Confidence returns to the legal industry

Confidence returns to the legal industry

Law firms share an optimistic outlook for their long-term business conditions.

I’m pleased to announce the release of the March quarter CommBank Legal Market Pulse conducted by Beaton Research + Consulting. This latest report has revealed that long-term optimism is returning to the industry. This turnaround in industry sentiment has been fuelled by expectations of revenue growth, low interest rates, a rising share market and an improved economy.

While the majority of these factors are beyond a firm’s control, sources of revenue growth are certainly one element that can be capitalised on through their actions. In the Report firms identified employment, insurance and property law as the most likely sources of increased revenues. When asked which areas were likely to see a fall in revenue, firms identified that federal and state government spending was in decline along with revenues from construction, IT, telecommunications and media.

Every top-tier firm surveyed in the Report has predicted higher revenues over the next six months in Europe, Asia and Sydney, with most also anticipating growth in Brisbane and Canberra.

While sentiment has improved markedly among top-tier firms, the mid-tier firms are less optimistic in their outlook. These firms are relatively less exposed to global economic growth and fewer large transactions. As a result they are much less likely to forecast the sort of revenue growth that the top-tier expect to experience over the coming 12 months. On a positive note, we see that most firms anticipate that their situations will improve before the end of the 2017 financial year.

From a staffing perspective, we have seen intense competition reflected by the continued lateral hiring of partners and lawyers. Firms are continuing to entice lawyers and partners from their competitors, while at the junior level, there has been a noticeable growth in turnover, as they switch employers in search of greener pastures.

Both top and mid-tier firms are planning to decrease secretarial and shared service staff, with almost a quarter of all firms having outsourced office functions to lower cost locations. A key driver behind this trend may be that half of firms believe there is growing pressure from their clients to use outsourcing to deliver a competitive price.

I hope you find this latest issue of the CommBank Legal Market Pulse useful and informative. I look forward to continuing to monitor the legal industry’s sentiment and performance, and sharing these insights with you in next quarter’s report.

What is the CommBank Legal Market Pulse?

The CommBank Legal Market Pulse is an in-depth survey of 31 law firms across Australia, Asia, Europe and the UK, commissioned by the Commonwealth Bank and conducted for us by Beaton Research + Consulting. It aims to provide law firms with reliable industry forecasting, business confidence and other lead indicators to inform strategic decisions and to budget more confidently. The firms surveyed represent a cross-section of the industry and together their combined revenues account for approximately $4.1 billion annually.

For more insights on mid and top-tier firms, view the full Report. For more information, contact Marc Totaro, National Manager, Professional Services, on 02 9303 1940 or via email at