25 August 2011

The changing face of law firms

Where does that leave information management?

Discussion

1. The changing nature of Australian law firms

2. Considering the ways that lawyers are accessing information

3. Adaptation and making the most of these changes

1.The changing nature of Australian law firms

The changing nature of Australian law firms

– We have experienced >two decades of profound transformation

– Mergers, consolidation, globalisation, technology, new law firm models and changes to the work force

Industry numbers: 10 year snap shot*

$7.08bn$5.8bnWages

$182,700$161,800Revenue per employee

16,39818,087Enterprises

126,416103,858Employment

$23.1bn$16.8bnRevenue

2010-20112001-2002Key statistics

*IBISWorld

A productivity surge? Exhibit (A)

Revenue per employee

150

155

160

165

170

175

180

185

Rev/Employee 162 166 169.7 177.7 176.7 175.6 179.9 181.8 182.1 182.7

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

*IBISWorld

A productivity surge? Exhibit (B)

Wages % Revenue

28

29

30

31

32

33

34

35

Wages % 34.6 33.9 33.1 31.7 31.6 32.5 32 31.5 31.5 30.7

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

*IBISWorld

But law firm cultures are changing

“Increased work intensity cannot be sustained forever, so my analysis predicted that the above-average productivity growth would be reversed as Australian workers reclaimed control of their lives in a stronger labour market…

- John Quiggin (UQ), AFR 20 August 2011

Average Wage

$55,000

$55,500

$56,000

$56,500

$57,000

$57,500

$58,000

$58,500

$59,000

$59,500

$60,000

Average Wage $55,961 $56,227 $56,134 $56,400 $55,905 $57,117 $57,583 $57,230 $57,394 $56,072 $56,344 $56,726 $57,277 $57,501 $57,890

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Average Wage

$55,000

$55,500

$56,000

$56,500

$57,000

$57,500

$58,000

$58,500

$59,000

$59,500

$60,000

Average Wage $55,961 $56,227 $56,134 $56,400 $55,905 $57,117 $57,583 $57,230 $57,394 $56,072 $56,344 $56,726 $57,277 $57,501 $57,890

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Top: Average hours worked (ABS)

The good times are over? Or are they…

Revenue % growth*

0

1

2

3

4

5

6

7

8

9

Revenue % 7.9 6.9 5.4 0.8 1.1 4.3 1.2 2.2 2.9 3.1 2.5 3.9 3.5 3.5

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

*IBISWorld

Overpaid, overqualified and over here…

– The arrival of some of the large US and UK firms is having a profound impact on the Australian legal industry

– Most likely we will see: • Further mergers/poaching

of talent• New entrants• Moves into Asia and

Africa

“The global financial crisis forced a rethink on growth for growth's sake while reinforcing how global and interdependent world society had become…

The right model for globalised legal services needs to consider the growth regions, sustainability and ability to export legal services. Access is important, and sometimes the most direct path to an international market is not the most suitable.”

- Don Boyd, Deputy Chief Executive Norton Rose in The Australian, 3 June 2011

“The global financial crisis forced a rethink on growth for growth's sake while reinforcing how global and interdependent world society had become…

The right model for globalised legal services needs to consider the growth regions, sustainability and ability to export legal services. Access is important, and sometimes the most direct path to an international market is not the most suitable.”

- Don Boyd, Deputy Chief Executive Norton Rose in The Australian, 3 June 2011

Good reasons for moving into the region

– Why large multinational firms are looking to are region?

– IMF Word Economic Outlook 2011

– Growth in GDP: • North America and

Europe “slow”• Asia and Africa growing• Apparently Mongolia is

the place to be!

Other factors…

– The challenge of an ageing work force, which will most likely increase the cost of labour (reducing profitability)

– Disruptive technologies as represent both threats and opportunities

– Commoditisation of technology and information…the “iPhone effect” that makes technology cheap, fun and accessible*

* Ask yourself, just how “cheap, fun and accessible” are law firm systems?

Why we should care

– Australian firms cannot afford to “stand still”– This have implications for the type of:

• Services we offer• Staff we employ• Technology we deploy• The perceived value we add to the firm

– Ask the question: • “How can you help the firm grow, retain talent and

differentiate itself from the competition?”

Implications

– The bad news: • Pressure on budgets• Pressure on services to meet increased

demands – both volume and sophistication• Pressure on staff retention

– The good news: • Represents opportunities that are both

challenging and add value to the business

2.How lawyers access information

Trend: the decline of the AFR as an authoritative source

– For some time we thought giving staff access to the full text of AFR articles would be a worthy goal: • But then reviewed our statistics in regards to retrieving

full text AFR articles from our news clipping services• On average, we retrieved x2 articles per month• Our users happily exist without it

– Users will “find a way” by themselves– Reflects a general decline in the popularity of

traditional news services

The decline of the desktop

– Our services, technology and infrastructure is built around a platform in decline*

– The number of desktops being “shipped” is small in comparison to mobile devices

* Morgan Stanley, Web 2.0 Seminar 2010 (held San Francisco)

The written word is far less important

– North American internet traffic has seen a rapid growth in video related content

– 35 hours of video content is added to YouTube every minute

– Increasingly, much of this is accessed via “mobile” devices

Social networks becoming the new information portals

– Recent McKinsey research* based on 100k respondents to survey questions indicate:• For people under 34 the preferred channel (minutes per

use) displacing email/text• 33% use social network platforms to navigate

content on the web – up from 13% in 2008• Yes, search engines are losing out to social networks as

“gate keepers”• Smartphones becoming the preferred platform of users

* Are your customers becoming digital junkies? McKinsey Quarterly July 2011

Node of trust: new versus old media

– Report “Reporting war, waging peace: the impact of new media technologies” (P. Mirchandani)

– New Web 2.0 technologies have: • “thrown into turmoil traditional media’s business

models”• traditional communication practices “are losing

trust and relevance

What is a “node of trust”?

– Audiences demand the right to “talk back and be heard”

– Users have adopted the notion that “sharing is cool”

– The line between “professional and amateur” is blurring for users

– New media is “eroding attempts at control”

– Influence is generated by “nodes of trust”

“New media have introduced a changed concept of a “node of trust”– it can now be an individual, a website, a network, a blog, an Internet TV channel – which people turn to for information…”

“New media have introduced a changed concept of a “node of trust”– it can now be an individual, a website, a network, a blog, an Internet TV channel – which people turn to for information…”

Its not the same “internet” we grew up with

– Users built networks and solutions from the bottom up

– The peers and social network of users are a vital conduit of information

– Less a “culture of the book”, and more of a “culture of video”

– The web has “decoupled” from the desktop, and now mobile

– Users want control and a voice – indeed, the expect and demand it if they trust the platform

3. Adaptation

Who we service?

– Question: do we continue to add a “full service”model in the hope we touch every part of the business?

– Answer/s:• Given the pressure on costs and resources, be strategic

in your choice of who you service• Conduct a “customer segmentation” exercise• Determine out which parts of the firm are growing• Worry about those groups/individuals who don’t use

your services only when they “pester you”

Align your business model to firm strategy

– Question: how can information professionals add value to the business?

– Answer/s: • Carefully align your services, collection and the skills of

your staff to firm strategy• At Middletons we conduct an annual planning session,

in which the firm strategy is the “foundation”• All new products and services match growth areas for

the firm – “ruthless” in selection• Developing subject matter experts on a small range of

subject areas

Accept the brave new world of the internet

– Question: how can we ensure users remain faithful to “authorised” sources of information?

– Answer/s:• Educate them on sources, but don’t worry about it – we’ve lost that

fight• Look at it from a risk management perspective and judge potential

negative impacts on the business (low-medium-high)• Explore Web 2.0 tools, but don’t race to embrace them all – ask

what suits the culture of your firm• At Middletons we are “retiring” resource guides and handouts –

web based “gadgets” or even Smartphone apps will most likely replace them

Allows users to “talk back” and control the spaces

– Using the “node of trust” content, explore how users can take control of the platform

– Provide them with the tools, then let them organise the spaces/social network

– Involve users in technology development– At Middletons we are redesigning our catalogue: feedback was

essential– The new “catalogue” will be tailored to the user:

• allow them to favorite materials• keep all their past research requests • alert them to new resources specifically related to their practice area• Have quick links to the “top five” most frequently used resources• Allow them to see what is “popular” in their groups

– Catalogue conceived in “pragmatic terms” – we know they use Google!

Think beyond the desktop and other traditional services

– Smartphones, the “cloud” and mobile internet will be upon us soon

– Start thinking about non-desktop services (i.e. Apps)

– At Middletons we are exploring “just-in-time”video/online training to compliment traditional training services

The “broker” model

– Too often information services become straddled with a range of “knowledge” activities or business units

– Advise information managers to pick your “niche”:• Advanced research?• Business or market intelligence?• Knowledge management?• Integration?

– Market you services in a “personal” manner– Deliver to you clients a range of “bespoke” solutions,

customised to their needs– Allow them choice

Our response

– Research desk: the “call centre”with one phone number with work being picked up by anyone rostered on

– Focus on projects that have positive impacts on business and can be delivered in reasonable time frames

– No catch ups for the sake of “catching up”: meetings are project based

– Structured Information Services to meet the changing needs of the firm (see right)

– Quietly dropping products and services that no longer “add value”

– Streamlining our services to match strategic direction of firm

Information Services

LearningCollection

ManagementInnovation &Technology

Questions

Further information

Michael Marriott | National Information Services ManagerT: +61 9205 2171E: michael.marriott@middletons.com

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