As law firms make radical cuts to their staff and lawyer numbers amid economic uncertainty and bleeding balance sheets, legal recruiter Hudson has announced that almost half of Australia's legal managers are not replacing staff as they leave, and that 44.3 per cent will continue axing roles.

While not commenting specifically on a particular law firm, or those that have made recent redundancies, Stuart Ablethorpe, director of Legal at Hudson said hiring managers are looking at a range of steps they can take to manage through the global downturn. 

Less obvious and publicised structural changes are also being made to law firm business, the survey of 185 hiring managers within law firms reveals. As job cuts have hit the headlines for some firms, more than 39 per cent of law firms are redeploying staff and lawyers elsewhere within their businesses.

"A lot of firms are looking at utilisation rates of their lawyers and are redeploying them into areas such as insolvency, general commercial litigation, insurance litigation, wherever the demand is," said Ablethorpe. 

Law firms making large numbers of redundancies, and facing negative press as a result, have pointed to other firms in recent months, claiming lawyers are being moved between unrelated practice areas to avoid the unwanted redundancy tar and feathering from the media. 

Some senior lawyers have spoken anonymously about the way their firms are moving particularly junior lawyers from practice areas with a surplus of practitioners into areas like insolvency, litigation and workplace relations. 

Ablethorpe said such suggestions are very real. "There hasn't been a massive demand for recruitment for insolvency lawyers over the past six years. So those groups are pretty skinny going into the current environment. 

"Where that work has picked up a lot of firms have moved their M&A and banking and finance lawyers into those areas. Insolvency lawyers in town have probably had the M&A lawyers launching with intent on their floor at different stages over the last couple of months," he said.

Ablethorpe said, however, that a lot of these moves are justified. "A lot of insolvency is about restructuring organisations to become operationally viable. M&A lawyers are used to restructuring organisations, so it's a good utilisation of skills.

"At the end of the day, in six months, a year, or two years' time, were going to end up with better skilled lawyers because they will have had exposure to disciplines they would not have had. That can only make a more well-rounded practitioner."

As well as moving into insolvency, lawyers are going into insurance, workcover, particularly amongst panel firms in Victoria at the junior end, Ablethorpe said.

Where firms cannot find placement within the firm, they are avoiding redundancies via sending lawyers onto secondments.  "Junior lawyers are being put out to particularly not for profits by way of increasing a firm's pro bono spread."