Marching on: What to expect in 2019
The year just passed was one of the busiest in law yet. It saw the introduction of new tech, the coming together of major legal players, the breakdown of others, and an amplified focus on better employee management.
With everything that’s happened, how are the next 12 months shaping up?
In this cover feature, we take a look at some of the big news items on the agenda in 2018, painting a picture of what to expect in 2019.
Technology was a pivotal focus point for both the private practice and in-house market over the past 12 months, with this set to continue in 2019.
Increasingly, law firms and organisations are looking to adopt greater processes to help them manage their matters more efficiently, so it’s understandable that they’re looking to lead the pack when it comes to implementing the latest and greatest.
Some of the tech terms thrown around include, but are not limited to: electronic billing/electronic case management, e-signatures, smart contracts, artificial intelligence, data mining platforms, e-filing, blockchain, e-discovery and legal research databases.
While serving different purposes in their own right, each of those listed above seem to have the common benefit of their users getting a problem solved faster and easier, hence the keen adoption rate over the past 12 months.
Of course as technology gets more intelligent with each passing day, this adoption rate is set to multiply even more over the next year, with 2019 likely to bring more tools we haven’t even heard of yet.
The good news is lawyers feel the benefits of tech and, despite past hesitation to move forward with the implementation of such tools (cue - robot lawyers), it is fairly safe to say that more are willing to put their fear aside, for the pros outweigh the cons.
In fact, BDO’s latest Law Firm Leaders Survey found a whopping 95 per cent of UK-based managing partners and senior partners believe their investment in tech would increase over the next five to 10 years, with 75 per cent expecting this investment to be substantial. Despite being a UK study, the trend is likely to resonate with local firms.
Information and document management’ was cited as the area of the business that would change the most by the application of new technologies, according to the survey. This was followed by ‘delivery of client services’ and ‘client communication’.
As lawyer and Columbia University LLM candidate Susan Wnukowska says, the idea of utilising tech comes from a desire to remove the grunt work away from lawyers, enabling them to assist clients in a more meaningful manner.
“For years, Richard Susskind has been calling on the legal profession to rethink the way it provides legal services in light of emerging technologies. While there is no doubt that the use of legal technology creates new complexities in the legal industry, these complexities do not necessarily spell the end of the legal profession,” she assures.
“Instead, they provide one of the first opportunities for the legal profession to redefine the work it does, and more importantly rethink how it does it.
“Legal technology may take over some of the traditional (and let’s be honest, often dull) work lawyers have performed in the past; however, it does not necessarily have to replace the profession if the profession is willing to adapt and find new and creative ways to utilise technology to provide more effective legal solutions for clients.”
Just like WWE’s infamous WrestleMania, 2018 saw a battle between law firm titans. With vast competition and a need to one-up each other, more law firms were looking to position themselves as being the champion to back.
As such, many in Australia’s legal market fought to offer competitive rates and bestowed a greater emphasis on nabbing the right people for the task.
This naturally saw the consolidation of many, especially those with a mid-tier offering. HWL Ebsworth Lawyers and TressCox Lawyers, McCabes Lawyers and Curwoods Lawyers, Russell Kennedy Lawyers and Aitken Lawyers, and DW Fox Tucker and Bradbrook Lawyers – to name a few.
The past year also saw international player MinterEllison integrate its South Australia and North Territory offices into the one fold.
With competition only going to continue to soar, could this be a trend that continues over 2019?
For Piper Alderman managing partner Tony Britten-Jones, it’s likely, but not to the same extremity.
Mr Britten-Jones’s firm merged with Norton Gledhill in 2017, suggesting he’s well-aware of the opportunities and conversely, challenges, of such a decision.
“We are open to the prospect of further mergers, but frankly, I think the prospects of a further merger in the short to medium term are remote simply because the opportunities to match two firms with complementary expertise, values and culture are rare,” he tells Lawyers Weekly.
“No doubt there will be further mergers, but I think that the level of merger activity seen over the past two years will not be as great over the next two years. Firms have been desperately trying to position themselves in spaces from which they can thrive and I feel that following the spate of mergers over the past 18 months there will be a period during which firms focus on consolidating their offering.
“However, disruption from technology and new competition will not slow and I believe there will be ongoing significant lateral movement between firms as lawyers seek out platforms which are more compatible with their practice, personal career development plans and values.”
Pipers’ Melbourne co-head Tim Clark offers a similar sentiment, saying that the acquisition of staff remains a key focus for many in a similar position going forward.
“Like many firms in the Melbourne market, we continue to focus on recruitment and retention of senior level lawyers across all our practice areas and we will continue to look at opportunities in Melbourne to strengthen our service offering in all [of the] firm’s major practice areas,” he says.
“… Of equal importance is retaining the talent in our existing teams both to service clients now as well as to develop as the future partners of the firm. Providing a clear pathway for their development was a driver for the merger and will continue to be a focus.”
Arguably the most newsworthy topic over 2018 was the prevalence of sexual harassment in the workplace. While perhaps the conversation took off as a result of allegations put forward against Miramax founder and producer Harvey Weinstein, it quickly trickled down into professions outside of Hollywood.
The business of law was by no means exempt from the MeToo hashtag, with many in the Australian legal profession speaking out about times they had been unjustly treated at work, and what little had been done or “could be done” about it.
The severity of the matter was highlighted further in a damning report broadcast by the New Zealand Law Society, which found 31 per cent of female lawyers had been sexually harassed at some point in their career, while 17 per cent have suffered in the past five years alone.
Forty-nine per cent of victims stated they didn’t speak up for fear of career consequences, while 38 per cent said they stayed quiet in fear of making the situation worse by reporting it.
While people put their stories forward, the Australian Human Rights Commission launched a world-first national inquiry to examine misconduct in Aussie workplaces, noting that the global conversation about sexual harassment “had exposed the true prevalence of the problem and the harm is causes to individuals, workplaces and society”.
Further, the NSW Office of the Legal Services Commissioner and Victorian Legal Services Board + Commissioner (LSBC) confirmed that it too would be taking a closer look at sexual harassment, and launch investigations into the legal profession specifically.
Victorian Legal Services Commissioner Fiona McLeay stated that “anecdotal information suggests that sexual harassment is actually far more prevalent in the legal profession than the small number of complaints we have received would suggest”.
“This office receives two to three complaints each year involving sexual harassment [but] clearly this is not the full extent of sexual harassment that occurs in the legal profession,” she says.
“The reasons that victims of sexual harassment are reluctant to speak up are well understood.”
With the prevalence of this issue in mind, it’s clear that the proper treatment of staff in the workplace should be top of mind for any employer in 2019.
After all, as Swaab Attorneys partner Michael Byrnes puts it, there are some firms which likely still have skeletons in their closets.
When asked on The Lawyers Weekly Show about whether he thinks there are law firms that either have covered up or are actively covering up offenses such as sexual harassment in-house, Mr Byrnes responded: “I have no doubt. I would bet my house on it happening.”
“There are lots of law firms and so I think it’s inconceivable that there isn’t at least one that isn’t in some way covering up unacceptable conduct that, if in the public domain, would lead to reputational damage for that firm,” he says.
“It’s too much of a Pollyanna approach to think there isn’t still some degree of cover-up happening, sweeping things under the carpet in at least one firm or probably more than one firm.”
Show me the money
Another key trend over the course of 2018 was the topic of pay disparity between different portions of the profession.
Interestingly a common factor, at least according to research by the Australasian Legal Practice Management Association (ALPMA), was that collectively across the profession there was a four-year low in salary increases, with the average increase at 0.7 per cent.
“Most Australian law firms are predicting modest wage increases at CPI, with 28 per cent expected to negotiate with employees above CPI and a further 17 per cent expect to increase salaries for all employees between 3 to 5 per cent,” says Dion Cusack, ALPMA president and corporate services manager at K&L Gates.
Despite the communal drop, the salary conversation appears to vary significantly in private practice, depending on if you’re at a top-tier, mid-tier or boutique law firm.
Late last year, it was found that lawyers first starting out with a top-tier in Melbourne earn between $70,000 and $85,000. In Sydney top-tiers, those in their first year practising earn between $75,000 and $90,000.
By stark comparison, those lawyers first starting out at a boutique law firm in Melbourne earn between $55,000 and $75,000, while those in Sydney earn $60,000 and $75,000, a report by Gatehouse found.
Similarly, the pay disparity between partners at boutiques and those at top-tiers was also evident.
At partner-level in a top-tier firm in Melbourne, employees earn above $300,000 while those in Sydney earn above $320,000. In comparison, at partner-level at a boutique in Melbourne, employees earn above $200,000 and in Sydney, above $220,000 – this paints a potential $100,000 difference between partners at boutiques and partners at BigLaw in terms of salary.
An insight into the earnings of those first starting out at a mid-tier. In Melbourne, new starters can expect anywhere between $65,000 and $80,000 if employed by a mid-tier, whereas in Sydney they can expect between $70,000 and $85,000.
At a mid-tier partner level, Melbourne-based professionals can expect above $275,000 while Sydney-based professionals can expect a salary above $300,000.
And how does the money fare in-house? Not as good as private practice, Hays says, at least when a raise is concerned over the next 12 months.
Looking ahead, it was noted that 11 per cent of law firms intend to increase lawyers’ salaries by more than 6 per cent, and 24 per cent expect to do so between 3 and 6 per cent.
However, for in-house lawyers, 65 per cent of employers say they’ll give corporate counsel a pay rise of less than 3 per cent in their next reviews, while 11 per cent will not get an increase on their salaries at all.
Just 6 per cent of in-house lawyers will get a raise of 6 per cent or more; 18 per cent will see an increase between 3 and 6 per cent.
The year just passed was also the year that saw an external body make headlines in the profession after it got involved in the happenings occurring internally at one of the country’s most well-known law firms.
The Melbourne office of global heavyweight King & Wood Mallesons received an Improvement Notice from the state’s WorkSafe in October, which was said to be concerning the management of employee fatigue.
Take the usual stress that any lawyer experiences in their day-to-day and add on a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which KWM and others did considerable work for, it seems hardly surprising that such a notice was issued.
KWM chief executive partner Berkeley Cox was quick to respond to the issue, saying his firm has processes in place to respond to workload demands and support employee wellbeing.
Such processes, he says, include the bringing in of resources from other parts of the firm, the spreading of work across centres and teams, appointing additional permanent legal staff in dispute resolution, use of work rosters and utilisation of a casual workforce.
“[We are] actively looking at what else we can do to support our people working in high pressure situations,” the KWM boss added.
With law firms among some of the most high pressure environments out there, one can only assume that such notices are a trend which may continue into 2019 and beyond – with employers upping the ante on how they effectively manage it.
“In recent years, the leadership of law firms has increasingly becoming aware of the need to invest in the mental health of its workforce. It is clear that progress has been made. The question is whether or not community standards have evolved much more than law firms realised,” said Minds Count on a Twitter thread shortly after KWM was issued its notice.
“The genuine health-risks of excessive work pressure and stress in legal workplaces should be well understood. Depression, anxiety, alcoholism and suicide are all well-established as potential outcomes. The risks are real, and the consequences can be devastating.
“… Fundamentally, real action is required in relation to workloads and workplace stress. Every law firm board and managing partner across the nation should be stopping to think about how they manage workloads and workplace stress,” said Minds Count on a Twitter thread shortly after KWM was issued its notice.
“As has been pointed out, law firms keep detailed data on the hours their people are working – they need it to generate billing. This means that if their people are working repeated 100+ hour weeks, the data are right there in front of management.”
Data, data, data
Last, but certainly not least, on what to look out for is the threat of exposed data. With law firms and corporate entities among the primary targets for hackers, it would be remiss not to give this a mention.
The past year has seen law firms among the many being hit by data breaches, leaving them compromising the confidentiality of both their clients and their own information.
In fact, the most recent report we have on such attacks, taken from the Office of the Australian Information Commissioner in November, found that the legal, accounting and management services sector provided the third highest number of data breach notifications during July to September.
What was perhaps, the most troubling fact was that the majority of breaches either resulted because of human error or criminal attacks.
With such high risks associated with a breach, it is important for firms to ensure they’re adequately protected. Some are doing this already, with the introduction of teams dedicated to proper data management and cyber security. Others, like Clyde & Co and Herbert Smith Freehills, are developing their own in-house software to better help clients respond to data leaks.
“Client data management is integral to the continuity of any practice and when it comes to preparing to manage and adhere to global data regulations, like GDPR, law firms need to think beyond traditional, defence-only security and instead implement a holistic plan. The plan should embody advanced security, business continuity, data protection and end-user empowerment,” says Mimecast’s Nick Lennon.
“A common misconception is that a world class security system constitutes robust data privacy, which just isn’t true. A security system is simply a fortress around the data, while privacy specifically relates to the legal collection, use, sharing, storage of and transfer of that data.
“Law firms should take a step back and reassess all of their security and personal data collection policies, and update any systems they have in place to ensure the risk of a data breach is minimised.
“Naturally, legislation will continue to reform and update to keep up with the changing technological landscape and the personal data and privacy policies at your practice should evolve in the same way.
“It is a great opportunity to turn the privacy approach and legislative compliance of your firm into a competitive advantage.”