues. Interestingly, supporting diversity and retaining women in the profession was only seen as a challenge by 4 percent and 2 percent of firms respectively.

Manual & Inefficient Processes

Most firms (78 percent) believe that there is ample opportunity to change their firm’s businesses processes, with manual, inefficient and old-fashioned processes holding back many law firms.

Resistance to change from partners and staff was reported as a key barrier to firm process-improvement initiatives by many respondents, particularly those in medium to large firms.

“Change is always difficult, particularly in a risk-averse, conservative environment like the law. Law firm leaders need to learn how to effectively overcome this resistance and implement modern work practices if they want their firm to thrive,” Mr Barnes said.

“Savvy law firm managers are skilling themselves up to become change agents and successfully drive through process improvement initiatives at their firms,” he said.

Most process initiatives are only at embryonic stage, aside from remote and flexible working which has been implemented by 44 percent of respondents.

The majority of firms have no plans to adopt legal process outsourcing, process improvement methodologies or best practice processes.

Firms struggling to keep up with technology

The struggle to keep-up with technology is the number one technology challenge for most law firms in 2016.

While 38% of respondents believe they are at the head of the pack for technology adoption compared to other firms, most firms believe they are in the middle or at the back of the pack. Smaller firms were the only ones to rate themselves as well ahead of the pack.

“Keeping up with technology changes and particularly integrating them into their own systems is certainly the most common cause of concern among the legal firms we work with,” Mr Ahern added.

“No one doubts the power of change for staff, clients and effectiveness, but it can be overwhelming at the rate the legal industry is moving, not to mention the pace of new technology.”

“Our best advice is to not let this overwhelm you,” he said. “Review what is necessary for your firm, do your research and develop a plan of attack.”

The struggle to keep up with technology is exacerbated by common challenges including the include lack of in-house IT capability, non-integrated systems and a lack of technology investment. Data and cyber security challenges were rated as an issue by 17% of respondents, with half of these from small firms.

Creating a Blueprint for Change

The 2016 ALPMA Summit ‘A Blueprint for Change’ will be held in Melbourne from 7 to 9 September 2016. More than 30 local and international speakers will provide practical advice and insight on the people, process and technology initiatives law firm leaders can adopt to ensure their firms thrive in the changing legal landscape.

The 2016 ALPMA Summit also features the largest legal management trade exhibition in the Southern Hemisphere and two Masterclass workshops on change management and legal project management.

InfoTrack is the Principal Partner for the 2016 ALPMA Summit and can be located at stand 35 at the Summit

To find out more, please visit: www.alpma.com.au/summit

2016 ALPMA/InfoTrack Australasian Changing Legal Landscape research report is available now.