Legal partnership survey: Mid-tier firms winning battle for fee-earners

Top legal partnerships showed their vulnerability in the war for talent during this survey period, says Shaaron Dalton, partner at Eaton Strategy + Search.

Top-tier firms are losing out to middle-market, high-growth firms in the war for non-partner fee-earners.

Data in the new The Australian’s Legal Partnership Survey shows some traditional market leaders such as Gilbert + Tobin, Minter Ellison and Clayton Utz lost out both on headcount and fee-earner ratio in the period surveyed, while growth-focused, mid-tier domestic and international firms Mills Oakley, Piper Alderman and HFW, Clyde & Co and Dentons picked up numbers.

Firms compete to attract and retain experienced non-partner fee-earners with three to eight years’ experience because they are highly profitable employees who need less supervision, are the backbone of supervising and mentoring within law firms, and integral to partners being able to service their clients’ work.

The challenge for any partner aiming for market-leading work is to have a team ready to support them to do the work to the requisite standard and cost-effectively if they win it. The impact of losing talent at the associate and senior associate levels causes loss of further staff and partners, as they all become thinly stretched and turn elsewhere for a more manageable workload. The issue tends to compound, impacting the firm’s ability to attract and retain work, profits and staff.

Competition for work and talent between firms tends to segregate roughly between those that are designated for the purposes of this survey as top tier, international and domestic.

The survey period seems to have been most challenging in the top-tier and smaller domestic-firm markets, with the mid-market, high-growth domestic and international brands winning out.

Shaaron Dalton.

All top tiers lost fee-earners in the survey period. The largest losses in the survey period measured by headcount were sustained by Clayton Utz (38) and MinterEllison (35). Gilbert + Tobin lost 29. Corrs Chambers Westgarth fared best, with only one less fee-earner in this survey period compared to the last, followed by Allens with five fewer.

In the international group, growing mid-sized UK-led firms Clyde & Co and HFW added significantly to their fee-earner headcount, and both firms’ partner fee-earner ratio improved dramatically. Dentons also added nine partners and 23 fee-earners, moving their fee-earner headcount up and ratio slightly upwards.

In the domestic sector, increased growth in the non-partner fee-earner stakes showed large firm Mills Oakley adding 61 by headcount and Piper Alderman 41. Hamilton Locke appointed 15 new partners and six fee-earners in the period but lost on ratio as a result of the large partner addition.

Where did all the fee-earners come from? There was a feeding frenzy as top-tier and in-house legal teams at corporations poached from the larger domestic firms and everyone poached from quality smaller ones. Swaab lost 18 fee-earners and Russell Kennedy, Holding Redlich and Hopgood Ganim also suffered losses.

A combination of drivers motivates talent in this market: money, career progression and culture. The top tier usually wins on money – though in the survey period, it suffered losses to the brain drain and overseas firms with even deeper pockets – but tends to struggle on career progression and culture.

The culture piece is now quite complex as Covid-19 has brought sustainability into high relief, not just in the physical world, but in terms of family, community and work and health balance.

Sustainability of top-tier billable hours and the pressure on high-performing teams was an issue for those firms in attracting talent attraction even before the pandemic and is more of an issue than ever since then.

Mid-market is generally experienced as offering a more balanced life.

It remains to be seen if 2023 will prove a better market for the top tier as cost of living pressures take their toll, sharpening their edge as the market’s big spenders on talent.

Shaaron Dalton is managing partner at legal search firm Eaton Strategy + Search.