- More than three quarters of respondents expect AI to be widely used in the legal industry within five years.
- Law firms rate finding and retaining talent as their biggest challenge.
- Four-day week is seen by staff as solution to work-life balance pressures, but firms remain resistant to implementing it.
More than one quarter of law firms plan to embrace Artificial Intelligence (AI) in their practices within the next 12 months as lawyers continue to express a strong preference for flexible working conditions, with a four-day week emerging as a popular option to address the industry’s on-going work-life balance concerns.
The 2024 Australia Legal Trends Report1, commissioned by Dye & Durham Australia and the Australasian Legal Practice Management Association, a rapidly evolving legal landscape, as firms grapple with digitisation and staffing challenges.
The survey of 226 firms in Australia and New Zealand on the key subjects of People and Productivity, Technology & Workflow, Business Strategy & Investment, finds retaining and attracting staff in a competitive market is a major challenge facing legal firms.
Dye & Durham Australia managing director, Dennis Barnhart said the survey showed a buoyant and resilient legal industry that was growing in the face of higher interest rates and cost pressures.
He said the survey showed how technology was dramatically increasing the efficiency of the legal industry which had benefits to both legal practitioners and their clients.
“The adoption of AI solutions is set to further enhance efficiencies in the legal industry by freeing up talented staff from routine administrative tasks, enabling them to focus on delivering more value to both their firms and their clients,’’ Mr Barnhart said.
Technology critical
Technology has become more vital to legal professionals than to the general workforce, with 64% of respondents reporting that they would be unable to do their job without technology, compared with 24% in the general working population.
Practice management software is now used by 82% of respondents with 17% indicating they will adopt it within 12 months.
Document management software is in use by 77% of respondent firms with 19% planning to adopt it within 12 months, while 70% of firms are using electronic signing technology with a further 18% planning to adopt it within 12 months.
The ongoing excitement in the industry around Artificial Intelligence and Large Language Models is reflected by the fact that 27% of respondents plan to implement it within 12 months, while 35% of respondents rate it as beneficial.
Co-pilot, Co-Counsel, other generative AI programs or large language models are currently in use by 18% of firms. Seventy per cent of people working at law firms have at least trialled AI compared with 49% in the general population.
While just 17% of law firms are using AI as a regular tool compared to 25% in the general population, 78% of respondents expect AI to be a regular feature of the legal industry within five years, compared with 48% in the general population.
Law firms ranked time (56%) and cost (54%) as the biggest impediments to technology adoption. Resource constraints or lack of key people to implement technology increased sharply to 43% in 2024 from 17% in 2023.
Race for talent
The survey found that 90% of law firms in New Zealand and 68% of Australian firms identified talent acquisition and staff retention as significant challenges.
Providing flexible working arrangements (64%), individually negotiated employment arrangements (56%), increased remuneration packages (40%), investments in learning and development (35%) and investments in technology (24%) were among the strategies used to attract and retain quality staff.
Respondents reported a decline in work-life balance over a period where interest rates and inflation increased, impacting cost-of-living.
The proportion of respondents who believed the industry had a good work-life balance fell to 28% in 2024 from 37% in 2023.
Most respondents felt their own organisations had a good work life balance (82%), a one percentage point decline compared with 2023, however perceptions of their own work-life balance declined to 68% positive in 2024 compared with 73% in 2023.
Those working in organisations with a philosophy of embracing new technology and using AI regularly were slightly more likely to believe they had a good work-life balance (84% and 83% versus 76% overall).
Four-day working week support
Respondents nominated the introduction of a four-day week as the initiative that would make the biggest improvement to their work-life balance (29%).
This was the first time this question was offered in the survey which may explain why 15% of respondents nominated enhanced flexible working conditions down from 30% in 2023.
This was followed by increased remuneration at 14% and implementing new technology to assist their role 13%.
Ninety-one percent of respondents said a 4-day work week would improve their work-life balance to a large, very large or extremely large extent.
However, there was reduced confidence that firms would deliver a 4-day week with only 29% rating it extremely, very, or moderately likely.
Technology ranked at 50% in terms of improving work-life balance while flexible working arrangements, like Work from Home, recorded 59%.
Winning work
The survey found an increased offering of fixed or other pricing arrangements, likely a reaction to a more cost-sensitive market.
Fixed-fee, alternative pricing arrangements were offered by 56% of respondent firms, up from 51% in 2023 and 45% in 2022.
Offering technology such as client communication portals, digital verification of identity options declined to 27% from 36% in 2023.
To download the full report, go to ALPMA 2024 Research Report – Dye & Durham (dyedurham.com.au)