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Many firms ill-equipped to manage financial and employee challenges, report finds
Although legal workplaces said they are “well aware” of the challenges facing their businesses, many are not equipped with strategies to improve their financial positions, employee retention, or business operations, according to a Dye & Durham report.
Naomi Neilson
In the report, produced with the Australasian Legal Practice Management Association, 128 firms were asked to consider what strategies they either already have in place or are planning to action in the next year to respond to changes in the legal profession.
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While firms have invested in technology, cyber security protections and business development, strategies to improve their financial and operational futures have fallen away. Concerningly, 12 per cent of firms reported they do not have any strategies to secure their future.
Reflecting on five years of data, the report found only 30 per cent of firms have adopted financial strategies each year since 2018. Meanwhile, during the same period, operational strategies “quite considerably” decreased from 60 per cent to 30 per cent.
On the other side of that, however, firms have invested in plans to improve client acquisition and business development. This included fixed-fee arrangements from 51 per cent of firms and access to senior legal professionals from 68 per cent.
“In a competitive legal market, firms are looking to provide clients with increased value for money and services in an attempt to both attract and retain clients,” the report indicated.
More than half of firms reported they see the value in adding technology as a strategy for clients and will do so in the next year, while a further 68 per cent said they can see how leaning into technological advancements would be beneficial to clients.
“With the rapid introduction and market penetration of new technology coupled with increasing client demand and expectations for both delivery and pricing for legal services, plus an increasing level of comfort by firms to use AI over the coming years, we may see that technology adoption quickly becomes a competitive advantage to attract and retain clients in the future.
“Firms [that] are agile, nimble and proactive in this space may see quick wins,” the report said.
As for employment retention, just 32 per cent of workplaces have a strategy in mind, compared to the 70 per cent hoping to hire. This indicates an “overwhelming challenge” to attraction and retention.
“Whilst optimism is high on the recruitment and growth front, the reality and success of these recruitment endeavours, in a talent-short market, will likely pose challenges for firms,” the report added.
When asked what would persuade them to either join or remain at a firm, respondents said they value work/life balance, flexible working commitments, new technology, organisational culture and increased remuneration. The latter two were recognised as most important.
For 81 per cent of employees, technology was recognised as a tool that “improves work/life balance”. However, firms are still struggling to find the time, cost and resources for implementing new technologies.
This does appear to be an area of improvement, with the survey indicating that the concern about a lack of resources has decreased from 60 per cent to 32 per cent. A fear of change has also decreased from 31 per cent in 2022 to just 9 per cent in 2023.
“This certainly indicates that the attitude within firms towards technology has changed over the past four years as firms become more confident in using technology and leveraging its benefits,” the report said.
