Top-tier outlook brighter than for mid-tier rivals
Top-tier firms have more positive prospects for the coming year than mid-tier firms do, according to a new market report from the Commonwealth Bank of Australia.
The Legal Market Pulse, produced by CBA and Beaton Consulting, revealed mid-tier firms are more concerned about overall economic performance, competition from non-traditional law firms and the effect of international law firm entrants on local firms than top-tier firms.
CBA professional services national manager Marc Totaro suggested the 2014-15 financial year saw "optimism generally increase amongst law firms across Australia”.
“The results have been driven by a more bullish outlook amongst the top-tier compared to the mid-tier firms,” he said.
When looking at the Australian economy over the next 12 months, a greater proportion of mid-tier firms forecast negative performance than top-tier firms.
Mid-tier firms have a net percentage outlook of -14 per cent, with 36 per cent predicting negative economic performance, 23 per cent predicting positive performance and the other 41 per cent of firms forecasting performance to be neutral.
Top-tier firms on the other hand have a net percentage outlook of 13 per cent, with 26 per cent forecasting positive economic performance, 13 per cent forecasting negative economic performance and the other 61 per cent of firms forecasting it to be neutral.
The report revealed that mid-tier firms see non-traditional law firms with alternative business models as more of a threat than top-tier firms.
For mid-tier firms, 24 per cent saw non-traditional law firms becoming stronger competition in Q1 FY15 and 30 per cent by Q4 FY15.
Top-tier firms seemed less concerned, with 20 per cent believing non-traditional law firms would become stronger competition in Q1 FY15 and 29 per cent in Q4 FY15.
The entry of international law firms into Australia is not seen as a threat to top-tier firms at all, with 50 per cent believing it will have a positive impact and 50 per cent seeing it as neutral.
On the other hand, almost one in five mid-tier firms see international law firm entrants as a threat, with 18 per cent seeing their entry to the Australian market as a negative, 46 per cent seeing is as neutral and 36 per cent believing it will have a positive impact.