Increasing price pressure and customer demands for better value is the number one factor driving change in Australasian law firms, according to the 2014 ALPMA/LexisNexis Impact of the Changing Legal Landscape on Australasian Law Firms research.
“This reflects the fundamental shift in power to clients and a strong buyers’ market for legal services,” said Australasian Legal Practice Management Association (ALPMA) President and Financial Controller of the Legal Lantern Group Andrew Barnes. “The traditional law firm model has been built around billing clients for time spent on a matter. But client sophistication is growing and this, combined with the commoditisation of legal services and a plethora of legal providers increasing competition, means that clients no longer have to accept the status quo. Law firms need to work harder at understanding what represents value to their customers, ensure they can clearly differentiate their service offering from the next firm and price their services accordingly,” he said.
“There’s no doubt that we are experiencing a period of unparalleled and irreversible structural change in the Australian legal services industry,” Mr James Parker, Executive Manager, Practice Management at LexisNexis said. “In this transformational environment, where the level and rate of disruption will only increase, law firms and their leaders must prepare to embrace change and to innovate in order to stay relevant and competitive.”
• Despite the increasing price pressure from customers, only 18% of firms report a major focus on changing their pricing strategy. This increases to 25% for larger firms (with more than 75 employees).
• Most firms are however enthusiastically embracing technology, with this ranking as the number one response to the changing legal landscape for the second year in a row. 50% of respondent firms are making major investments in technology this year, an 11% increase on last year. Only 3% of firms (all small firms with less than 25 employees) are making no technology-related investments.
• Workflow, mobility and customer relationship management (CRM) are the top three technologies that law firms are investing in over the next 12 months. The majority of respondents are also continuing to invest in growth strategies (59%) and cost-cutting programs (58%) in response to the current environment.
• Change is ‘work-in-progress’ at law firms – but most firms satisfied with this. Where change is being made at firms, it is very much a work-in-progress, with most initiatives either currently being implemented or in the planning stage. Of those making changes, very few have completed projects. Only 9% of respondent firms have completed technology projects, 6% have completed cost-cutting programs and only 2% have completed growth-related initiatives.
• Despite this, the majority of respondents (58%) are satisfied with the rate of progress their firm has made in responding to the changing legal landscape over the past 12 months. Staff at larger firms are least satisfied with their progress to date, while mid-sized firm respondents are the happiest (71%).
The results of the research will be presented by LexisNexis at the opening session of the ALPMA Summit ‘Thrive and Prosper’, held from 27-29 August at the Melbourne Crown Convention Centre. Register here www.alpma.com.au/Summit