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How to survive the downturn

How to survive the downturn

The need for law firms to engage internationally and avoid kneejerk pricing was identified at a seminar on surviving the downturn hosted at the University of Technology Sydney on…

The need for law firms to engage internationally and avoid kneejerk pricing was identified at a seminar on surviving the downturn hosted at the University of Technology Sydney on Thursday.

Professor Jim Bright, partner of career development company Bright & Associates, told the audience that the Australian legal industry needs to ensure that relationships between China and India, in particular, are not taken for granted.

He added that the push by Magic Circle firms in the UK and US to enter into these markets should not be overlooked.

"If you look at firms like Clifford Chance in the UK, they already have 'best friend' ... relationships with major law firms in India and back office organisations in Delhi. Clifford Chance, every year for the past five or six years has been recruiting eight to 10 top Indian lawyers into its graduate program," he said.

Australia needed to expand its legal markets into the Asian and Indian regions, said Bright, predicting more mergers and acquisitions such as the recently announced planned Deacons and Norton Rose amalgamation.

"I think we have to be very careful about complacency - [thinking] that somehow our special relationship with Asia and, to a lesser degree, with India will see us through. Because those companies in the UK and the US are building up their capacity and their relationships as we speak," he said.

"I think if we are serious about those opportunities in those countries then we are going to have to start learning from, copying and adding to what's happening with some of those Magic Circle firms."

Cindy Carpenter, executive director of human resources and marketing at Corrs Chambers Westgarth, said law firms had been facing the challenge of winning work from corporate clients who have been instructed to contain legal costs.

At Corrs, the number of tenders responded to in the last year has more than doubled to 90, she said, and the firm is being asked about using practitioners from cheaper locations such as Brisbane. Clients are also looking for more certainty in pricing, she said.

"There is so much press about value pricing or fixed pricing ... I think at the moment there is more talk than action on this front, there is rhetoric at the moment, but that is not to say that the tectonic plates aren't shifting - they are," she said.

Carpenter advised the audience to learn the difficult skill of scoping and negotiating fixed fees.

"It is tough and write-offs are higher because you have to bear the risk on the scope and on not accurately forecasting what the worth is required for a matter," she said.

"It's best to start practicing now. What I recommend you do is - before you are asked by a client to negotiate fixed pricing - take a stab at the tasks that you think are required, estimate the time and every couple of days see how accurate you were because you need to learn these skills and the best thing to do is start now."

But Carpenter warned against kneejerk pricing after she spoke to an industry expert who conducted a review on pricing.

"He said that partners were more inclined to chase rates down than clients were asking for rates to be chased down. That's my experience - I've seen the occasional partner who, at fear of a price war, is [then] in danger of creating a price war," she said.

"So ... remember that pricing is the single biggest driver of culpability and back yourself - don't discount too readily, understand the value that you deliver and that value means your expertise, your reliability [and] your speed."

Bright emphasised that continual change should be viewed positively by the legal industry and that reinvention should be encouraged.

"We still manage people in terms of objectives, goal-setting and annual contribution - very static kinds of contributions - rather than taking a position that things are going to continually change [so] praise flexibility, promote flexibility and promote continual reinvention from the individual all the way through to the organisation," he said.

- Sarah Sharples

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

How to survive the downturn
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