The property sector, which fell so far and so hard during the financial crisis, remains a weak spot and an area of uncertainty. Money is still tight, so a lot of litigation seems less urgent now. In the wake of the GFC, no one quite knows what is next, writes Michael Pollak.

The money trail will be the key determinant in which areas of the law will face challenges in 2010, with property and those sectors dependent on heavy corporate investment the most vulnerable.

Flatness is expected to persist in several sectors in Sydney, largely because the city is the base of a large number of ASX top 100 companies and houses the head offices for global corporates, according to the director of Burgess Paluch Legal Recruitment, Paul Burgess.

"Sydney was the hardest hit by the GFC, with Melbourne and Brisbane hot on its heels," Burgess reports. "By contrast, Perth is better placed because of its larger number of smaller cap corporates - that is, companies outside the ASX200 - and the large number of mining companies which are bouncing back better than most from the economic downturn."

Similarly, observes Burgess, other markets such as Adelaide, Canberra and Darwin, which are less reliant on large transactional work and where government spending has continued, are likely to be less affected than the larger commercial centres.

"That said, sentiment and caution have meant that even in those cities recruitment has been on a needs basis and not founded on optimism," he explains.

Brisbane-based firm Cooper Grace Ward is among those firms which have experienced flatness in litigation, with managing partner Chris Ward stating that "six months ago clients were screaming for litigation, but they're not screaming any more".

Large cases have been in the pipeline for a while, but Ward sees no immediate upturn because "funding still remains an issue".

Ward envisions only a gradual recovery in commercial work following an absence of big transactions in 2007-08 which is expected to significantly pick up only in the second quarter of next year.

Property is also a weak spot at CGW, not just because the sector bore the brunt of lack of funding but also because of unresolved issues in the commercial property market. "There has been mute activity in property for some time, and this is expected to continue until confidence and funding return," Ward says.

He describes a de facto hiring freeze by his firm on property experts and believes the flat conditions will require most of next year to sort out.

"We simply haven't been hiring in this area - unlike in commercial, insurance, family and dispute resolution," he says.

Commercial property remains a concern for most recruiters with Naiman Clarke's Elvira Naiman describing the sector as having been "very flat" since mid-2008 and "not a spike area next year" despite a significant pick-up in activity in the latter part of this year.

Of more concern to Naiman is intellectual property, which is expected to "remain flattish" throughout 2010.

"Companies throw money at IP when they have the funds to do so, but right now they're not swimming in money, preferring to allocate their resources to areas like industrial relations," she says.

Blake Dawson's Helen McKenzie also reports "no significant hiring" in the property sector despite some pick-up in overseas investment in the latter part of this year.

Across large and mid-tier law firms, a period of continuing uncertainty persists in commercial property as major listed property trusts, corporate investors and developers deal with myriad problems ranging from lack of finance to a lack of confidence in the trusts.

Such factors have seen a drop-off in such activities as the management of property-related IPOs with knock-on effects such as stamp duty and trust licensing, all of which continue to face challenges.

For example, property trusts suffered among the most extensive falls in value of any investment over the past two years, beginning even before the GFC struck, and they are only now beginning to make a cautious comeback, with no significant relief anticipated in 2010.

The once seemingly recession-proof property sector began taking a hit in 2007, with the principal basket of trusts down by 5 per cent compared with their earlier 17 per cent annual gain as the sub-prime crisis and high interest rates kicked in, interest rates again being a possible ogre in 2010.

In the property sector generally, 2009 began with more dividend cuts and asset deflation as the GFC took a heavy toll; the prospects for the early part of 2010 are nowhere near as bleak, but problems remain which are of concern to law firms' HR departments.

Spanning the national landscape, Burgess says he is witnessing a "key concern" for law firms moving forward: namely, how to avoid the expected costly churn as supply and demand shift to favour lawyers and those who have been putting off moves to enter the jobs market.

At the forefront of preparing lawyers for the changing realities are the law schools, which are seeking to guide graduates so that they can respond to any situation.

Preparing lawyers with "multiple competencies" is among the mandates at the University of NSW's Faculty of Law, whose dean, David Dixon, wants graduates to have the skills and attitudes to "equally be able to work at either Macquarie Bank or at the Indigenous Law Centre".

Dixon describes the ethos of his faculty as preparing graduates to "serve the whole community, with specialised skills complementing a broad knowledge" whereby they'll be able to better withstand a particular area of law turning temporarily sour.

As part of this philosophy, UNSW is expanding its program of getting students out of the classroom and working in legal clinics where they can see first-hand how cases are handled, become involved in the minutiae of the legal process and, where applicable, participate in a social justice internship program with an international component.

Dixon warns that in-house opportunities may slacken in 2010.

"All indications from the legal firms suggest that they'll maintain current intakes, but things will be much tougher at in-house employers like banks," he says.

"A graduate planning to work for a major international bank like Goldman Sachs should think again, and instead look to somewhere like the International Court of Justice."

This approach to education is mirrored at the University of Queensland Law School, where dean Ross Grantham seeks to respond to the needs of big firms for "graduates with a deep grasp of the fundamentals".

As such, Grantham is seeking curricula which have a global outreach and an intellectual sophistication, moving away from "old-fashioned and creaky programs which are outdated, reflecting 1980s legal practice and out of step with the needs of 2010".

Law firms are wary about several aspects of the coming year and the biggest bugbear is uncertainty, as defined by Lander & Rogers partner Craig Higginbotham, who says: "There is concern about whether the economy is heading for another dip, and, if so, if it's going to be a big dip or not. It's a matter of tossing a coin, and the trouble is that there are so many views out there and no commentator really knows what direction things are heading."

Bleak prospects remain in some specific areas, but law firms and recruiters are united in believing a period of across-the-board revival is at hand, and this is where the emphasis seems to lie.

On Ice

PROPERTY

Corporate investors and developers are still struggling with a lack of finance and confidence. Some firms have reported de facto hiring freezes on property lawyers

SYDNEY

It was the hardest city hit by the GFC, according to Burgess, given the city is the base for a number of large ASX top 100 companies. Compared to Adelaide, Perth and Brisbane, Sydney has some catching up to do

LAW FIRMS

Burgess has questioned just how law firms will manage increased staff turnover in 2010, as lawyers who have been putting off changing jobs finally make a career move

IN-HOUSE OPPORTUNITIES FOR GRADUATES

UNSW dean of law David Dixon expects in-house opportunities to slow in 2010, with law firms retaining their graduate intakes, but banks and other corporates slicing intakes

NERVES

Lander & Rogers cites continued uncertainty as a problem for law firms in 2010, especially as to whether or not the economy is heading for another dip or not

COMMERCIAL WORK

Cooper Grace Ward sees only a gradual recovery in commercial work in 2010, already following an absence of big transactions in 2007-2009

INTELLECTUAL PROPERTY

Naiman Clarke expects intellectual property to remain flat through 2010, with companies simply not having the resources to throw at IP

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