Slow recovery but steady improvement

Thankfully, with an improved outlook, business confidence has increased over the last 4 consecutive quarters.    M&A work has more than doubled, and employment for junior lawyers is also forecast to improve.

Here are the figures to give you renewed faith in the legal market.

Quarterly legal confidence

The quarterly legal confidence survey compiled by the Commonwealth Bank and Beaton Research & Consulting shows that business confidence among law firm leaders is still in negative territory but is now at its highest point since July of last year and has been improving for 4 consecutive quarters.    Those surveyed included the leaders of 30 law firms – 8 top-tier practices and 22 mid-tier practices.

% of firms who believe that business conditions are negative is as follows:-

  • 17% October 2014;
  • 23% in July 2014;
  • 28% in April 2014;
  • 43% in November 2013;
  • 70% in July of 2013.

While it is a slow recovery, there is a steady improvement.

Corporate/M&A

Australia has become the second biggest/most active market for Corporate/M&A deals in the Asia-Pacific region, after China.  The Australian market accounted for almost a quarter of the M&A deals completed in the Asia-Pacific.  The recovery in M&A work has contributed to a big improvement in business confidence at the most senior levels of the nation’s lead law firms.  The M&A work has more than doubled in value compared to last year, and the value of completed mergers and acquisitions within Australia in the 9 months to October more than doubled to the same period last year.

Many of the recent transactions have a cross-border element and another noteable aspect was the return of private equity.

A Partner from HerbertSmith Freehills has said it is the strongest start to the year since records began in the Asia-Pacific – a return of the “bold/strategic type M&A” rather than deals that were triggered by corporate distress.

Many positive deals are now part of people’s forward-thinking and strategic planning.     For the first time, activity is being seen in M&A across a range of sectors and from different buyers.

The top-tier firms are the main beneficiaries from the increase in M&A.

Other areas of law/improvement

Despite the boom in M&A, revenue is expected to only improve over the next 6 months in just 6 of the 15 surveyed practice areas.   The biggest decline in revenue is expected in insolvency and restructuring.

The improved outlook for law firms was in line with what was happening in Canada and the US.    Corporates are cashed up again and there are opportunities to gain market share and rationalise industries at that phase in the cycle.  Most firms expect Partner and Senior Associate numbers to grow at a slower rate over the next 6 months (primarily due to a more cautious approach to hiring at top-tier practices).    Top-tier firms expect no change in equity partner numbers in the next 6 months and believe they will continue to reduce the number of salaried partners and Senior Associates.

Junior Lawyers

There is strong improvement in the employment outlook for junior lawyers – 50% of firms expect to increase the number of lawyers with up to 3 years of experience (up from 39% in July of 2014).  Of those 50% of law firms, 55% of mid-tiers and 38% of top-tiers expect to be hiring.

It’s not you, it’s the market

In June 2013, New South Wales (and our other States) experienced the lowest level of business and consumer confidence in 30 years.  We had hoped that 2014 would herald a new market, with renewed vigour and with the bleak business conditions of 2013 behind us.    While that has been the case particularly with our top-tier firms recruiting again, unfortunately we continue to hear ourselves stating the old “catch cry” of 2013, “It’s not you, it’s the market”.  This continues to be the case for junior lawyers, litigators and those without local experience.  There still remains an oversupply of litigators given that there was a real dearth of litigation roles in 2013 and only two or three in the first half of this year.

Such a “catch-cry” encompasses the time that the recruitment process now takes.  We have seen turnaround times improve (reminiscent of recruitment in the pre GFC Nos 1 and 2 eras) in the areas of law where talent is short, particularly in property and Corporate/M&A.  Recently, we have had three offers being made by mid-tiers within a week.  However, it is not unusual for us to see a process take up to 3-4 months, and sometimes 6 months.

While it is very hard to educate our lawyers in relation to the “new norm” which we experience on a day-to-day basis and have done for some 18 months (which makes us more atuned to the economic conditions of Australia and the World), it often has to be experienced to be believed.  We are at the “coal face” of these economic challenges that affect our States differently.

Our Brisbane and Perth offices have been affected by the mining boom and now, the drop in iron ore prices is a new challenge.  However, Perth and Brisbane have a shortage of lawyers and an oversupply of roles.  Up until this point, we have had an oversupply of lawyers (in some areas of law) in New South Wales, with our clients wanting to see some 15-20 CVs for one position, and making sure they exhaust the market before making a decision, so that they can be assured they have the “best in the market” at the time.    Interestingly, for the first time in a considerable period, we have been able to place our public sector lawyers straight into our top-tier private practices.  In addition, given the structural change in the market (with many mergers), our top-tier Australian and International clients have an added wish list.    From a cultural perspective, those clients want their lawyers to be engaging, able to win work and be a motivational fit.  It is not good enough to be a technical lawyer any more.    They want to see overseas experience from the Magic Circle.

Our New York counter-part has informed us that the US market has picked up however there is still some conservatism.  As is the case here, clients are wanting to see lawyers who only want to continue practising in their area of expertise, and particularly at the 3-6 year level.

We continue to adapt and change with this exciting market.

Latest Employment Trends and Tips

As part of our regular review of employment trends, we offer the following advice.

According to the latest ANZ Job Ad Series, seasonally adjusted total job ads fell 1.3% in April. The ANZ bank says ABS labour force data has been so volatile in recent months that it’s unable to make an employment forecast.

Combined newspaper and online job ads were down 18.2% year-on-year to 136,470 per week in April.

ANZ chief economist Ivan Colhoun said anecdotal evidence suggested job ads were weakening in line with declining mining and construction activity.

“Employment figures have been exceedingly volatile in recent months and have become effectively impossible to forecast and therefore largely uninterpretable on a monthly basis,” Colhoun added.

“For that reason, trends in the unemployment rate should be focused on. ANZ expects the unemployment rate to remain unchanged at 5.6% in April.” Read more

Legal job search trends

Legal job search online is changing

Mobile technology has changed the way candidates search for jobs. Today’s busy professionals are connected online, anywhere, anytime, with the number of candidates searching for jobs on their mobile undergoing massive growth.

We know that most of our legal and office support candidates are savvy online searchers. For them, looking for a new position is done primarily through a range of online avenues.

For job seekers, mobile technology offers a high degree of privacy and immediacy. The small screen and portability means that job seeking can be done at lunch breaks, on the bus or even while waiting for their morning coffee. Read more