With the start of 2013 I thought it was time I began my own blog that commented on business development and market activities as they relate to law firms in Australia.
Although I’m not a huge fan of trying to predict what the future might hold – as I’m nearly always way off the mark, after some thought I decided my first post would be a list of 10 things that could or might happen in the Australian legal market in the 12 months ahead.
So, here’s my list (in no particular order):
- At least one international firm who has set up in Australia in the past few years will end their alliance/tie-up or pack-up shop and go home. This figure could be higher if the Australian Dollar goes below parity with the US Dollar. It has long been my belief that international firms operating in Australia are disguising their real revenue figures behind a strong Australian Dollar exchange rate (as part of firm-wide reporting).
- Any number of ‘mid-tier’ firms will decided to dissolve (see 3 below for reasons).
- There will be significant consolidation of the ‘mid-tier’ sector. Australia does not have the depth of market for 30 odd law firms to be making $50 million plus a year in revenue year-in, year-out. This issue will likely come to ahead in 2013 with the recent influx of international firms resulting in less referral work and a greater challenge for Australian and Asian-based work.
- We may see a restructuring of in-house legal teams as the role of General Counsel becomes more aligned with C-suite needs. Historically General Counsel in Australia have overseen the work of their in-house teams. I foresee the in-house roles below General Counsel becoming more aligned with the business units of their employer, while the role of General Counsel itself becomes more strategically aligned with the Board (although overall reporting will still likely be to the General Counsel or an anointed deputy).
- There will be less graduate intakes. Unfortunately graduates are likely going to be one of the biggest losers in 2013, as law firms and in-house counsel continue to outsource commoditised work. In addition, clients are simply not willing to pay for work being done by graduates anymore and law firms looking to try and maintain some level of profitability don’t have the stomach to pay for this training out of their own pocket.
- Considerable lateral hire movement of partners and senior lawyers. Although this trend is a continuing one in Australia, with all the disruptions going on in the market, partners are now far more willing to take their business to other firms at the drop of a hat if they think their new firm stands a better chance of surviving the apocalypse or if they will be getting a better deal. Unfortunately, law firms themselves have still to learn that they need to do proper due diligence on a lateral hire to ensure the new hire will (a) fit with the culture of the firm, and (b) be able to bring across to the firm the work they promise.
- There will be a further round of redundancies of lawyers and support staff (although, to be fair, this has reportedly already started).
- In order to try to keep costs down, international firms (as well as Australian firms with offices overseas) will probably look to outsource more legal work to their offshore offices. This will be in addition to the legal process outsourcing (LPO) of commoditised work that has been taking place over the last few years.
- At best there will be zero growth in outside legal spend, and probably a reduction.
- I will try to blog on Tuesdays and Thursdays, which, like the 9 predictions above, may or may not actually happen.
Happy 2013 to all!