By Warrick McLean, ALPMA National President and General Manager, Coleman Greig Lawyers
The focus of our conversation was the recent press coverage surrounding the demise of the broadsheet newspaper industry. Who would have ever thought ten years ago that Fairfax would have quoted this in its own newspapers: 'It is virtually certain that physical daily newspapers will go the way of dinosaurs' ?
A younger Principal was able to observe what was happening in that industry and then applied those learnings towards the legal sector, and in particular to our own firm. Clearly this Principal is eager for our firm to be ahead of that pack, and not one of the dinosaurs.
He began to raise various questions that lead us to reflect on significant changes that have occurred in numerous sectors in Australia over the last few years. For instance the dramatic change and decline in the fortunes of the manufacturing industry. The strong impact of the high ‘Aussie dollar’ on our exporters. The turbulence taking place in the Australian airline market. The downsizing within the government sector. Many large and small companies have collapsed, leaving thousands without jobs. Put simply; Australia’s challenging two speed economy.
Achieving profitable growth in law has been a challenge in recent years.
At the recent ALA Annual Conference and Exposition in Hawaii, a presenter from consulting firm Altman Weil suggested that in the US, “3% is the new 6%.” He went on to suggest that law firms can no longer expect to grow by simply increasing hourly rates, highlighting that clients will simply walk.
Another colleague recently attended a practice management conference in London and reported that UK firms are no longer focusing on winning business from prospective clients as it’s all too hard and costly. Rather these firms have shifted their focus towards growing a greater ‘share of wallet’ from their existing clients.
There are other various internal pressures continuing to brew within the legal profession.
For instance a growing number of law firms having to manage ‘baby boomer’ partners and the subsequent succession planning issues; top tier firms are becoming Australian divisions of global operations which in turn is creating its own effects; the creation of ‘new model law firms;’ and the ongoing challenge of attracting and retaining talent. All of these internal industry pressures when combined with what is occurring in the wider global economy creates the “current state of play” that has the makings for a challenging future unless the legal profession actively responds to market pressures and embraces the opportunity to innovate. Innovation and the ability to change quickly in an industry that is inherently conservative will be a significant challenge for some firms.
Has our industry’s inherit conservatism led to complacency in our industry?
Will underperforming firms be able to transform to remain competitive in the ‘new world’?
Put simply many firms will not change and some may in fact simply “turn off the lights.”
As many consultants to the industry keep on reminding us, our clients are now calling the shots. Not only in how work is completed but also how the work can be charged. Prospective clients are now becoming increasingly savvy about selecting a legal provider. It is essential now, more than ever, for firms to listen, understand and act on client needs.
Where are you going?
• Do you have a clear vision?
• What do you want to be famous for?
• How will you measure your progress?
If they can’t answer – or you get inconsistent replies – then it is time to step back from the daily grind and make sure your firm (and you as one of its leaders!) are better positioned to succeed in this challenging environment and not go the way of the newspapers and the dinosaurs.