Australasian Lawyer, 22 July 2014
Joanne Rees, one of Australia’s most respected strategic legal advisers, recently attended a major legal project management conference in Chicago and was surprised by the lack of action legal leaders are taking in other parts of the world.
“They had a panel of presenters from different firms talking about what they were doing in the legal practice management space and I found it interesting that really not a lot was happening, even though firms were spending a lot of money,” she says.
“I came away feeling surprised that there wasn’t the attitude of ‘well, we have to do this’.”
Rees attended the conference expecting to learn about action that legal professionals in Australia have yet to take, but actually found that we are ahead of the trend.
“I spoke to other people over there that were doing consulting work and they were of the view that in fact Australia is advanced in terms of attitude and innovation,” she says.
Rees is the CEO of Allygroup, an alternative legal services provider that advises in-house counsel with the aim of cost-effectively improving the service, value and accountability of their professional legal services.
She’s had a legal career spanning almost 30 years, and was the founder and – for almost ten years – the public face of legal firm Phillips Fox Canberra, where she built the business into one of the largest government practices in the city.
Rees is also currently a non-executive director on a number of government boards and committees, and is the CEO and convenor of the Federal Corporations and Markets Advisory Committee.
She says that despite her findings that Australia is ahead of the innovative legal trend, there is much work to be done especially considering the trends that are starting to emerge in terms of the relationship between in-house counsel and external firms.
There needs to be a meeting of minds between the two groups Rees says, and too often she hears in-house counsel complaining that the law firms aren’t delivering what they want, while the law firms are saying the former aren’t being clear enough.
But one of the biggest barriers to success is the current cost models that are no longer of benefit anyone, she says.
“The only way firms are making profit is by using junior lawyers and paralegals, and these people are taking a hell of a lot longer to do the work, which is costing the clients money… It’s an unsatisfactory model all around…General counsel need to start trialling different models and seeing what is going to work. More and more, general counsel or firms have to come up with some initiatives.”
And the issue is close to her heart – Rees herself has specialist expertise in project-managing high profile litigation and has a track record of managing to reduce legal spend on major cases by 25%.
She says the key is learning from other professional service providers in Australia who haven’t been able to charge by the hour for a long time.
“I think the major challenge for law firms will be that the clients over time will say they won’t pay by the hour, and the challenge with this is their business models are established on charging by the hour.”
The growth and consolidation of in-house lawyers is another major issue within the legal space, she says.
It’s a trend that she doesn’t anticipate will slow down any time soon.
“[Corporations] see under the hourly rate model that they have to pay $500 plus an hour to get senior partner-level advice, but if they pay people to do that in-house, they can get that at a fraction of the cost…the advice is also then a lot more strategic,” Rees says.
The consequences of this are only just starting to emerge in Australia and have seen corporations systematically begin to reduce the number of external firms that they use, in preference for a select few.
These “deep relationships” are almost like secondments where the corporation and the firm know the other’s business intimately, she says.
“This provides a great opportunity for firms…but the real challenge for general counsel is that they could almost become beholden to a firm,” Rees says. “Whether over time general counsel will find it’s actually too big a risk for them because firms realise [they are beholden] and stop offering discounts, I’m not sure.”
Martin Wiseman, the chairman and partner of New Zealand’s DLA Phillips Fox, which has an alliance with DLA Piper, also mentioned this trend to Australasian Lawyer and says it’s starting to creep into the New Zealand market too.
“There are now everywhere large in-house teams of experienced partner level lawyers. They are trusted and strategic advisers to their businesses and astute buyers of external legal services who rightly demand demonstrable value for money,” he says. “As someone who has been very close to DLA Piper for over 10 years now, it won’t surprise you if I add that the law is globalising as general counsel look to a trusted external adviser in one location to look after them in another.”