Preparing Australasian Law Firms for a Digital, Divergent ... · Q5 – Plans for Scope of Clients...

Preparing Australasian Law Firms for a Digital, Divergent, Differentiated Future2015 ALPMA/LexisNexis Research Results

2

ContentsSynopsis 3

Key Challenges 3 Key Strategies 3 The Future 3

Introduction 4Objective 4 Methodology and Participant Profile 4

Preparing for a Successful Tomorrow 5Q1 – Challenges Facing Law Firms 5 Q2 – Other Challenges 7

Strategic Plan 7Q3 – Overall Strategic Plan 7 Q4 – Effectiveness of Strategic Plan 8

Target Markets and Services 9Q5 – Plans for Scope of Clients 9 Q6 – Plans for Scope of Services 10 Q7 – Plans for Pricing of Services 11

Resourcing Strategy 12Q8 – Plans for Resourcing 12 Q9 – Plans for Leadership 13

Marketing and Business Development Strategy 14Q10 – Plans for Business Development 14 Q11 – Plans for Marketing 15

Operational Strategy 16Q12 – Plans for Systems & Processes 16 Q13 – Plans for Service Delivery 17 Q14 – Plans for Strategic Relationships 18

Preparing for the Future 19Q15 – Preparation for “Tomorrow’s Firm: Digital, Divergent & Differentiated” 19 Q16 – Preparation for a Digital, Divergent, Differentiated Future 20 Q17 – Preparation for Other Initiatives 21

Survey Participant Profile 22Participant’s Position 22 Firm Size 22 Firm Location 22

Appendices 23 About ALPMA 25 About LexisNexis 25 Acknowledgements 25

CONTENTS

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Key Challenges § The number one key challenge facing Australasian law firms in 2015 is finding new customers and

winning new business. This is common across all firm sizes and is ranked highly in both Australia and New Zealand.

§ The other key challenges facing law firms are: improving operational efficiency, staying ahead of technology, differentiating themselves from other firms and growing firm profits.

Key StrategiesLaw firms are planning to implement a mix of strategies to address these challenges and prepare for the future.

In the next 3 years, firms plan to:

§ Grow target markets• 54% will increase the number of target markets addressed• 44% will increase their geographic footprint

§ Expand service offerings• 39% plan to offer new legal services• 32% will offer new online services

§ Implement new pricing models• 45% will offer more services on a fixed fee basis• 23% will offer more services based on value-pricing

§ Ramp-up digital investment• 59% will increase investment in online presence and social media• 32% will increase digital lead generation investment

§ Improve workflow and processes• 67% plan to invest in workflow/process management systems• 63% plan to change precedent management• 50% plan to improve document management

§ Focus on business development• 48% will expand their client referral program• 41% will improve sales training for partners and lawyers• 35% will invest in professional business development resources

§ Extend strategic relationships• 50% will increase collaboration with other professional services firms• 41% will increase collaboration with other businesses• 26% will increase collaboration with other law firms

§ Adopt flexible working practices• 45% will increase adoption of flexible working practices

The Future Most law firms are just at the beginning of their preparations for a digital, divergent, differentiated future.

§ 54% are beginning to prepare their firm § More than 30% are well-prepared or fully prepared § 12% are unprepared § Firms are most prepared for a differentiated future and less prepared for a digital and divergent future

SYNOPSIS

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ObjectiveThe global legal industry is undergoing irreversible transformation - driven by a range of factors including customer demands for better value, a highly competitive market, rapidly evolving technology and changes to the way we work and live. ALPMA and LexisNexis® have collaborated in ground-breaking research to track how Australasian law firms are adjusting their strategies and business models to adapt to the changing legal landscape and prepare themselves for a digital, divergent and differentiated future.

The 2015 ALPMA/LexisNexis “Preparing Australasian Law Firms for a Digital, Divergent, Differentiated Future” survey aims to understand what changes (if any) Australasian law firms plan to make over the next three years to: the markets they serve; their resourcing mix; marketing and business development strategies; internal systems and processes; legal services delivery model and strategic relationships - in order to position themselves for a successful future.

The research results will provide your firm with greater insight into exactly what Australasian firms are doing to respond to the changing legal landscape - and help you develop and refine your firm’s business strategy.

Methodology and Participant ProfileThe 2015 ALPMA/LexisNexis Survey was open to all Australian and New Zealand law firms from 1 July to 17 July 2015. The survey was designed and distributed using Survey Monkey software. The data provided by firms is held as strictly confidential and no individual firm is identified in the survey results in any way. The survey was conducted by an independent researcher and results are provided in aggregate form only.

The target audience was the Australasian Legal Practice Management Association members and subscribers, and LexisNexis law firm clients in Australia and New Zealand. A total of 147 law firms completed the survey by the closing date. The data is presented as overall findings and further split by country, and firms in capital cities versus regional locations. See the full participant profile in Appendix B.

INTRODUCTION

81+19+DNew Zealand

19%

Australia

81%A total of

147 Law Firmsfrom Australia and

New Zealand

5PREPARING FOR A SUCCESSFUL TOMORROW

Q1 - Challenges Facing Law FirmsRespondents were asked to rank the top five challenges they need to address to prepare their firm for success in the future. The challenges listed were (15 options given):

§ Commoditisation of legal services § Differentiating my firm from other firms § Ensuring firm keeps up/ahead of technology changes § Finding new customers/winning new business § Attracting quality personnel § Growing firm profits § Having the right information for decision making § Improving operational efficiency § Internal cultural change § Workforce planning § Meeting customer demand for better value § Retaining existing customers § Retaining talent § Succession planning as partners retire § Developing the next generation of leaders

The results were analysed by totalling the number of people who cited each challenge as an issue and then factoring the ranking they assigned to it.

Challenges Facing Law Firms

Finding new customers/winning new business

Improving operational efficiency

Ensuring firm keeps ahead of technology changes

Differentiating from other firms

Growing firm profits

Attracting quality personnel

Commoditisation of legal services

Meeting customer demand for better value

Succession planning as partners retire

Developing next generation of leaders

Retaining existing customers

Retaining talent

Having right info for decision making

Internal cultural change

Workforce planning

0 10 20 30 40 50 60 70 80 90

Top 5 challenges: Finding new customers/winning new business


Ensuring firms keep up/ahead of technology changes



1

2

3

4

5

6

Key Findings § Finding new customers/winning new business

• This is the most prominent challenge highlighted by 88 people in the survey and is common across all firm sizes.

• In capital cities, this is the highest ranked challenge; it is not as important in regional centres, ranked 4th highest challenge.

• Of those who cited this challenge, more than 60% ranked it the most important or second most important challenge they are facing.

§ Improving operational efficiency • This challenge was recorded for 85 people in the survey and is ranked 2nd in firms up to 150

people. Larger firms rate this challenge nearly as high as winning new business.• In capital cities, operational efficiency is ranked 2nd and in regional centres, it is ranked 3rd.• However of those citing this challenge, only 16% ranked this as Number 1.

§ Ensuring firm keeps up/ahead of technology changes• This challenge was recorded by 80 people and this is consistent across most firm sizes; small firms

ranked it 4th.• In capital cities, technology changes is ranked 3rd but in regional centres, it is ranked 2nd. • The ranking for the challenge of technology changes was spread evenly from 1 to 5.

§ Differentiating from other firms • This challenge was recorded by 72 people and is ranked lower by firms with more than 25

employees; small firms rate this challenge higher than larger firms.• While this challenge is ranked 4th in capital cities, it is the highest ranked in regional centres.• Of those citing this challenge 28% ranked it as Number 1.

§ Growing firm profits • This was ranked as a challenge by 58 people and the ranking is consistent across all firm sizes.• This challenge is ranked similarly in both capital cities and regional centres.• Of those citing growing firm profits as a challenge, 29% ranked it as Number 1.

Differences between Australia and New Zealand § Finding new customers/business is ranked highest in Australia; in New Zealand this is the 3rd ranked

challenge. § Improving operational efficiency is ranked 2nd in Australia, but 9th in New Zealand. § Differentiating from other firms is highest ranked in New Zealand, but 4th in Australia.

The rankings for each country have been sorted and are listed below.

The challenges that did not rank highly were workforce planning and internal cultural change. A summary of all challenges analysed by firm size, country and firm locality is given in Appendix A and B.

PREPARING FOR A SUCCESSFUL TOMORROW

Rank

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

New Zealand Challenges











Retaining talent



Having right information for decision making

Workforce planning

Rank

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Australian Challenges













Retaining talent


Workforce planning

7

Q2 – Other ChallengesRespondents were given the option to add their biggest challenge if it was not included above:

§ Accommodating a virtual workforce. § Implementing an effective digital marketing program with buy-in from authors. Especially in relation to

content generation. § Strategic planning in the face of rapid change. § Dealing with the NZLS Lawyers Complaints Service and the way it is destroying our profession. § Market awareness of the practice benefits of the dispersed law firm consultancy model. § Developing and maintaining an innovative firm.

Q3 – Overall Strategic PlanRespondents were asked if their firm has a strategic plan and what type of plan. This was a multi-choice question with an option to indicate any other plans the firm held.

Strategic Planning in Law Firms

YES: 3+ year strategic plan

YES: 1-3 year strategic plan

YES: 12 month strategic plan

NO: 12 month budget only

NO: no plan

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

14%

33%

20%

18%

16%

Key Findings § Two thirds of survey respondents indicate they have a strategic plan.

• 14% of plans are for three years or longer duration – half of these are large firms (150+ people).• 33% of plans are between one and three years duration.• 20% of plans are for one year duration.

§ One third of respondents indicate their firm does not have a strategic plan. • 18% these firms operate with an annual budget – 60% of these are small firms; 8% are large firms.• 16% firms have no strategic plan – 82% of these are small firms.

Differences between Australia and New Zealand § 68% of New Zealand firms utilise a strategic plan compared to 65% in Australia.

• NZ: 8% firms plan for three or more years, 36% plan for one to three years, 24% plan for one year• Australia: 14% plan for three or more years, 31% plan for one to three years, 14% plan for one year

§ 32% of New Zealand firms do not have a strategic plan compared to 35% in Australia.• NZ: 20% use a 12 month budget and 12% have no strategic plan• Australia: 18% use a 12 month budget and 17% have no strategic plan

Differences between capital city firms and regional centre firms § 66% of firms in capital cities utilise a strategic plan and 64% in regional centres.

• Capital cities: 16% plan for three or more years, 31% plan for one to three years, 19% plan for one year

• Regional centres: 6% plan for three or more years, 34% plan for one to three years, 23% plan for one year

§ 34% of firms in capital cities do not have a strategic plan compared to 36% in regional centres.• Capital cities: 16% use a 12 month budget and 18% have no strategic plan• Regional centres: 23% use a 12 month budget and 13% have no strategic plan

8STRATEGIC PLAN

Differences across firm sizes § More than 80% of firms larger than 25 people utilise a strategic plan compared to only 47% of small

firms.• 1-24: 5% firms plan for three or more years, 22% plan for one to three years, 21% plan for one year• 25-74: 10% plan for three or more years, 44% plan for one to three years, 26% plan for one year• 75-149: 14% plan for three or more years, 43% plan for one to three years, 29% plan for one year• 150+: 53% plan for three or more years, 27% plan for one to three years, none plan for only one year

§ 47% of firms with less than 25 people do not have a strategic plan compared to 20% of larger firms.• Small firms, 1-24: 24% use a 12 month budget and 29% have no strategic plan

Q4 – Effectiveness of Strategic PlanRespondents were then asked to indicate how effective the current strategic plan is in directing activity and outcomes in their firm.

Strategic Plan Effectiveness

Very effective

Effective

Neither effective nor ineffective

Ineffective

Very ineffective

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

7%

63%

26%

3%

1%

Key Findings § 70% of survey respondents indicated their strategic plan is working well. § 26% of respondents feel their plan is not adding to the business positively or negatively – 85% of these

are small and medium sized firms. § Only 4% indicated their plan is ineffective. § Of those firms who indicated they did not have a plan, 70% were from small firms.

Differences between Australia and New Zealand § There is very little variation between countries; nearly 70% of firms in both countries have a plan.

• Plans considered effective: Australia 68%, New Zealand 71% • Plans considered neutral: Australia 28%, New Zealand 24%

§ New Zealand firms did not select very effective or very ineffective.

Differences between capital city firms and regional centre firms § Plans are considered effective by 71% of firms in capital cities; 62% in regional centres. § Plans considered neutral by 25% of firms in capital cities; 31% in regional centres.

Differences across firm sizes § There is large variation in how effective plans are across firm sizes:

• Plans considered effective: 58% firms (1-24), 75% firms (25-74), 33% firms (75-149), 91% firms (150+)

• Plans considered ineffective: 3% firms (1-24), 4% firms (25-74), 17% firms (75-149), no firms (150+)

9TARGET MARKETS AND SERVICES

Q5 - Plans for Scope of ClientsRespondents were asked to indicate from a multi-choice list, the plans their firm has for target markets (types of customers) and geographic areas in the next three years. Respondents were able to select all options that apply to their firm.

Law Firm Clients & Target Markets

Continue to addres the same target market/s

Increase the number of target markets we address

Expand our geographic footprint

Keep the same geographic footprint

Reduce the number of target markets we address

Reduce our geographic footprint

0% 10% 20% 30% 40% 50% 60%

25%

54%

44%

7%

1%

Key Findings § In the next three years, 25% of survey respondents will continue to address the same clients and

markets. § The most notable strategies were emphasis on growth: 54% will increase the number of target markets

and 44% expanding geographic footprint. § Other strategies involving a narrowing focus were less popular: 32% keeping the same footprint and 7%

reducing number of target markets.

Differences between Australia and New Zealand § There is large variation between countries:

• Continue with current plan: Australia 25%, New Zealand 40%• Growth strategies: increasing markets Australia 57%, New Zealand 48%, expanding geographic

footprint Australia 46%, New Zealand 40%

Differences between capital city firms and regional centre firms § 34% of firms in regional centres will continue with their current plan; 23% of firms in capital cities.

Differences across firm sizes § There is significant variation in the growth plans for scope of clients and markets across firm sizes:

• Continue to address same markets: 32% firms (1-24), 26% firms (25-74), 29% firms (75-149), 7% firms (150+)

• Increasing markets: 49% firms (1-24), 62% firms (25-74), 57% firms (75-149), 53% firms (150+)• Expanding footprint: 40% firms (1-24), 44% firms (25-74), 57% firms (75-149), 67% firms (150+)• Only small firms plans to reduce their geographic footprint

32%


Q6 - Plans for Scope of ServicesRespondents were asked to indicate from a multi-choice list, the plans their firm has with respect to services in the next three years. Respondents were able to select all options that apply to their firm.

Law Firm Services

Continue to offer the same range of services

Offer new legal services

Offer new online services (either legal or non-legal)

Rationalise or consolidate range of services we offer

Offer new non-legal services

0% 10% 20% 30% 40% 50% 60%

30%

39%

32%

24%

12%

Key Findings § In the next three years, 30% of survey respondents will continue to offer the same services. § At least one third of law firms plan to add new online services to their current business services. § 12% of firms are planning to offer new non-legal services.

Differences between Australia and New Zealand § There is significant strategy variation between countries:

• Offer new legal services: Australia 43%, New Zealand 24%• Offer new online services: Australia 34%, New Zealand 28%• Rationalise or consolidate services: Australia 20%, New Zealand 36%• Offer new non-legal services: Australia 12%, New Zealand 4%

Differences between capital city firms and regional centre firms § More firms in capital cities anticipate adding new services

• Offer new legal services: capital cities 44%, regional centres 30%• Offer new non-legal services: capital cities 14%, regional centres 4%

§ More firms in regional centres will look to expand online:• Offer new online services (either legal or non-legal): capital cities 31%, regional centres 36%

Differences across firm sizes § There is some variation in the plans for services offered across firm sizes:

• Continue to address same services: 37% firms (1-24), 34% firms (25-74), no firms (75-149), 27% firms (150+)

• Offer new legal services: 33% firms (1-24), 44% firms (25-74), 43% firms (75-149), 47% firms (150+)

§ Small firms are less likely to move online or to add non-legal services and some will rationalise services:• Offer online services: 24% firms (1-24), 40% firms (25-74), 14% firms (75-149), 53% firms (150+)• Offer non-legal services: 8% firms (1-24), 10% firms (25-74), 14% firms (75-149), 20% firms (150+)• Rationalise/consolidate services: 24% firms (1-24), 22% firms (25-74), 29% firms (75-149), 20%

firms (150+)


Q7 - Plans for Pricing of ServicesRespondents were asked to indicate from a multi-choice list, the plans their firm has for pricing of services in the next three years. Respondents were able to select all options that apply to their firm.

Law Firms’ Pricing Strategies

Continue with current pricing model

Offer more services on a fixed fee basis

Offer more services on a value price basis

Offer more services on a capped-fee basis

Offer more services on a risked-sharing fee basis

Offer more services on an hourly fee basis

0% 10% 20% 30% 40% 50% 60%

43%

45%

23%

12%

7%

5%

Key Findings § 43% of survey respondents will continue with their current pricing model in next three years. § The most prominent pricing strategy indicated by nearly half the survey respondents is offering more

services on a fixed fee basis. § 12% of firms are planning on offering services on capped-fee basis and 10% of firms surveyed will adopt

risk-sharing or hourly-fee pricing strategies.

Differences between Australia and New Zealand § Nearly half of survey respondents will continue with current pricing model: Australia 43%, New Zealand

48%. § 32% of New Zealand firms will offer services on value price basis compared to 23% in Australia. § Only 4% of New Zealand firms will offer services on capped fee basis compared to 13% in Australia.

Differences between capital city firms and regional centre firms § 50% firms in capital cities anticipate offering more services on fixed fee basis compared to 40% firms in

regional centres.

Differences across firm sizes § Large firms (150+ employees) are likely to change their pricing strategy in various ways:

• Offer more services: 67% on fixed-fee basis, 47% on value price basis, 27% on capped-fee basis • Only 20% indicated they will continue with same model

§ Approximately half of all firms up to 75 employees will continue with current pricing strategy• 43-46% of firms will introduce a fixed-fee basis strategy• 20-22% of firms will use a value price basis strategy• A small number (less than 10%) of these firms will add services on capped-fee, risk-sharing or

hourly fee basis

12RESOURCING STRATEGY

Q8 – Plans for ResourcingRespondents were asked about their firm’s resourcing strategy (i.e. how the firm deploys its talent, structures its workflow and creates and delivers its services) over the next three years. Respondents were able to select all options that apply to their firm.

Law Firms’ Resourcing Strategies

No change to current resourcing strategy

Increase adoption of flexible work practices

Increase number of permanent/part time

Restructuring the practice

Increase use of outsourced operational services

Increase in lateral hires

Increase use of outsourced legal services

Increase use of contract lawyers

Reduce number of permanent/part-time employees

Increase use of offshore legal services

0% 10% 20% 30% 40% 50% 60%

28%

45%

32%

21%

18%

16%

12%

10%

7%

5%

Key Findings § 28% of survey respondents will continue with their current resourcing strategy. § The most prominent strategy cited by 45% of all firms is the adoption of flexible work practices. § 32% of firms surveyed will increase the number permanent and part time employees. § Only 5% of firms plan to increase their use of offshore legal services..

Differences between Australia and New Zealand § Similar strategies will be used by firms in Australia and New Zealand:

• Flexible work practices: Australia 47%, New Zealand 52%• Increase employees: Australia 33%, New Zealand 40%

§ Strategy to increase lateral hires is more common in Australia 19%, than New Zealand 4%

Differences between capital city firms and regional centre firms § More firms in regional centres will increase employees and adopt new work practices:

• Adopt flexible work practices: capital cities 45%, regional centres 53%• Increase the number of permanent/part time employees: capital cities 30%, regional centres 43%

Differences across firm sizes § All large firms surveyed plan to make changes to their resourcing strategy. § Small firms will tend to focus on flexible work practices and increasing the number of employees. § Larger firms will also concentrate on lateral hires. § 60% firms with 150+ employees will restructure their practices.

13RESOURCING STRATEGY

Q9 – Plans for LeadershipRespondents were asked if their firm is planning to move to a corporate style leadership team.

Is your firm moving to corporate style leadership team?

27+73+A13+87+A60+40+A27%

Already exists13%

Yes60%

No

Key Findings § More than half of firms indicated they don’t plan on changing their leadership structure, 13% said they

would and nearly one third of firms surveyed said they already have a corporate style leadership team.

Differences between Australia and New Zealand § 28% Australian firms & 24% New Zealand firms already have a corporate style leadership team. § 68% of New Zealand firms will not be changing leadership style and 58% Australian firms. § More firms in Australia (14%) plan on moving to a corporate style leadership team compared to only 8%

in New Zealand.• Charts given in Appendix C

Differences between capital city firms and regional centre firms § 30% firms in capital cities & 23% firms in regional areas already have a corporate style leadership team. § 55% firms in capital cities will not be changing their leadership structure and 70% firms in regional areas. § More firms in capital cities (14%) plan on moving to a corporate style leadership team compared to only

6% in regional areas.

Differences across firm sizes § 14% of small firms have a corporate style leadership team, 33-40% of larger firms already use this

structure. § 75% of small firms indicated they would not be changing leadership style. § 14-20% of firms larger than 25 employees may move to a corporate style leadership team.

14MARKETING AND BUSINESS DEVELOPMENT STRATEGY

Q10 – Plans for Business DevelopmentRespondents were asked about their business development strategy (i.e. how they plan to win new projects and new customers) and their plans for the next three years. Respondents were able to select all options that apply to their firm.

Law Firms’ Business Development Strategies over next 3 years

No changes to current business development strategy

Expand our client referral program

Improve sales training for partners and lawyers

Increase use of professional business development (sales) resources

Improve sales forecasting and sales pipeline management

0% 10% 20% 30% 40% 50% 60%

24%

48%

41%

35%

22%

Key Findings § 24% of survey respondents indicated they anticipated no change to their current business

development plan. § The most common strategy for the next three years is expanding the referral program (48%).

Differences between Australia and New Zealand § 44% of New Zealand firms plan to continue their current strategy vs 22% Australian firms. § Firms from both countries will expand their referral programs. § More Australian firms plan to make improvements to their sales programs.

• Improve sales training for partners/lawyers: Australia 46%, New Zealand 28%• Improve sales forecasting: Australia 25%, New Zealand 8%

Differences between capital city firms and regional centre firms § There are only slight changes between firms’ strategies between capital cities and regional centres.

Differences across firm sizes § 27% of small firms plan to continue their current strategy. § More than 50% firms up to 150 employees will expand their referral programs; 33% larger firms will do

same. § Large firms plan to make improvements to their sales programs for partners & lawyers.

OtherRespondents were given an opportunity to add other strategies they are using. The responses were:

§ Improve our digital offering. § Significantly improve our client focus and teaching lawyers how to broaden relationships. § Improve business development by lawyers.

15MARKETING AND BUSINESS DEVELOPMENT STRATEGY

Q11 – Plans for MarketingRespondents were asked about their firm’s marketing strategy (i.e. how they position and promote their firm to attract clients) and their plans over the next three years. Respondents were able to select all options that apply to their firm.

Law Firms’ Marketing Strategy over next 3 years

No change to current strategy

Increase investment in firm’s online presence and social media

Increase investment in digital lead generation programs

Increase use of professional marketing resources

Re-position/re-brand law firm

Increased investment in online advertising

0% 10% 20% 30% 40% 50% 60%

21%

59%

32%

26%

20%

16%

Key Findings § 21% of survey respondents indicated they anticipated no change to their current marketing strategy. § The most prominent planned marketing strategy is increased investment in online presence and social

media. § 33% of firms will increase investment in digital lead general programs.

Differences between Australia and New Zealand § More New Zealand firms plan to use professional marketing resources, reposition their law firm &

invest in online advertising• Increase use of professional marketing resources: New Zealand 36%, Australia 25%• Reposition law firm: New Zealand 28%, Australia 19%• Increase investment in online advertising: New Zealand 28%, Australia 15%

§ More Australian firms plan to invest in firm’s online presence and digital lead generation programs• Invest in online presence & social media: Australia 65%, New Zealand 56%• Invest in digital lead generation programs: Australia 34%, New Zealand 24%

Differences between capital city firms and regional centre firms § 67% firms in capital cities will invest in firm’s online presence and digital lead generation programs

compared to 57% in regional centres. § 26% firms in regional centres plan to re-position/re-brand their law firm compared to 18% in capital

cities. § 30% firms in regional centres will use professional marketing resources compared to 25% in capital

cities.

Differences across firm sizes § At least 59% firms across all firm sizes will increase their investment in firm’s online presence and social

media. § Only 7% of large firms will increase their investment in online advertising compared to 20-21% of small

and medium sized firms.

OtherRespondents were given an opportunity to add other marketing strategies they are using. The responses were:

§ Increased face to face meetings with potential clients. § Modernise website, blogging. § Targeted approach. § Still in the planning stage.

16OPERATIONAL STRATEGY

Q12 – Plans for Systems & ProcessesRespondents were asked to indicate where they plan to invest in systems and processes over the next three years. Respondents were able to select all options that apply to their firm.

Law Firms’ Future Investment in Systems & Processes

Workflow/process management

Document management

Practice management

Customer relationship management

Data management

Business intelligence & reporting

Project scoping, estimation and management

Financial management

Resource management

Change management

0% 10% 20% 30% 40% 50% 60% 70% 80%

67%

50%

44%

37%

29%

29%

22%

20%

14%

9%

Key Findings § Two thirds of firms surveyed will invest in workflow management in next three years. § Half of firms surveyed will invest in document management in next three years.

Differences between Australia and New Zealand § Firms’ investment was similar across countries except:

• Business intelligence & reporting: Australia 32%, New Zealand 16%• Project scoping, estimation and management: Australia 21%, New Zealand 28%• Resource management: Australia 16%, New Zealand 4%• Change management: Australia 7%, New Zealand 20%

Differences between capital city firms and regional centre firms § Firms’ investment was similar between capital cities and regional centres except:

• Customer relationship management: 42% in capital cities, 36% in regional centres• Resource management: 17% in capital cities, 9% in regional centres• Change management: 8% in capital cities, 13% in regional centres

Differences across firm sizes § There is variation in types of investment across firm sizes. The most significant types by firm size

are:• Small firms (1-24): 65% in workflow/process management & 54% in document management• Medium firms (25-74): 80% in workflow/process management & 50% in document management• Med-large firms (75-149): 71% in document management, 57% of firms will invest in workflow/

process management, customer relationship management and data management• Large firms (150+): 67% in workflow/process management & 60% in customer relationship

management and 53% in business intelligence & reporting

OtherRespondents were given an opportunity to add other investments they were making into systems and processes. The responses were: Digital offering & reducing costs

17OPERATIONAL STRATEGY

Q13 – Plans for Service DeliveryRespondents were asked what service delivery strategies they plan to make changes to over the next three years. Respondents were able to select all options that apply to their firm.

Law Firms’ Legal Services Delivery

Automation/Workflow management

Precedent management

Online service delivery

Customer portals

Collaboration

Electronic discovery

Artificial intelligence

0% 10% 20% 30% 40% 50% 60% 70% 80%

63%

43%

42%

21%

20%

9%

73%

Key Findings § 73% of firms surveyed will make changes to the automation/workflow management systems. § 63% of firms plan to make changes to precedent management. § Similar numbers of firms will invest in online service delivery and customer portals. § 20% of firms will invest in collaboration systems and electronic discovery. § Interestingly, 9% of firms will invest in artificial intelligence.

Differences between Australia and New Zealand § There are some significant variations in service delivery changes across countries:

• Precedent management: Australia 63%, New Zealand 80%• Online service delivery: Australia 48%, New Zealand 32%• Customer portals: Australia 44%, New Zealand 52%

Differences between capital city firms and regional centre firms § There are slight variations in service delivery strategies between capital cities and regional centres:

• Automation/workflow management: 73% in capital cities, 79% in regional centres• Precedent management: 65% in capital cities, 68% in regional centres• Online service delivery and customer portals: 49% in capital cities, 38% in regional centres

Differences across firm sizes § The most significant changes in service delivery by type are:

• Automation/workflow management: 68% firms (1-24), 80% firms (25-74), 100% firms (75-149), 73% firms (150+)

• Precedent management: 67% firms (1-24), 70% firms (25-74), 57% firms (75-149), 53% firms (150+)

§ Large firms are more inclined to invest in some service delivery areas than smaller firms:• Customer portals: 33% firms (1-24), 52% firms (25-74), 43% firms (75-149), 73% firms (150+)• Collaboration: 21% firms (1-24), 14% firms (25-74), 29% firms (75-149), 60% firms (150+)

OtherRespondents were given an opportunity to add other changes they would make to how they deliver legal services. There were no responses.

18

Q14 – Plans for Strategic RelationshipsRespondents were asked about their firm’s strategic relationships and their plans over the next three years. Respondents were able to select all options that apply to their firm.

OPERATIONAL STRATEGY

Law Firms’ Strategic Relationships

No changes to current strategic relationships

Increase collaboration with other professional service firms

Increase collaboration with other businesses

Increase collaboration with other law firms

Acquisition of other law firms

Mergers with other law firms

Mergers or acquisition with other businesses

0% 10% 20% 30% 40% 50% 60%

28%

50%

41%

26%

18%

8%

3%

Key Findings § 28% of survey respondents indicated they anticipated no change to their current strategic relationships. § Half of all respondents said they plan to increase collaboration with other professional service firms and

41% indicated plans for increased collaboration with other businesses. § Strategies involving mergers with other firms are not popular with survey respondents (less than 10%),

however 18% of firms are planning acquisitions of other law firms and 26% are planning to increase their collaboration with other law firms.

Differences between Australia and New Zealand § More Australian firms will increase collaboration with other non-legal firms

• Other professional service firms: Australia 54%, New Zealand 44%• Other businesses: Australia 45%, New Zealand 28%

§ 28% New Zealand firms plan to increase collaboration with other law firms; slightly higher than 25% of Australian firms.

§ 19% Australian firms will focus on acquiring other law firms compared to 12% of New Zealand firms.

Differences between capital city firms and regional centre firms § There is less urgency in regional centres to collaborate with other businesses or law firms

• Increase collaboration with other law firms: 30% firms in capital cities, 19% in regional centres• Increase collaboration with other businesses: 45% firms in capital cities, 36% in regional centres

§ 6% firms in capital cities plan to merge with other law firms and 19% plan to acquire other law firms § 13% firms in regional centres will look to merge with other law firms and 15% plan to acquire other law

firms

Differences across firm sizes § 13-14% large firms (75+ employees) will leave strategy unchanged compared to 25-30% small-medium

firms § There is variation in plans for changing relationships across firm sizes. Firms will increase collaboration

with:• Other businesses: 41% firms (1-24), 34% firms (25-74), 57% firms (75-149), 67% firms (150+)• Other law firms: 33% firms (1-24), 18% firms (25-74), 14% firms (75-149), 27% firms (150+)

§ Less than 10% small firms plan to merge or acquire other law firms § Nearly 30% of medium-large sized firms plan to merge or acquire other law firms in next three years.

OtherRespondents were given an opportunity to add other relationships strategies they are using. The responses were:

§ A merger if the fit is right. § We have not successfully attracted quality candidates for succession planning.

19

Q15 – Preparation for “Tomorrow’s Firm: Digital, Divergent & Differentiated”Respondents were asked how prepared they believe their firm is for a “digital, divergent, differentiated” future.

PREPARING FOR THE FUTURE

How prepared is your firm for a digital, divergent & differentiated future?

54+46+A29+71+A12+88+A2+98+A54% 29% 12% 2%

Beginning to prepare

Well-prepared Unprepared Fully prepared

Key Findings § 54% of firms surveyed are at the beginning of their journey to prepare for a successful future. § More than 30% are well-prepared or fully prepared. § 12% are unprepared.

Differences between Australia and New Zealand § There are significant variations in the stages of preparedness between countries:

• Well prepared: Australia 32%, New Zealand 20%• Beginning to prepare: Australia 53%, New Zealand 72%• Unprepared: Australia 14%, New Zealand 8%

Differences between capital city firms and regional centre firms § There are slight variations in the stages of preparedness between capital cities and regional

centres:• Well prepared: 33% in capital cities, 23% in regional centres• Beginning to prepare: 53% in capital cities, 62% in regional centres• Unprepared: 11% in capital cities, 15% in regional centres

Differences across firm sizes § Approximately half of all firms surveyed are beginning to prepare; only a fraction of small firm and

very large firms indicated they are fully prepared:• Well prepared: 29% firms (1-24), 30% firms (25-74), 43% firms (75-149), 27% firms (150+)• Beginning to prepare: 51% firms (1-24), 64% firms (25-74), 43% firms (75-149), 60% firms (150+) • Unprepared: 19% firms (1-24), 6% firms (25-74), 14% firms (75-149), 7% firms (150+)

20

Q16 – Preparation for a Digital, Divergent, Differentiated FutureRespondents were asked in what areas their firm is best prepared for and best positioned to exploit.


Preparing for a fundamental shift in the way legal services are

purchased and commoditisation of legal products through digital

technology

Digital

Embracing new ways of delivering legal services, led by a range of

‘newlaw’ disruptors in the market

Divergent

Making your firm stand out in a competitive market, offering unique

value that is difficult to replicate

Differentiated

Preparation for “Tomorrow’s Firm”

Digital

Divergent

Differentiated

All of the above

None of the above

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

20%

12%

36%

6%

22%

Key Findings § 72% of firms surveyed have identified the area in which they are ready to develop their practice. § Most firms are prepared for a differentiated future; offering unique value and standing out in a

competitive market. § 6% believe they are ready to take advantage of all three areas: digital, divergent & differentiated. § 22% of firms are unprepared and not ready to develop any area.

Differences between Australia and New Zealand § 32% New Zealand firms do not feel they are prepared for digital, divergent & differentiated future

compared to 20% Australian firms. § The focus differs between countries:

• A digital strategy is more prevalent in Australia 25% compared to New Zealand 8%• A divergent strategy is similar in both countries: Australia 13%, New Zealand 12%• A differentiated strategy is more prevalent in New Zealand 44% compared to Australia 35%

Differences between capital city firms and regional centre firms § A higher percentage of firms in capital cities have established which area they will exploit: 32% of firms

in regional centres do not feel they are prepared for any area compared to 17% firms in capital cities. § A similar percentage of firms in both localities will take a divergent (13%) or a differentiated approach

(36%). § 27% of firms in capital cities see themselves positioned to take a digital approach compared to 13% in

regional centres.

Differences across firm sizes § 29% small firms do not feel they are prepared for digital, divergent & differentiated future compared to

13-18% of medium to large firms. § The percentages of firms selecting areas to focus on varies across firm sizes:

• Digital: 21% firms (1-24), 26% firms (25-74), 14% firms (75-149), 20% firms (150+)• Divergent: 13% firms (1-24), 12% firms (25-74), no firms (75-149), 20% firms (150+)• Differentiated: 30% firms (1-24), 42% firms (25-74), 57% firms (75-149), 33% firms (150+)

§ Very few small and medium firms indicated they were ready to exploit all areas:• All areas: 8% firms (1-24), 2% firms (25-74), 14% firms (75-149), 13% firms (150+)

21

Q17 – Preparation for Other InitiativesRespondents were asked what other initiatives their firm has established or is in the process of developing to prepare for the future. Approximately 25% shared their ideas, thinking and additional plans: these have been grouped into organisational areas.

1. Employment/Resourcing » Workflow

• More collaborative office • We plan to have “matter pathway” • Efficiency and productivity • Flexibility and diversity in practices • Leaders to advise, consult and delegate and work as a team even more than they do now. • Use our youngest lawyers to spend half their time as legal engineers contemplating the future and

move the firm strategically forward in the digital age. They will come up with ideas; management will collaborate, agree priorities and set goals for teams to achieve in the short and medium term.

» Succession planning/mentoring• Bringing in younger authors and allowing them a greater say in the running of the firm.• Current managing partner not embracing technology. With succession planning, take the firm

forward with new partnership model in years to come. » Organisation structure

• Increasing spend on external expert consultants to help drive change/move the firm forward.• As very small firm, we recently employed a Practice Manager to guide us - only at start of journey• Move towards specialist teams and building capacity• Recent focus on strategic planning and leadership development• Relocate and reduce costs. Otherwise, just to survive - as we have for 28 years now

2. Marketing/Business Development » Culture

• Good attitude• Creating & embed an innovation strategy/mindset - critical to adapting to a new future

» Growth• Keep looking at current trends and stay with them• Diverse business and service offering• Already a virtual law firm; we plan to sell books, online courses and products (commoditisation)• Grow our non-legal service initiatives

» Service• Commitment and high standard of service to our current client base (at a Marketing level). • Our Managing Partner also has plans in place for future development.

3. Technology » Planning

• Ensuring we understand what new technologies are emerging that may/will assist• Full comprehensive administrative and technological review

» Operations• System consolidation/aggregation• Substantial investment in tech refresh program including workflow, automation and data analytics• Online payment system• Move to DMS as the Source File - moving away from Hard Copy• Moving to the cloud • Developing document assembly software

» Firm-Market Interface• Website rebrand• Interfacing Skype so we can reach regional clients easier.• Improved mobility of lawyers so they work from client premises.• Improved use of technology for work delivery without commoditisation.• Online legal precedent publishing service (B2B)• Project to form an electronically-based centralised database for all Wills in NZ


22

75+25+D

Survey Participant ProfileThe ALPMA/LexisNexis Summit Survey 2015 was completed by 147 firms across Australia and New Zealand.

Respondents were also asked to indicate the size of their firm and whether the firm was situated in a capital city or regional centre.

Participant’s Position

Firm Size Firms were asked to indicate their size based on number of employees:

Firm Location Respondents divided by country and capital city/regional centre:

SURVEY PARTICIPANT PROFILE

Large Firms 150+

Medium-Large Firms 75-149

Medium Firms 25-74

Small Firms 1-24

Regional Centre

25%

Australia

81%

Capital City

75% 24+76+DRegional Centre

76%

New Zealand

19%

Capital City

24%

Rank

30%

20%

10%

9%

7%

5%

5%

5%

3%

Participant Position

Practice Manager

CEO/COO/GM

Managing Partner

Partner

Business Development Manager

Finance Manager

Marketing Manager

Lawyer

Other

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

22%

5%

36%

47%

23APPENDICES

AppendicesAppendix A: Challenges divided by firm type The ranked responses to challenges were totalled to indicate the intensity of each challenge by firm size.

Appendix B: Challenges divided by country and localityThe ranked responses to challenges were totalled to indicate the intensity of each challenge by country and then by firm location (capital city or regional centre).

Appendix C: Corporate Leadership StyleIs your firm moving to corporate leadership style?

Challenge














Retaining talent

Workforce planning

Small Firm

63%

59%

56%

59%

46%

41%

32%

30%

25%

25%

21%

18%

11%

10%

5%

Medium Firm

61%

57%

56%

42%

34%

42%

34%

32%

10%

34%

18%

38%

10%

18%

14%

Medium-Large Firm

57%

43%

43%

29%

29%

29%

14%

43%

43%

14%

14%

57%

43%

29%

14%

Large Firm

60%

60%

53%

40%

27%

40%

33%

20%

0%

47%

27%

27%

40%

27%

0%

Challenge














Retaining talent

Workforce planning

Australia

64%

62%

53%

45%

38%

37%

31%

27%

20%

33%

23%

25%

16%

15%

9%

New Zealand

49%

39%

64%

65%

39%

56%

36%

45%

8%

19%

8%

40%

12%

16%

4%

Capital City

67%

60%

55%

43%

37%

37%

32%

31%

17%

36%

20%

24%

16%

16%

8%

Regional Centre

51%

53%

55%

59%

40%

47%

32%

30%

19%

19%

19%

36%

15%

15%

9%

28+14+58+DAustralia

Already exists

28%

Yes

14%No

58% 24+8+68+DNew Zealand

Already exists

24%

Yes

8%

No

68%

24

4%

8%

4%

5%

2%

3%

3%

4%

1%

APPENDICES

Appendix D: Challenges by country The ranked responses to challenges were totalled to indicate the intensity of each challenge by country.

Challenges Facing Law Firms by Country












Retaining talent



Workforce planning

0% 2% 4% 6% 8% 10% 12% 14% 16%

16%

11%

13%

6%

11%

13%

9%

14%

8%

10%

8%

11%

7%

9%

6%

3%

7%

2%

2%

1%

1%

Australia New Zealand

25

About ALPMAThe Australasian Legal Practice Management Association, (ALPMA), is the peak body representing law firm managers and leaders. ALPMA provides an authoritative voice on issues relevant to legal practice management. ALPMA delivers a comprehensive professional development program for members, which includes the annual ALPMA Summit, regular practice management seminars across Australia and New Zealand, the Leading Your Firm program, for smaller and regional law firms, online resources and a legal industry research program. For more information visit www.alpma.com.au

About LexisNexisLexisNexis® Legal & Professional (www.lexisnexis.com) is a leading global provider of content and technology solutions that enable professionals in legal, corporate, tax, government, academic and non-profit organisations to make informed decisions and achieve better business outcomes. As a digital pioneer, the company was the first to bring legal and business information online with its Lexis® and Nexis® services. Today, LexisNexis Legal & Professional harnesses leading-edge technology and world-class content, to help professionals work in faster, easier and more effective ways. Through close collaboration with its customers, the company ensures organisations can leverage its solutions to reduce risk, improve productivity, increase profitability and grow their business. Part of Reed Elsevier, LexisNexis Legal & Professional serves customers in more than 175 countries with 10,000 employees worldwide.

In Australia, LexisNexis® (www.lexisnexis.com.au) is the leading provider of Australian and international news, business, tax and legal information, using leading-edge technology, tools and online solutions.

AcknowledgementsThanks to Jordan Furlong, Principal with Edge International for reviewing the questionnaire and providing his insights on the preliminary findings. Jordan was a workshop and keynote presenter at the 2015 ALPMA Summit, 9-11 September at the Gold Coast Convention and Exhibition Centre.

LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. Other products and services may be trademarks or registered trademarks of their respective companies. Copyright 2015 LexisNexis. All rights reserved. KK

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