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Law Firms Have Been Urged to Advance their Client Management Strategies

Lawyer and client shaking hands, finishing up a meeting

According to a new report, the Australian legal market is changing and law firms are slowly adapting to the new client needs. As a matter of fact, the market has been consistently declining for the past four years. Law firms have been urged to be aggressive on the new changes and customise their services to avoid experiencing low client demand.

The report was achieved after analysing top 21 law firms across the country.  The analysis was carried out basing its facts on financial data among the 21 great law firms. They were divided into two sections whereby the first section represented 13 firms known as ‘Large Firms’ and the remaining eight firms were put in a section known as the ‘Big Eight’.

The fourth consecutive annual decline was determined by measuring the total hours billed in each of the listed large firms. The FY2015-2016 indicated that there was a client demand decline by an average of 1.9 per cent across the 21 firms. The report came in following the FY2014-2015 which recorded a decline of 2.0 per cent across the firms. This shows that immediate action should be taken by all Australian law firms to keep the legal market profitable.

With only a third of firms recording profit and revenue growth in FY2015-16 analysis, the legal market continues to face financial hardship as demand drops overall.

The 13 Large Firms actually recorded a decline of 3.5% in average, while the Big Eight firms recorded an average rise in client demand by 0.4 per cent.

However, the good news is that when the Large Firms and the Big Eight were analysed one at a time, the Big Eight recorded a better client demand as compared to the 13 Large Firms. Hence, this shows that there is still room for the client demand to go higher by implementing effective client management strategies. In addition, this will significantly contribute to a steady growth within the Australian legal market.

Profitability was actually affected by rising costs, poor marketing strategies, stagnant rates and weak client demand. Averagely, the profits declined by 9.0 per cent for the 13 Large Firms and 4.4 per cent for Big Eight firms.

Mr. Barolsky, a principal at Barolsky Advisors suggested that law firms should get out of their comfort zones and choose true leaders in order to succeed.

“The data outlined in our report portrays strong evidence that the legal market is consistently becoming more competitive due to the changing client needs. In the past, law firm managing partners were more of coordinators and convenors than true leaders,” said Mr Barolsky.

According to Thomson Reuters’ vice president, Michael Abbott, the challenge for Australian law firms is not only affected by weak revenue and client demand but also global thought leadership and client management.

“Law firms should boldly take on the mantle of change and implement effective client management strategies in order to get above the ground,” said Mr Abbott while speaking to Aussie Lawyer Blog. He believes that the bigger challenge is long-term; hence gradual effort should be made by all firms to avoid the bigger ground shifting beneath their feet.

“In order to thrive in these consistent difficult conditions and pressure, Australian law firms must embrace greater creativity and agility in addressing changing client needs across all the states,” added Mr. Abbott.

When firms change the way they approach and manage their clients and adeptly execute their strategies, then they can be assured of identifying new opportunities.

Firms need true leadership and professional marketing in order to flourish through this challenging legal environment.

 

Written by Joseph Craig

Joseph Craig

Joseph Craig is a writer, blogger, legal researcher and best-selling author of dozens of technology, law, digital marketing and self-development books and courses. You can contact him at josephcraigwrites@gmail.com

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