Business is booming in Australia but there are clouds on the horizen, law firms report in the latest bank research.
Australian law firms are enjoying renewed business confidence as the economy improves. A rise in mergers and acquisitions, more frequent capital raisings and renewed optimism in the wake of a well-received federal budget has given the legal marketplace a boost. The research revealed, however, that whilst top tier firms were most optimistic, mid-tier law firms remained more cautious. The report also reveals that whilst current conditions are good, the outlook for the future is less rosy with firms no longer confident that the future will bring better times. Perceptions of conditions in 24 months’ time have fallen from a net reading of 47 per cent in 2016, to 15 per cent in 2017, with 28 per cent expecting conditions to become negative, CommBank said.
The report notes that a range of challenges remain for law firms. Negotiating price remains the number one concern, with 70 per cent of firms saying they find it challenging or very challenging, including six out of eight top-tier firms. There has also been no improvement in the proportion of firms who find winning new business challenging,especially in the top tier (six out of eight firms). However, firms have become slightly more likely to say that competing with other firms is manageable (52 per cent) or easy(5 per cent) than challenging — suggesting that the initiatives many firms have taken to improve their competitive position are beginning to gain traction.
Though 52 per cent of firms currently do not outsource any of their fee-earning work, only 30 per cent believe this will be the case in two years’ time. Meanwhile 50 per cent say they have had moderate to high return on investment in new technologies. Investment in IT software and hardware is accelerating: last year 55 per cent said they would be increasing investment and this rises to 68 per cent this year.