A rise in innovative practices is emerging in the legal sector, as a raft of entrepreneurs use their business acumen to form a whole new approach to problem solving, writes Sarah Sharples

With continuing uncertainty about when the global financial crisis will end, the legal profession is scrambling to reinvent itself. A clients' market means that demand outstrips supply and organisations can be picky about who they choose for their legal work.

Tony O'Malley, a managing partner at Mallesons Stephen Jaques, says clients are demanding only the highest quality of service - not only quality in terms of legal issues, but also lawyers with business acumen and knowledge of industries and sectors. This has consequently changed the requisite skills for a lawyer, says O'Malley.

"Lawyers are going to have to have much stronger work-origination skills - so the ability to actually win work in a tightening market ... you have to be able to have the right quality conversations with your clients and really understand their business and provide solutions for their business needs," he says.

Vijay Cugati, a corporate partner at Allens Arthur Robinson, agrees that difficult financial times have meant organisations are turning to lawyers as trusted advisors - which means looking beyond mere legal advice.

"The aim is to ensure an outcome for clients which is technically correct but focuses on their commercial aims and ensures that we aren't giving advice merely in a vacuum - it's all about the commercial realities," he says.

"I think we have to be technically excellent but beyond and above that I think [we need] commercial awareness. You need to understand your clients' business; you need to understand their risks and what concerns them and you also you need to have an awareness of their industry and what is affecting their business.

"How you do that is by talking to clients. It's about reading up on them and asking them questions and developing personal relationships with them."

Managing partner of Marque Lawyers, Michael Bradley, who left Gadens in Sydney to set up his own firm, agrees that the profession is starting to catch up with the notion that clients value a lawyer with commercial skills.

"The law in the abstract isn't a particularly useful thing, but having the ability to understand the way commercial people think and the depth of understanding of a commercial context will give you the ability to apply the law in a way that is useful to clients," he says.

"I've always placed a pretty high value on what I would call 'real world' experience. One thing I would always like to see in a CV is that someone had an actual job - not so much legal experience but a job in the real world, particularly one that involved dealing with people [and] customers, because of the basic commercial skills that that teaches."

O'Malley agrees that real world experience and secondments are much more valuable than further studies such as an MBA or an applied finance degree.

"It's my personal view there is no substitute for experience in a commercial law firm - working shoulder-to-shoulder with clients on their matters and in their industry," he says.

"We see secondees as an investment in that relationship because that lawyer, whilst they're there with the client, they will be doing essentially a deep-dive learning experience about the business and the sector and the strategy behind that.

"This is somebody, when they return to the firm, who will be supporting that relationship for many years to come, so that's on-the-job training experience and my personal view is that is far more useful and relevant than some of the formal educations."

Entrepreneurs in the marketplace

Nick James, along with co-founder Christian Hyland, is one lawyer who set up an entrepreneurial legal practice two years ago. The firm, Optim Legal, offers satisfaction-based billing arrangements which allow clients to lower or increase their fees by as much as 20 per cent at the end of each month.

James is a former Freehills and Allens lawyer, and has worked as an Associate to Justice Michael Kirby. He says the firm tends to attract lawyers with a genuine interest in business and a capacity to, at times, act as entrepreneurs.

"Entrepreneurs have a drive to make things happen and they have a drive towards thinking creatively to solve solutions and that's pretty much the genesis of our organisation. We see ourselves as an organisation that's solving a lot of issues and problems that we found with legal service providers and so ... like attracts like ... our lawyers are really encouraged and rewarded for thinking creatively and entrepreneurially," he says.

Hyland, who has a business background and was a client of some of the top-tier law firms before he helped start up Optim Legal, adds that removing billing targets for lawyers has brought a number of benefits, not the least of which is giving their staff time to listen to clients.

"Coming into the industry with some fresh thinking really seems to be unlocking a strong entrepreneurial spirit in a lawyer who is looking at ways to shape a truly alternative top-tier firm, [and] that gives [Optim Legal] lawyers the capacity and even the incentive to operate with much more of a focus that is aligned with what businesspeople are looking for," he says.

"In my experience businesspeople want solutions, they want people who have the time to listen and learn about what they're doing and who seek to understand them and what they are about, rather than just coming at it from a purely [problem-solving] focus or not having the time to understand their business."

For lawyers working in the top-tier, O'Malley says entrepreneurial skills can be applied in certain circumstances.

"I think it's good to have people with entrepreneurial abilities, because we have to continually change our business model to adapt to the market so the visionaries amongst us can help plan and set the strategy for that," he says.

"In terms of pure entrepreneurial skills [and] risk-taking - I think that is not the role of the lawyer with the clients. I think we can assess risk and advise on levels of risk for clients but, ultimately, they have to form the view as to where their comfort levels are and what they want to do with that advice.

"So with law firms you will get some entrepreneurial types, but I would say probably in the minority."

Not a cookie cut-out lawyer

Former UK lawyer James Middleweek, who started new Perth-based legal firm Financial Redress during the global financial crisis, is a good example of a legal entrepreneur. His firm, set up in March, is the first law firm in Australia to specialise in recovering compensation for consumers and businesses over unfair charging by financial institutions.

As managing director, Middleweek, says it is unfortunate but the economic climate has ensured that the firm's customer base is solid, with enquiries inundating the firm. People are facing harder times and are looking for returns, including seeking compensation from penalty charges, he says.

The legal director of the firm, Douglas Taylor, actually moved from Sydney to Perth for three to four months to help establish the business because he saw the opportunity that was available, before returning to Sydney due to growing demand on the East Coast, he adds.

Middleweek says the biggest challenge facing the business is overcoming the natural conservatism of lawyers and attracting those who are entrepreneurs.

"That has been the only frustration - we would like, in terms of our expansion ... to recruit more lawyers. We think the whole area of financial consumer business compensation for mis-selling and unfair charging is an unexploited [and] unlooked at area," he says.

"I think it all depends on the type of lawyer you want to be, if you want to work at a sausage factory firm [where] the work is handed to you on a plate and you earn a good salary and maybe a bonus, then great.

"But, at the end of the day, the law is a business. What I look for is people who want to go out and actually find new areas, have a bit of sympathy for the underdog and give it a good go - and sometimes those aren't always characteristics you find in the current generation. But a lawyer who is an entrepreneur is a very powerful weapon."

Meanwhile, O'Malley is predicting a shift in practice from the last 15 years during which lawyers were becoming increasingly specialised.

"I think the market is now moving back the other way and lawyers are being required to be a little bit more of a generalist, so they can meet a broader set of client needs and, of course, it makes sense for the practitioner," he says.

"You want to have more than one string to your bow or more than one skill because if you only have one skill or expertise and the market no longer requires that then you are going to be out of a job or you're going to have to diversify your practice pretty quickly."