While the global financial crisis has forced a third of practice managers to streamline their processes, a worrying discrepancy between the current and optimal levels of leverage across the sector has opened up, according to a recent industry survey.
The survey of 175 practice managers completed by LexisNexis and The Australian Legal Practice Management Association (ALPMA) revealed a significant gap between law firms’ ideal levels of support staff and those they are actually employing. The findings showed that more than 40% of practice managers both believe their current leverage ratio was 1.5 support staff or more per lawyer and that the ideal ratio was one member of support staff for two or more lawyers.
This significant difference is having an adverse impact on the bottom line of legal businesses. The survey highlighted the need for comprehensive practice management solutions to reduce complexity and improve efficiency across the legal industry, although it also showed that practice managers do not see cost reduction as a current business priority.
Respondents instead preferred to concentrate on improving the efficiency and performance of their processes. According to the results, only 10% ranked driving down costs as their most pressing challenge, as opposed to 30% citing maximising efficiency as the top priority. A further 20% of survey respondents preferred to concentrate on performance improvement.
“With clients demanding efficiency and better performance, we can expect to see a transformation in the way that the legal world operates. It is often said that when one door closes another one opens, and this is never truer of a law firm [than] in an economic downturn,” said Theuns (TJ) Viljoen, CEO of LexisNexis Pacific.
“However, the disparity between the optimal numbers of support staff and lawyers working together in law firms and the true figures is a concern that we must take very seriously. Practice management is an essential part of each and every law firm, and we should be ensuring that each firm has the correct balance of staff to maximise its impact.”
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