Good news: Australasia ahead of the legal innovation game

by Sophie Schroder30 Jul 2014
Joanne Rees, one of Australasia’s most respected strategic legal advisors, recently attended a major legal project management conference in Chicago and was surprised by the lack of action legal leaders are taking in other parts of the world.

“They had a panel of presenters from different firms talking about what they were doing in the legal practice management space and I found it interesting that really not a lot was happening, even though firms were spending a lot of money,” she says. “I came away feeling surprised that there wasn’t the attitude of ‘well, we have to do this’.”

Rees attended the conference expecting to learn about action that legal professionals in Australia have yet to take, but actually found that the country is ahead of the trend.

“I spoke to other people over there that were doing consulting work and they were of the view that in fact [we are] advanced in terms of attitude and innovation,” she told NZ Lawyer's sister publication Australasian Lawyer.

Rees is the CEO of Allygroup there, an alternative legal services provider that advises in-house counsel with the aim of cost-effectively improving the service, value and accountability of their professional legal services.

She’s had a legal career spanning almost 30 years, and was the founder and - for almost ten years - the public face of legal firm Phillips Fox Canberra, where she built the business into one of the largest government practices in the city.

She says that despite her findings that Australia is ahead of the innovative legal trend, there is much work to be done especially considering the trends that are starting to emerge towards significant in-house growth and consolidation.
“[Corporations] see under the hourly rate model that they have to pay $500 plus an hour to get senior partner-level advice, but if they pay people to do that in-house, they can get that at a fraction of the cost…the advice is also then a lot more strategic.

The consequences of this are only just starting to emerge, Rees says, and have seen corporations systematically begin to reduce the number of external firms that they use, in preference for a select few.

These “deep relationships” are almost like secondments where the corporation and the firm know the other’s business intimately, she says.

“This provides a great opportunity for firms…but the real challenge for general counsel is that they could almost become beholden to a firm. Whether over time general counsel will find it’s actually too big a risk for them because firms realise [they are beholden] and stop offering discounts, I’m not sure.”
Martin Wiseman the chairman and partner of New Zealand’s DLA Phillips Fox, which has an alliance with DLA Piper, also made comments to NZ Lawyer regarding this trend.

“There are now everywhere large in-house teams of experienced partner level lawyers. They are trusted and strategic advisers to their businesses and astute buyers of external legal services who rightly demand demonstrable value for money,” he says. “As someone who has been very close to DLA Piper for over 10 years now, it won’t surprise you if I add that the law is globalising as general counsel look to a trusted external adviser in one location to look after them in another.”

Another Kiwi expert, Minter Ellison Rudd Watt’s managing partner Mark Weenink, agrees that we have seen a rapid increase of in-house growth and consolidation in New Zealand, but says our law firms have always been good at adapting to changing client needs, diversifying and innovating as the market and regulations move on.
“Yes, there’s a definite shift to in-house going on across corporate New Zealand. This is great news for the profession as general counsel becomes more trusted and valued within their businesses,” he told NZ Lawyer.
“With the shift in-house comes changes to the role of external counsel, and we are having some really interesting conversations about how we can support GCs as their role expands into new areas.”
Australia’s Rees says there needs to be a “meeting of minds” between external firms and in-house counsel in order to make some strategic plans going forward.
One of the biggest barriers to success in doing this is the current cost models that are no longer of benefit anyone, she says.

“The only way firms are making profit is by using junior lawyers and paralegals, and these people are taking a hell of a lot longer to do the work, which is costing the clients money… It’s an unsatisfactory model all around…General counsel need to start trialling different models and seeing what is going to work. More and more, general counsel or firms have to come up with some initiatives.”