What practice areas will thrive in FY25–26?

Reflecting on the financial year that is about to pass, Lewis noted that FY2024–25 was defined by “overall demand growth, elevated work rate growth, and improvements in utilisation”.

This market resilience, she explained, translated into strong growth across three core practice areas, which included banking and finance (10.5 per cent), workplace relations (6.9 per cent), and construction (4.3 per cent).

Looking ahead, Anderson predicted that the transactional side of the legal market will gather significant momentum in FY25–26, spurred by growing interest from foreign investors, particularly from Asia and North America, seeking opportunities in Australia’s most in-demand sectors.

“Following a period of softer market conditions in some areas, we’re seeing strong demand on the transactional side of the business. As we head into FY26, we’re expecting to see continued momentum in deal activity, driven by foreign bidders from across Asia and North America who are targeting new opportunities in sectors such as critical minerals, AI, renewable energy, EV supply chains, and infrastructure,” she said.

However, not all outlooks are optimistic. Anderson warned that elevated insolvency rates are likely to continue as businesses contend with “sustained downward pressure” that is expected to persist into the new financial year.

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In light of this, she identified restructuring as a practice area that will remain critical, with businesses in financial distress increasingly relying on legal support to implement survival strategies.

“We’re expecting our restructuring practice will remain busy as businesses seek to recapitalise and deploy strategies to keep their businesses afloat. Private credit is also playing a more prominent role in distressed deals, opening up new opportunities, particularly where lenders are willing to convert debt into equity,” she said.

On the disputes front, Anderson flagged continued growth in areas such as “regulatory investigations, cyber-related incidents, ESG-related litigation, and class actions – particularly in sectors like financial services, energy, and tech”.

She noted these areas are expected to thrive in FY25–26, primarily driven by “heightened regulatory scrutiny and evolving stakeholder expectations”.

A recent report from Thomson Reuters, Generative AI in Professional Services, revealed that the number of legal professionals using AI in their work “has doubled in the last year”. Building on this, Lewis predicted that the influence of such technology will continue to grow throughout the next financial year.

She attributed this surge to the increasing “appetite for AI” among both law firms and their clients.

However, despite this growing interest, Lewis highlighted a key challenge: many law firms struggle to effectively communicate their use of AI to clients, with a significant number of clients unaware of how AI is integrated into their legal services.

“Whilst the report reveals a desire by many clients for their firms to use GenAI, 70 per cent are unaware of how GenAI is actually being used by their firms. This presents a unique opportunity for firms to align their offerings with evolving client needs through proactive communication about the technology they use to enhance efficiency and innovation,” she said.

Given the uncertain legal landscape ahead, Lewis emphasised that in FY25–26, law firm leaders will need to increasingly embrace “data-driven decisions” to identify growth opportunities and adopt a more proactive approach.

“Law firm leaders need insights about industry trends at their fingertips, to better understand where the sources of growth are originating from and to anticipate how their clients’ businesses and industries will be impacted by regulatory changes,” she said.

“Firms can demonstrate value by leveraging their regulatory expertise and industry exposure to help their clients adapt and thrive in response to market opportunities.”

To prepare for the challenges and opportunities FY25–26 will bring to the legal profession, Anderson emphasised the importance for law firms to strengthen their “cross-border” capabilities to meet the growing demand from international clients.

“Law firms should continue to build capability in cross-border transactions. With international investors showing sustained interest in Australia, the ability to advise on complex, multi-jurisdictional matters is critical,” she said.

Another key factor in positioning firms for success, Anderson noted, is the integration of “legal and consulting services, such as risk advisory”.

She noted that these combined offerings will better equip firms to “support clients navigating increasingly complex regulatory and commercial environments”.

Lewis said: “Those who are successful by the end of FY26 will have achieved three things: embedded additional value with their clients, embraced an AI-powered technology ecosystem, and worked in partnership with their clients to enhance cost predictability and transparency.”