Increased investments in technology, coupled with shifting research trends and the challenges of keeping up to date with frequently changing legislation, are just some of the aspects characterising the small law firm in South Africa. This is according to a survey of more than 160 independent law firms, commissioned by leading content and technology solutions provider, LexisNexis South Africa. The survey also reveals that smarter use of technology is seen as a key catalyst for growth by the overwhelming majority of these firms, with networking second and marketing and online services sharing a close third.
“Small law firms have recognised the need to adapt or be left behind by those who are able to use technology for business benefit. To survive in the competitive online content marketplace, they must know how to filter through information and conduct research quickly,” says Billy Last, CEO of LexisNexis South Africa.
“Online solutions can help them save time on research and add intelligence to information, which is increasingly important in a tough environment where companies need to cut down on research costs, yet still be more productive in their research efforts,” he adds.
The LexisNexis survey was carried out by an independent research firm in August 2014 with responses from lawyers and support staff in smaller law firms. LexisNexis data shows that of the 10,930 law firms in South Africa, with over 21,000 lawyers in total, more than three quarters are considered small firms of 1 to 10 fee earners mostly engaged in litigation, debt collecting and conveyancing. In countries such as the United States, United Kingdom and Australia the legal landscape is dominated by larger law firms, although they do have a sizeable small law market.
“The small law firm is a significant and evolving part of the South African legal landscape and characterised by a strong spirit of entrepreneurship. In our research to investigate what drives them and the unique challenges they face, we discovered passionate, dedicated lawyers who believe strongly in what they do and enjoy contributing to their own sphere of activity,” says Last.
Of the independent lawyers surveyed, just under half practise as sole practitioners (47.8%),while 37.4% were firms of one to two fee earners and the minority in boutique law firms or partnerships. The respondents had a wide range of experience, with the majority (68.2%) being experienced lawyers who had been practising law for five years or more, while 46.9% had been in their current small law practices for three years or less. For most respondents (more than 80%), small law was a conscious and planned career decision. One in four lawyers specifically wanted to run their own business.Only a small percentage of the sample (1.7%) were in a small law firm due to dissatisfaction with large firms, while under 10% went this route because of a change in circumstance.
Technology and trends
The survey showed that most of the independent law firms are early adopters of change who recognise that technology will have a significant impact on their business. The majority (58%) view smarter use of technology and networking (42%) as the most important ways to grow their business. Seven out of ten reported they are increasing their investments into new technology and processes and are reviewing the way they access information, with a significant two thirds carrying out their legal research online. Two thirds of the firms rated themselves as technologically sophisticated when it comes to using technology-enabled research tools, however the remaining third believed they were not very sophisticated in their approach.
Six out of 10 of the small law practices cited word-of-mouth referrals as the most effective marketing tool to grow their businesses and over three quarters favoured face-to-face networking over online and social media. Only one in ten smaller firms outsource their marketing, with more than two thirds carrying out in-house marketing. Social media adoption was low among smaller firms, but among those who are experimenting and innovating LinkedIn is seen as their main social media channel to grow their business, with Facebook as the next alternative. Personal service, specialisation and attention to clients’ needs are seen as crucial to delivering the returns among small law firms. Furthermore, the need to evolve and adapt was recognised by 88% of the respondents.
In terms of their economic outlook, more than half had a stable business outlook and more than two thirds said their business was growing, although a significant 68% reported that it is harder to make a living out of law in the current climate. Optimism about the future and continued enjoyment of the practice of law were still highly evident, with 96% of the firms confident to very confident in their practices while 77% had plans to grow over the next five years.
There is the perception among a number of these independent firms that the Legal Practice Bill of 2012, promulgated into law on 22 September as the Legal Practice Act 28 of 2014, is problematic. Also of concern to them are regulations allowing non-legal practitioners to perform legal tasks such as conveyancing and estates, as this is seen to be eroding the work of smaller practices. There is also an underlying sentiment that the government is making it harder for small law firms to be competitive by over regulating, and that it could do more to actively support the small lawyer, especially Black-owned firms.
Small law firms share many of the business concerns of other small business owners, including cash flow, retaining and growing a client base, economic effects and being up to date with their profession.
“However lawyers in this segment are still passionate about their careers, have often overcome difficulties to get where they are and see law as something more than just a job but rather a lifelong pursuit,” says Last, adding that a combination of wisdom in practice and a fresh approach to business marked the lawyers who participated in the survey.
In response to changing professional needs and technology developments in sectors such as small law, LexisNexis has introduced a spate of new platforms that enable legal and tax practitioners to search, sift and filter through the most up-to-date information quickly, efficiently and more cost effectively on various devices. An example is the LexisMobile loose-leaf app which provides access to legal content both on- and offline, with automatic updating of changes, advanced referencing and highlighting functionalities.
A previous LexisNexis study in 2010 found that South African legal professionals, like their peers overseas, demand more customised tools to help them manage increasing volumes of information in the workplace. At that time, 90% of legal professionals in South Africa said that not being able to access the right information at the right time wasted time and impeded productivity, and that their research took up so much of their time that sometimes they ended up not billing for all of it.
The full LexisNexis report, entitled The Changing Landscape of Independent Law in SA, can be downloaded at www.lexisnexis.co.za/pdf/LN_HEADLINE_REPORT_20_November.pdf