#auslaw: Stepping into a new era

By Jerome Doraisamy|21 January 2020

The modern legal marketplace continues to evolve – both organically and in response to environmental shifts that impact upon our profession. Here, we explore some of the biggest issues and trends from the year that was and how they will affect the year to come.

While the Australian legal profession is broken up into seemingly diverse segments – BigLaw, boutique, the bar and in-house – the issues, trends and moments they face all come back to the question of how to navigate daily practice in a professional environment that is ever-changing. This past year has seen some fascinating discussions and moments come to the fore that, as we enter a new decade of the 21st century, will continue to shape the nature of legal practice.

The Lawyer X scandal has, of course, been the most explosive news story for Australia’s legal profession this year – and is possibly the most extraordinary such saga for our nation’s lawyers in some time. However, we have opted not to cover it as part of this feature for two reasons: one, the Victorian-based royal commission into how and why Victoria Police registered a criminal defence barrister as an informant remains ongoing (as of the time of writing), and two – perhaps more importantly – in spite of its incredulity, Nicola Gobbo’s actions are not reflective of our legal profession (as our bar associations have been quick to remind us), and thus the lessons to be learned from the inquiry will not necessarily be applicable or commensurate for broader, more consequential marketplace trends in law.

Instead, we focused on the professional, financial, managerial, legislative and environmental matters that have influenced the practice and business of law in 2019 and will continue to shape the legal profession in 2020.

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To explore these expansive issues, we spoke with Greenpeace Australia general counsel Katrina Bullock, Brisbane Family Law Centre director Clarissa Rayward, Governance Institute of Australia CEO Megan Motto, Swaab managing partner and Minds Count board director Mary Digiglio, UTS dean of law Professor Lesley Hitchens and Maurice Blackburn national head of class actions Andrew Watson.

IN-HOUSE: Learning to do more with less

When we speak with corporate counsel, one of the first issues being faced that they flag is how budgetary constraints have forced them to explore new ways of delivering effective services.

From the perspective of Ms Bullock, a weak global economic outlook and slowing growth in our national economy have “inevitably caused” a number of organisations to tighten their purse strings”.

“In the civil society space, a raft of new electoral legislation across multiple jurisdictions has increased the compliance burden for charities, not for profits and unions,” she outlines.

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“Compliance with these new requirements is incredibly time-consuming for in-house lawyers. Resources across the sector are being redeployed away from impactful campaign-related work to respond to the changes.”

Increased regulation and compliance burdens in this space have also prompted close collaboration between legal advisers in the civil society sector, she explains.

“Legal teams across different organisations are increasingly looking at ways to pool resources and, where appropriate, work together to respond to the threats and opportunities within the sector. This year has reinforced the value of sector-wide collaboration,” she says.

However, increasing budgetary constraints “naturally prompt innovation,” Ms Bullock notes.

“It has become more important than ever for in-house legal teams to embrace new, timesaving technologies and empower their internal clients to make decisions using legal checklists and resources, without engaging the legal team on every contract or issue.”

Elsewhere, she says that in-house teams are restricting their spend on external advisory work and scrutinising legal bills.

“There appears to have been stronger uptake in billing software which analyses external legal spend and flags potential queries,” she muses.

“The billing software can usually be tailored to the organisation's spend parameters – for example, only allowing up to two external lawyers from a firm in the same meeting or flagging longer-than-expected contract review time entries.”

Looking ahead, GCs who embrace tech will be poised for success in 2020, Ms Bullock determines.

“Time management software and workflow platforms have the potential to streamline processes and generate data which can help in-house legal teams evidence their value within an organisation. It’s become easier than ever to work remotely and this yields a number of benefits: to an employee’s wellbeing, the environment and their hip pocket,” she says.

BOUTIQUE: Balancing the many different hats

Lawyers who run boutique firms often have to be “doing a bit of everything”. As Ms Rayward explains, this can be both advantageous and challenging.

“It’s an advantage, because where I think small firms and boutiques have significant advantage in the marketplace is that we’re so nimble, because the person in charge can quickly make decisions, can try things if they don’t work, change things, and there isn’t the same sort of corporate machine that sits around bigger organisations where it’s much harder for them, I’ve observed, to implement and change things because it needs to go through, often, a committee decision-making process,” she says.

“The disadvantage with the wearing many hats is exactly that. You are constantly wearing many hats, and those hats pull you in different directions. What I’ve observed within the small and solo firms space, that again, I think is starting to set it aside, and it’s got some real strength at the moment, is collaboration between firms and a real openness in terms of sharing of information and resources between firms.”

In striking the right balance, boutique firms are growing in non-traditional ways, Ms Rayward identifies: “Not in the sense of adding lots of fee owners and people and having that distinction between professional staff and perhaps administrative staff, but growth through products, growth through technology, and grow through partnerships, and partnerships with different firms doing different areas of law, or even the same areas of law, but in different locations.”

“I think the idea of growth in the small and boutique space is perhaps different than it might be in a larger or more traditional space,” she surmises.

This is a real strength, she continues.

“We’re seeing a lot of niching happening, a lot of expertise being built in that space, and very competitive when it comes to price. A lot of these smaller firms have moved to fixed and value pricing models, which the marketplace is responding really to. So, from my perspective, there is a lot of energy in that space,” Ms Rayward says.

Moreover, there are “many more women” moving towards small firm ownership as compared to men, Ms Rayward observes.

“As a result, we’re starting to see different business models arising, often driven by the different needs that women have of balancing their hats outside law, particularly as parents,” she says.

Overall, she concludes, “it’s a pretty positive space to work in at the moment.”

“It’s a collaborative space, and I think there’s a lot of good things going on,” Ms Rayward says.

GOVERNANCE: A renewed focus on compliance and ethics

The effects of the Hayne royal commission’s final report are still being felt, given the focus on addressing cultural failings in corporate sectors, says Ms Motto – especially given the emphasis on corporate culture as a “root cause” of problems.

“Many law firms have clients in the financial services sector and have been assessing the impact of the commission’s recommendations. Corporates are currently thinking about board accountability and clarity of management responsibilities and incorporating ‘non-financial’ measures into remuneration incentive structures,” she argues.

Revamping the corporate environment will be even more challenging, she continues, given the wave of post-royal commission legislative reform in the pipeline for the coming two years.

“Given the size of the reform program, consultation periods are likely to be short and will require fast turnaround times. Non-royal commission-related legislative reform is likely to take a back seat,” Ms Motto says.

A key lesson for firms and legal teams, Ms Motto says, is to appreciate the need for a renewed focus on culture, ethics and governance.

The commissioner recommended that financial services boards assess their culture and governance, identify any problems, deal with those problems and determine whether changes have been effective,” she reflects.

“From a governance point of view, there are also some important issues around the importance of managing non-financial risks. ASIC’s October 2019 report on director and officer oversight of non-financial risk is a must-read for all governance and risk professionals and their advisers,” Ms Motto says.

Another fundamental takeaway is the need for compliance and enforcement of the law, she adds.

“This immediately puts legal teams, internal and external on notice. Regulatory scrutiny is now far greater and more proactive than it has even been across sectors. The aged care commission has also exposed critical failures in governance, operations and compliance that have laid the sector open to far-reaching legal consequences,” she outlines.

“For legal teams and law firms, there are key messages here on the need for their diligence and oversight to ensure sound governance and compliance frameworks, monitoring systems and safeguards.”

The profession will do well to bear in mind, Ms Motto points out, that the latest Ethics Index from Governance Institute saw lawyers perceived by Australians as one of the lowest 10 occupations for ethical conduct.

“It would be good to see this increase in 2020,” she remarks. 

An ethical framework must sit at the heart of governance structures to guide, rather than direct, its decision-makers while maintaining organisational integrity, Ms Motto concludes.

“The framework serves as a common and authoritative point of reference for all in the organisation and gives shape to organisational culture,” she says.

“This framework guides directors, executives and employees alike through the ‘Can we? Should we?’ decisions they face every day. Lawyers should consider the questions ‘Can we? Should we?’ as questions for their clients rather than ‘Is what I am doing in accordance with black letter law.’”

BIGLAW: The inextricable link between wellness and workplace culture

Corporate governance concerns flagged by Ms Motto then extend to the personal, professional and environmental wellbeing of employees, argues Ms Digiglio (who – for transparency’s sake – is, alongside this writer, a Minds Count board director).

Across the legal profession, the Hayne royal commission (as well as the criticism levelled at law firms) has shone a spotlight on institutions that walk the talk on promoting healthy workplaces, she says.

“The aftermath has applied pressure on legal organisations to critique the expectations placed on individuals and on teams and to play a more active role in work allocation on major projects,” she notes.

“It has highlighted that despite the profession’s commitment to promoting better mental health and creating ‘well’ cultures, when push comes to shove, many organisations are still falling well short, despite apparent commitment.”

Change does not come without growing pains, as Ms Digiglio was reminded of earlier this year, when the firm refurbished its premises to have a “dynamic and funky hybrid open-plan environment”. The project, she reflects, was not “without resistance and challenge”.

“It has been an eye-opener: appreciating the impact of workplace change from those who have (in other contexts) been progressive and innovative,” she muses.

“It has highlighted to me that at least in our firm, there is still a degree of conservative thinking around the physical environment some of our people think they must have in order to be an effective lawyer.  This is despite the top-tier firms who have made similar change well before us.”

However, despite such growing pains in enforcing change, there has been a growing awareness of the importance of workplace culture in the holistic wellness of staff, she says.

“More firms are taking active steps and owning responsibility for the care of the ‘whole’ person, not just the professional aspect of people,” Ms Digiglio observes.

“The evolution of bringing the ‘whole person’ into remit of the firm’s ‘people and culture’ function is a positive development for the profession's commitment to better mental health across the board, at all stages of one’s career and irrespective of one’s role in a legal organisation.”

Large firms will continue to be challenged by those who “fear the interplay” between wellness and a successful workplace, she predicts.

“While we have come so far in this space, I remain aware that when leaders are challenged with specific incidents of mental health in their firms, there may be a tendency not to ‘walk the talk’,” she posits.

“In my view, this is because of a combination of fear of the unknown, concern about the impact of the incident on their practice, ignorance of the issue and how to assist in its management, lack of emotional intelligence and arrogance.”

Mental health first aid, ultimately, has to become a compulsory prerequisite to holding a practising certificate, she submits.

“Culture is all about behavior and environment. Those firms who require their people (as opposed to make education available) to become better educated in both physical and psychological human challenges will stand out as employers of choice,” she said.

EDUCATION: Understanding future roles for lawyers

For Professor Hitchens, there were numerous topics that shaped conversations around legal education in 2019, most notably the incorporation of technology into curriculums.

“What I see developing is recognition of the need for a deeper understanding of the appropriate and responsible use of technology. As lawyers, we have to bring our professional ethical framework to technology as well,” she explains.

“In a different context, ‘robodebt’ provides a telling example of what happens when the automation process itself is designed badly; the legal implications are not properly considered; and, the human interface is not thought through.”

Elsewhere, the conversation around evolving professional skills continues, Professor Hitchens says.

“The expectations are changing, becoming more sophisticated, broader, such that we need to be thinking about skills or competencies such as process management, people management and emotional intelligence, and managing client relationships,” she says.

Such matters lead to an emerging conversation, she posits, about a broader understanding of the future roles for lawyers.

“For a long time, we have lived with the traditional roles of ‘solicitor’, ‘barrister’, but, certainly, within law firms this is going to change, but we don’t yet have a clear view of those roles – the skills needed and the career path.  However, they are emerging,” she submits.

Such trends create challenges for resourcing and curriculum design, Professor Hitchens notes, but a more existential challenge for educators is deducing what a syllabus should be offering moving forward.

“As dean, I am in contact with members of the legal profession across all branches, and I think in some quarters the view of what constitutes ‘the study of law’ can be limited, so that subjects that encourage broader critical thinking and a better understanding of the way law works in practice, may seem at first glance to be well removed from the ‘Priestley 11’ and are not seen as ‘real law,’” she says.

“For example, many law schools include electives that may look at gender and the law (the role gender has in the development and application of law). Subjects such as these are important not only in providing a richer understanding of our legal system, but also in building complex legal thinking.  The latter a skill, much needed, as the practice of law changes.

“As legal practice changes, I think it is important that there is acceptance that ‘the study of law’ – knowledge and skills – may look very different from the legal education that some of us would have experienced.”

Law schools need to respond to such change in ways that are conducive with their strategic goals, research strengths and idiosyncratic student cohort, Professor Hitchens argues.

“It is important that we have diversity – not a single uniform view of what a law school does.  However, we can do more to share experience and support one another. We need to remember too that law school is only the start of a process of lifelong learning and development. Continuing development is a strong feature of the legal profession and will increase in importance,” she says.

CLASS ACTIONS: Responding to shifts in the regime

There has been a bevy of big moments in the class actions space in Australia this year, Mr Watson says.

These include – but are not limited to – “the successful outcomes for plaintiffs in the Queensland Floods and Transvaginal Mesh trials; the successful settlement of the long-running VW Dieselgate matter; the endorsement in Myer of market-based causation and the use of event studies in shareholder class actions;  the ALRC’s report and its confirmation that in broad terms the system is operating well and its recommendation for the introduction of contingency fees; the introduction of legislation permitting the Supreme Court of Victoria to make a contingency fee order; the guidance offered by the AMP and BHP decisions regarding the resolution of multiplicity disputes; the High Court’s rejection of s.33ZF as a source of power for common fund orders,” he lists.

Reflecting on the year that was, Mr Watson says the class actions system continues to provide “real remedies” for those affected by mass wrongs.

“The competitive landscape after a flurry of new participants and activity is settling down and contingency fees in class actions now look more likely,” he says.   

“The greater clarity on loss issues in shareholder actions as a result of Myer is a welcome development as is the recognition in AMP and BHP of the advantages to group members in no-win, no-fee arrangements.

“The High Court’s decision in regard to common fund orders was disappointing but may have no long-term adverse impact if contingency fees are introduced and if courts make common fund orders at the settlement approval stage.”

The latter, he notes, will mark a significant hurdle for lawyers in this space next year.

“Apart from the usual challenges associated with running hard-fought large-scale litigation, the particular challenges next year will be responding to the High Court decision on common fund orders and sorting through the practical implications of the Myer decision in future legislation,” Mr Watson tells us.

“The single greatest opportunity to make a good system better is the implementation of contingency fees subject to court supervision in Victoria.”

But, for lawyers working in this space, there remains the underlying imperative to ensure vulnerable persons can seek the redress they both need and deserve, he says.

“[The legal profession can help by] ensuring that the focus of the class actions regime remains providing real remedies for those who have suffered mass wrongs,” Mr Watson concludes.

Conclusion

2019 was an eventful and consequential year for Australia’s legal profession. 2020 promises to be no different. As always, the team at Lawyers Weekly will have ears to the ground, ensuring that our practitioners, professionals and students are equipped with the tools they need not only to succeed but also better understand and appreciate the nature and operation of law as we enter a new decade.

#auslaw: Stepping into a new era
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