The market for legal services in Australia is seeing an increase in the number of boutique firms. In their State of the Legal Market white paper, Melbourne Law School and Thomson Reuters highlight a substantial expansion in the number of boutique firms operating in the market over the past few years. Similarly, Macquarie Bank has reported that small firms with gross fees of less than $4 million per year have recorded a larger increase in both revenue and profit than their mid-tier and top-tier competitors. A number of partners at some of Australia’s major mid-tier and top-tier firms are jumping ship to start or join boutique firms operating in relatively discrete areas of specialisation.

So what’s behind the rise and rise of boutique firms in Australia? What can they offer clients that their larger competitors can’t? Why should you instruct a smaller firm rather than a big-name player at the high end of the market?

Specialisation

Firms at the upper end of the market tend to be generalist full-service firms. They have dedicated practice groups that span the length and breadth of the business of their clients.

Boutique firms, on the other hand, tend to have a key area of specialisation. This ensures that clients receive a high quality product based on significant accumulated experience in the relevant area of practice. This accumulated experience decreases the cost of work by enhancing productivity.

Boutique firms can also specialise in the clients that they wish to serve. Whilst larger firms tend to have experience in providing services to businesses across a broad range of industries, boutique firms tend to focus on particular industries, or on businesses of a particular size. This ensures that they are able to provide advice that is cognisant of the strategic direction of their clients’ business, and the legal and commercial risks that they are likely to face over the short, medium and long term.

Disaggregation

Another emerging trend is the trend towards ‘disaggregation’. Historically, a corporate client would tend only to instruct one generalist law firm to provide a full range of legal services across all areas of its business.

Nowadays, corporate clients are disaggregating their instructions by sending different components of their overall legal services requirements to different firms. Whilst they may continue to retain large firms for complex transactional and financing work, they increasingly instruct boutique firms to advise on other aspects of their business, such as employment and human resources disputes, due diligence and contract management and review. They realise that, by spreading work amongst a number of specialist advisors, the overall legal services bill tends to go down.

Price competitiveness

Large generalist firms are significant commercial operations with high overheads and large bureaucratic structures. This can tend to place upward pressure on prices.

Boutique firms are comparatively nimble. They are smaller organisations with lower overheads and more flexible mechanisms for providing services to clients. This, along with their specialisation in key areas, places downward pressure on fees.

I am the principal solicitor of JFMLAW, a boutique firm that offers employment law and corporate governance advice to small to medium sized enterprises and not for profit organisations. Please get in touch on (02) 9331 0266 if you are interested in cost effective legal services from a firm that doesn’t lose sight of the broader commercial picture. The first phone consultation is always free.

John Morrissey

John Morrissey

T: +61 2 9331 0266
E: john.morrissey@jfmlaw.com.au

John Morrissey has been a practising Sydney solicitor for 30 years, and for the past 20 a sole practitioner and the principal at JFMLAW.

His main focus employment law, advising small to medium-sized firms and their employees of their rights and obligations.

For many years he was a lecturer at UTS to students obtaining Masters in Human Resources Management with a focus on performance management and creating a culture of delivery in workplaces. John has acted for a significant number of employers, not only in developing a performance based culture in the workplace but also solving particular problems that arise relating to unfair dismissal, contract disputes, improper use of intellectual property or other property as well as enforcements of restraints of trade.

John is very happy to speak to any employer who has an issue on a free of charge basis by a phone call. Please feel free to ring John at anytime up to 6pm most days.
John Morrissey