Earlier this year, the National Australia Bank published the Legal Services Industry report, which had some findings many legal firms will find surprising.
So, we invited NAB’s Customer Executive for Professional Services, Brett Moore, to be a guest on A Legal High to discuss the report with our listeners.
In this podcast, you will learn:
1. Why so many SMEs are dissatisfied with their law firm
2. Why one third of SMEs have switched law firms in the past five years
3. What is the “golden opportunity” for law firms?
4. What lawyers can learn from accountants in terms of client satisfaction
5. Where law firms really get it wrong it not understanding their clients business
6. What do “better lawyers” do differently?
7. What legal services are most in demand by SMEs
8. How can lawyers meet the long term needs of their clients
About our guest, Brett Moore
Brett Moore is General Manager, Professional Services for the NAB. Brett has held strategic roles with the NAB for more than 10 years and enjoys working with the NAB’s professional services customers.
Want to learn more?
- Download NAB Legal Services Industry survey report
TRANSCRIPT – A Legal High with guest, Brett Moore.
Graham Seldon: [00:00:00]
In today’s episode, I’m joined by Brett Moore, who is NAB’s Customer Executive for Professional Services. And earlier this year, the NAB published the Australian Legal Services Industry Survey, key insights into what your SME clients need and want. And I’ve invited Brett to be a guest on A Legal High and share the findings of this report, which we’ll also post on our website with the show notes. Brett, welcome to a legal high.
Brett Moore: [00:00:24]
Graham, thanks for having me.
Graham Seldon: [00:00:26]
So, Brett, my first question really is the NAB being one of Australia’s biggest banks, why did it decide to produce an inaugural report on Australian Legal Services and tell us about the scope and size of the survey?
Brett Moore: [00:00:39]
Graham, we have just in the last 12 months built a professional services specialisation. NAB has a rich history of industry specialization in our business bank. We’re the second largest agri bank in the world. We have a specialization in health, government, education and key industries for the growth of the Australian economy. And we believe that specialization adds value for our customers in those industries and thought the same for professional services. So a key component of the professional services market is the legal fraternity and beyond the provision of bankers products and services, we can tap up our large SME base to get a voice of customer perspective back to the legal industry. And that’s what we’ve done with the survey.
Graham Seldon: [00:01:25]
It’s incredibly useful. When you get a report from a bank, often you sort of glaze over and think, how is this going to be relevant? I was actually fascinated that it’s really relevant to the people who work in law firms business development marketing because it seems there is a real dissatisfaction amongst SMEs on a range of issues, including things like cost and service delivery and expertise. Were you expecting this?
Brett Moore: [00:01:50]
We didn’t know what to expect, to be honest. We conducted a similar survey with our accounting customers last year and where we looked for opportunities for mismatches between what the accounting customers were thinking and saying about their customers and vice versa. And what we find is it’s a really rich source of conversation with our customers then to say this is what the SME base is saying. What’s your response to that? So we weren’t pre-empting necessarily the outcomes. But when you know, when we’re tackling such big questions, I know the industry is tackling in the moment, which is how do we understand value, particularly as it relates to to to cost? How do we charge for our services, etc. What’s what impact is disruption playing that it was going to throw up some some interesting results and that it has.
Graham Seldon: [00:02:39]
Some of the key findings that will be of real interest to our listeners are the statistic I think that a third of SMEs switched law firms in the past five years and that the average spend, though were quite small ($39,000 annually) demonstrates really quite an opportunity for growth for law firms. If a third of its SMEs are changing their law firms and their spend is $40,000 at the moment (but obviously going to go up as they get and as they get bigger in business). What do you think the opportunity is for law firms in this particular market?
Brett Moore: [00:03:10]
Yeah, I think the golden opportunity for lawyers is to understand their clients. What we found in the survey is that one in three SMEs said their lawyer had never sought any feedback from them. So, I think and I can only presume here and we’ve just started testing this with some of our SMEs and some of our legal customers is the assumption that I will have you as a customer. You’ll stay with me as a customer forever. And I think that’s a fallacy. If you look at the stats and therefore there is a need for legal firms to to continually engage with their customers, to understand their needs, to meet their needs and to therefore mitigate the risk of them leaving.
Graham Seldon: [00:03:47]
And that’s between transactions. So your view would be that you should be talking to your clients at all times, not just when you’re doing a transaction.
Brett Moore: [00:03:56]
Yeah, and it’s one of the unique perspectives that we have when we are fortunate enough to look across the accounting, legal, real estate and financial planning markets. And whilst there’s some similarities between the industry there are some differences. And I know that there’s professional pride amongst all of those industries. But I think there is an opportunity for the legal fraternity (some may raise their nose at this Graham) but to to learn from accounting industry.
Brett Moore: [00:04:21]
The accounting industry’s moved from a transaction based, very much compliance driven form of relationship with their customers to being the number one adviser to SMEs in this country and to being in a position where they are in regular contact with their customers. Their customers see them as having a really critical role in supporting the growth of their firm. And I think there’s a leaf out of the accountant book that the legal fraternity can take to say, okay, how do I build a relationship that is beyond the transaction such that this customer recognises my value. And as a business advisor, not just as a technical expert.
Graham Seldon: [00:05:04]
Interestingly, when you surveyed law firms and they believed that they really understood their clients. And yet there was a discrepancy between what the SMEs said versus what the lawyers believed in terms of things like fees charged, client listening, that sort of stuff. Can you talk us through those findings?
Brett Moore: [00:05:24]
I certainly can. So, I mean, again, another an assumption on behalf of the legal fraternity that I think is is challenged by the SMEs feedback in this regard. So fees were key to 4/10 SMEs answers as to why they switched. But other reasons and it probably goes to the previous point we discussed, Graham, which was not understanding the business, poor responsiveness, a lack of a personal relationship, lacking in expertise, everything done at the last minute. So I mean, they’re quite significant in terms of, you know, 26 per cent said that the lawyer didn’t understand their business. Poor responsiveness. 23%. A lack of a personal relationship 22%. So I think, you know, some of this does data shows that legal services are underestimating the importance of some of these issues to SMEs. And certainly, you know, it’s not an insignificant decision to change any service provider, professional services provider. But I think the opportunity, if you look at this, is to, you know, I suppose to question how well you or your firm are performing against some of these dimensions of responsiveness. Do I have a deep personal relationship with my client and do I truly understand their business? And if I do, then they’re less likely to leave and and are more likely to win some other clients who my competitors are not servicing in this regard.
Graham Seldon: [00:06:48]
It’s clear they’re not listening because or they don’t know because one the statistics that really stood out to me was that that SMEs said that the 18 percent that they thought everything was done at the last minute and only 1 percent of lawyers thought that might be a reason why they would change. So it’s interesting that lawyers may perceive that the reasons for for them leaving to engage another law firm is around price or around and maybe products that they’re offering, but actually something as simple as service delivery, which is getting it done on time and in good time.
Brett Moore: [00:07:20]
Well, I think it goes to a broader point, I think Graham, which is, you know, we would argue that the better lawyers see the commercial challenges facing their clients first and the legal question second. So those with a transactional mindset might miss the the the underlying or the second or third order reasons as to why client really needs this advice, because there might be flow on implications for their business, not just the technical piece that they’re solving for that particular point in time. So I think all these threads come together in a way that says, if I better understand my client, if I’m closer to their needs, then the particular piece of work I’m working on at the moment understand the consequences of.
Graham Seldon: [00:07:56]
And where it fits. And how it’s a priority
Brett Moore: [00:07:57]
That’s right.
Graham Seldon: [00:07:57]
You also looked in the survey at the services you think SMEs are most looking for from the legal sector and the opportunity therein for law firms to offer these services. You want to talk us through some of those findings?
Brett Moore: [00:08:12]
Yeah. Again, this was great. There’s consensus amongst certain offerings from legal firms, but also opportunities as well. So, you know, fast growing areas in demand for legal services. So around 1/4 SMEs identified employment and workplace law as the fastest growing in demand, followed by commercial law of 22 per cent and taxation law at 20 outside of commercial law. Law. The lawyers in the survey did not identify any of those areas as particularly fast growing for their business. Instead, about close to 40 per cent highlighted Wills and Estates as the fastest growing service in their practice. Interestingly, just three per cent considered insurance and taxation law amongst the fastest growing services for their practice, despite being identified as some of the fastest growing areas for SMEs. So really, again, what the lawyers perceiving to be the opportunity in market. But the SMEs saying, look, we need more support, particularly as it relates to insurance and taxation law, as an unmet need in the market at the moment.
Graham Seldon: [00:09:18]
And you would think that it’s obvious the employment law would be high because as these SMEs get bigger and they get more complicated and their businesses grow and they need to bring on board people and hire people maybe in different jurisdictions, different states, but that type of thing.
Brett Moore: [00:09:31]
You would also assume that some of the challenges that we’re seeing around large employers in the hospitality sector and the challenges they’ve had regarding employment law could be a catalyst for SMEs to say, how am I looking at this? And maybe their lawyers not necessarily being on the same page at that point in time as to meeting that need.
Graham Seldon: [00:09:49]
So there’s some fascinating insights for readers who haven’t yet read the report, log on to the website and you’ll be able to get a copy of it. There’s some really interesting sort of information about the types of law that SMEs are really focusing on and if you’re working for an organization, law firm that has SMEs in your sights, which you should, then that should be good ammunition for you to go back into your business and talk about business development plans for those areas.
Graham Seldon: [00:10:13]
So thinking about client buyer behaviour, I just want to pick up on something you said at the beginning of the podcast and to understand your experience of working across professional services because you don’t just focus on the legal industry, (you’ve referenced the accounting industry). Given this is the first time you’ve done this report for law firms sort of what came out of it? What advice would you give to law firms generally about how they compare or how they can match the expectations of clients from the accounting sector for instance?
Brett Moore: [00:10:40]
Yeah, it’s a good question, Graham. I think if we looked at the report as to that again, how did SMEs choose their law firm? And the assumption might be is that advertising, internet, social media. The reality is these points are really low in terms of how they make that purchase decision. Internet search, 8 per cent referral from a finance broker, 9 per cent social media 8 per cent. Overwhelmingly, it’s through a referral from a business associate. So one in three customers or SMEs find the new firm through a business associate or through their account. So the question, I suppose, for the industry, for the legal industry is how well connected are they to their colleagues in other industries, particularly accountants? Where are they looking for opportunities to pay it forward, if you like, to provide value for that accountant or for their business associate that then has them front of mind when a particular legal matter related to their area of expertise comes across the desk of that accountant or that other professional services adviser. So it’s also I think we referenced earlier on in our discussion today, it’s looking beyond the transaction. So it’s about saying what is what might be the second, third order needs of this client in time? How is it that I can position value or provide value now that has them knowing that I have their long term needs at heart? And what we see is that the accounting industry has been able to do that particularly well. They have traditionally had the I suppose the remit of being seen as the, you know, the pen pushing conservative, diligent number crunchers. They have fundamentallg refocused their in many cases their practices, their business models to embrace technology. And as I mentioned before, be seen as the number one adviser for the SMEs. Now, that’s I think that’s contested space. I think there’s an opportunity for the most progressive legal firms to take that place by meeting some of the feedback provided by our SMEs in this survey.
Graham Seldon [00:12:47]
You mentioned technology and we’ve explored technology in the legal sector in prior podcasts. Can you share any insights around technology from the report? I mean, is there a particular area of technology that you think law firms should be investing in, or is there a particular trend around technology that you think accountants have proven works that law firms should emulate?
Brett Moore: [00:13:08]
Yeah, certainly technology improvements provide the opportunity to lower costs for legal firms. They also improve the customer experience. And as we mentioned before, the accounting industry’s embrace technology particularly driven, I think, by the role Xero has played in that market. I don’t think there’s an equivalent Xero for the legal industry in this market yet. That’s driven such innovation and such take-up.
Brett Moore: [00:13:30]
But there’s, you know, interesting study results from the survey, Graham, that law firms believe that they’re actually change ready for any disruption that might be occurring. And we know that in the States we’re seeing large amount of disruption in the legal industry that arguably is not here as yet.
Brett Moore: [00:13:46]
But I suppose the question is, you know, how change ready are they for the emerging potential disruptions of new technology, new competitors? The survey says that the legal industry is unconcerned about the mandatory introduction of e-conveyancing and they deem themselves to be quite, very well prepared for that. Similarly upbeat about the preparedness for online courts, an online dispute resolution. It’s really interesting this attitude towards digital disruption. And at one level, we find it quite surprising. And I’ll defer to my colleague within the bank, Dean Pearson, who’s ahead of behavioural economics and industry, where he would see most other industries in our economy seeing themselves as more vulnerable to digital disruption. He asked the question across most industry sectors. Businesses are not only aware of digital digital disruption, but they believe their business models are vulnerable to it. And this is in stark contrast to what we found in our survey. So Dean’s question, and for that my question really to the legal fraternity is, whether the profession is more advanced when compared to other industries or collectively underestimates its vulnerability. And I suppose only time will tell.
Graham Seldon: [00:14:56]
I was going to ask, do you think it’s do you think it’s arrogance In the legal industry or do you think it’s naivete?
Brett Moore: [00:15:03]
That’s a really hard question to answer. To be honest, I think there would be pockets. Arrogance is a strong word. I think there are certain traditions in the legal fraternity that are whole, that are held strongly and and very much part of the fabric of a really important industry in our economy. The challenge, I suppose, for participants is what elements of those does one need to retain that that’s important to the practice into the profession? But what others need to be challenged to ensure that they are meeting their customers needs today and into the future.
Graham Seldon: [00:15:40]
I mean, it’s a fascinating report. You’ve been going around and talking to some of your law firms clients on the legal industry about this report. What’s been the reception from the lawyers to some of the things that come out?
Brett Moore: [00:15:51]
Yeah, we’re just at the early stages of that at the moment, and we’re looking forward to over the next few months sharing this with our customers on the basis that it challenges their thinking about their practice and how they’re growing their practice and hopefully provide some with new levels of thinking that help them be better able to serve their customers. I think in summary, the topic we’ve just been discussing now, which is the rise of tech. My experience in the conversations I’ve had with our legal customers is that reaction is mirrored. So I’m not seeing a disconnect there. And it does pose them with the challenge to get to go and think about. The pricing discussion, I think is evergreen. And again, there’s some there’s some insight in the pack that that does that. I think overall and I’ve used this term a couple of times in our discussion today is really the challenge from the report that says how do I move beyond the provision of technical legal advice in a transactional sense to really thinking deeply about meeting the long term needs of of my customer. And in doing so, mitigate any risk of them leaving. So that’s the message that I think this report provides the legal industry and really challenges them to think deeply about how they’re doing that for their customers would be my summary.
Graham Seldon: [00:17:11]
I think if you’ve really sort of raised some very interesting and difficult questions for the legal industry, particularly those that I think are ignoring this massive opportunity in the Australian market with you know firms that organisations, corporates, small SMEs that are only at the moment spending on average about $40000 but can quickly turn that into $100000, $200000, $30000 as they get bigger.
Graham Seldon: [00:17:36]
Thank you so much for coming in and explaining that. There’s so much in this report for you to go and read everybody. So I would encourage you to log on and get that. And if you have any questions, feel free to come through to me on email and I’ll do my best to answer them. Thanks so much for coming in.
Brett Moore: [00:17:49]
Thanks for having me Graham, cheers.