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Law firms adjust as clients dabble in law

Law firms adjust as clients dabble in law

LAW FIRMS are facing pressure from clients that are becoming increasingly involved in both the substance and method by which legal service is delivered, Australia’s managing partners have…

LAW FIRMS are facing pressure from clients that are becoming increasingly involved in both the substance and method by which legal service is delivered, Australia’s managing partners have revealed.

In an investigation into what keeps managing partners up at night (full report next week in Lawyers Weekly), a majority of those interviewed said the increased level of client savviness was a significant factor changing the practice of law in their firms.

Joydeep Hor, newly appointed managing partner at Harmers Workplace Lawyers, said the “number one change” to the practice of law recently has been clients’ increasing sophistication in terms of their expectations “both as to the substance and method by which legal service is to be delivered”.

Don Boyd, chief executive partner at Deacons, said in-house counsel was “much more informed and sophisticated”. A new generation of in-house counsel has a better understanding of how private practice works because many of them have come from private practice.

This has resulted in a lot of change to the work of private practice lawyers, said Boyd. “I think it has resulted in more commoditised work being done in-house by in-house counsel or people who work for them.”

While the role of in-house counsel in this involvement was widely considered to be significant, some managing partners also saw the need for people in non legal roles to “dabble in legal matters” on a more regular basis to be influencing the ways private practice lawyers work with their clients.

As a firm that specialises in employment law, Harmers Workplace Lawyers finds Human Resources departments, for example, undertaking their own legal work where possible in an effort to save costs, said Hor. “We see some very sophisticated HR managers who are doing a lot of the legal work, in terms of appearing in commissions and other things. There is a perception that they can do a lot of the work themselves.”

Hor rejected suggestions that this was stemming from a false confidence in their own skills, claiming instead that it comes from a desire to save money. “I think a lot of them prefer to wing it and accept the risks of doing that for a lot of issues, up to a particular point. It is only for the very major things that they will get their lawyers involved. That is not all clients, but it is an increasing trend.”

It is primarily larger clients, whose HR managers are doing masters degrees in labour law and relations and therefore have some skills to do the work, said Hor, adding that with this increased education, the expectations they have of their lawyers change.

HR managers are expected to have a certain level of legal knowledge and understanding, which impacts their external lawyers and the way they work. They are “up-skilling themselves”, said Hor, and while this doesn’t make them qualified practitioners, in a lot of jurisdictions in which Harmers practises, you don’t have to be a qualified practitioner, he said.

Law firms are going to have to change their mentality in the way they respond to this increased involvement from people such as HR managers, said Hor. “If a client is very cost conscious and wants to do things a certain way, then you have the choice as a law firm of saying ‘no, we insist on doing it in this particular way’, but you are not going to keep the clients for any prolonged period of time.”

He said clients have their lawyers at their mercy in terms of whether or not they choose to use them. “There are a lot of firms that will do things precisely in accordance with the way clients want. So, sometimes it is about trying to work with clients to get to a position of trust, where they trust you so much that you can actually give them the advice that they need, which includes advice on the way they should be doing things or not doing things.”

He said lawyers can struggle with the perception from some clients that lawyers and law firms are just trying to line their own pockets. This is why trust is so important, he said.

“If they come to you thinking any advice is going to be on the basis that the law firm needs to look after their own interests financially — that is not really a platform from which you can develop a good client relationship in any industry. There is no doubt that is a big change to the practice of law.”

See Lawyers Weeklys Managing Partner Report next week in issue 300.

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