Survey on South Africa’s small law firms

March 1st, 2015
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By Nomfundo Manyathi-Jele

In an effort to understand the unique challenges that attorneys in small law firms face, independent research firm, Activate, conducted a survey on behalf of LexisNexis. Over 160 independent small law firms across South Africa were approached to partake in the survey.

According to the report, the survey was carried out in August 2014 with responses from lawyers and support staff in small 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 and are made up of one to ten fee earners who are mostly engaged in litigation, debt collecting and conveyancing. The survey sample consisted of a balance of lawyers (56%) and support staff (44%). Activate spoke to a total of 80 lawyers, which consisted of 42 black lawyers and 32 white lawyers, as well as, a smaller number of Indian and coloured legal professionals.

The survey revealed that 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 firms in South Africa. The survey also revealed that smarter use of technology is seen as a key catalyst for growth by the majority of the firms, with networking second and marketing and online services sharing a close third.

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 were 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%), practising in a small law firm 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

According to the report, the survey showed that most of the law firms are early adopters of change who recognise that technology will have a significant impact on their business. Seven out of ten of the law firms surveyed have already increased their investment in new technology and processes; recognising that this is going to have a significant impact on their businesses.

The majority (58%) view smarter use of technology and networking as the most important ways to grow their business with two thirds stating that they carry out their legal research online.

Six out of ten 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. Social media adoption was low among smaller firms, but among the 40% who are experimenting and innovating, LinkedIn is seen as their main social media channel to grow their business with 72% saying it is their platform of choice. Facebook was the next alternative at 58% with Twitter coming in third at 18%.

The survey also revealed that 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 (58%) had a stable business outlook and more than two thirds (37%) 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’, the report states.

According to the survey findings, the Legal Practice Act 28 of 2014 emerged as a worry for some lawyers. They feel that the government is making it harder for them to be competitive by over regulating while at the same time taking away business that was exclusively the domain of an attorney such as conveyancing and estates, as this is seen to be eroding the work of smaller practices. Keeping up to date with legislation, precedents and new developments in their field is also a concern to independent lawyers.

Many of the challenges facing small law firms are common to small business owners including cash flow, retaining and growing a client base, economic effects and being up to date with their profession. However a strong entrepreneurial spirit is evident in this market. There is some concern that the pie is shrinking, but more attorneys are wanting a share of it.

According to the survey report, law is a chosen and intentional career decision with over 57% citing it as a planned move, and a further 25% wanting to own a business.

‘This is a significant and evolving part of our legal landscape, and we wanted to discover their attitudes towards the challenges facing them. What we discovered were passionate dedicated lawyers who believe strongly in what they do and enjoy contributing to their own sphere of activity,’ the report states.

Nomfundo Manyathi-Jele NDip Journ (DUT) BTech Journ (TUT) is the news editor at De Rebus.

 This article was first published in De Rebus in 2015 (March) DR 8.

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