The inaugural LEAP Small Law Industry Index highlights the deep divide in the expectations and confidence of small law professionals for 2019 on a broad range of issues including profitability, cyber security and proposed AML/CTF legislation.
“More than half of the respondents believe cyber security will be the top priority for the legal profession over the next two years with cloud-based operations and the importance of relationships also taking centre stage, suggesting that as our use of technology grows, our personal connections become even more important,” commented LEAP CEO, Brendan Smart.
Over half of the industry (52%) believes that the interception of emails is the biggest threat to their business, 22% cited unauthorised access to client data, 13% said non-compliance with regulation and 9% identify fraud. There is a recognition that cyber-attacks and fraudulent behaviour from hackers are rapidly escalating.
Work-life balance tops the list for planned investment in 2019 (50%), followed closely by marketing (49%) and the combined investment in technology and practice management system upgrades (43%). Training and development are also a major investment priority which is not surprising given the disruption across the entire profession generally and eConveyancing in particular.
Staff numbers however are tipped to remain static with 58% indicating they do not intend to increase staff numbers and of the 42% who do intend to increase staff numbers, 92% will do so with one, two or three people.
Of all the respondents 54% expect to increase profitability and most (85%) don’t plan to change their current business model. Of those that do, 6% will opt for new law, 3% virtual law, 3% outsourced law and 1% subscription law. An emerging trend appears to be a hybrid model.
Concerningly, despite the increasing use of technology in the profession, over one in five small law firms (22%) report they never conduct a risk management assessment, 23% conduct one quarterly, 20% annually, 22% monthly and 13% weekly.
The benefits of effective risk management in small law cannot be overestimated,” says Mr Smart. “Ultimately, there are a range of ways that a firm’s risks may be mitigated. For example, work in some areas of the law can be avoided, preventative procedures can be established, and education or training can help.
“These are the topics that we will discuss at our inaugural Small Law Industry Summit in March,” he added, “as we have developed our agenda based on the biggest issues and challenges reported in the Index”.
And despite the anti-money laundering regulator reporting a 70% increase in suspicious matter reports and the Federal government’s decision to again delay AML/CTF legislation that would make lawyers, accountants and real estate agents accountable under the legislation, small law is again deeply divided as to whether these sectors should be accountable under the legislation with 53% of the respondents saying yes and 47% saying no.
On the vexed issue of housing policy, an overwhelming majority (70%) believe that attempts by the government to curb foreign investment in the property market will continue to influence property prices in 2019.
Nor is small law convinced that there is sufficient collaboration between legal tech companies and law schools to integrate technology in the classroom, with 71% saying there is not and 29% convinced there is.
With the continuing evolution of technology in the industry, principals will be seeking employees skilled in both the law and technology, with 61% of respondents saying they will be seeking both skills. Just 15% said they would not and 24% are undecided.
“When asked whether they believe the legal profession will do more to empower women in the workplace in 2019 and beyond, 76% of respondents thought they would. Greater flexibility to work from home was the top response (54%), followed by part-time work opportunities (14%), encouraging men to share parenting responsibilities (10%) and job sharing at 8%,” says Mr Smart.
“We were also delighted to learn that work-life balance is increasingly important with an overwhelming 71% of respondents reporting work-life balance as an important part of the culture in their business.
On the down side however, 64% of respondents are not confident that legal professionals are adequately resourced to cope with mental health in 2019 and beyond. Law is widely recognised as a high-stress industry and, while awareness has increased, it is felt that there is not enough understanding by the legal profession, and a stigma attached to the issue,” Mr Smart concluded.
The LEAP Small Law Industry Index was conducted in November 2018 by surveying over 750 small law professionals across the country. Tickets to the LEAP Small Law Industry Summit can be purchased at https://www.leap.com.au/summit/.