Yesterday’s [4 July 2014] Australian newspaper Legal Affairs section published an article – “Top-tier firms axe hundreds of jobs” (subscription required if you wish to read the full article) – that opened with the following paragraph:
THE nation’s biggest law firms are in the midst of an employment shake-out with hundreds of jobs disappearing as the firms slash costs in the face of flat demand and intense competition.
The point of this post is not to opine on whether or not demand for legal services in Australia is truly flat, nor whether indeed demand among, so-called, ‘top-tier’ firms is intense, which I’ll leave for another day, but rather to comment on whether or not such flat demand, and indeed intense competition, should lead to the loss of hundred of jobs.
First off, anyone who has a memory even slightly longer than a gold fish, will recall that most (if not all) international firms (of whom most make up this so-called ‘top-tier’ level here in Australia) who entered the Australian market post the GFC cited “flat demand” in their domestic jurisdictions, and the need to grow revenue from other jurisdictions, as a strategic reason for doing such.
It seems somewhat strange then – even in the short-termism world that exists in the legal profession – that so many of these top-tier firms now cite this same flat demand as being a reason why hundreds of people have to lose their jobs. Stranger still is the fact that these firms could not have foreseen the situation, given they have very likely experienced very similar economic circumstances in their ‘home’ jurisdictions.
But what I find truly amazing about this whole situation is that no one seems to have asked the question: so what can I do about it?
Even if we accept the premise that demand for legal services in Australia is flat – and I will put my hands up and say I have very serious reservations this is true – law firms who have essentially made the whole reason that they are in Australia around the fact that (a) they are ‘international’, and (b) they have ‘global’ clients, should be able to see that relying on domestic demand alone makes for a bad strategic decision?
And so if we then say that reliance on the local domestic market makes for a bad strategic sense, and that cohesion among the network globally is required to look for business development opportunities elsewhere, then why is that I read:
- “Record M&A Spree Sees Banks Dominate Dollar Sales: Asean Credit” – Bloomberg news article stating that M&A activity by Asian corporate buyers rose 19% year-on-year to $343 billion!
- “Chinese investment abroad is poised to surpass its inward flows” – The Economist maps & charts (very good and worth looking at) that estimates we have about a year left before Chinese outward investment will exceed inward investment (and where, pray, do Australian law firms think some of this money might be going, given they are our biggest trading partner?!?)
- “Offshore bond issues gain pace among Chinese firms“- a South China Morning Post (SCMP) article commenting that with recent successful equity capital markets transactions leading to a level of apathy in the market, debt capital markets might be the next place mainland Chinese companies look for capital funds – to fund, in part no doubt, all those M&A deals!
in the last few days alone, I have yet to see a single piece of marketing or business development material from a single ‘top-tier’ law firm that would take advantage of this?
After all, while I would be the first to acknowledge this is not a life or death situation, as the Australian article demonstrates:
The Australian operations of nine top-tier international firms have shed a total of 420 legal jobs in the year to June 30 — which is equivalent to 10.4 per cent of their legal workforce.
we are talking about real people and real lives here. So it really is incumbent on us to ensure we are doing our very best when it comes to the issue of whether or not we have tried our hardest to grow the business today.