At Christmas time, even the blackest, coldest of hearts can melt. Firm Spy, although heartless at the best of times in 2010, is no different. To round out the year, we therefore show our human side by bestowing our most coveted award on one deserving corporate Australian firm.
The winner of the 2010 Firm Spy Corporate Firm of the Year is Optim Legal. To read Managing Director Nick James’ acceptance speech, please visit the comments section below. Feel free to add comments too.
Optim Legal was a clear winner for a host of reasons, however in order to contextualise its merit, it is necessary first to refer to how the Australian legal industry is changing.
The Outdated Model
Michael Bradley, Managing Partner of Marque Lawyers (and a person we have done a major 180 on***) made this prescient observation in an opinion piece featuring in the AFR earlier this year (02/07):
…Law firms have gotten as big as they’re ever going to get in our lifetimes. In fact, they peaked about 5 years ago and now they’re just going to shrink… [and] if you work in a mega firm and your face isnt in the equity partner trough yet, it’s something of an existential threat. If the firm isn’t going to get bigger, then your path to the glorious riches of partnership is reduced to a narrow and crowded lane.
…Competitive pressure driven by an overcrowded market and increasingly less pliable clients… progressively took the fat out of the business model… A liesurely retirement plan disappeared and the personal pressure on partners to produce ever-increasing revenue grew exponentially.
Firms will get smaller … because the shrinking pool of equity partners will not become any less attached to the personal incomes they now enjoy, and in the absence of continuous growth that can only be maintained by attrition. It’s a zero-sum game, but that’s fine if you’re already at the table.
The question really is whether they will continue to be able to attract the best talent and, therefore, maintain their competitive edge in the absence of genuine growth.
Bradley’s comments were substantiated two weeks ago by an AFR survey (10/12) which revealed that Australia’s fastest growing partnerships were Tresscox (12.9%), HWL Ebsworth (8.1%), Hall & Wilcox (7.1%), while Norton Rose, Holding Redlich, Middletons and Cooper Grace Ward also posted significant mid-tier growth. Note the absence of the top-tiers; they are all constricting.
Bradley’s views are also consonant with the observations of John Chisholm, who made a case against the partnership model in The Australian earlier this year (02/07). Chisholm wrote:
Since law-firm partnerships began involving more than three people, there have been a number of legal commentators, advisors and observers saying there just has to be a better model, that the traditional partnership model is outdated and inefficient, is ineffective, stifles creativity and innovation, lacks quick decision making, fails to separate ownership from control and often rewards the lowest common denominator.
The traditional partnership model…, like most business models… has a life cycle … and [it] has well and truly reached the maturity stage. It should be, and is being, replaced by other models that better serve and reflect modern business as well as the interests of the profession and, importantly, the profession’s customers.
Clients are also among the growing chorus of people calling for an end to the partnership model, itself made possible by inefficient billing practices such as the 6-minute billable unit. The AFR reported earlier this year (16/07):
Risk sharing is the new vogue in the legal world and the days of the traditional hourly billing model may be numbered as sophisticated clients clamp down on legal costs… Fixed-fee offerings [and alternative billing options] are becoming more common.
The Directionless Profession
Like the Queen Mary trying to change directions, major corporate law firms in Australia have been cringingly slow to recognise the writing on the wall. We hope our readers – the next generation of Australian lawyers – can more clearly grasp what the future holds:
- increasingly smaller equity pools at major firms;
- eventual replacement with other models that better serve and reflect modern business as well as the interests of the profession the profession’s customers; and
- commercially savvy in-house counsel looking to spend company money in the most efficient manner possible (ie not in top tier law firms).
So if you’re already in the profession, treading water as your PQE stacks up, and the path to partnership is “reduced to a crowded lane” that just started to look a lot less lucrative, what do you do?
Well, you can do what one former top-tier lawyer did and break-out.
The Deserving Victor
Against this backdrop of necessary industry change, ex-HCA Associate to Justice Kirby, Nicholas James, has assembled a small army of ex-top tier lawyers to create what we believe is the most innovative firm in Australia; Optim Legal. Optim Lawyers is a truly deserving victor of our highest honour. In its own words:
Optim Legal is staffed by lawyers from leading law firms, who want a more commercial and hands-on role with their clients. We pride ourselves on being a firm focused on clients rather than maximising fees. Here are a few of the innovations that we have introduced to make high-quality legal advice more accessible:
- Eliminating unnecessary costs which don’t add value to clients (such as marble clad offices with harbour views);
- Passing cost savings on to clients through lower charge-out rates (our base rates are up to 40% less than the top 8 firms);
- Always working as efficiently possible. This means working diligently as individuals, pulling together well structured teams and identifying the optimal point on our clients value curve;
- Being fair and transparent on fees. We have a unique billing system which allows clients to control how much they pay using a score-card system (imagine legal fees determined by your level of satisfaction with the services received);
- Offering innovative pricing structures. We are designing alternative billing models to suit our clients’ and their circumstances (such as fixed fees, flexible retainers and hybrid solutions);
- Focusing on client relationships rather than billing more and more time. Our legal teams operate without ‘minimum billing targets’ to address the root cause of over-servicing and over-charging.; and
- Investing in technology that lawyers need to get the job done efficiently and enables the flexibility clients want from their advisers
The Firm Spy’s hat is off to you, Optim Legal. To all our in-house readers across Australia, consider using a truly innovative, no-nonsense firm like Optim Legal the next time you are assessing where to direct your legal spend.
See you all next year.
Firm Spy
***Michael, you are a winner this Christmas too. We have deleted our old Marque Lawyers posts which we now appreciate were off the mark.
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It is early days for Optim Legal, so we will take this as recognition of what we are seeking to become as much as anything. We do believe the industry needs a new way forward, and we have been earnestly and energetically working on what that should be, over the last three years of our existence.
It is Optim Legal’s clear long term mission to improve the practice of law by humanising the law firm and in so doing, making it better at all the things it is supposed to do. This mission is an inevitable result of the context that lawyers of emerging generations find themselves in. In particular, lawyers in their late thirties and early forties who are now coming into senior positions in their firms and who are naturally now wanting to begin shaping their workplaces. Lawyers in these emerging generations are inheriting a model that is (as you say) disenfranchising, unwieldy and which has grown into what it has become, in an unplanned and largely unintended way.
The firm of the future, we believe, will be anchored in an emphasis on individual well-being as the basic building block and source of it’s ongoing success. We think it will be a firm engineered for less politics, which has the ability and desire to continue to innovate and which protects the autonomy, individuality and flexibility of its lawyers while remaining steadfastly committed to becoming better and better at what a law firm needs to do to be successful. We believe it will be a law firm which creates a genuine community of lawyers driven by (their own and a collective) authentic purpose rather than one driven by hierarchy and one which makes profit virtually the exclusive aim of lawyers’ working lives.
What that better way is, is an evolving project. Whatever it is to be, it must be inspired and informed by effective and cutting edge management examples from outside of the legal world. Lawyers are some of the smartest and most creative people in our society, there is no reason why the organizational design of their workplaces should not now begin to reflect this. We believe the best lawyers of the future are increasingly going to be attracted to work environments which are up to date and which stand for doing something which is smarter and has at is heart a more inspiring vision of what a law firm and a lawyer could be. The law firm which properly delivers on this vision, we believe, will be the law firm of the future.
We would love to be that firm. In this early stage of our development and growth, we thrive on coming into contact with senior and junior lawyers, as well as in-house lawyers who want to be a part of the process of genuine development in the legal industry. If you are the sort of lawyer who is interested in joining the conversation about what a law firm of the future could be, we would love to hear from you!
Thanks and Happy xmas,
Nick
Nick James
Managing Director
Optim Legal
Who?
Congrats nick & optim. Sounds like a very interesting proposition
I’m quite sceptical about this. Sure, the vision sounds great but FS seems to have simply assumed that if the corporate vision sounds good therefore this mob deserves an award for it.
If you go through the list of Optim’s “own words” (which FirmSpy has been remarkably uncritical of) you’ll see some interesting try-ons:
Eliminating unnecessary costs which don’t add value to clients (such as marble clad offices with harbour views) – PROBABLY RIGHT INSOFAR AS IT RELATES TO OFFICES, BUT WHAT OTHER UNNECESSARY COSTS DO LAW FIRMS INCUR? SERIOUSLY – THEY’RE AS LEAN AS THEY COME IN MY BOOK (THE EXCEPTION OF COURSE IS PARTNER DRAWINGS, WHICH IS WHERE THE REAL SAVINGS COULD BE MADE). ALSO, THE FLIP-SIDE OF MARBLE-CLAD OFFICES IS ACKNOWLEDGMENT OF THE FACT THAT LAW FIRMS HAVE TO OBTAIN AND RETAIN GOOD STAFF (WHICH HELPS CLIENTS) AND MARBLE CLAD OFFICES AND HARBOUR VIEWS ASSIST WITH THIS… FINALLY, OUR MARBLE CLAD OFFICES ARE RIGHT NEAR OUR CLIENTS’… MARBLE CLAD OFFICES.
Passing cost savings on to clients through lower charge-out rates (our base rates are up to 40% less than the top 8 firms); MAYBE, ALTHOUGH THE WORD “UP TO” CAN CONCEAL ALL MANNER OF SINS. ALSO, BIG FIRMS DISCOUNT TOO, WHEN THEY’RE TRYING TO OBTAIN NEW CLIENTS (WHICH IS THE STAGE THAT OPTIM IS AT). THE CYNIC IN ME SUGGESTS THAT A MORE VIABLE COMPARISON WOULD BE TO LOOK AT MID-TIER FIRMS’ RATES – WHICH THEMSELVES TEND TO BE ABOUT 30% LOWER THAN TOP TIER RATES. THIS WOULD BE ESPECIALLY APT AS VERY FEW OF THE TOP TIER LAWYERS REFERRED TO ON OPTIM’S SITE HAVE WORKED AT TOP TIER FIRMS IN A SENIOR CAPACITY.
Always working as efficiently possible. [INCLUDING BY OMITTING WORDS] This means working diligently as individuals, pulling together well structured teams and identifying the optimal point on our clients value curve; [AND APOSTROPHES] THIS MARKETING JUNK (ASIDE FROM THE POOR PROOFING) COULD HAVE COME FROM ANY LAW FIRM AND IS MEANINGLESS.
Being fair and transparent on fees. We have a unique billing system which allows clients to control how much they pay using a score-card system (imagine legal fees determined by your level of satisfaction with the services received); NOW THIS IS INTERESTING. BUT THERE’S AN OBVIOUS CONFLICT HERE AND I THINK IT COULD HAVE BACK OFFICE EFFECTS TOO (REMEMBER FIRMSPY’S REPORTS THAT TOP TIER FIRMS HAVE BEEN INCENTIVISED TO GIVE POOR PERFORMANCE REVIEWS IN ORDER TO CONTROL STAFF EXPENDITURE – I CAN’T SEE WHY CLIENTS WOULDN’T BEHAVE THE SAME WAY)
Offering innovative pricing structures. We are designing alternative billing models to suit our clients’ and their circumstances (such as fixed fees, flexible retainers and hybrid solutions); ALL FIRMS DO THIS.
Focusing on client relationships rather than billing more and more time. Our legal teams operate without ‘minimum billing targets’ to address the root cause of over-servicing and over-charging.; and ALL FIRMS SAY THIS (OTHER THAN BILLING TARGETS, ALTHOUGH THE TRUTH IS THAT BILLING TARGETS ARE MERELY A PROXY FOR CORPORATE GREED, THE REAL ISSUE).
Investing in technology that lawyers need to get the job done efficiently and enables the flexibility clients want from their advisers THIS COULD MEAN ANYTHING (ALTHOUGH AGAIN THE GRAMMAR IS A BIT … WELL … CRAP)
Sorry Nick for my cynicism and Firm Spy as well, but I don’t understand what’s here that worthy of the level of uncritical support that’s been given (other than Nick’s own comments above, which show a far greater level of insight).
Nick, it may be too early but are there any thoughts about opening an office in Brisbane?
That’s all well and good in theory Firmspy, but in practice I hear Optim’s not doing that well. Has lost many of its lawyers since it commenced operating and now is having financial troubles apparently.
@ My 2c
since you’re being a grammar Nazi; “that’s” in your last sentence.
Don’t worry, one day you’ll be promoted out of the file room.
Yes, proofing standards for comments on blogs should be the same as for law firm websites.
Thanks for the file room comment. That was definitely warranted.
I mostly concur with My 2c. It’s become obvious from what I’ve been hearing that this crowd have been packaging the same old rotten egg with a slight awareness of this millennium and labelling it some kind of innovative break through; it not. The underlying issues that plague the industry (partner greed, overwork, cut throat environment) are as much a factor here as anywhere else, and a shiny mission statement only draws attention to how badly painted the stripes on the zebra really are.