On September 15 2008, Lehman Brothers collapsed, setting into a play a focal point deep in the heart of the Global Financial Crisis. Twelve months on, Lawyers Weekly explores the winners and losers of the GFC in the Australian legal sector.
Insolvency lawyers - When times were booming insolvency lawyers kept a relatively low profile in the years leading up to the GFC - albeit with a few exceptions including the collapses of HIH and One.Tel. But that all changed with the global recession. Earlier this year, a report by Blake Dawson and Pricewaterhouse Cooper found that between 2007 and 2008 the number of companies entering voluntary administration in Australia rose by 10 per cent, while the number of insolvency appointments rose by 6 per cent. Meanwhile, leading banks saw a rise of 174 per cent in bad debt charges. Law firms have reported to Lawyers Weekly that workloads in their insolvency practice groups have risen dramatically in the last 24 months.
Mid-tier firms - With clients looking to decrease their legal spend, the top-tier firms are not quite as necessary as they previously were and buyers of legal services have increasingly been required to justify their legal spend. Enter the mid-tier market - where lawyers are more than happy, and seemingly able - to offer similar legal services for a smaller cost. The mid-tier market is also snapping up some high-profile talent falling out of the top-tier firms that they may previously not have been able to entice.
Outplacement providers - There's never been a better time to be in the outplacement services industry. With organizations now expected to ensure that redundant employees receive the assistance required to gently leave their place of work, outplacement service providers are reaping the benefits of sending in counsellors and careers advisors to assist.
Lawyers who want to leave their firms – Voluntary redundancy programs have this year swung into action at firms including Allens and Mallesons, leaving lawyers – as long as they are approved – able to voluntarily take what on the outset looks like a generous redundancy package. Never has there been a better time to leave a firm it seems – as long as you’re not hoping to step into another legal job.
In-house lawyer - Competition for legal work has heated up, putting in-house lawyers in a prime position to start negotiating their own destinies and put pressure on law firms to lower their costs.
Acronyms - Never has an acronym taken off across the world as fast as the GFC!
M&A, corporate, banking and finance and property practice groups - now that we've gotten the obvious practice groups out of the way, let's move on to some of the more interesting things...
Law firm support staff - When staff numbers need to be cut, the non-fee earners will always be the most vulnerable. It's been a tough year for secretaries, administrative staff and staff in support functions within firms who are constantly needing to prove their worth. During redundancy rounds, support staff cuts usually far outnumber the lawyers asked to go. When Blake Dawson cut 89 staff last in March, only 23 were lawyers. When Phillips Fox made 46 cuts in May, 26 of them were support staff. And when Minter Ellison made 35 staff members redundant in May, 24 of them were from support roles.
Lawyers in international markets - Now if you thought it has been a tough 12 months for the Australian legal sector, it pays to spare a thought for those lawyers in New York and London. Redundancies in these areas have been relentless, with some major firms in the UK up to their fourth rounds. Australian lawyers have not been immune - meaning many are returning home to make the local job market even more competitive.
Pay packets - The salary freezes have been cold and hit most of the country’s top law firms. Clayton Utz, Minter Ellison, Freehills, Allens and Mallesons have all confirmed salary freezes across their firms with Lawyers Weekly. Meanwhile, Blake Dawson has continued to deny a salary freeze for staff in its firm, recently telling Lawyers Weekly that strong-performing lawyers would be rewarded with a salary increase, while support staff who had performed exceptionally would primarily receive bonuses.
Legal recruiters - No movement means no money, and even for the few job openings that are available at the moment, lawyers are not quite as keen to get out and make lateral moves like they used to.
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