Firms’ ongoing investment in people and technology indicates that the sector is positioning itself for the gradual rebound in business conditions and workflow. The report shows that while confidence fell sharply following the onset of the pandemic, firms expect short term uncertainty to give way to a strong rebound over two years.
Belinda Hegarty, National Head of Professional Services, Commonwealth Bank, said: “Despite the operational and financial disruption brought about by coronavirus, the Australian legal sector remains in great shape.”
“While there is a lack of visibility around future business conditions and uncertainty among clients adding to fee pressures, a focus on people, technology and prudent cost controls are putting them in good stead as the recovery gets underway,” Ms Hegarty said.
“We expect to see a continued focus on digital transformation that has followed years of investment in technology within the sector. This will help firms meet client expectations that legal services need to be delivered faster, more cost-effectively and add greater value than in the past.”
While many in the sector are adapting well to the coronavirus, with 21 per cent of firms reporting a year-on-year fall in profits, the report shows that some firms are more resilient to disruption than others.
To understand the traits of more resilient firms, the report examined five criteria as an indicator of firms’ ability to withstand the pressure of changing operating and market conditions. These included profit growth, maintaining cash flow, managing staff utilisation, adapting to remote work and firms’ ability to compete.
The report found that just 38 per cent of firms met all five criteria of resilience. These firms were not only more confident about business conditions than their less resilient peers but stood out for their plans to invest in their workforce’s training and development and to reward their contribution through higher salaries, as well as a focus on technology.
“More resilient firms have clearly led the way in adopting technology. They better understand its potential to help deliver services faster, simpler and cheaper, and to create new products and services. Years of steady investment in this area saw these firms smoothly switch to working remotely and delivering services digitally. Very few less resilient firms could claim the same,” Ms Hegarty said.
CommBank Legal Market Pulse is a wide-ranging analysis of the Australian legal sector. The report is based on a quantitative survey of CEOs, Managing Partners and other senior leaders. Fifty-six law firms participated in the survey for this edition, carried out in September 2020 by Beaton Research + Consulting.