The Australian’s partnership survey: Legal firms shed staff as partnership growth halves

Legal jobs at the nation’s top law firms have been slashed over the past six months.

Managing partner Alison Deitz says Norton Rose Fulbright achieved its strongest profit result in 10 years after shifting to ‘quality rather than quantity’.

Legal jobs at the nation’s top law firms have been slashed over the past six months, with the worst-hit firms cutting one in five non-partner legal roles since July.

Partnership growth halved this year compared to the previous year, but still grew 1.9 per cent in 2020, according to The Australian’s partnership survey conducted by ECP Legal.

Two of the largest firms reduced their partnerships by more than 10 per cent.

Global law firms Dentons and Norton Rose Fulbright shrank their Australian partnerships by 13 per cent and 11.4 per cent respectively this year.

KPMG Law shed 20.2 per cent of its legal staff over the past six months (reversing 22.2 per cent growth in the first half of the year) and reduced partner numbers 5.2 per cent in 2020.

About 3.4 per cent of legal jobs at the 40 firms surveyed disappeared over the past six months, as many implemented hiring freezes in response to the tumultuous conditions.

This followed a hiring spree by firms in the first half of the year, when non-partner fee earner numbers rose 6.6 per cent. As a result, legal jobs grew 3 per cent over the 12-month period — a big fall from last year’s 8.5 per cent growth.

Insurance law firm Wotton + Kearney was the standout performer, growing its partner numbers by 30.3 per cent and its fee earner numbers 23.8 per cent this year.

Other domestic firms bucked the trend too, with rapid growth in legal staff.

International firm Clyde & Co, also strong in insurance, stacked on another 56.3 per cent of fee earners, while Johnson Winter & Slattery grew 23.4 per cent, Gilbert + Tobin 17.6 per cent and Holding Redlich 16.1 per cent in 2020.

Norton Rose managing partner Alison Deitz said her firm had shifted deliberately to “quality rather than quantity” — away from high-volume areas such as small-claims insurance. As a result, the firm had achieved its strongest profit result in 10 years, she said.

“We have made some necessary but tough decisions about the type of work we want to do and the mix of capabilities that we need to deliver it,” she said.

Baker McKenzie national managing partner Anthony Foley says productivity has increased during the pandemic. Picture: John Feder

Clayton Utz chief executive partner Bruce Cooper said his firm, which reduced fee-earner numbers 4.4 per cent over six months, had imposed a hiring freeze out of caution (with exceptions for business need) — but productivity had remained strong.

Government and regulatory work, M&A, competition and litigation had held up well, although areas such as real estate had been less buoyant.

“I would’ve predicted that by March, as the government support starts to come off there’d be some real hesitation in the market, but I’m not seeing that now. I am quite cautiously optimistic,” he said.

Some law firms delayed their partnership promotions when the pandemic hit.

Ashurst global managing partner Paul Jenkins said promotions planned for May were delayed six months, but the firm had since promoted 15 partners globally, eight in Australia.

Gilbert + Tobin chief operating officer Sam Nickless said his firm delayed its promotions in April, but in November appointed five new partners and four special counsel from January 1.

Minter Ellison promoted more partners than any other firm in the six months to January 1 — 14.1 FTE partners (or 15 people), while Thomson Geer promoted 14, Ashurst appointed 12 new partners, and Clayton Utz and Mills Oakley each promoted eight.

Minter Ellison is by far the largest partnership in Australia (249.8 FTE partners), followed by Clayton Utz (166.6), King & Wood Mallesons (163.8), Ashurst (155.2), Herbert Smith Freehills (151.3), then Allens (142.1).

Many firms have lifted savings measures imposed during the pandemic earlier than expected.

HopgoodGanim managing partner Bruce Humphrys said equity partners agreed in March to a “significant” income cut, and in April, all staff earning above $65,000 were asked to accept a 20 per cent cut to their pay and hours. However, the measure ended on June 30, four months earlier than expected.

US firm Quinn Emanuel’s Australian managing partner Michael Mills said partnership draws had been reduced, but would return to normal by January 1. Staff had no reductions in pay.

Many firms are now actively considering their future space needs, with staff expected to embrace a “hybrid” of home and office work. While firms say up to three in four Brisbane and Perth lawyers have returned to the office, Sydney offices are at about 40 per cent capacity, while Melbourne has a limit of 25 per cent.

Baker McKenzie national managing partner Anthony Foley said productivity had increased during the pandemic. The firm had not decided on its future space needs, but had assembled a diverse group of lawyers and professionals, including younger staff, to make recommendations, he said.

Holman Webb chief operating officer Magdalena Kosior-Molloy said her firm had not put any pressure on staff to return to the office. The firm’s Sydney lease had expired this month, and it had taken the opportunity to move to slightly smaller offices, she said.

Maddocks chief executive David Newman said his firm expected its staff to continue working part of the week from the office — but downsizing was “not under consideration”.

King & Wood Mallesons chief executive partner Australia Berkeley Cox said COVID-19 had been “the world’s largest working-from-home experiment” and presented a once-in-a-generation chance for businesses to embed flexibility and autonomy into their cultures.