The Impact Of COVID-19 On The ANZ Legal Sector Report

Towards the tail end of 2020, when Delta was either the fourth letter of the Greek alphabet, an Australian singer or an American airline, and we were otherwise feeling rather smug about how we were managing COVID-19, IPS conducted a survey of 30 ANZ legal firms to determine how they were coping. As we draw closer to another Xmas, and all states begin to enjoy another return to relative freedom, we thought it might be opportune to revisit some of our findings and speak to some of the firms that contributed to the original survey and to contemplate whether the old office-based world will re-emerge as the dominant way of working.

Business continuity plans thoroughly tested

If nothing else the pandemic and consequent lockdowns ensured that legal firms were able to thoroughly test, and refine, their business continuity plans, and now have the experience and technology to adequately cope with remote working and future lockdowns. From a technology perspective most firms have migrated the majority, if not all, of their workforce onto laptops, with desktops only being used in places like reception or meeting rooms. And because of the laptop deployment, and to offset some of the cost, there has been an accelerated move from remote management solutions such as Citrix towards a more immersive mobile experience, heavily predicated on a Microsoft road-warrior model.

Video conferencing

Another significant change is the widespread adoption of video conferencing as an acceptable means of communication between staff and clients. Although itm may not always be ideal, video conferencing has proven its value, and the products primarily being used, Zoom and Microsoft Teams, have, to some extent, replaced some of the more traditional video conferencing providers with their more expensive solutions. MS Teams has also been a quiet and inexorable achiever due to the popularity of Microsoft platforms across professional services and the remarkable, almost religious, conversion to Microsoft SaaS based licencing and a MS Office 365 addiction.

Flexible working

Although there appears to be a preference for having staff return to the office all the firms we have spoken to expect that most staff won’t return on a regular basis until after Xmas. And they also confirm that a flexible approach to work will remain. However, there will be the challenge of how to manage a workforce where a small percentage of staff may continue to remain unvaccinated. Colin Biggers & Paisley are adopting a flexible approach and the firm’s managing partner, Nick Crennan, observes that "The bonds of collegiality and friendship, culture and learning have been challenged by lengthy enforced remote working. This has had a deep impact on many people, on their wellbeing and in some cases, mental health. We have always been committed to flexibility and our new way of working will be a mix of distributed, flexible and office work. In that environment, we will be focused on renewing and deepening the bonds between us. What is clear is that there is quite a range of experiences, affected by career and life stage, practice area and personal living arrangements. The future is therefore very challenging but also very, very interesting". 

"The Great Transfer"

Nick’s comments also reflect how the firm intends to approach the possible threat of `The Great Resignation’. Mark Pistilli, CEO at Gadens, makes the point that "We have all been hearing about the "big quit" or the "great resignation". We call it the "great transfer" here at Gadens. Sure, some people will leave the industry, but many will move within it. That means there will be winners and losers. The firms who have the right values and purpose and have the right tools to allow a modern workforce to work and learn the way it wants to work and learn, will be the winners. The right technology to support law firms and their clients is a key part of that." Although there are differing views on whether the Great Resignation will become a reality, there is little doubt that what we have experienced during COVID lockdowns will have given many people cause to reflect on their careers and where they might live in future and based on what has been announced by several firms, lawyers can generally expect to receive reasonable salary increases.

"War for Talent"

Louise Campbell, Baker McKenzie’s Australian director of talent management, acknowledges that there is a "higher demand and fierce competition for talent in the current legal market - often referred to as the 'war for talent'. Baker McKenzie is increasing hiring this year in order to meet very high levels of demand and a strong pipeline of work". Consequently Bakers' aim to remunerate our lawyers consistent with the top of the market, and we will be undertaking an out of cycle remuneration review effective 1 January 2022, in order to ensure that we continue to meet this objective.

Louise adds that "Retaining talent is vital, so recently we provided additional COVID leave days and enhanced the flexibility of our working arrangements in order to support our staff during the pandemic. Indeed, COVID has continued to keep wellbeing top of mind in our work, and we used Wellbeing Month to drive home our array of new and targeted wellbeing initiatives. In terms of attraction, we have an upcoming New Zealand and London campaign to attract talent from offshore."

When it comes to be remaining competitive in respect of salaries several CIOs have commented on the challenges they are currently faced with when it comes to recruiting new IT people. The demand for good IT people is high, driven largely by large IT companies that are prepared to pay more and can offer more interesting and diverse roles. As Dylan James, Head of IT - Asia Pac at DLA Piper, observes, "competition for IT professionals comes from any and every organisation and as people in IT have long proven that they can successfully work remotely competition for talent is not limited to location". This is not helped when salaries for incumbents have generally fallen well below current market.

Law firm readiness

Before any lockdowns, when the world had just begun to accept the real risk of a pandemic, we met with several law firms and were pleasantly surprised by their state of readiness. In fact, some of them already had in place what has now become the norm – laptops for all, mostly cloud based systems and infrastructure, robust networks and video conferencing software such as Zoom. These firms have coped with the pandemic and working from home remarkably well and have reaped many of the benefits such as reduced overheads (travel, office costs and printing), no reduction in productivity (in fact many report the opposite), and increased revenue. This preparedness was confirmed by our survey that found that:

• 89% of firms considered that their firm was well prepared for operating during a pandemic
• 72% of firms were operating a flexible workforce pre-COVID
• 100% of firms were operating a flexible workforce post-COVID
• 100% of firms believe that more employees will be working flexibly post COVID

Outside-In view

Firms that were not so well prepared, generally those that had not invested sufficiently in IT, have not fared so well, and during a time of high demand for many products, such as laptops and screens, struggled to obtain the necessary equipment to properly sustain a remote workforce. To gain a vendor perspective on supply we asked John Brimer, account director at Ethan for his view. Ethan is an Australian owned IT provider of hardware, software and services and the company has a particular focus on the legal sector, helped by having several ex legal IT people on their team. John says the firms "that were prepared for a “work from anywhere” approach to their end user services (using remote desktop technology or the Microsoft Modern approach) were able to pivot quickly, and in some cases flourish. This is particularly true of the firms consuming compute and storage as a service with public or private cloud because scaling and securing resources and implementing productivity tools to support a remote workforce is an agile process and not one that is affected by technology delivery delays. Early in the pandemic Ethan worked with one national firm that was able to immediately re-position their workforce and consolidate their commercial real estate footprint.

Further, The COVID epidemic has created a Semi-Conductor shortage worldwide, which has affected the supply of devices required for remote working, such as laptops, docking stations and LED screens. Some firms who weren’t prepared for mobility have had to wait up to 10 months for the delivery of their orders. Vendors that are affected include, HP, Microsoft, Lenovo, Apple and Dell. A combination of manufacturing delays and high demand for devices & accessories required for remote working has seen such delays. Some customers have had to compromise by accepting anything that closely matches the specifications of the device they have standardised on, rather than wait."

Dominant themes

Long term there are certain dominant themes that appear to be emerging. These include:

1. Plans to reduce office space, or to retain existing physical space while better utilising flexible working to ameliorate short term growth demands.
2. Acceptance of remote working and a flexible workforce, recognising that working remotely does not necessarily equate to a reduction in productivity.
3. Accelerated move to the Cloud for the dual benefits of "high availability” and a growing demand for more sophisticated data controls that are often beyond the capability of inhouse IT teams.
4. Mobile technology for all staff regardless of role, especially those that are more digitally skilled.
5. The acceptance of video of solutions such as Zoom and MS Teams as a way of conducting business.
6. A rethink of expensive physical meeting rooms and traditional associated audio visual and video conferencing equipment.
7. A greater appreciation for the commercial advantages long advanced by IT for digital substitution within the business – that is, actively substituting physical costs related to premises and labour costs associated with repetitive processes for digital alternatives.
8. A recognition that the digital skill sets of personnel directly influence the holy tenets of collaboration and productivity.
9. Disruption posed by the emergence of pure digital processes and that are impacting traditional office roles such as personal assistants, law clerks and administrators will also start to influence the performance of professionals.

Future Tech, gig economy and time for eReview?

To what extent the process, scale and repetition benefits of more recent technology related to robotic and attended process automation offset the present demand for legal services remains to be seen. However, strong demand for legal services in Australia, better than anticipated profitability, expected wage increases for lawyers and healthy graduate intakes, though significant, suggest they won’t be at a pace that will exceed demand.

It seems apparent that salary earner bargaining power has increased and that that firms will look to offset wage rises with generous flexible working arrangements that will entail greater options and hopefully satisfaction for stakeholders (parents are an obvious beneficiary) and that firms, recognising the benefits of these “gig economy” working styles, come to embrace them. To what extent such a rebalancing benefits all stakeholders is yet to be seen, however, signs do not augur well for late adopters.

New disciplines are also emerging from old practices. One area we regard as “hot” is eReview, the digital activities associated with compiling, reviewing and organising briefs and disclosures – exchanging information in accordance with practice rules – as lawyers and counsel, forced to work remotely opt to replace paper-based review for a pure digital experience. In our view, despite being a wonderfully low carbon operating model, fleets of office bound trolleys are stranded assets, albeit fit for recycling.

No doubt Managing partners, CEOs and HR are pondering which skills, attitudes, expertise and behaviours matter most in a world of flexible working predicated on digital means?

Also Read: Gender Balance Owned By Boards Is Good Business

Authored by John Duckett, InPlace Solutions Director