Martin Wiseman: Time for New Zealand firms to shift focus

by Mackenzie McCarty03 Feb 2014
It’s time for New Zealand law firms to wake up and smell the fresh scent of change in the air, says DLA Phillips Fox partner, Martin Wiseman. As global trends lap our shores and technological advancements render traditional ‘bread-and-butter’ legal work redundant, firms need to be taking a hard look at their current processes.

“There are a number of trends which I think…law firms in New Zealand need to respond to. These are global and national trends and they are either having an effect, or are likely to have an effect, on revenue now and in the future.”

First off, he says, the commoditisation of areas of the law which were once significantly more remunerative – numerous aspects of banking and finance legal work, for instance, is having a significant impact on many firms' bottom line.

“In large part this trend has been driven by technology. What was once solely the IP of self-styled elite firms is now available to all firms. Precedents or template documents relating to all types of transactions and matters are transferred by email between firms all over the world many times daily. Document management systems have also advanced and clients now frequently maintain their own templates for relatively routine legal matters. Many transactions, registrations and enquiries can now be completed on-line directly by clients without the need for either in house or external lawyers to be involved.”

The commoditisation shift, Wiseman argues, has also been fuelled by (and is itself fuelling) another trend in the legal environment: the rapid rise of senior, experienced and large in-house legal teams. New Zealand Law Society figures show corporate lawyers accounted for 8.04% of all lawyers in New Zealand in 2013, up from 6% in 2003 - and the trend shows little sign of easing.

“Clients are taking legal work in-house and simultaneously incentivising in-house lawyers to reduce external spend,” said Wiseman.

“It is a trend which is not going away, in part because the general counsel is in many instances now the trusted legal adviser to the board and executive team, displacing the partner of an external law firm who once performed that role. General counsel are often partner-level lawyers who have many years’ experience in firms, meaning that they know how to reduce the use of external firms and how to use them efficiently when they do need to for risk management, capacity or specialist expertise reasons.”
Maintaining flexibility when it comes to fee structures is also increasingly important as client expectations grow, says Wiseman. While he doesn’t believe the hourly rate structure is dying, he argues that firms need to keep an open mind when it comes to fixed rates and alternative billing methods.

“The real challenge now is how you make your firm and your people as effective as they can be for clients, for as little cost. Clients are not going to pay for the inefficiencies of firms, or for firms to train their people…Firms are becoming much more ‘professional’ organisations across the board now, so they’re investing much more time in things like recruitment, retention, training, technology, business development, knowledge management - because they know that unless they invest in those things, they won’t meet the growing demand of clients who consistently want you to deliver more for less.” 

COMMENTS

  • by Auckland Lawyer 3/02/2014 8:48:40 a.m.

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  • by Ron Pol, TeamFactors.com 3/02/2014 11:55:30 a.m.

    The figures for in-house counsel are considerably higher than the 'corporate' quoted, as it also includes 'government' plus unions etc.

    We've maintained records over many years; the trend is indeed rising, and as well as the growth of in-house counsel in absolute numbers, it's now around 20% of the profession.

    Interestingly in the context of Martin's comments, the growth is often in 'new' general counsel positions, not just expanding existing legal departments.

    Every few months we seem to see another 'mid-sized' company, or (to a lesser extent) agency, which had previously relied exclusively on external counsel, hire their first in-house lawyer.

    And oftentimes, firms are surprised, even though the signs (typically) follow a fairly common process over several years beforehand.