find the latest legal job
Corporate/Commercial Lawyers (2-5 years PAE)
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Specialist commercial law firm · Long-term career progression
View details
Graduate Lawyer / Up to 1.5 yr PAE Lawyer
Category: Personal Injury Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Mentoring Opportunity in Regional QLD · Personal Injury Law
View details
Corporate and Commercial Partner
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Full time · Join a leading Adelaide commercial law firm
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Sydney NSW
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Melbourne VIC
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
Revenue growth on the cards despite challenging conditions

Revenue growth on the cards despite challenging conditions

While the next five years are likely to pose significant challenges for law firms, the sector’s revenue is predicted to grow, according to a new sector outlook report.

Released last week, the IBISWorld Industry Report: Legal Services in Australia forecast that legal industry revenue would grow by 1.9 per cent a year between 2016 and 2021, to reach a total of $24.8 billion.

Wages were also set to increase, from a total pool of $10.5 billion in 2015-2016 to $11.4 billion in 2020-2021.

In the same period, an additional 8,365 staff will join the legal sector and 2,346 new establishments will open supplying legal services.

Nonetheless, the coming period is not expected to be smooth sailing, the report warned.

“IBISWorld expects subdued demand to continue as businesses seek value for money in their spending on legal services,” it stated.

“These price pressures are expected to result in the further streamlining of firms’ operations.”

In particular, the report warned profit growth may be constrained “as clients continue to demand better value for money and increasing competition from smaller players puts downward pressure on prices.”

To improve their cost management, firms are likely to focus on recruiting high-quality partners from rivals – and offer high wages as a retention measure.

However, firms are also likely to turn to off-shoring low-level legal work, which IBISWorld warned may limit opportunities for entry-level lawyers.

“Off-shored work typically involves basic legal tasks that graduates and entry-level lawyers traditionally completed,” the report stated.

“This is causing concern among current law students, who are anticipated to compete for a smaller number of clerk and graduate positions over the next five years.”

Demand for legal services will vary strongly between practice areas, with some likely to prosper while others struggle in the coming half-decade.

“Industry transactional work is expected to rebound over the next five years, as largely positive business confidence and heightened foreign investment boosts merger and acquisition activity and IPO,” the report stated.

“In addition, demand for intellectual property legal services is projected to rise over the next five years. This is due to forecast increases in demand from biotechnology firms and pharmaceutical product manufacturers for patents to protect newly developed products, and will be supported by rising private research and development expenditure. “

On the other hand, property practices are not likely to be as fortunate.

“Demand from the property market, one of the industry’s major downstream markets, is forecast to decline over the next five years, due to the tightening of bank lending to property investors, who have been substantial drivers of housing market activity over the past five years,” the report warned.

Opportunities in the current market include increasing demand for global firms in international markets, IBISWorld predicted.

“The forecast weakening of the Australian dollar, which will encourage overseas companies to invest in Australian businesses and infrastructure, is expected to aid international expansion,” the report stated.

Mid-size local firms are also tipped to have a competitive edge in coming years, with IBISWorld predicting they will “become more aggressive in commercial markets, as they seek to capture work from large law firms by leveraging lower prices.”

The same trend is pipped to drive an increase in NewLaw providers who offer “greater specialisation, value for money and fee transparency.”

However, a wholesale overhaul of pricing practices was deemed unlikely by IbisWorld.

“While industry firms are anticipated to incorporate alternative billing arrangements in line with client expectations, some changes to billing arrangements, like lifting bans on contingency fees, are unlikely,” the report stated.

“Most firms are anticipated to retain the billable hour as their primary charging method due to its extensive use as a performance measure within the industry.”

Like this story? Read more:

Book commemorates diamond milestone for WA law society

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

Revenue growth on the cards despite challenging conditions
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Dec 18 2017
Summer in the city
Across Australia, a number of law students have kicked off their commercial law aspirations with the...
microscope
Dec 18 2017
‘Exorbitant legal fees’ under government microscope
With the growing number of class action proceedings in Australia, the government is looking at how ...
Funds, money, cash
Dec 18 2017
Law Access WA receives welcome funding
Law Access Western Australia has received a grant from the state government to fund its pro bono leg...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...