Cost of living

According to Jacob Corbett, director at Bradley + Bray Lawyers in Mountain Creek, Queensland, the ongoing cost-of-living crisis being faced by Australians will continue to impact SME law firms – and not just in the daily management of those practices but also in the ongoing management of client expectations.

“Clients will continue to feel the pinch during 2024, and SME practitioners and sole practitioners will continue to have a role to play in justifying their costs for the jobs,” he said.

“Practitioners will need to develop better strategies to retain clients and form relationships in order to secure the jobs.”

Kelli Martin, managing partner of Brisbane-based KLM Solicitors, agreed.

“[Cost of living] continues to put pressure on SME employers to find the funds to support competitive wage increases across the board and for employees, if they are unable to secure the wage to support their cost of living, it means a change in job or perhaps an additional source of income to support them and their family,” she explained.

Aldermane partner Rory Alexander, who is based in Canberra, added: “The effect of inflation, at a time where cost of living and budgetary pressures are increasing for clients (of all sizes), is putting strain on profitability and cash flow within firms.”

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“With the two-fold impact of increased cost of operations and the tightening of client budgets, firms will need to focus on their operating and fee models to ensure they remain open for business.”

Competition (technological and recruitment)

The advent of a bounty of legal technologies and productivity tools will, Mr Alexander went on, assist firms in reducing their costs and fees and in the recruitment and retention of the talent needed to grow and service their existing and new client base.

However, he pointed out, there is a potential downside to such developments.

“The flip side of these new technologies is that it is now easier than ever to open a new practice, leading to increased competition in the industry and a splintering of the traditional legal service delivery model,” he espoused.

“To ensure that firms stay ahead of challenger firms, they need to compete on both price and quality.”

Mr Corbett also sees recruitment as a key consequential challenge in the coming year, noting it is one that is “plaguing” many firms coming into the new year.

“From speaking with colleagues and other firm owners over the past 6 to 12 months, this issue has been the single most difficult challenge to overcome for sole practitioners and SME firms,” he posited.

“There seems to consistently be less long-term experienced legal staff in the profession looking for work, despite there being continued strong numbers coming out of law schools.”

Connection

Claire Styles – the founder and principal of C Legal & Co, based in Sydney – noted that connection is a foremost challenge for boutique practitioners.

“It can be a lonely path, so making sure you are surrounding yourself with like-minded people and having a healthy social network is important,” she mused.

“Work/life balance is often hard to achieve when you are the one wearing all the hats, so ensure you are prioritising your health and wellness so you can take care of your business and clients to the best of your ability.”

“You cannot give from an empty cup.”

Other challenges and moving forward

Elsewhere, Patrick Dawson Law principal Patrick Dawson, who practises in regional NSW, said that continuing to maintain and protect client information and data with increasing risks associated with cyber security, as well as adapting to the changes in the workplace with the shift back from the WFH model to the office and team environment, will be key issues for consideration for boutique firm owners in the next 12 months.

Looking ahead, Ms Styles outlined that, particularly in the face of so many seemingly urgent challenges, there are two areas that are consistently required to run a successful firm: communication and responsiveness.

“This is particularly important for sole practitioners and SME practitioners. Having systems and technology in place to assist you with this is super important,” she submitted.

Furthermore, she added, learning how to delegate is as critical as ever.

“If someone can do it for you (IT, content writing, organising social events), then delegate. Your time is best spent focusing on the clients – bringing in the clients and retaining them,” Ms Styles said.

Ultimately, Mr Dawson surmised, “each year, the profession is faced with change, opportunities, and growth, which is both exciting and daunting”.

“As we move forward into the new year, the best advice is to share knowledge amongst colleagues, talk about change, work together, and grow together,” he concluded.