Evaluating the Next Generation of Law Firm: The Australian Perspective

As Australian law firms embrace incorporation, the partnership model has become a relic of the past. There are now more new law firms choosing the incorporation model over any of the traditional law firm structures. The growing cohort of legal practices undergoing incorporation are far from the usual suspects of top-tier, global law firms. Instead, the majority of these Incorporated Legal Practices (ILPs) are sole practitioner or micro-firms, with a preference to suburbia.

There are two unique traits of Australian ILPs; non-lawyers can become directors and shareholders of the law firm, and Legal Practitioner Directors must ensure the ILP has “appropriate management systems” in place. This difference between ILPs and traditional models produces a set of circumstances for sole practitioner and micro-firms which did not exist when traditional models were the norm. A scientific and repeatable methodology to evaluate an ILPs’ effectiveness to address the appropriate management systems requirement is of practical concern. This has implications for regulators, legal practice reform, and consumer rights.

In light of ILPs’ growth eclipsing traditional models, the question posed in this paper is how socio-legal methodologies can be embraced to measure the effectiveness of small Australian ILPs in addressing their appropriate management systems requirements.