ALPMA looks at past and future trends across legal practice management

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Law firms have been forced to evolve at a fast pace over the last two years, resulting in a shift away from traditional management practices. Remote working, digital advances, process management changes and the juggling of client relationships with virtual communications have all posed challenges. Emma Elliott, CEO of ALPMA, talks about the impactful changes to practice management, and future industry trends

THE PANDEMIC hasn’t been a bad thing for the legal industry; in fact, the majority of firms have fared very well. Over the last two years, many saw increases in demand for their services, most firms remained financially buoyant, and some saw financial growth. The ALPMA/Findex FY2021 financial performance benchmarking report, to be released in late March, has supported financial confidence. Law firms have, on average, reported gross profit and net profit figures of 52.8% and 35.4% respectively. Meeting the challenges of the pandemic The legal industry has seen some seismic shifts in operational management during the pandemic and have pushed through changes at speed. The sense of urgency that the pandemic brought saw long-overdue changes being implemented, says Emma Elliott, CEO of the Australasian Legal Practice Management Association (ALPMA).

The Australasian Legal Practice Management Association (ALPMA) is the peak professional membership association for legal practice managers, law firm leaders and their teams within Australasia. Our purpose is to educate, promote and develop legal practice management skills, advance the business of law best practice and provide thought leadership knowledge for the legal industry. If you work within an Australasian law firm, legal association, law society, corporate legal department or government agency, then ALPMA is for you.

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Support operations challenges for APAC firms

say billable hours have stayed the same or decreased

56%

“For the most part, the legal industry adapted, survived and thrived [during the pandemic], so now the challenge becomes maintaining the balance and working out how to merge the best parts of our pre- and post-COVID worlds and keep this continuous improvement momentum happening”

Emma Elliott, ALPMA

“Many new practices and ways of working, adopted during the past two years, are not new concepts to our ALPMA members. The pandemic brought with it the sense of urgency necessary to get these changes over the line,” she says. ‘’Essentially, we have been forced into a test-pilot of a number of technology advancements and to find alternate working styles, amongst other things, with the result being far better than expected. For the most part the legal industry adapted, survived and thrived, so now the challenge becomes maintaining the balance and working out how to merge the best parts of our pre- and post-COVID worlds and keep this continuous improvement momentum happening.”

Interestingly, in a recent ALPMA survey 43% of respondents said they had introduced between three and five new technology platforms in the past two years, and a further 7.7% had introduced between six and 10. Pleasingly, 70% of respondents said they were either early adopters of technology or were technology focused, with many firms looking to technology to solve challenges or drive internal efficiencies. “Another standout challenge that arose during the pandemic for all firms was communication, delegation and workflow systems in a completely virtual environment. Removing the ability to communicate physically made alternate forms of visibility over legal work a priority,” says Elliott. So, in 2021, ALPMA teamed up with BigHand to produce The BigHand Legal Workflow Management Report, based on the largest-ever industry survey on law firm workflow practices. Over 900 legal management professionals were surveyed across the UK, North America and the Asia-Pacific. “Essentially that report was looking at how law firms had changed the way that they were operating from a workflow point of view, with a particular focus on the administration or business support services function throughout the pandemic,” says Elliott. In an office-based environment, visibility and face-to-face communication were key to this process; the report looked at the changes that have been made and how firms have adapted. “This survey was about finding out how firms were managing matter workflow within their firms during the pandemic. It was particularly interesting given the distributed workforces and increased need for digital transparency given the removal of face-to-face communications. It also investigated how firm support functions were being brought into this picture,” says Elliott. The report revealed several key findings highlighting that there are issues within the support operation functions at most firms, which will continue to be a challenge as the industry transitions to the post-pandemic hybrid working model. The report also found that a reduction in support staff has led to lawyers undertaking more low-value administrative work themselves, contributing to reduced billable hours. “Interestingly, we are now hearing this higher admin load imposed on lawyers is starting to become a key driver for lawyers to start considering a law firm move,” Elliott says. “Not only are lawyers in demand, but good secretarial and administration staff are in short supply too. Lawyers are seeking firms who have good administration support structures in place, have flexible working arrangements and who view technology as an enabler to drive firm efficiencies.”

‘’There are many firms that have prioritised check-ins with employees, and the focus of those check-ins has been purely the wellbeing of the person, how they are coping, what strategies they are using, and whether they’ve put solid boundaries in place to prioritise their mental health’’

Emma Elliott, ALPMA

Prioritising mental health Mental health has come to the fore as a priority during the pandemic. In such a demanding industry that requires long hours and a high level of detail, mental health issues have always been prevalent, and the pandemic saw companies, across all industries, prioritising the mental health of their employees. “In 2018, we were working closely with legalsuper and The College of Law to address the mental health concerns we were seeing in the industry, and in 2019 we brought the first mental health first aid training program to the industry, supported by Mental Health First Aid Australia. This course has been specifically tailored to the legal industry to provide direct and relevant information for participants to support colleagues experiencing a mental health issue,” says Elliott.

“It’s similar to your physical first aid certificate where you can respond to someone who has broken an arm or had a fall, etc. Mental health first aid is a training course that provides participants with a toolkit to be a first responder for someone suffering from a mental health crisis, but more importantly the course provides participants with a proactive and structured way to identify and then start a conversation with a colleague they think might be experiencing a mental health issue. “It’s a course that is definitely in high demand,” Elliott says. “There are many firms that have prioritised check-ins with employees, and the focus of those check-ins has been purely the wellbeing of the person, how they are coping, what strategies they are using, and whether they have put solid boundaries in place to prioritise their mental health. This course assists with these check-ins. It’s important to note this is not a course for just one person with the law firm. Several people across all levels should be provided with this training. Mental health is everyone’s responsibility.”

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32%

made temporary or permanent reductions to support staff headcount

say lawyers are encouraged to delegate legal support work to the most cost-effective resource available

47%

Emma Elliott, ALPMA

Future trends Managing a distributed workforce has no doubt been challenging for the industry over the last two years and will continue to be challenging as the industry moves to a post-pandemic operating model of hybrid working. The BigHand Legal Workflow Management Report 2021 found that hybrid working is welcomed by both lawyers and business operations professionals, but individuals are concerned about the way work can be effectively allocated to support teams. Another key finding of the report was that retirement and attrition are set to put a tremendous strain on support teams over the next five years, with firms confirming that recruiting like-for-like replacement talent is ‘extremely difficult’. Employee acquisition and retention are therefore a large focus for most firms with distributed workforces and talent shortages. The ALPMA 2022 New Zealand HR Issues & Salary Survey report, released in March 2022, has reinforced this focus, with the top five HR challenges facing the legal industry including:

Managing risk and policy reviews

Employee retention/talent management

Managing workloads and employee flexibility

Finding quality staff/talent acquisition

Managing mental health and wellbeing in the workplace

Elliott indicates that New Zealand salaries have increased in the past 12 months, with some positions seeing significant raises, showing a strong financial retention strategy at play. She suggests that findings of the ALPMA 2022 Australian HR Issues & Salary Survey will likely be similar to New Zealand’s this year, and she looks forward to reviewing the report prior to its release to market in April 2022. Elliott adds that “at ALPMA we are seeing a strong interest in the return of our in-person events right across Australasia. Our members have missed the ability to connect with their peers, network and learn from each other in person. For this reason, we're looking forward to the return of our annual three-day flagship conference, the ALPMA Summit, which will make a return to the calendar this year in late August on the Gold Coast”. The pandemic also resulted in some firms focusing more on their social media strategy as most brand activities moved to online platforms, Elliott explains. “If a firm has not put in place a social media strategy, it should think about developing a plan and implementing it. The focus should be on doing things differently and better, not just matching what other firms are doing in a digital space. Humanising your firm and increasing human connections is a great place to start.”

Readers of Australasian Lawyer who would like to receive more information on ALPMA’s research (including upcoming report launches), events, learning and development webinars, conferences or membership options should visit www.alpma.com.au/AL and subscribe to its newsletter. ALPMA’s 1,150 members are representative of 600-plus law firms across Australia and New Zealand.

Key findings of 2022 NZ Salary Survey

Wage growth in the NZ legal industry is higher than national average

Forecasts for growth are optimistic for 2022

#1 HR challenge is managing risk & policy reviews including COVID-19

Emma Elliott, ALPMA