21 May 2020

Key takeaways

  • The COVID-19 crisis may create new challenges for legal practices, and accelerate existing trends
  • Maintaining and preserving working capital may be a key priority, as revenues could suffer from a broad-based economic downturn
  • Impacts will vary by practice area; so you may want to consider preparations to redeploy resources
  • Maintaining new work practices that you have implemented during the lockdown could help you increase productivity and flexibility
  • It may also be an important time to reach out to clients, and demonstrate your problem-solving skills.

While the first wave of the COVID-19 health crisis appears to have passed, the economic fallout may be just beginning. That’s set to create new challenges for legal practices, and may exacerbate or accelerate trends that are already evident across the industry.

Let’s look at some of the key challenges that your firm may face, and some suggestions for how you could meet and overcome them.

1.    Maintaining working capital

This may be one of the most immediate issues facing businesses in many industries, as the repercussions of a government-induced shutdown ripple across the economy. While it is likely that most firms have been taking steps to preserve cash, further challenges may lie ahead. You may experience a sharp uptick in clients who are unwilling or unable to make payments.

You may want to consider:

  • Reaching out to larger debtors and, if necessary, rearranging their payment profile
  • Reviewing your working capital reserves to identify any funding gaps
  • If there are gaps, determining how these may be closed – what role can cost reduction, equity injection from partners, and external debt play in managing your working capital position?

2.    Managing demand across key practice areas

Impacts may vary significantly by practice area, with demand in some areas (property, litigation, banking and finance) possibly suffering declines, while demand in others (government, insurance, corporate restructure) possibly remaining healthy.

You may want to consider:

  • Actively managing the impact on each practice area
  • Looking for opportunities to redeploy resources towards more productive practice groups.

3.    Adapting to an altered working environment

Although the Australian government has begun to ease its lockdown restrictions, the effects on our workplaces may likely be longer-lasting. These may range from an ongoing need to maintain physical distance, to a growing requirement for remote working and flexibility. A challenge is to identify the efficiency and productivity benefits of changed work practices, then ensure that you continue or extend them.

You may want to consider:

  • Convening a working group to examine what’s worked well during the lockdown, and what you can potentially retain in the future. For example, travel costs may have reduced, as virtual client meetings become commonplace
  • Thinking about how you can attract and retain skilled staff. For example, by improving the employee experience by offering staff the option to work remotely
  • Thinking about how you could structure occupancy levels to ensure social distancing
  • Re-evaluating how you measure staff activity to focus on value creation and problem solving, not just time expended.

4.    Maintaining and building client relationships

This may be an opportunity for you to build stronger relationships with your existing clients. It may also be an opportunity to reposition your offering from specialist adviser to flexible problem solver, which might allow you to serve more of your clients’ needs.

You may want to consider:

  • Investing time with clients to explore the problems they are facing
  • Focusing on solving problems, in addition to provisioning legal advice
  • Focusing on areas like employment issues, counterparty risk and supply chain management, and ensuring that you are prepared to support them.

How Macquarie can help

The Macquarie Legal team is here to help you with personalised support, delivered by industry specialists.

To find out more, contact your Macquarie Relationship Manager, call 1800 442 370, or visit macquarie.com.au/business-banking/legal-industry

Additional information

The information on this page has been prepared by Macquarie Business Banking, a division of Macquarie Bank Limited AFSL & Australian Credit Licence 237502 ("Macquarie") for general information purposes only, without taking into account your personal objectives, financial situation or needs. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service.