The majority of law firm managing partners foresee further global tie-ups in the Australian legal market, the Lawyers Weekly Managing Partner Survey 2013 has revealed.
The inaugural survey, which interviewed 20 of Australia’s top managing partners, found 37 per cent of respondents believe globalisation of the legal market will spur domestic firms to look to merge with international firms.
Professional services consultant Ted Dwyer (pictured) shares this view. He told Lawyers Weekly that large domestic firms are under threat, with recently-merged global firms more likely to snap up premium work from big corporates.
“Large domestic firms run the risk of losing income because they’re no longer as attractive to international companies as the global firms,” he said.
Dwyer claimed the large local firms missing out on high-end international work also face being priced out of the domestic market by competitive mid tiers. He urged all domestic firms to at least consider their options for a global tie-up.
“Closing your door to the possibility of an international merger doesn’t make sense to me,” he said, in reference to the finding that a third of respondents would not consider merging with a global firm.
Most managing partners whose firm isn’t already merged with a global are heeding Dwyer’s warning, claiming a merger is either already part of their long-term strategy (22%), or that it is a consideration, but they aren’t actively looking (33%).
The survey also found that 21 per cent of managing partners believe some mid tiers will fold as a result of the globalising legal market. Dwyer admitted that there could be victims of intensified competition among the mid tiers.
“The proliferation of mid tiers will give domestic clients a lot of choice,” he said. “Mid tiers will have to compete across all practice areas for work that is essentially dropping in price, and it will become tough to do business.”
Dwyer singled out insurance and litigation as two practice areas that will become increasingly price sensitive.
He clarified, however, that mid tiers that fold will do so because they are not running efficiently or because they take on too much low-priced work without adjusting their work practices.
Keep an eye on our website for the next two weeks for further stories based on the results of the Lawyers Weekly Managing Partner Survey 2013.