Once defined by a number of dominant top-tier firms, the Australian legal market is undergoing an ongoing shift, with mid-tier and large national firms on the rise and global presence driving a new tier of firms.
While the Australian legal market has historically been dominated by a select few top-tier firms, changing market conditions could be leading to a new classification of firms in Australia, with global law firms priced out of certain work and more focused on multinational clients, and mid-tier firms growing – and recruiting top-tier talent in order to do so.
In a recent post on LinkedIn, Julip Advisory founder Kim Wiegand predicted that there would be firms on a “global elite” level, a new “top eight” group of firms, and then a third group of mid-tier firms: top 50 firms that “haven’t quite hit scale, service diversification or regional breadth” compared to the other groups of firms in Australia.
The “global elite” tier of firms, including Ashurst, A&O Shearman, and HSF Kramer – the result of a recent merger between Herbert Smith Freehills (HSF) and New York City-headquartered firm Kramer Levin – combine “full-service capability with global networks, multi-jurisdictional capacity and premium margins”, according to Wiegand. However, these firms’ cost structures “often price them out of government and domestic panel work, creating opportunities for national firms to gain market share”.
Domestic top-tier firms now form a “recalibrated second tier”, including Clayton Utz, MinterEllison, Corrs Chambers Westgarth, and Gilbert + Tobin, a group which Wiegand said would be joined by “a small number of ambitious, fast-growing national firms that now rival them in scale and practice diversity” – the likes of which include Thomson Geer and Gadens.
“This group of ambitious national firms is increasingly confident and acquisitive, using lateral partner and team hires, targeted growth and brand investment to challenge the incumbents,” she said.
“They have built national reach and sector depth, are more agile on pricing, and often deliver high profitability without the overheads of the global elite. This is an exciting group to watch as they really challenge the current court of Australian law firm royalty.”
Top-tier firms were previously large, state-based firms that dominated the Australian legal market, but over the last 15 years, the globalisation of the market has meant that those top-tier firms are now global.
As these firms shrink their practices and offerings in Australia to focus on more relevant international work, firms that have previously been mid-tier are well positioned to fill the gaps, with growing ranks and major corporate clients.
Gadens managing partner and CEO Mark Pistilli said this latest evolution is opening up opportunities for Australia’s national “challenger” firms, as global firms refine their strategies and target the largest, most complex deals.
“The Australian legal market is evolving. At Gadens, we call it ‘back to the future’ – where we expect the Australian legal market to again be dominated by large Australian national firms (or as some call them, the ‘challenger firms’),” he said.
“They will just be different to the ones that we remember, and hopefully Gadens will be one of them.”
The rise of mid-tier firms
Thomson Reuters’ Australia State of the Legal Market 2025 report recently revealed that top-tier firms in Australia are being “outpaced” by competitors, with large law firms (more than 50 staff) seeing a 5.4 per cent demand for their services compared to just 1 per cent of top-tier firms.
The report also found that large law firms had expanded their headcounts by 4 per cent more than the “big eight” firms, with half of Australia’s top 10 firms by profits per equity partner (PPEP) now being large law firms outside of the “top-tier” category.
And as globalisation and market shifts prompt these top-tier firms to refocus their efforts, this means that large and mid-tier firms have a “significant opportunity” to capitalise on certain practice areas or government panels that top-tier firms are (or will be) priced out of, according to Thomson Reuters’ AI and legal tech for Asia and emerging markets senior director, Catherine Roberts.
“Large and mid-tier firms are uniquely positioned to thrive in this evolving landscape. The key lies in simultaneously winning more demand from clients while increasing the value in every billable hour,” she said.
“That means large firms must double down on three critical fronts: attracting and retaining top-tier talent, refining their billing sophistication, and accelerating the integration of technology into their legal service delivery.”
Mid-tier and national firms can offer more competitive rates for areas where “global elite” firms are being priced out of, but Pistilli said this is a “deliberate strategy” top-tier firms execute to focus their efforts on higher-value work.
“Given their pursuit of high profits (with some of their partners earning US$10 million to $20 million or more), the global firms are only focusing on very high-end matters and matters crossing multiple borders which can bear much higher charge-out rates than the market has historically seen,” he said.
Earlier this year, mid-tier firm Thomson Geer acquired the entirety of Ashurst’s Canberra office, including seven partners and more than 50 staff, as the top-tier firm shut down its operations and Commonwealth government practice in the state.
Thomson Geer was appointed to the Whole of Australian Government Legal Services Panel in November last year and has since continued to grow Ashurst’s former Commonwealth government practice, which was previously ranked as one of the highest in the country.
At the time, Ashurst’s head of region for Australia, Lea Constantine, said the move to decrease its Commonwealth panel work was a “consequence of a review of our strategic priorities” – and shortly after the acquisition announcement, the firm poached M&A partner Tony Damian from HSF. Damian spent 29 years at HSF and reportedly made the move to Ashurst for a salary package of approximately $7.5 million.
According to law.com, in terms of revenue in top-tier firms, HSF Kramer pulled in more than $1.05 million per lawyer in FY2023–24, with Ashurst closely following at $1.04 million.
As a result, Thomson Geer chief executive partner Adrian Tembel emphasised that competition within the Australian legal market currently isn’t mid-tier firms versus top-tier firms – it’s “domestic firms versus genuinely global firms with a significant US footprint”.
“Some domestic firms are well placed to provide top-tier work, they do not need to be global to do so. When we win mandates historically done by the top tier, it’s not about taking work off them – it’s about operating at that level,” he said.
“Some firms, like ours, are making that transition. Others won’t, and in some cases, that’s a strategic choice. Australia’s legal market rewards firms that are built for its dimensions – national reach, deep specialist lanes, and disciplined cost architecture. That combination is proving durable.”
Former lawyer and founder of GSJ consulting Richard Smith echoed a similar sentiment, adding that firms with a more specialist focus – including boutiques – will grow.
In fact, the “most unrecognised growth” in Australia’s legal market over the last three years has been the rise of boutique firms, which Smith said points to an interesting future trend.
“We are seeing clients return to preferring genuine industry experts over full service. On that basis, I would say we will continue to see a rise of firms focused in on only one or two specific areas – with practitioners who are recognised (by clients) as genuine market specialists,” he said.
“The problem is this: current compliance costs for legal panels are very high. In most cases too high for boutique firms (no longer worth the cost of doing business). So, what does that mean for the future of legal panels? Will we now see a move to legal panels with individual industry experts appointed over the firms they work at? Highly likely.”
Competition in the market moving forward
While global law firms chase cross-border clients and higher fees, competition in the Australian legal market will enter a new phase, defined by national strength, sector focus, and execution discipline.
As mid-tier firms continue to poach top-tier specialist partners, national firms with “deep benches in key practices” can deliver work historically reserved for top-tier firms “without a global overlay”, according to Tembel, who argued that firms “don’t need foreign ownership to deliver top-of-market outcomes for business done in Australia”.
“The transition to true top-tier performance is about consistent access to high-quality and complex matters and delivering on them, month after month. In Australia, firms with economics built for this market can sustain high performance without importing pricing expectations of colleagues off shore,” he said.
“There’s a clear pathway to top-tier performance for firms that invest in national benches, sector specialisation, and disciplined matter execution. Some are on that journey and accelerating; others have chosen a different path and choose to remain there. As access to complex matters compounds, the transition to top-tier performance becomes self-reinforcing.”
National “challenger” firms, while not able to compete with global firms across borders, will be able to compete in the Australian legal market, with Pistilli noting that more “tier 1” partners and lawyers are joining these firms every day.
“These firms are working on the most significant matters in the market and are providing broader coverage across Australia (by geography and expertise). As the global firms get smaller, and the challenger firms get bigger, more of the work will flow from one to the other,” he added.
“This will be aided by the other development in the market – which is the increasing number of large Australian organisations looking for more ‘value’ from their lawyers. The challenger firms, now teeming with top-tier talent charging materially less, provide a good alternative for many of their clients’ needs.”
In the last month alone, Thomson Geer recruited a partner and special counsel from multinational law firm Baker McKenzie, Corrs Chambers Westgarth poached the former co-head of Ashurst’s global tax practice, and Sparke Helmore took an insurance partner and a team of two from HWL Ebsworth, which has the largest legal partnership in Australia.
This lateral partner movement is “reshaping competition” in the Australian legal market, added Wiegand, who said that to be sustainable moving forward, firms need more than high profits.
“In 2024, there was a marked uptick in partner and team moves, as firms looked to buy in capability and client relationships rather than build organically. The war for senior talent is altering firm structures and competitive advantage almost as much as mergers, and it is happening fast,” she said.
“Technology, client sophistication and pricing pressure are also driving realignment. To sustain profitability, firms need scale, efficiency and sector specialisation, not just size for its own sake. The firms that can combine those attributes with clear identity, whether global, regional, or national, will define the next era of Australia’s legal market.”
Lauren is the commercial content writer within Momentum Media’s professional services suite, including Lawyers Weekly, Accountants Daily and HR Leader, focusing primarily on commercial and client content, features and ebooks. Prior to joining Lawyers Weekly, she worked as a trade journalist for media and travel industry publications. Born in England, Lauren enjoys trying new bars and restaurants, attending music festivals and travelling.
