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Although it seems unbelievable, 2010 is just around the corner. This makes it a prudent time to look back at the Law Council of Australia’s 2010 Discussion Paper – Challenges for the Legal Profession, which outlines some of the common challenges facing small law firms, as well as take a look at how small firms have responded to these issues.

The issues at hand

It its 2010 Discussion Paper, the Law Council identified four key challenges for small law firms: recruitment, firm culture, flexible work practices and scope of work.

Concerning recruitment, the Law Council noted that “small firms may have... limited opportunities for advancement; slightly lower salary scales; and a degree of social isolation. On the other hand, principals with appropriate skills can offer young solicitors a personalised mentoring experience that is typically not possible in the hurly burly of a large practice.”

Regarding firm culture, the Law Council noted that “the perceived culture of large firms is unattractive to many new graduates, as is evidenced by the number of young lawyers working outside legal practice. Ironically, it seems that large firms actually need to adopt a small firm culture to ensure that young practitioners do not feel like a mere cog in a wheel.”

In the area of flexible work practices, the study noted that “the cost of flexibility can make many options difficult for small firms. Leave options present an opportunity to grant additional flexibility to employees without necessarily involving additional cost to the firm.”

When it comes to providing varied work, the Law Council noted “smaller firms may have more difficulty in providing young lawyers with the variety to enable them to develop a broad range of skills and an understanding of different areas of practice. This may require exchanges between smaller firms.”

How small firms are tackling these challenges

Dell spoke to Frank Egan, legal practitioner director at LAC Lawyers, to see how his firm has responded to the Law Council’s list of challenges facing small firms.

Egan says he is briefed on “the best and most exciting work in tax in Australia,” no mean feat for a firm that’s not a household name. Given Egan’s success, it’s worth exploring how he operates.

According to Egan, every firm, large or small, faces challenges when it comes to recruiting talented staff. But he says if you approach this issue with a little lateral thinking, it is easily possible to solve this problem.

Egan says a common approach is to employ law students who are nearing the end of their studies so that by the time they qualify you end up with a young solicitor familiar with the firm culture. This approach allows you to get to know your employees and whether they will be the right fit when they qualify. However this approach has some drawbacks from an employee’s perspective. According to Egan “students have to attend lectures right when you need them to be in the office, which is a disruption to business.”

An alternate approach is to hire graduates that are studying at night and can be present during the business day, with a particular focus on hiring people that already have business experience.

“It’s the career change people you’re after, they have a mindset that’s far more mature and valuable than recent graduates,” he says.

For example, someone may have had a successful career in the mining industry, but always nurtured a passion for the law. These types of people often study for a law degree in the middle of their career. When they have completed their law degree they are a highly desirable resource in business because of their dual experience.

The benefits of small firm culture

When it comes to offering an attractive firm culture as well as flexible work practices, Egan says the small firms often have a lot more to offer than larger firms, something that was noted by the Law Council.

“At the big firms you work very long hours and they pay you well, but the compensation is never worth the work. You get to 45 after having worked a 100 hour week for years and you’re burnt out; you have to get out to survive,” he says.

“The focus in these firms is also so narrow young lawyers don’t get a range of different experiences in their careers early on. If you’re in property you might end up only working on leases, or only doing mortgages and nothing else, which means you don’t learn anything,” he says.

By contrast, small firms usually offer even junior lawyers the opportunity to work on a broad range of cases, which means they don’t end up only doing the one thing. This gives them job satisfaction, high staff morale and better staff retention.

Scope of work promising

One of the key concerns of the 2010 Discussion Paper was that small firms would have to give up all the interesting, meaty cases to large firms. But, says Egan, this is not the case.

“You have to work out your demographics and pitch your services to people in these demographics,” says Egan, who says there are four key demographics in the law: the top, middle, small business and mum and dad markets.

“The key to success is not just servicing one demographic. Although I would stay away from the top end because they just want to own you,” he says.

It’s also important to be focused on the right kind of work and be disciplined about staying away from work that’s not your area of specialty.

“If someone comes to me with an $18,000 GST dispute I’ll send them elsewhere. Same if someone comes to me with a $100,000 income tax problem. But if someone walks through the door with a $10 million tax problem, I’ll tell them to come and see me,” he says, adding that “I only work with a small number of clients; it’s better to have 12 great clients than 60 mediocre ones.”

Ultimately, a small firm’s long-term success comes down to its efforts to overcome the challenges highlighted by the 2010 Discussion Paper. Firms that are focused on addressing these issues will likely survive beyond 2010. Those that don’t will likely falter.