#ICYMI you can read Issue 246 of my Weekly Digest on all things #legal #strategy #pricing #vbp #CRM #clients #customers #innovation #auslaw #asialaw #uslaw #uklaw here.
Citing a recently published Thomson-Reuters ‘State of the Legal Market 2020‘ report, The Australian Financial Review (AFR) published two articles last Friday (28 August 2020) that, collectively, provide one of the first insights in to how Australian law firms are fairing in this post-pandemic COVID-19 world.
How is Australia doing compared to the rest of the world?
The first article ‘Law firms prove world-beaters as virus strikes‘ by Michael Pelly would, at first blush, seem to suggest that law firms here in Oz are doing far better than the rest of the world.
Looking at the five key metrics of:
- billable hours,
- hourly rates,
- fee revenue,
- productivity, and
- lawyer growth,
Australia’s results look spectacular.
But kick the tires a little and you’ll see that a June Q19 to June Q20 period is an Australian Financial Year – and not all, in fact none of the other regions, works to that same time line.
So these results should be read with caution, in that they are a moment in time which may not be a true reflection of how the other markets are fairing (it would be interesting to run those same numbers on a Jan to Dec timeline which would probably be a truer period [admitting that even then the UK numbers would be out] because, as we know, not every month is equal – in that we don’t split an annual budget by 12!).
Nevertheless a good result for the Oz firms – but that ‘red blip’ of productivity would be a concern to me if I were a Managing Partner.
Which leads us to…
…who is doing the work?
One of the more interesting takeaways from the chart above is how the hourly rate in every geographic region has increased, even where fee revenue and number of billable hours has decreased (and in some cases significantly).
If you are asking yourself how can that possibly be, look no further than my post of two weeks ago – ‘When does the law of supply and demand not apply? – when you’re running a law firm of course!‘ – and this is also (in my opinion) reflected in the second of the AFR articles last Friday: ‘Law firm partners working harder during pandemic‘:
Look at that spike in partner hours!
For those who may not have read my post of two weeks ago there are, in my view, two reasons why you get that kind of spike:- (1) the work is more complex and needs more grey-haired thought, or (2) senior lawyers need to protect their budget – your choice.
So where are we at really?
I’d treat the financial results of the Australian law firms above with a pinch of salt till the end of February 2021, which -in my opinion – will be a truer barometer of how the industry is doing down here.
As always, the above just represent my own thoughts and would love to hear your thoughts (and; ps: if you want to know why I say end of Feb 2021, email me).
As we approach end of Financial Year here in Australia many will be looking at finalising, and implementing, their strategic plans for FY2021.
With this in mind I thought I would share my own base-level planning tool; my go-to starting point for any short, medium and long-term planning activity – I call it my ‘5 x 5 Planning Tool‘, it has served me well and works like this:
- 5 Minutes: Will the decision I make have an affect/effect 5 minutes from now?
- 5 Days: Will the decision I make have an affect/effect 5 days from now?
- 5 Weeks: Will the decision I make have an affect/effect 5 weeks from now?
- 5 Months: Will the decision I make have an affect/effect 5 months from now?
- 5 Years: Will the decision I make have an affect/effect 5 years from now?
It’s rare, but possible, that a decision you make will have an affect/effect on all five plains; but, in my experience, what the above does do is give you clarity. It allows you to compartmentalise thoughts into the short, medium and long-term and gives you the ability to then focus on what is then, in that moment, important to you and your business.
Give it a try.