As usual, the Report provides useful insights into the latest thinking of Australian law firm managing partners/leadership, as well as the trends and developments impacting on the Australian private practice legal industry sector.
Interesting outtakes from the latest edition of the Report include:
- although short-term (next 12 months) economic confidence is fairly dire, the long-term (24 months+) outlook is very positive.
- surprisingly, given the lack of confidence in short-term economic conditions, every single top-tier surveyed firm is forecasting higher revenue in the next six months. As Marc Totaro’s introduction covers, top-tier firms expect this [next six months] revenue growth to come from Europe, Asia and Sydney; but this paints a little too rosy a picture to me.
- both top-tier (67%) and mid-tier (47%) firms anticipate seeing revenue growth coming from their employment teams.
- insurance (60%) related work gets the nod as the expected highest revenue growth area for mid-tier firms. While the Report doesn’t elaborate on whether this is claims related or commercial work, the recent re-jig in the market – with insurance teams moving from the top end of town firms to mid-tier firms – must certainly account for some of this positivity. This is probably also reflected in the fact that top-tier firms surveyed forecast a fall in their insurance practice revenue over the next six months.
- excepted revenue growth within taxation (50%) ranked higher than I would have guessed among top-tier firms; but maybe this is more reflective of the time of year (Q3).
- one possible hidden indicator in the Report: mid-tier firms seem more optimistic about getting their hands on “construction, engineering and major infrastructure” (50%) work than top-tier firms – who don’t rank this area in their top 3 revenue growth practices. On the flip-side, clearly the recent M&A work in “IT, telecoms and media” (think 9 Network and iiNet) has been going to the top-end of town with 67% of top-tier firms expecting this practice area to be one of their highest growth areas.
- top-tier firms forecast revenue growth in UK/Europe, Asia, Brisbane, Canberra, Melbourne and Sydney, but revenue in both Adelaide and Perth are predicted to contract.
The Report also provides forecasts on expected realisation rates (and if you thought these couldn’t possibly get any worse, think again), expenses* and outsourcing.
But, saving the best to last, probably the biggest shock the Report contains is the forecasted change in staffing; and, in particular, the bloodbath that is anticipated to take place within the partnership ranks of top-tier firms. And to be clear, a 33% and 67% forecasted decline in net proportion of equity and salaried partners respectively can only be described as a “bloodbath”!
As usual, I suggest you download and read the Report – it’ll make for an interesting weekend read.
* on a personal note, I see there is a forecasted 17% reduction in “Marketing and Business Development” expense by top-tier firms in the next six months. I can only hope that doesn’t come about.