New report show Australian law firms have done well – and will continue to do so next year
Most Australian law firms have prospered in 2020 according to a new report.
While the COVID-19 pandemic has caused considerable disruption and financial pain for many businesses, almost 8 out of 10 law firms said that profits were stable or increased in the 12 months to the end of June 2020 compared the previous 12 month period.
The strong results are part of the latest CommBank Legal Market Pulse, released today, which reveals a mean profit increase of 7% across the sector.
A further boost of 5.5% is expected in FY2021.
The buoyancy of the legal services sector has meant that most firms have retained their workforce, with few changes across all roles.
Digital transformation remains a key focus for firms over the next 12 months while flexible and remote working options are expected to expand across almost all firms, along with enhanced digital services for clients.
Belinda Hegarty, Commonwealth Bank’s national head of professional services, says that the Australian legal services industry has thrived despite the operational and financial disruption of COVID-19.
“We expect to see a continued focus on digital transformation that has followed years of investment in technology within the sector. This will help firms meet client expectations that legal services need to be delivered faster, more cost-effectively and add greater value than in the past,” she said.
One fifth of firms under pressure
The good news isn’t universal though with 21% of law firms reporting reduced profits.
The firms that have shown greatest resilience score well against five criteria: profit growth, maintaining cash flow, managing staff utilisation, adapting to remote work, and ability to compete.
“More resilient firms have clearly led the way in adopting technology. They better understand its potential to help deliver services faster, simpler and cheaper, and to create new products and services. Years of steady investment in this area saw these firms smoothly switch to working remotely and delivering services digitally. Very few less resilient firms could claim the same,” added Hegarty.