Demand is measured by the Report as volume of billable hours worked on average at a firm. Simply put, the average Australian law firm was busier in Q4 FY20 compared to last year, as their counterparts the world over experienced a considerable drop in workflows. The Report put this down, in large, to the continuation of commission work and the advanced virtual capabilities already in place in Australian courts.

Demands in Australia were up throughout FY20 having grown by 7.4 per cent, considerably better than FY19 where demands grew by only 4.8 per cent compared to FY18. Interestingly, the main driver for this increase was large national law firms outside the big eight – with demands increasing not only in the hubs of Sydney (9.2 per cent) and Melbourne (10.3 percent), but considerable growth was evident in Brisbane (9.2 per cent) and Perth (4.6 per cent).

This has continued into FY21 with clients reporting a swift increase in workflows in Perth in particular, a region of the country relatively unaffected by the pandemic. Lawyers in our network at large firms reported having been busier than they have ever been throughout the pandemic.

Unsurprisingly, dispute resolution was the practice area that drove this increase. The significant demand in dispute resolution in FY19 continued throughout FY20 and in Q4 as courts and trials adjusted to working remotely. The Report noted we should be cautious of future economic slowdowns due to the increase in demand in restructuring and insolvency and workplace relations – indicating companies are facing challenges as a result of the pandemic. Whilst this is true, our clients are reporting that workflows have remained consistent in many other areas, notably projects and construction and insurance. We envisage large firms who service these specific areas with a diverse client base, will remain busy.

How has this demand impacted hiring?

“Concerns about the coronavirus did little to slow lawyer hiring, as fourth quarter Qualified Fee Earner growth alone outpaced growth for the entire previous year,” the report noted. 

The above was not true for BigLaw, where generally a conservative approach was taken. Whilst most firms honoured offers made to lawyers prior to the pandemic restrictions being imposed, by March 2020, several firms had implemented firm-wide hiring freezes and others only hired for roles that were business-critical. EG Consulting, for example, experienced a 93 per cent drop in the number of instructions for opportunities at BigLaw firms overnight. The majority of QFE growth in Q4 therefore came from large national firms, mid-tier and boutiques.

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In addition, the number of lateral partner moves was at a five-year low in Q4. As partner moves are more as part of a firm’s strategy for growth, it is unsurprising that both the law firms and the partners would be cautious of such hires when there was uncertainty as to how the pandemic could play out. We were aware of several partners who put their moves on hold. These processes were not terminated, rather postponed. Partner moves are now rapidly increasing at the start of FY21 as the economy starts to return to some form of normality.

Well-positioned, financially stable and relatively low-impacted large law firms have been making big strategic moves in the market. Thomson Geer completed four team hires in two months, including a three-partner corporate team in Perth and the entire Dentons’ 20-partner Brisbane-based team. Mills Oakley hired two partners from Norton Rose Fulbright in two months. We are expecting to see similar high-profile hires from the other major mid-tier firms that have a reputation for growth through partner poaching, in addition to Thomson Geer and Mills Oakley, the likes of: Colin Biggers & Paisley, Hall & Wilcox, Lander & Rogers, Maddocks and McCullough Robertson.

The Report outlined that the practice areas with most partner movements were: litigation, banking and finance, employment – as we had already discussed here and here. The trend towards team moves was consistent throughout FY20 and we have seen this pick-up again in early FY21.

Conclusions

Ultimately, firms did not stop hiring. Concerns about the coronavirus did little to slow lawyer hiring, as fourth-quarter QFE growth alone outpaced growth for the entire previous year. Partner hires slowed in Q4 FY2020 as senior hires were more tentative. This has been outbalanced by the significant increase in moves announced in early FY21.

This all leads on to the vital question – if billable hours increased and hiring bounced back, is there any ongoing justification for pay review freezes or delays?

Kumara Mallikaaratchi is an executive search consultant for private practice at EG Consulting.