Services outsourced as firms change culture

Some law firms are at crisis point and could be forced to downsize and outsource more work to low-cost jurisdictions.

Some law firms are at crisis point and could be forced to downsize and outsource more work to low-cost jurisdictions offshore as the market for legal services ­contracts.

Managing partners at leading law firms say changes in the market had triggered an overhaul of embedded ways of doing business and encouraged a new culture of innovation.

Stephen Purcell, managing partner of Dibbs Barker, said the “crowded market” was placing pressure on all firms, from the top tier down to boutiques, to broaden their services and do away with practices such as hourly billing and hierarchical structures.

“I think it’s exciting,” Mr Purcell said. “The market is changing and I think it creates opportunity.

“You just have to work out where you want to position ­yourself.”

He said law firms were embracing the changes in order to remain relevant to sophisticated and tech-savvy clients.

This is part of a wave of innovation in the legal services industry that has been identified in a series of roundtable discussions with law firm leaders that is part of The Australian’s Legal Week initiative.

This initiative includes a series of special reports and videos as well as The Australian Legal ­Review magazine, which was published last Friday and is available online by clicking here.

“Every firm is moving in some direction,” Mr Purcell said.

“Nobody is just sitting there doing nothing.

“It’s a very crowded market, with a lot of firms, a lot of inter­national firms coming in, and limited clients,” Mr Purcell said.

The innovation wave that swept through the industry in a little over two years had been a shock to many in the market, with some firms losing old-style ­hierarchical partners who had struggled to deal with the pace of change.

Set fees have been introduced for many transactions and at some firms partners had lost their corner offices and now sit among the staff in open-plan workplaces.

Short-term profits have been reinvested into long-term structural change, transparency of fees and practices has become crucial, and the needs of clients have taken on even greater importance.

Professionals other than lawyers, such as IT experts and ­project managers, now also sit in on high-end client meetings alongside partners, and the old-boys’ luncheon network does not have the same import that it once did.

Mr Purcell said one of the fundamentals of legal practice had not changed: “You have to be ­listening to your clients and understanding what you can do to help them be more competitive.”