2024 Australian legal industry considerations
17th Jan 2024
In recent years, the legal landscape in Australia has undergone significant transformation, driven by advancements in legal technology and evolving client expectations. As legal professionals adapt to these changes, it is crucial to explore key trends and strategies that can enhance legal operations, streamline practice management, attract and retain top talent, and explore new revenue streams within legal services.
Revenue generation and cost control
Cost control is paramount, with legal spend management a key focus for firms and legal departments. Thomson Reuters’ 2023 Australia: State of the Legal Market Report found that indirect expenses increased from 7% (FY22) to 14.3% (FY23). Marketing and business development and knowledge management were the top two expense items, at 47.4% and 21.7% respectively.
To gain competitive advantage, organisations are diversifying their service offerings, exploring alternative fee structures, and adopting technology-enabled solutions, particularly those that not only streamline billing processes but also provide actionable insights into expenditure. By utilising spend management solutions, legal professionals can:
- Free up time and resources normally spent on admin tasks like reviewing invoices, reporting expenses and chasing payments;
- Capture and manage competitive RFPs and multiple fee structures including fee estimates, fixed and capped fees;
- Formulate strategic plans and manage and optimise budgets; and
- Maximise outside counsel and vendor value by benchmarking price and performance metrics.
By leveraging the vast amounts of data generated in delivering legal services, legal professionals can make data-driven decisions for driving profit, efficiently allocating resources, increasing productivity and enhancing client experience.
Attracting and retaining talent: The human element
Attracting and retaining top-tier talent has become increasingly competitive.
According to Thomson Reuters' Tech & the Law 2023 report, 71% of Australian law firms and 41% of corporate legal departments identified this as their top priority for the next 12 months. The top challenges for talent retention have been identified by Lawyers Weekly as:
- ‘Breadth, complexity and volume of work (22 per cent experiencing this);
- Workload is too high (22 per cent);
- Regulatory and political pressures (22 per cent);
- Risk management (21 per cent);
- Exhaustion and burnout (21 per cent);
- Under-resourced legal team (20 per cent);
- Inefficient workflows (20 per cent);
- Increasing concerns about a recession (19 per cent);
- Introduction of new legal technology (18 per cent);
- Lack of legal technology (18 per cent); and
- Legal technology not living up to expectations (18 per cent).’
Thomson Reuters’ Tech & the Law 2022 report showed that almost one in three legal professionals were prepared to leave their firm for one that was more innovative. Law firms and legal departments can set themselves apart by exploring innovative approaches to accommodate flexible work arrangements, offering professional development opportunities and embracing technology that empowers legal professionals to do their best work.
Selecting the right technology: A strategic imperative
The legal market is increasingly adopting cloud-based technology solutions that streamline case management, document collaboration, and workflow automation. Legal professionals are recognising the value of integrated platforms that enhance collaboration among team members and improve client communication, leading to enhanced operational efficiency and client satisfaction. However, choosing the right legal technology is a critical decision that impacts the entire legal ecosystem.
Tech & the Law 2022 also showed that 23% of legal departments had failed in a legal technology implementation project, with 53% saying that choosing the wrong technology was the primary cause of failed implementation, followed by change management (33%) and budget constraints (22%).
Legal professionals are faced with a plethora of options, with an increasing number of vendors entering the market in recent years, each promising unique benefits. When selecting a technology platform or solution, organisations should ensure that they:
- Clearly define objectives and goals, aligning them with the firm’s long-term strategy;
- Conduct a comprehensive assessment that addresses current and future needs;
- Engage key stakeholders in the decision-making process to gain stakeholder buy-in and increased user adoption;
- Consider the total cost of ownership, including the initial purchase or licensing costs, user training, ongoing maintenance, support, and potential future upgrades;
- Prioritise technologies with the highest standards of security and compliance; and
- Evaluate a vendor’s reputation and reliability, as well as its future development plans against the organisation’s long-term strategy.
It is important to understand that technology solutions are not plug-and-play; each platform offers features designed to be tailored to your firm’s specific requirements. Successful transformation begins with a clear understanding of organisational needs and a strategic approach to technology selection, so it is essential to conduct a thorough assessment of a platform’s long-term impact and its functionality, scalability, and compatibility with existing systems to ensure seamless integration.
Balancing optimisation and automation
Optimising current processes and workflows is crucial for law firms and corporate legal departments undergoing digital transformation. By not doing so prior to adopting new technologies, organisations risk:
- Amplifying inefficiencies and bottlenecks by automating inefficient workflows;
- Overlooking improvement opportunities such as enhancing client experience;
- Creating digital silos where new technologies operate independently of existing workflows;
- Implementing technology on a foundation of inaccurate or inconsistent data, compromising the effectiveness of data analytics and AI tools; and
- Scope creep, budget overruns, delays in implementation and poor user adoption during digital transformation initiatives.
Optimised processes make organisations more agile and responsive to changes in the legal landscape. When workflows are efficient, it becomes easier to adapt to new technologies, regulatory changes, and evolving client expectations.
The imperative for the legal industry is clear: embrace change, adapt strategically, and chart a course for unparalleled excellence. This transcends the mere adoption of technologies – it includes optimising existing workflows and processes, cultivating a workplace that nurtures talent, and placing client needs at the forefront of your organisation's transformation.
This is an edited version of an article from Legal Practice Intelligence published by Novum Learning Pty Ltd.
The ALA thanks Nicole Catabran for this contribution
Nicole Catabran has extensive experience in digital transformation across multiple industries, particularly in the legal industry. Previously at PwC, she is now the Principal Consultant for the Australia and New Zealand region at Jalubro.
The views and opinions expressed in this article are the author's and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).