Angus Henderson is all about having the right people – and he makes no bones about it.

The head of the Sydney-based international boutique practice Webb Henderson is speaking to Lawyers Weekly about the year that was, and now the year that will be.

Good firms, he says, start with getting good people.

“We generally have a ‘no dickheads’ policy and we stick to that very stringently – everyone knows it,” he says, talking matter-of-factly about the view of the firm both from within and from outside.

“[Bad behaviour] is not something that we tolerate,” he says.

The ‘no dickheads’ policy was made famous by the Sydney Swans, helping a team that was – not so long ago – a national laughing stock to win two premierships and make a further two grand finals over the past decade.

While it is debatable whether there was a complete absence of idiots during this time, the perception was that the Swans had their house in order.

Fans and sponsors flocked to the once ugly ducklings, with the club enjoying a high standing both inside and outside the Aussie rules football community due to the quality of its people.

Clearly, the legal profession would also benefit from the perception that it is at least trying to stamp out bad behaviour.

However, the very structure of a law firm makes the elimination of such behaviour a tough ask.

“It is harder for large firms to monitor that behaviour all the time and they can be held ransom to it if that person is a high revenue earner,” says Henderson, who was a senior partner at Gilbert + Tobin before launching his own firm in 2009.

Meanwhile, 2014 was a year in which lawyerly bad behaviour found itself firmly in the spotlight.

In March, the Law Council of Australia released the National Attrition and Re-engagement Study (NARS).

The NARS reflected the thoughts and experiences of 3,801 practising lawyers, 84 lawyers who had left the profession and 75 individuals who have completed a law qualification but have not practised law.

The survey results were uninspiring to say the least.

Half of all women (around 70 per cent of survey respondents) claimed to have experienced discrimination based on their gender.

Half of all women surveyed – and one in three men – also said they had been bullied or intimidated in the workplace.

Such statistics give weight to what we have known, based on personal testimonies from lawyers, for years – that the profession tolerates bullies.

Prior to the release of the NARS, Lawyers Weekly asked its readers in an online poll in 2013, ‘Is bullying a problem at your firm?’

The most popular of the four possible responses from the almost 500 survey participants was, ‘Yes, partners are particularly prone to bullying junior staff’ (33 per cent), with the second highest response (29 per cent) being that bullying was a problem at all levels throughout the firm.

Less than one third of respondents (28 per cent) said they’d never witnessed bullying at their firm.

With such a cultural problem in the profession identified and now beyond dispute, how can it be eliminated?

Fiona McLeod SC, a former president of the Victorian Bar Association, was one of the key architects of the NARS.

She believes a raft of guidelines, conduct rules and processes with “zero tolerance” for abusive and offensive behaviour need to be implemented and supported by law firms to reduce the high levels of bullying, intimidation and harassment.

Crisis? What crisis?

Given that discrimination is rife within the profession, is it any wonder that the perennial issues of gender diversity and depression are still to be properly addressed?

In fact, you could argue the profession is actually going backwards when it comes to making the legal workplace fairer and happier.

In November, a report from the Workplace Gender Equality Agency (WGEA) showed the gender pay gap in law in Australia sat at 36 per cent – 10 per cent higher than the professional services average (see Analysis on p16).

Sixty-six legal organisations with a combined workforce of 30,000 employees contributed to the WGEA report.

In those organisations, women represented just 15.6 per cent of all equity partners.

“Women dominate the lowest level of management, but then it seems they are significantly blocked as they move up the tree,” said WGEA director Helen Conway, a former lawyer herself, when speaking to Lawyers Weekly following the report’s release.

Baker & McKenzie Australia managing partner Chris Freeland is a “male champion of change” trying to address the unholy trinity of depression, diversity and discrimination at his firm – and in the profession as a whole.

Freeland took part in a panel discussion at the launch of the NARS in Canberra in March.

In the wake of that report and the release of guidelines by the Tristan Jepson Memorial Foundation in May to tackle the high rate of depression among lawyers, Freeland has organised regular meetings with other law firm managing partners in a bid to find some common ground on how these issues can best be tackled.

“Diversity is an issue where we all do badly and all firms can do better,” says Freeland, adding that diversity “is an explicit priority for me”.

Specific goals linked to the promotion and retention of female talent are included in his key performance indicators and those of practice group managers.

“It is now at the forefront of our thinking in a way it wasn’t a few years ago. In fact, we were probably embarrassed to bring it up,” he says. “I talk about it and we (Bakers management) talk about it a lot. I use it as a lens when making decisions, but I am not trying for an instant to say we have it sorted.”

On Freeland’s watch as managing partner, Bakers has started initiatives such as the BakerWomen program and greatly lifted the firm’s percentage of female partners.

On a global level, Bakers has committed itself to the “aspirational” target of having women in 30 per cent of leadership positions (although a date has not been specified).

Other global firms in Australia such as King & Wood Mallesons and Herbert Smith Freehills have set similar aspirational targets around the percentage of female partners.

Bakers also has a global diversity and inclusion committee, where employee wellbeing is specifically addressed via the BakerBalance program.

“We are demanding of our people, and we need to recognise the need to have the right support mechanisms in place,” says Freeland, acknowledging that, as with diversity, the profession can do more in this area.

“As leaders of law firms we can have more of a collective impact,” he says.

Lawyers bunkered down in the legal trenches throughout Australia are sceptical of whether such policies can bring about meaningful change.
Competition to get a gig with a law firm at graduate level is fierce and once inside a firm, new recruits quickly discover that the path to partnership is becoming longer and more onerous.

Barristers have to work exceedingly long hours to make a crust and general counsels frequently see external legal budgets slashed, with no mandate for more headcount from their corporate paymasters.

Given all this – not to mention that private practice lawyers are often subject to tight, client-driven deadlines and exacting internal performance targets – the competitive and confrontational nature of legal practice leaves many believing that such wellbeing policies are not worth the paper they are written on.

“A few months ago, my firm distributed helpful tips printed on colourful postcards suggesting we ought to ‘Go for a swim in the ocean’ or ‘Go home and cook a meal with your family’,” wrote one lawyer, anonymously, for Lawyers Weekly in 2013.

“Apparently the irony of recommending such fun and whimsy to a group of employees who are effectively required to remain at the office upwards of 14 hours a day for months on end was lost on the hopeful folks in human resources.”

Under such conditions, and with the profession’s poor track record in looking after its own, such cynicism is well placed.

However, recent developments have brought a cautious optimism that meaningful change can occur – at least among some members of the profession.
The Tristan Jepson Memorial Foundation (TJMF) is dedicated solely to reducing psychological ill-health in the legal community.

In May 2014, the TJMF launched the “world first” Psychological Wellbeing: Best Practice Guidelines for the Legal Profession.

The guidelines include 13 psycho-social components, incorporating culture, leadership, balance and growth and development. In just over six months, more than 80 legal bodies have signed up to them.

“There is one psycho-social factor that really resonates with me – civility and respect in the workplace,” says TJMF director Jeremy Hyman. “It is very powerful when someone thanks you for what you have done or acknowledges your contribution or shows interest in you outside of the workplace and cares about you as a person.

“That is really at the heart of what we are trying to achieve.”

Hyman, a communications manager at K&L Gates in Australia, speaks with great passion and eloquence on a subject close to his heart.

The TJMF seeks to engage with the whole profession, he explains, and in adopting such an inclusive approach, the organisation does not take a position on whether timesheets or billable-hour targets should be scrapped as a way of reducing depression.

“The psycho-social factors can exist along any model that a firm or legal body engages with,” he says.

Rather, Hyman believes that for the TJMF, success or otherwise in 2015 will be determined by the sharing of ideas around how to promote healthy legal workplaces.

“What we are talking about spans generations… cultural change takes time,” he says. “I believe that come next year when we are sharing ideas that come from implementing the guidelines, everyone will see the great work and strides being made.”

Leaving it all behind

Over the past 12 months, a number of legal professionals have sought to find a better way to practise.

Boutique firms such as Hive Legal, GrilloHiggins and Speirs Ryan all emerged in 2014, created by senior partners from large national and global firms who were disaffected and disillusioned by the large law firm model.

“With Hive, I was excited by the opportunity to start with a clean slate and design a law firm specifically for the contemporary legal market, which is undergoing fundamental changes,” said Mitzi Gilligan, a former partner at Minter Ellison and one of the founders of Melbourne’s Hive Legal, when speaking to Lawyers Weekly 12 months ago.

Hive, GrilloHiggins and Speirs Ryan are all seeking to offer clients alternatives to hourly billing and offer staff the opportunity to work flexibly.
Despite such a model resonating with clients and lawyers alike, hourly billing is still popular with many large law firms, and many of their large institutional clients.

“The vast majority of our client base has a preference for hourly billing on the basis that it is quantifiable,” says King & Wood Mallesons partner Peter Stirling, who is one of Australia’s pre-eminent M&A and capital markets practitioners.

“I think the whole market on the law firm side and the client side is still finding its way as to what the best models on alternate pricing are… we are seeing a stronger desire from clients for us to cap or go further [in discounts] in components of transactions, so there is a degree of certainty as to what costs will be.”

More women and men are, of course, demanding the ability to work flexibly as part of having to juggle work, family and – hopefully – fun.

Jodie Baker, managing director at Hive, told a conference in late August that the more firms offer flexible work options, the more likely more women will stay in the profession.

“It got to the point in my 30s where I watched a huge number of my peers step away from the industry altogether,” she said. “Smart, experienced, super-qualified people who just said this is too damn hard – and most of them were from top-tier firms.”

The smarter top-tier firms are starting to get the message, with flexible work and part-time roles for fee earners becoming de rigueur for firms seeking to keep their best female talent.

“I think the boutique trend is symptomatic of what the larger firms will do, if they haven’t already, is look at more innovative ways of interacting with staff,” says Bakers’ Chris Freeland.

The fact that many firms have been slow in coming to the party when it comes to flexible work – along with the timesheet culture – has been one of the reasons why the in-house arm of the profession has been the fastest growing for some time now.

ACLA CEO Trish Hyde believes that while 2015 will still see many private practice lawyers seek a change of scene, in-house lawyers will continue to feel the squeeze being felt throughout corporate Australia.

“Workflow is projected to increase, so if workflow is increasing, you will be expected to do more with less,” says Hyde, adding that for many corporate heads of legal, in-house budgets will not increase or decrease in 2015.

“Demonstrating value is a growing need for in-house counsel. When de-aggregated, that means how am I being billed? How am I managing rates and resources?

“That leads to project management becoming incredibly popular.”

Keeping the coffers full… or at similar levels

For the large law firms, 2014 was a tough year. Many firms saw revenues decline as a tight transactional market, falling commodity prices, a contractionary federal Budget and a falling Australian dollar cut into revenues.

That said, in the last quarter of 2014, the capital market surged and there was a sense that corporate Australia was loosening the purse strings somewhat.

“We have had a really good deal pipeline,” says Stirling, identifying the Medibank IPO and the accelerated roll-out of Australia’s National Broadband Network as significant transactions in the last quarter of 2014 that had KWM kicking up its heels. “On big ticket M&A work we have a good pipeline, so the catchword around here as we move into 2015 is infrastructure.

“There is a lot of potential M&A activity in that space.”

Despite domestic economic clouds, global law firms continue to enter the local market.

Keypoint Law and Bird & Bird were two international firms which launched Australian practices in 2014, while established international firms such as Jones Day, Baker & McKenzie and Clyde & Co opened new Australian offices.

With new firms, new names and new flags on law firm maps, the successful firms in 2015 will be the ones that can cut through the noise.

“The market remains very dynamic. We will see some consolidation in the mid-tier and more spin-offs in the form of boutiques,” says Henderson.
“This means we have to be very distinct and clear about what we do and what segment of the market we are targeting.”

Henderson says his firm saw revenue increase in 2013/2014 by around 20 per cent from the previous financial year, and that his firm’s targeted strategy of picking key battlegrounds such as telecommunications and competition and regulatory work means that what the firm stands for is clear.

“2015 presents an opportunity for firms with a clear vision,” he says.

Henderson’s old Gilbert + Tobin colleague, Chris Freeland, says that despite its status as the world’s largest law firm, local knowledge and clearly articulating what you stand for is a key plank of Bakers’ Australian strategy.

“Some firms are trying to do everything, and it is not clear where their areas of differentiation are,” he says, adding that many of the recent international mergers in Australia were done in haste and were not well thought out.

“I think there was a bit of FOMO [Fear of Missing Out] going on in the legal market, with some overseas firms worried they would miss out on an Australian piece to their firm, so they moved ahead quickly.

“As time has gone on they think ‘this has not made sense’ or it has not been as easy as they thought it might be. In five years’ time we will see a different composition of domestic firms and I am not so sure that the international alliances will work.”

Just as globalisation of the world’s economy becomes increasingly entrenched, so knowledge of a local legal market and local expertise become more highly sought-after.