Clients are still leading on law firm relationships and their enhanced buying power is here to stay, writes Angela Priestley
It's typical that change should afflict the legal profession - as it does most areas of business - during and in the short-term following a recessionary period.
But, as has certainly been the case with the Australian legal market in recent decades, it's also typical that such dynamic shifts quickly return to normal once the market improves.
The global financial crisis has broken all the rules in this regard.
According to Middletons managing partner Nick Nichola, the changes and their consequent challenges facing the Australian legal market following the GFC are here to stay.
"They are game changing and they're irreversible. I don't think we've seen that before," he says.
Such changes relate to the increased buying power of clients as a result of competition in the legal services market: their ability to now ask for more from their law firms, to work with technology, diversify legal purchasing according to their needs, retain more staff in-house and access cost saving initiatives such as legal process outsourcing (LPO).
Nichola believes the depth of the GFC along with a long-term and thus more engrained change of psyche from clients means such changes are here to stay.
"Clients realise they really do have bargaining power and they don't have to just accept what law firms dish up by way or 'this is how we charge and this is our method of charging and if you want to use us well you've just got to accept it'."
And he believes that the increased use of LPO globally is only going to exacerbate such changes. "We now have corporations like Deutsche Bank outsourcing a whole heap of their legal functions to LPO. Corporates are talking about LPO, and they're talking about the savings."
Ultimately, says Nichola, good management will allow a firm to outlive such a dynamic environment.
He believes that means good staff engagement, harnessing opportunity - be it opening a new office, offering LPO-like services to clients and/or assisting with clients who are looking to diversify their legal purchasing - and applying a vision to what a firm needs to do to stay relevant in the decades to come.
Nick Nichola is speaking at the LexisNexis Practice Management conference.
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