Overall, IBISWorld found that the legal services industry is expected to make a combined profit of $6.1 billion this financial year and total revenue of $21 billion.

In the top-tier, the six largest firms collectively account for 13.1 per cent of industry revenue this financial year, with Mallesons Stephen Jaques leading the pack making up 2.5 per cent of market share, followed closely by Freehills on 2.4 per cent, Clayton Utz on 2.3 per cent, Minter Ellison on 2.2 per cent, Allens Arthur Robinson on 2.1 per cent and Blake Dawson on 1.8 per cent.

But mid-tier firms appear to be catching up to their top-tier counterparts with IBISWorld finding that firms like Maddocks, DibbsBarker, and Gilbert + Tobin are outperforming the largest six firms in terms of revenue growth.

Such strong growth may come down to a realisation from clients that complex legal work does not necessarily have to be undertaken by top-tier firms, according to the report.

However, a spokesperson for Mallesons told Lawyers Weekly today that the firm has not experienced any drop in work to indicate that the mid-tier is acquiring portions of their client base. She said that while mid-tier firms can eat into the top-tier market on individual transactions, they will still find it hard to compete on the large complex work - such as the more difficult aspects of the Telstra broadband network separation.

IBISWorld also found that a drop in M&A and IPOs has negatively affected revenue at the top end of town, but that countercyclical work like insolvency and restructuring have provided some relief.

Check back with Lawyers Weekly for further analysis of the IBISWorld Report