A new Australia-wide study has revealed Australian law firms are ill prepared for the challenges of the future – more than a third admit their business models are not fit for the demands of the years to come.
Legal and tax solutions provider, Thomson Reuters, surveyed 100 senior fee-earning legal practitioners from Australian firms to compile the Future of Law report. A key trend to emerge was a sheer lack of preparedness for the years to come. Some 18 per cent of professionals lack confidence that their firm’s existing business model is sufficiently future-proof for them to remain competitive in 10 years’ time, 20 years’ time (32 per cent) or 30 years’ time (36 per cent).
One reason for the pessimistic outlook is the rapid pace of innovation in today’s legal landscape, with 69 per cent agreeing it is faster today than at any point in the last 10 years. There was acceptance that this would continue into the future, with 60% predicting it would be faster still in 10 years.
The findings of the report came as no surprise to Lachlan McKnight, CEO of LegalVision, one of Australia’s first purely online law firms. He tells Dynamic Business that his goal is to disrupt the legal services industry by providing online, cost-effective and high quality legal advice to small and medium business.
“My view is that the vast majority of lawyers have no idea of what’s coming. There are over 400 legal start-ups listed on AngelList alone. Legal services is one of the last big industries that hasn’t been disrupted by online providers,” McKnight says.
He also believes that the trademarking space provides a preview of what’s on the way for legal services. For example, ten years ago it cost $3k to register a trademark in the US, now it costs $300. “Online players have commoditised the market and competition has ensured pricing has moved to a whole other level.
“Businesses are sick of paying through the nose for legal services. Those legal services business which accept the new reality have a bright future, limited only by their ability to build processes, practices and systems which enable them to deliver high-quality, cost effective legal services at scale. Those law firms that either don’t accept, or don’t understand the new reality, will fail.”
Similarly, Principal Lawyer and Director of new online law firm LAWYAL Solicitors, Leonie Chapman says she has anticipated the future trends in the provision of legal services, and responded accordingly.
“As a virtual law firm operator myself, I am not at all surprised that Thomson Reuters predicts 14 per cent of all firms will operate virtually in 30 years, with no physical office space. I think perhaps this number might in fact be much higher. [That’s why] we have created unique software that enables clients to interact with their lawyers and view all their matters through a client portal from anywhere at anytime, without the need for expensive city office-space or cumbersome paper files and process.”
The role of social media also came under the spotlight in the Thomson Reuters findings, with 20 per cent predicting it would play a ‘very important’ role in terms of driving firm-wide profitability in the future, and 11 per cent saying it would be ‘crucially’ important.
Other key trends included:
- The emergence of more niche and specialised practices (62%);
- Fewer firms and market consolidation (53%);
- A rise in consumers managing their own legal affairs (44%);
- A rise in remote working, with 26% predicting half their staff would work outside the office in 30 years;
- 44% predicting their firm’s legal library would ‘virtually disappear’ by 2044;
- 14% predicted all firms, half of firms (27%) would operate virtually in 30 years’ time with no physical office space;
- Firm specialism, with 26% becoming highly-specialised (26%) in the next 30 years in order to stay competitive in the market.