Top 3 Trends from the Half Year Report Card on the Legal Industry
Posted at Legal Practice Intelligence - 13 July 2015
The Australian and the Australian Financial Review (AFR) have produced their half year reports on the state of the Australian legal industry. Legal Practice Intelligence analysed the reporting and identified three significant trends:
1. Disaggregation of legal work
Tony Macvean, Managing Partner of Hall & Wilcox, uses the term “disaggregation of legal work.”
Quoted in the AFR Mr Macvean said the disaggregation of legal work in the market provided real opportunities for mid-tier firms such as Hall & Wilcox in areas that had traditionally been dominated by top-tier law firms.
"I think clients are getting more sophisticated and they will use different firms for different things. Lots of corporates have panels, but rather than having say six top-tier firms, now they will have, say, two top-tier firms, two mid-tier firms and two boutique firms.
"There is disaggregation of legal work and this provides real opportunities for us," he said.
2. The great Partner reshuffle
In the last few years, more than 20 global firms have entered Australia. Typically, they have either merged with local firms or poached a small number of Australian lawyers to open their local operations.
In the market as a whole, we are going through a low growth period in the demand for high-end legal services. The AFR's July 2015 Partnership Survey noted that "there was almost no movement in overall partner numbers among the nation's leading firms in the past six months. The total number of partners increased slightly, from 2902 to 2916, meaning almost as many partners left their firms as joined or were promoted."
The three factors of a low growth environment for legal services, disruption caused by global entrants and an increasing acceptance of small law firms by corporate Australia has led to a stunning outcome as reported by the AFR: Lateral partner hires outnumbered internal partner promotions by 93 to 72 overall.
3. Decline in top tier workforce
The Australian surveyed 43 top law firms and found that in the past 12 months the number of employed lawyers declined by 4.4%. The employed lawyer workforce declined by around 8% in the top tier while the mid tier held steady with 0.5% growth.
© 2015 Legal Practice Intelligence
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