The size of your firm has no bearing on the amount you can charge clients.
Now if you have read the above quote and thought to yourself “of course the size of your firm has no bearing on the amount you can charge clients, clearly Smith has lost it again!“, then bear with me.
In a recent matter before the Central District of California, the Honorable Michael W Fitzgerald disagreed with the notion that the size of a law firm should have no bearing on the amount you can charge clients when he stated:
โit is simply unreasonable to award big law rates to a four-person firm representing mom-and-pop warehouses.โ
In what is otherwise far reaching commentary on the history and application of the billable hour (well worth a read in itself), Fitzgerald’s ruling is troubling; not least because it is based on a premise that bigger means better โ and better means more expensive. Now that could be true. But it doesn’t make it so.
Conversely, should I, as a client, be happy to pay more because the attorney acting on my matter works in a firm that has seven floors over one that has one? Surely the answer here is “no”, I’m paying for outcomes over inputs.
But that’s not the case here. If we follow Fitzgerald’s reasoning in this case, the real drivers of price: (a) Perceived expertise and relevance; (b) Client experience and accessibility; and (c) Outcome certainty and risk management, are certainly consideration, but no longer primary.
Read pretty much any report on the legal market over the past 20 years and the story is the same: Growth, growth, growth. But, a recent report by legal advisory boutique Taha & Watmough would suggest that, while that may be true at some level, the real story is a little less rosy.
Nearly all top [UK] 100 firms have seen real-terms rises in revenue and profit over the past ten years;
60% of firms have seen their revenue per lawyer fall in real terms;
60% of firms have seen profit per lawyer shrink;
More than a third of firms have seen partner profits decline.
Meaning the average equity partner at a top 100 [UK] law firm is earning less [in real terms] today than 10 years ago.
Given the rise in salaries and other costs here in Australia over that period, I wouldn’t see our numbers as being too different to those above.
So the next time you see stats telling you how well law firms are doing, remember:
โVanity metrics are the fine China of analytics โ pretty to look at, but useless at the table.โ
Get in touch if you want to have a chat about how you can sustainably grow your firm
Private equity has scored a partial victory in its push to expand in the US legal market, after lobbyists softened legislation in California that threatened to disrupt liberalisation of law firm ownership rules. Attorneys in the countryโs largest state will be allowed to partner on some legal work with investor-owned law firms under the terms of a law signed by Governor Gavin Newsom.
What Does This Means for the US Legal Market?
By far the largest legal market in the world, what does this development mean for the future of the US โ indeed Global โ legal market? While this compromise isnโt a full liberalisation of the Californian (let alone US) legal market, along with the recent liberalisation of neighbouring Arizonaโs legal market, which now allows non-lawyers to own law firms under an โalternative business structureโ (ABS) model, itโs certainly a crack in the door. For private equity, itโll be a sign that resistance to change from within the profession can be negotiated down. For Californiaโs legal establishment, itโs a signal that โ finally – the status quo is no longer politically or economically inevitable. For the Global legal market, itโs further evidence, if it were needed, that despite all of the challenges that come with owning a law firm, private equity very much remains interested in this asset class.
Earlier today The ๐๐ถ๐ด๐ต๐ณ๐ข๐ญ๐ช๐ข๐ฏ ๐๐ช๐ฏ๐ข๐ฏ๐ค๐ช๐ข๐ญ ๐๐ฆ๐ท๐ช๐ฆ๐ธ published the results of its Law Graduate Salary Range Survey.
Makes for an interesting read. On the one hand, nowhere near as high as overseas markets such as London, HK and the US. On the other hand, Grads on A$130K would have been unthinkable 5 – 10 years ago!
๐๐ผ๐ ๐บ๐๐ฐ๐ต ๐ถ๐ ๐ฎ ๐ต๐ฎ๐ป๐ฑ๐ฏ๐ฎ๐ด ๐๐ผ๐ฟ๐๐ต? In this case, a staggering A$15.3 million.
๐ง๐ต๐ฒ ๐๐ฎ๐น๐๐ฒ ๐ผ๐ณ ๐๐๐ผ๐ฟ๐๐๐ฒ๐น๐น๐ถ๐ป๐ด Unlike most handbags however, this one has a story to tell.
It was the very first Birkin bag.
Designed by Hermรจs executive Jean-Louis Dumas in 1984, following a chance encounter on a flight with actress and singer Jane Birkin (hence the name), the bag was used daily by Birkin for nearly a decade before she donated it to an Aids Charity auction.
What the sale of this bag evidences though is how value extends beyond material worth. Value is not the $$$ signs you seen on the price-tag; it’s about the stories we tell, the history we preserve, and the emotional connections we forge.
The sale of this bag is a powerful reminder to professionals that authenticity and narrative can elevate your service offering from ordinary to iconic.
It is your powerful – and likely only – differentiator. It is what clients are willing to pay for.
As we navigate 2025, Australian midsize law firms find themselves at a pivotal crossroadsโbalancing client expectations, talent retention and the promise (and pitfalls) of technology. The recently released 2025 Australian Midsize Law Firm Priorities Report by Actionstep offers a deep dive into whatโs shaping the future for these firms.
Hereโs s summary of what you need to know from the Reportโand how your firm can stay ahead.
๐ฏ Client Satisfaction: The Cornerstone of Growth
Itโs clearโclient satisfaction is king. 71% of midsize firms rank it as their top priority for protecting and growing revenue. But itโs not just about delivering legal outcomes; itโs about building trust-based relationships, offering personalised service and consistently exceeding expectations.
Interestingly, firms are focusing more on deepening relationships with existing clients rather than chasing new business. In fact, 37% see expanding existing client accounts as their primary growth strategy for 2025.
โ Takeaway: If your firm isnโt investing in client experience, youโre leaving growth on the table.
๐ฅ Talent Retention: Your Secret Weapon
While technology grabs headlines, midsize firms know that people drive performance.
59% of firms highlight attracting and retaining talent as a top strategic priority.
Engaging work, leadership and firm culture outrank pay as key reasons employees stay.
However, when employees consider leaving, pay and remuneration become the decisive factor. This signals a clear message: while meaningful work keeps people engaged, competitive compensation keeps them committed.
โ Takeaway: Create a workplace where talent thrivesโoffer challenging work, clear career paths and ensure your pay structures remain competitive.
๐ป Technology & Automation: The Untapped Advantage
Despite recognising efficiency challenges, midsize firms remain cautious adopters of automation and AI:
Only 38% are actively using automation tools.
Just 5% have reached AI maturity.
Cybersecurity concerns and data privacy remain top barriers.
Thereโs also a noticeable gap in digital client experience. While firms excel in personalised, human-centric service, only 41% feel confident in their digital touchpoints like client portals and automated communications.
โ Takeaway: Embrace technologyโnot to replace people, but to empower them. Automation can reduce workloads, freeing your team to focus on high-value client interactions.
๐ Cybersecurity: More Than Just ITโs Problem
With client trust on the line, cybersecurity is non-negotiable. Yet, the biggest risk isnโt technologyโitโs human error. Over 63% of firms cite staff behaviour (think password sharing, weak authentication practices) as their top vulnerability.
โ Takeaway: Build a security-first culture. Regular training, robust protocols, and smart tools like multi-factor authentication are essential to protect both your firm and your clients.
๐ 5 Strategies for Midsize Law Firm Success in 2025
Acknowledge Tech Scepticism: Start small, demonstrate wins, and build confidence in automation.
Prioritise Efficiency: Use automation to tackle time constraints and free up your team for strategic work.
Enhance the Client Experience: Leverage digital tools to complement your personal service.
Strengthen Cybersecurity: Focus on both technology and employee awareness.
Put People First: Foster engaging work environments and ensure competitive compensation.
Final Thoughts
2025 presents both challenges and opportunities for Australiaโs midsize law firms. Those that blend human expertise with smart technology, prioritise client relationships, and invest in their people will be best positioned to thrive in an increasingly competitive market.
A recent report, “Strategic Sector Insights for the Legal Profession 2025: Mid-Sized Firms”, published by The Law Society and MHA, reveals a striking trend:
๐ More than 50% of mid-sized law firms report that their lawyers bill less than 25 hours per week on average. ๐ Less than 3% of lawyers at these firms bill anywhere close to the full 40-hour workweek.
While it’s unrealistic to expect lawyers to bill every hour they work, these numbers highlight why alternative pricing models are a key priority for firm leaders in 2025.
โ๏ธ What does the future of legal pricing look like? If you’re exploring value-based pricing, subscription models, or hybrid fee structures, letโs talk!
๐ฉ DM me to discuss innovative pricing strategies for law firms.
Earlier today, the Thomson Reuters Institute published its Midyear Update on the Australian Legal Market, providing valuable half-year insights into industry trends in the Australian legal market.
There’s a lot to unpack in the Report, and I highly recommend you download it. That said, here are my top takeaways:
โ Whatโs Happening with Non-Equity Partners? Is there an underlying story in the Non-Equity Partner segment? The data suggests there might be more to explore.
โ Equity Partners Carrying the Load? If legal market demand and worked rates are up in 2024, yet the average billable hours per lawyer are down, it raises a big questionโare Equity Partners absorbing the extra workload? If so, why?
โ Billable Hours Decline With 12 months in a year, many law firms have lawyers billing less than 1,500 hours annually. What does this mean for profitability and productivity?
If you’re looking to refine your pricing strategy or need guidance on law firm profitability, feel free to get in touch. In the meantime, download the two-page update and see the data for yourself!
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