State of the Legal Market
Lawyers generally are very time poor which makes it difficult to have a good understanding of the broader legal market – most are able to comment on the snippet of the market in which they are immersed: their own firm and team, drunken opinions discussed with University peers at the pub and the odd gambit read whilst swiping through Lawyers Weekly on the train. The extent of this knowledge tends to be limited to rumours about how much some firms are paying; how hard some firms are working or the anti-climax that comes with the discovery that pre-workout is the only stimulant being taken by lawyers at work.
Thomson Reuters recently produced a report titled: Australia: State of the Legal Market and market it as a “strategic decision–making tool” for law firms or organisations in the legal industry. This article will provide a bite-sized overview of its content which we think should be digested by lawyers at every level to understand market trends and make strategic decisions about their careers.
Here’s how we’ve broken it down– drivers and demands, key performance indicators and whether litigators are still on a high from Hayne.
Drivers and demands
Infrastructure and major construction were the main drivers for the legal market in FY19 – given how many projects are clearly visible on a daily basis ($100 billion’s worth to be precise) and the plethora of trial-trams that rolled around the Sydney CBD full of cement bags for months – this will be no surprise. We saw a consistent demand for lawyers from firms at every level throughout FY19.
Regulatory investigations and class action defence follow close behind and the demand increased steadily (and continues to do so). This is a result of the increase in self-imposed and government-enforced regulatory loads on businesses.
The report predicted the market was set for an increase in shareholder class actions, although the extent to which this influx may actually materialise might be reconsidered due to the recent decisions in Myer and BMW. The decisions provided guidance on how shareholder class action claims should be valued and as a result have potentially “destroyed the game” for litigation funders.
Key performance indicators
The report suggests that fluctuations in demand have created difficulties for firms to meet their resourcing needs. M&A, which saw an influx in hiring in early FY19, did not see the growth expected throughout the year leaving corporate lawyers at every level underutilised and spending their office hours finding new innovative ways to pad their time (extra units for discussing their workflows with colleagues over their daily coffees – that’s no longer admin time, right?)
High from Hayne
The post-Hayne Commission growth in dispute resolution continued from the 22% increase in FY18. The demand for litigators was unparalleled at the start of FY19. The demand continued in the lead up to Christmas (Christmas eve interviews no less!) and is already on the rise again in the new calendar year.
Thomson Reuters shockingly concludes that recruiting is significant but is “impacted by the quest for greater work-life balance and competition for top-tier talent. This, however, is leading to drops in productivity.”
The above statement is reflective of the 16 firms surveyed (those considered the “top-tier”). We agree that lateral tier-1 to tier-1 moves are more of a rarity. However, we have seen a significant increase in ambitious and driven lawyers (outside the “top-tier” firms surveyed) utilising the shortage in the market – in particular in construction, litigation and banking – to pursue a ‘step-up’ in tier to fill the gaps.
Associates might find it interesting to note that 226 partners moved firms in FY19. With more international market entrants on the horizon, partners and associates are likely to have greater options to achieve their career goals in 2020. Regardless of your practice area, our aim is to provide you with relevant market information, so that when the time is right you can make an educated decision on your career – whether that is now, in 6 months’ time or in a few years.