Law firms change business model

In the Australian Financial Review on Thursday 25/6/09, the lead article "Downturn squeezes big law firms" provided a sneak preview into changes that are occuring within the legal profession due to the economic slowdown. In the article, James Eyers, Alex Boxsell and Rachel Nickless report on the current challenges to the legal profession as we once knew it. These included a decrease in the size of large law firm partnerships, redundancies, shrinking profits, stricter performance management and pay and hiring freezes.
In general, the legal profession has acted as a leading indicator as to the likely changes that will be witnessed in the accounting profession. Even if the accounting profession doesn't follow in the immediate footsteps of the legal profession, much can be learned from the activities of the law firms in response to these tough times for accounting practices in Australia.
The current environment for legal services sees a growing number of clients seeking quality advice at lower prices. A shift to medium tier providers is occuring as some of the leading advisors move into smaller firms.
Ted Dwyer, a consultant who works with medium and large legal firms is quoted in the article as follows "If the partners seek to maintain high profits in a climate with lower prices, they need to rework their overheads by re-engineering the way they do the work day by day, using people and technology differently. They also need to design a new pricing model". (page 6)
The changes being adopted appear to be fundamentally sensible. Firms need to relate to their clients in a more personal way, take advantage of technology to communicate more broadly and in quicker timeframes and work with clients in a relationship geared towards results rather than just fees from time spent.
Accountancy firms that do not similarly respond to the recent downturn with a different approach to their client relationships will inevitably lose out to smaller leaner practices that are willing to change the current business model for both clients and accountants alike.