Productivity and the future of workplaces leads legal sector focus

Pitcher Partners has released its annual legal firm survey, which focuses on the impact of COVID-19 on legal firms, their staff and businesses.

Key findings:

• A focus on flexibility and connection will be key for employee wellbeing in 2021
• Employment will remain steady, with some slight growth
• Managing productivity will be a key challenge moving forward
• Financial stability remains steady but should be closely monitored
• The focus on cybersecurity is on the rise due to COVID-19 working arrangements
• JobKeeper (60%), the ATO cash flow boost (42%) and the Payroll tax wavier (36%) were the main stimulus measures accessed by firms

2020 saw a realignment of priorities for legal firms, which is likely to continue throughout this year.  Asked what the greatest challenges had been facing firms during the year, 61% mentioned staff wellbeing, followed by productivity (39%), financial stability (31%) and profitability (28%).

Ben Lethborg Partner at Pitcher Partners Melbourne said that as the economy continues to recover from the impacts of COVID-19 and law firms look at the future of work, staff wellbeing and productivity will continue to be top focuses.

“Balancing these areas with the financial stability of firms is another important issue. Many people have shown they can be productive from home, but what’s the price in terms of wellbeing and lost connection?,” he said.

“Key causes mentioned for a decline in employee wellbeing were isolation (people being alone and lonely), stress, mental health and anxiety and the challenge of looking after children and homeschooling.

“Some have welcomed the change in terms of working from home.  Some have found this difficult and prefer the office environment.  So, a mix of wellbeing improvement and decline,” Mr Lethborg said.

Most legal firms surveyed (68%) noticed an impact on employee wellbeing in 2020, the majority noting a decline (52%), some no change (23%) and some (14%) a surprising increase. This increase was noticed in firms of all sizes.

Still looking at employees, while some firms had redundancies (36%), the majority kept staff (64%), and half did not change their employment arrangements.

Mr Lethborg noted that those that altered their employment arrangements changed the number of hours worked and/or remuneration in response to the economic impacts of COVID-19. However, where there were financial risks to be mitigated, there was also new business opportunities.

“For many firms, 2020 was a year of opportunity, with 24% of legal firms surveyed developing new business lines.  Perhaps in response to these new services lines, 31% of firms are looking to increase the employment of new staff, with the remainder set to either stay the same (61%) or reduce (8%),” he said.

“With productivity so closely related to employee wellbeing, there were again some surprises. Small firms saw the greatest drop (39%), while medium firms mostly (38%) remained unchanged, and many large firms (38%) saw productivity increases.

“Increasing productivity could be driven by staff and partners not taking leave and so continuing to work through”, observed one COO, “maybe the drop in productivity will be deferred until 2021 when people start to take normal amounts of leave”.

More than half the responding firms (54%) reported no (29%) or positive change (25%) to their financial situation because of COVID-19.  Of the 46% who had been negatively affected, a decline in new work (58%) and a decline in revenue (48%) were the main issues and a surprisingly small number (18%) seeing an increase in bad debts. Consistent with the other varied results, 25% saw some positive financial impacts.

On the future of work, Mr Lethborg said, “legal firms need to consider the challenges of flexible working. Key considerations will include who will be in the office and when, the OH&S issues of working at home, paying for property full time when people are only there part-time, and people feeling comfortable on public transport”.

“Most firms are either making working from home more permanent (48%) or have already offered it (17%).  Only 16% say it will not be part of the future environment, while another 18% are unsure.

“What’s clear from legal firms across Australia is that, despite the challenges of 2020, it’s given firms ideas for new ways to approach working and highlighted the importance of employee wellbeing, which will remain key in 2021,” Mr Lethborg concluded.