Cybersecurity, major data breaches and privacy reform are all on the table as we size up 2023. For those who manage law firms, tightening security is top of the agenda. Here at the College of Law we have assessed the year that was and the year to come. These are our five big predictions for legal practice management trends in 2023.
It’s essential reading for every law firm principal, partner, practice manager and owner - as well as lawyers, paralegals, bookkeepers, and legal secretaries without whom a law firm could not function.
1. Firms get serious about cybersecurity through policies and cyber insurance
Once every seven minutes a cybercrime is reported in Australia. According to the Australian Cyber Security Centre, criminal gangs are increasingly targeting small businesses and families.
Law firms are taking note. In addition to the standard cybersecurity clients expect, the law imposes strict burdens of confidentiality. With so much confidential correspondence sent via email, this is a cause for concern.
We predict in 2023 that law firms will reassess how secure their electronic communications are, especially with respect to email. Many law firms already collaborate through online portals like DropBox but may seek options built to meet the security standards law firms require. Savvier firms are likely to depart from email for sending files or attachments, preferring a secure cloud collaboration platform with password protected logins and two factor authentication. In some cases, firms may do away with email itself, exclusively using platforms like Microsoft Teams for example. The way businesses communicate is evolving significantly.
Many firms will consider revising their cybersecurity policies and seek cyber insurance in the event of a hack.
2. Renewed assessment of data management, privacy and storage
Following the data breaches experienced by Optus and Medibank, law firms are likely to reassess how they manage and store any kind of client data. This will be especially important for identity documents such as passports, Medicare cards, and driver licenses.
With Australia’s privacy laws among some of the world’s weakest, hefty penalties are on the way. Maximum penalties for serious or repeated breaches of privacy will increase from $2.2M to $50M, or similarly priced penalties under the Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022.
Such major reforms and penalties will cause a significant rethink of how law firms collect, manage and store data. Policies and procedures will need to be revised so firms store only what they need to store, for the minimum time required under law, and nothing more.
3. Hybrid firms become the norm, and normalise cloud collaboration
Women solicitors now outnumber their counterparts, comprising 53% of all solicitors in Australia. Alongside their rise, particularly among early and mid-career lawyers, comes a greater push for workplace flexibility. As Australia lives with fluctuating WFH recommendations, hybrid firms thrive.
However, as cyber-attacks increasingly target vulnerable forms of communication like email, law firms will move towards sensitive information being transferred via secure online platforms.
The prevailing skills shortage also benefits firms open to lawyers who have relocated to less populated areas, like regional hubs or quieter cities. As hybrid firms become more of the norm, they normalise secure cloud collaboration. This can involve seeking e-signatures where the law doesn’t require ‘wet ink’ signatures, requesting review of legal documents online, and receiving client enquiries through intuitive client intake forms.
The way lawyers can interact with their clients has become far more flexible and allows for greater ‘virtual’ client service and automation in the legal sector.
4. Growth prioritised for nimble boutique firms and social media embraced
Australian law firms have experienced near record levels of growth in the past year according to a recent report issued by the Thomson Reuters Institute, 2022 Australia: State of the Legal Market. Overall revenue growth came in at 10%, outstripped only by profits, which grew by 12.6%.
Of note are boutique firms, which generally found it easier to transition to a remote work or hybrid model than their larger counterparts. Some boutique firms were already embracing the hybrid model pre pandemic. Through the pandemic, firms seized the opportunity provided by LinkedIn and other social media platforms to explore new ways of communication, to help combat the lack of physical interaction. These social pathways became a more personal and authentic medium of communication, in the absence of face-to-face meetings. It also reflected the increasing blurred lines between work and home.
Lawyers who posted genuine and informative posts enjoyed significantly higher engagement, and were able to grow their following.
As the pandemic eases, boutique firms are continuing to prioritise growth. With fewer clients expecting a traditional ‘office’ from their lawyers, boutique firms are better positioned to outperform both through personalised service and price. This trend will continue in 2023 as the global recession starts to bite into budgets.
5. Empathetic, efficient law firms lead the way
There is a growing trend towards firms becoming more client centric and empathy is a key factor in this process. Some firms have begun using this type of messaging as a selling point to attract clients and recruit talent. From a practice management perspective, an empathetic approach to law can often mean providing clients with clarity over how much they will be billed and getting their buy-in ahead of any costly legal work. It can also mean explaining a potential solution not merely in legal terms, but also in more practical, emotionally sensitive language.
As high inflation and interest rate hikes impact legal budgets, clients will gravitate towards law firms which demonstrate efficiency in their service delivery and pricing. Refining practice management processes to make the most of automation, such as clause libraries, or time recording, can improve efficiency.
Law firms are likely to engage greater analysis and data-driven audits to make better business decisions. For example, creating timesheet reports to better understand how their lawyers spend their time throughout the day, and where low value, repetitive work might be automated or simplified.
From security to efficiency, our legal practice management predictions reflect the pressures law firms are facing in 2023. To grow and thrive, the most effective will move fast to revise and refine their approach to practice management and gain an edge over competitors.
Have you thought about becoming a business owner or practice leader?
Transitioning from solicitor to principal of a law practice requires new skills and an in-depth understanding of the business of managing a firm. The Legal Practice Management Course (LPMC) from The College of Law will open your eyes to what’s involved – giving you the fresh perspective you need. The course also meets the licensing requirements of state regulating bodies in NSW, QLD, Victoria, WA and SA.
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