Shaaron Dalton | Source: The Australian, Tuesday, Sept 3, 2024
Despite economic turbulence, the increasing usefulness of AI and higher employment costs, law firms across the board have grown, at partner, fee earner and graduate levels in the 12 months from July 1, 2023, to June 30, 2024.
Diversity, equity and inclusion (DEI) teams must also be celebrating as the gender balance swayed even further in favour of females in every level. We saw an increase overall in partner headcount of 3.73 per cent but females in partnership headcount went up 10 per cent, as did the percentage of females in equity partnership.
Fee earners increased overall headcount by 7.66 per cent, while the percentage of females vs. males in that headcount increased 18 per cent.
Grad numbers increased 5 per cent and the number of female graduates increased by 8 per cent.
The dramatic difference in this survey period is the demise and non-participation this year of the Big 4 consulting firms’ legal arms.
Although only KPMG Law has fully exited the Australian legal market, the other three teams have shrunk and are no longer spruiking a growth trajectory.
However, there are several leading law firms growing consulting and legal process management areas, previously dominated by Big 4. For instance, Ashurst and MinterEllison have hired in many of the refugee consulting partners from PwC and KPMG.
The legal firms are focused on risk and regulatory management, and focusing on highly regulated sectors such as financial services. We will be interested to see how integration works when the lawyers are running the show. It was not seamless the other way around.
The firms surveyed are a mix of top 50 local market and international commercial law firms, and those firms have been doing exceptionally well in an economy that is under stress. Fuelled by capital markets that didn’t die as expected, increasing regulation and legislation in the sectors serviced by these firms and increasing risk in the cyberworld and environmental social and governance (ESG) and with rising insolvencies, the firms continued to hit budgets and hire at all levels.
In addition, there are several law firms in the list that do a lot of insurance sector policy and claim work; with floods, fires and infrastructure catastrophes, those firms have been busier than ever.
The strongest growth at partner level was seen in the domestic firms with nearly 4 per cent growth. Next were international firms, averaging 2.84 per cent partner growth.
For top-tier firms partner growth was marginal at 1 per cent.
Where top tiers outstripped the market was in fee earner growth with 22 per cent growth for the year, compared with only 9.64 per cent in domestic firms and 4.44 per cent for international firms.
The market for talent at the associate and senior associate level is tough. Firms that have the best attractor brands and pay the best are growth oriented with good opportunities for their talent to work on interesting large and complex matters, and are winning more of the available talent pool.
In many cases firms can be as interested in the team that follows a partner as they are in the partner themselves, because those partners are able to hit the ground running in transitioning their fee base.
Trends to watch for the next year is more of the same. London is opening up to hiring Aussie lawyers again and we expect the talent squeeze in popular practice areas of Corporate, Finance, Projects, Competition and IT/Cyber to tighten further at the sweet spot of 3-6 year experienced lawyers as they go for money and experience offshore. It is fortunate that firms stocked up in the past year as that may hedge them as the new war for talent takes hold.
Partner moves will continue, although may slow somewhat with the upcoming election as firms may choose to wait for certainty. We expect the major demand for partners to continue in the domestic larger and mid-market sector with the addition of the growth-oriented internationals. In top tier there will be team moves when conflicts or the work type of the partner is no longer a good fit and where there is significant financial enticements on offer, and we will see further hiring for gaps or new practice areas but we are not expecting those firms to grow significantly overall.
Lawyers are lucky for now as there are plenty of good opportunities at all levels, and in a cost-of-living crisis they are well-positioned for continued prosperity.
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