A majority of Australian law firms have shrugged off the impact of the coronavirus pandemic to post stable or rising profits this year, according to a Commonwealth Bank report.
Almost 80% of firms saw profits rise or remain unchanged compared to 2019, with average profits climbing 7% across the sector as a whole. Almost three-quarters of firms also said maintaining cash flow was easy or manageable.
Belinda Hegarty, national head of professional services at Commonwealth Bank, said: “Despite the operational and financial disruption brought about by coronavirus, the Australian legal sector remains in great shape. While there is a lack of visibility around future business conditions and uncertainty among clients adding to fee pressures, a focus on people, technology and prudent cost controls are putting them in good stead as the recovery gets underway.”
The report showed that more than three in four firms are planning to increase their investment in technology next year. Some 93% of firms are also planning to offer more flexible and remote working options, with 89% saying they plan to provide more services digitally.
Hegarty said: “We expect to see a continued focus on digital transformation that has followed years of investment in technology within the sector. This will help firms meet client expectations that legal services need to be delivered faster, more cost-effectively and add greater value than in the past.”
The report also showed that some firms are more resilient than others, based on indicators including profit growth, cash flow, managing staff utilisation, adapting to remote working and their ability to compete. While just a fifth of firms saw profits fall this year, only 38% of firms met all five criteria for resilience. Those firms were typically more confident about the business outlook, but they were also more likely to focus on tech, according to the report.
Hegarty added: “More resilient firms have clearly led the way in adopting technology. They better understand its potential to help deliver services faster, simpler and cheaper, and to create new products and services. Years’ of steady investment in this area saw these firms smoothly switch to working remotely and delivering services digitally. Very few less resilient firms could claim the same."