RAJ LAWYERS is the next in a growing number of firms to take the plunge into incorporation and is due to formalise the move in August.
As the national firm has publicly stated, it has long been the intention of those in charge to incorporate as soon as the Queensland Government proclaimed the Legal Profession Act 2007, which came into force on 1 July.
In fact, managing partner Niren Raj told Lawyers Weekly that he had been eager for some years to incorporate, while New South Wales, Victoria and Western Australia each passed their own legal profession acts. The delay taken in Queensland only added to the frustration, as Raj postponed its plans in order to avoid a doubling up of accounting systems.
“I did not want two operating systems,” Raj said. “You would have had [NSW], Victoria and [WA] on one operating system, and … Queensland on another one.
“What should have happened back in 2004 — every Attorney-General should have agreed to the legislation. But unfortunately you have different mindsets in different places, working to different timetables. So [there has been] a lot of frustration. But now we’re there, and it’s time to do it, and do it properly.”
Raj said one of the reasons the firm chose to incorporate because the increased transparency and accountability through financial reporting were realities of operating in the world of business, something that was increasingly being demanded by clients.
“I think as a profession we are still quite secretive. I don’t think we are unequivocal about what we do, and how we do it,” he said. “The whole intention of the Legal Profession Act is to reform the profession. Incorporation is just one element of it.”
According to Raj, there is a push among “the institutional client base and commercial clients” for greater transparency from their lawyers.
“They want to know what their lawyers do. They want to go behind what lawyers tell them,” he said. “The greater transparency you have, there is a more significant take-up from clients — they understand what your business is about.”
But of course with increased accountability comes the requirement to make public the salaries paid to staff, something Australia law firms have long been reluctant to divulge.
“I think that if it means that we have to disclose what we pay our people, there is that traditional fear that ‘our competitors will know what we are doing’,” Raj said. “But you have to transcend those fears if you really want to be in the commercial world.”
Apart from assuaging any concerns that clients may have about where their money is going, Raj said incorporation is also a way of retaining talented lawyers.
“Basically you can share the profits of the business with all of your practice, rather than just your senior lawyers,” Raj said. “You can give income streams to non-professional staff, but this is really the truest way of reflecting that you value all of your people rather than just your senior fee earners.”
According to the managing partner, profit sharing will not be a panacea for the profession’s retention woes.
“It allows you retain at a better level. I don’t think that alone will be an incentive to stay. But I think that because you have a corporate structure, it’s an influence. Hopefully if you can provide the other things that junior lawyers require, this will be just an additional incentive for them to stay.
As Lawyers Weekly reported in early July, Gilshenan & Luton Lawyers has incorporated, while Carter Newell had delayed its decision until further notice. As with Gilshenan, Raj Lawyers will be introducing changes to job titles to accord with the new corporate structure. Some former partners and heads of divisions will become directors, while other more junior lawyers may be named managers.
Some very junior lawyers displaying obvious talent will also be rewarded with the position of manager too. “If you have got a graduate who is just extraordinary — I’ve got one in my Sydney office — I would make her a manager straight away. She’s had about 16 months out [of university], and she shows to me that she is a star of the future,” he said.