Can Diversity rescue the Australian Legal Profession from its outdated business model?

An article by Errol Price, Legal Director, Symmetra

The legal profession in Australia, like its counterparts in other advanced jurisdictions, is facing a period of radical change. The business model which has served the profession well for over a century is now starting to show strains and cracks.

The changes will take place in many areas, but chief amongst these will be the people composition of firms, how law firm members are recruited, promoted, mentored and selected for assignments.

The profession is aware of the seismic shifts that are taking place and it is well understood that those legal firms which are able to adapt to the change most quickly or better still to anticipate some of them, will survive and prosper; those that cannot will fall by the wayside and may well disappear.

Working with some of Australia’s leading legal firms, Symmetra is delivering specialised initiatives to develop leaders of the profession to gain new perspectives on proactively meeting the challenge.  Symmetra has noticed a growing demand for programmes such as diversity and inclusion as well as unconscious bias, that address the unique challenges that lie ahead for the legal industry.

The forces which are currently impacting on the legal system have arrived simultaneously from a number of unrelated sources. The factors Symmetra identifies as driving this change are:

Pressure on costs

Power is shifting from the suppliers to the purchasers of legal services. Clients are becoming more cost conscious and discerning. Remuneration will be increasingly linked to product and results – billable hours will become a rarity in time. Large corporations, in particular, will use their financial muscle and the knowledge of their in-house counsel to get the best deal.

Increasing awareness and sophistication of clients

Consumers of services whether they be medical, accounting or legal have greater access to information through the internet and through social media which will enable them to constantly monitor and evaluate the cost, quality and effectiveness of the services which they purchase. Lawyers will have to be increasingly transparent and accountable at every stage of delivery.

Disaggregation or commoditization

Legal services of a fairly routine or non-complex kind will increasingly become commoditized. They will be supplied by businesses or professionals not necessarily peopled by trained lawyers. High-end and complex legal services will continue to be delivered by trained lawyers, but lengthy legal processes will be broken down into smaller and discrete parts with the more straight-forward ones being outsourced to organisations with lower cost structures

Globalisation

Markets for legal services will become globalised and will begin to emulate to a certain extent the way commerce generally has become globalised. Some legal services will continue to be restricted by regulation to locals but even this will succumb to internationalisation as foreign firms merge with or take-over local firms or simply enter the local legal marketplace.

Technological developments

Technology is developing so rapidly and is changing virtually every conceivable industry so radically that it is not possible to envisage all the ways in which it will reconfigure the legal profession. Some of the likely advances and innovations will include:

  • Online dispute resolution
  • Electronic market place where sellers of legal services can present their offerings, credentials and fee structures and buyers can purchase their services in much the same way as they do with other products on the internet
  • Artificial intelligence – computers are now at the point where they no longer simply store and sort vast amounts of data but can engage in solving complex problems in a manner which mimics human thought, only much faster. Legal problems will in future become increasingly the domain of computer resolution.
  • Social networking is increasingly becoming a mode of business communication and this is something that will have to be embrace by the legal profession

New Competitors

As the market for legal services becomes liberalised and more transparent, competitors from non-traditional sources will undoubtedly emerge. Accounting firms and others whose services intersect with legal regulation and advice will increasingly broaden the range of their legal offerings.

Almost all individuals and organisations are notoriously resistant to change but perhaps none more so than the legal profession.

How adaptable to change is the legal industry?

In 2010, a group of psychological researchers in the USA (Foster, Richard, Rohrer and Sirkin) comparing the personality traits of 1800 lawyers against 4800 high-level managers and other professionals concluded that the lawyers scored higher on being:

  • Excitable – becoming tense and overly critical
  • Cautious – being reluctant to take risks
  • Sceptical – a tendency to become argumentative as well as suspicious of others.

They scored lower on the characteristics of being bold; colourful, mischievous and imaginative.

The difficulty, therefore, is that the legal profession appears to be fundamentally averse to change, but nonetheless recognises that it is inevitable. Since most lawyers are steeped in the ethos of their profession and are inherently cautious and sceptical of rapid changes, those who occupy the most senior and powerful positions are unlikely to be the originators of the most effective changes.

A critical first step in meeting the new wave of challenges is for legal firms and institutions to fully and unambiguously embrace diversity and use it to embark on a road of cultural reorientation.

Diversity in this sense is not a numbers game – simply increasing the head-count of women and minorities. It requires the absorption of people into the organisation from many different spheres – including non-lawyers – whose conceptual framework is fundamentally different from the Anglo-white males currently populating the top echelons of Australia’s legal professions.

In this way, new ideas, new technologies, new talents, structure and business models will come to the fore and help Australia become a dynamic service driven economy in the 21st century.

 

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