Kiwi Lawyers Face Major Challenges In Years Ahead

Kiwi Lawyers Face Major Challenges In Years Ahead
LawFuel - The Law Jobs and News Wire
New report shows productivity declines and service delivery needs marked improvement

New Zealand law firms will need to look at outsourcing, remote working, commoditisation of services and alternative structures if they are to retain their profits and partner incomes.

Despite its $2.15 billion size, representing 1.3 per cent of GDP, the NZ legal industry faces significant changes in face of both the credit crunch and challenges facing the profession, according to the Thomson Reuters report releases on Friday, 'The Business of Law'.

The report, researched and written by Ashley Balls and Ron Pol, professional services consultants who have extensively researched and consulted to the legal profession for many years both within New Zealand and overseas, indicates that local lawyers face significant challenges as their profits decline in real terms.

The report identifies some of the not unexpected problems facing lawyers - the property slowdown, deflationary pressures and a downward pressure on fees, among others.

However, it also identifies other factors that may not perhaps have been quite so obvious. Among these are the need for "quality management" in the face of the downward pressure on legal fees. While much large corporate work has headed overseas, there has been a signficant growth in government and local body and state-owned enterprise work who seek not only quality work but high value from their legal advisers.

It is also apparent that ‘real’ growth has declined or at least “flat lined” over recent years and the report points to factors such as low productivity, an increase in lawyer numbers beyond the demand for services and work that has migrated to other service providers, among others.

Lawyers, the report says, need to reduce the cost of sales through increased productivity.

Profits are being squeezed through a growth in the number of sole practitioners, the suplly of in-house legal services and the “relative” decline for services. “In a makret where credit has become less available and more expenive, private practice is going to be under increasing pressure to deliver more from less,” the report notes.

The result is lkely to be a consolidation in the number of law providers, resulting in a reduced production cost for legal services and the development of better optimised service delivery mechanisms using such tools as case management software and document management systems.

The 150 page report, the most extensive produced on the New Zealand legal business, examines a variety of fiscal, professional and other features of the profession.

Interestingly, it shows that the fastest-growing segment in the legal market is the in-house legal team, whose growth has served to further restrict growth and fee-growth options for lawyers as clients seek to reduce legal costs and increase efficiencies in service delivery

Equally interesting is the surge in lawyer numbers, with over 10,500 lawyers holding practising certificates in 2007 – a 500 per cent increase in lawyer numbers in the past 50 years.

ENDS

© Scoop Media