The Australian’s partnership survey: Law firms emerge from pandemic in fine shape

The outlook for the legal profession is positive. Picture: AAP

Australia’s legal profession has remained remarkably stable in the face of the global pandemic. 

Many firms have reported strong profits off the back of a busier-than-expected half year and achieved strategic growth in their partnership ranks in 2020. 

The Australian’s partnership survey has revealed significant shrinkage in fee-earner ranks, but I would argue that is the result of cautious talent management and hiring strategies that have already started to lift.

For international and domestic firms there was a 4 to 5 per cent drop over the past six months but for large firms the drop was 14 per cent. The drop follows strong growth over the past three years.

Notable losers of higher numbers of staff were large firms MinterEllison and Norton Rose Fulbright with around a 10 per cent loss and a mix of mid-sized domestic and international firms. Jackson McDonald, Colin Biggers Paisley, Dentons, Russell Kennedy and McPherson + Kelly all had losses of more than 10 per cent.

A number of insurance-led law firms including Wotton + Kearney, Moray & Agnew, Clyde & Co and Gilchrist Connell reported net gains, which is hardly surprising in a time of force majeure.

Other firms that gained were Johnson Winter Slattery (nearly 10 per cent) and Thomson Geer (about 9 per cent) — and both of these firms added partner-led teams during COVID.

Pre-pandemic the legal profession in Australia was experiencing a major shortage of mid-level experienced talent. There was a brain drain of top talent to the US, London and Hong Kong, as well as to in-house corporate legal roles.

When COVID-19 hit, most of the law firms surveyed were determined to retain their talent. 

To manage their risk, many law firms imposed easing and hiring freezes early in the pandemic. A number of firms have reversed these measures since October, repaying staff for deficits and paying bonuses.

Attrition appears to have occurred naturally, or as a result of promotion to partnership. Replacements have been put on hold until the lifting of freezes. 

Although still cautious, most law firms surveyed are already hiring or planning to hire in the next six months.

There has been a substantial increase in advertisements for senior associates, mid-level lawyers and special counsel in the past two months, with a view to start dates in January and February.

We see a very positive outlook for non-partner fee-earner opportunities in 2021.

At the partner level, numbers have increased slightly by an average of almost 3.5 per cent for domestic firms and close to 2 per cent overall, as has gender diversity. The growth includes both promotion within the firms and lateral hiring.

Many Australian law firms have increased partner numbers substantially, including domestic firms Wotton + Kearney (more than 30 per cent), Gilchrist Connell (15 per cent), and Holding Redlich and Russell Kennedy by 10 per cent each.

Large and international firms have also experienced growth with Gilbert + Tobin increasing their partnership by nearly 10 per cent and Allens and Ashurst growing each by close to 6 per cent.

While there was a careful approach to hiring, the majority of firms surveyed continued partnership promotions. 

There was some caution, slowing down the promotion calendar from June to September for October 1 or November announcements instead of July 1 (for example, Ashurst, Gilbert + Tobin and Hopgood Ganim).

However, others reported their largest numbers of senior appointments ever, on the usual timetable (Hall & Wilcox, Keypoint Law) or a larger promotion round than last period (MinterEllison, Mills Oakley).

The lateral partner hiring front is perhaps most interesting of all as many firms saw the COVID-19 period of disruption as an opportunity to attract talent and continue their strategic growth plans in Australia, even with the background of global hiring freezes. 

Australian law firms have come through the pandemic so far with in many cases increased profitability. 

The competition is now on to increase capability in areas of growth, to position the firm for the post-COVID marketplace.

Law firm partnerships are plunging into the flood waters, cashed up and keen to attract a torrent of talent.

Shaaron Dalton is a partner of ECP Legal, a specialist legal search and strategy consultant to the legal profession