Market Advice

Private Practice in 2021- 2022

Private Practice

Recruitment
  •   Areas of demand include corporate law, commercial law, finance, funds management, information technology, regulatory (particularly cyber security and privacy), governance, property law, litigation, and insurance.
  • Demand is particularly strong in corporate law where M&A activity is currently very strong. Mid level lawyers are most in demand. It is expected this demand will only continue to increase as the year progresses.
  • Firms have continued to hire and expand their consulting arms and demand has been strong for lawyers and professionals with risk and governance experience.
  • The demand for lawyers has been increased by border closures which has restricted firms from recruiting talent from offshore jurisdictions, particularly the UK, South Africa, Singapore and Hong Kong.
  • Firms are now relying mostly on recruiting local talent and this is creating competition in the market.
  • Overseas hiring has been more focused on returning Australian lawyers. As the borders begin to reopen, firms will adapt their recruitment strategies to focus on hiring overseas lawyers.
  • More recently, there are signs of this changing with a small number of mid level lawyers recently reporting that they are leaving to go and work overseas.
Retention
  • A greater focus on the wellbeing and interests of employees, and more flexible work environments, have been good for most lawyers. This has resulted in higher retention rates.
  • Since the border closures, firms have lost far fewer lawyers to offshore jurisdictions.
  • Hybrid working models are now entrenched in most law firms.
  • Whilst some traditional law firms have insisted on their lawyers working five days in the office, other firms have moved to flexible models.
  • Junior lawyers have reported that whilst they appreciate some flexibility, they enjoy interacting with colleagues and they need face-to-face learning, supervision and mentoring.
  • How some firms have failed to adapt to working from home has disillusioned some lawyers and led them to leave their firms.
  • The absence of opportunities in 2020 and the uncertainty created by COVID-19 reduced lawyer mobility. 2021 has seen an increase in confidence and lawyers are now more mobile.
  • The demand for junior to mid level lawyers in NSW has resulted in some firms paying retention bonuses to valued staff.
  • Most firms will continue to pay an annual bonus which will serve as a reward for performance and retention.
  • Many lawyers are waiting until the end of year performance reviews before deciding on career moves.
Remuneration
  • Lawyers will receive good salary increases this year with the range in NSW typically being 3-15%. Most juniors at major and mid firms in NSW will receive around 10-15%.
  • In Victoria, the range is 5-10% with most junior to mid level lawyers expecting to receive around 10%. The increased demand for lawyers has resulted in salary bands increasing, particularly at the senior associate level.
  • Salary bands in some practice areas (particularly corporate law and banking law) have become less relevant given market competition and the need to attract and retain quality lawyers.
  • Salaries are often about individual merit and the practice area rather than maintaining the salary band.
  • High performing lawyers have a strong expectation of obtaining a bonus. Bonuses however remain discretionary and opaque.
  • Law firms have been more flexible around remuneration when hiring top quality lawyers and have offered premium salaries.
  • In NSW, sign on bonuses have also been paid to new joiners, and retention bonuses to mid level lawyers who are “at risk” of leaving.
Trends
  • Lawyer mobility and salaries are trending up. Opportunities will grow.
  • The consulting arms of law firms will only continue to grow and provide opportunities for lawyers and non-lawyers. There has been increased interest in relocating within Australia. This has mostly come from lawyers wanting to move from Sydney and Melbourne to cities which offer better housing affordability such as Brisbane and Adelaide.
  • Firms have been receptive to allowing lawyers to transfer to interstate offices or to work remotely.
  • We are now seeing onshoring hubs where work is being moved out of commercial centres such as Sydney

Partners

Recruitment
  • As always, the demand for partners with transportable practices remains high. This year has witnessed significant team moves leading to contractions in the
    exiting firms.
  • Most partner movement has been from the major firms and into premium and international law firms. There have been fewer lateral hires into the major firms.
  • Mid firms also remain open to offering salaried partnerships to senior associates and special counsel with skills and who bring a small client following or; client connections in strategic areas of demand.
Remuneration
  • Most mid to major law firms have performed well in 2020 and have increased profitability. Partners in mid to major law firms will see healthy draws.
  • For some firms this increased profitability has been a result of firms reducing expenditure rather than increased revenue.
  • Significant savings to overhead costs have been achieved by reducing office space, travel, and entertainment.
  • As the year has progressed, there has been steadier increased workflow particularly in corporate and finance transactions which bolster firm revenues.
Retention
  • Retention levels for partners have been higher this year than in previous years.
  • Higher retention levels reflect better financial performance by many firms and concerns about a move in an uncertain environment.
  • Lower partner mobility was particularly evident in Victoria which experienced multiple lockdowns and weaker business conditions.
  • Mobility has also been impacted as many law firms have achieved high levels of profitability and, partners are doing well. There was less impetus for a move.
Trends
  • Partnership moves will increase in the coming year particularly partners who bring transportable practices and teams.
  • Firms will seek to expand their offerings and market share by acquisition and will more aggressively pursue reputable partners with practice groups.
  • Partners are already beginning to feel more confident in considering options and will pursue the more profitable and higher rewarding practices that suit their needs.
  • Partners leaving with entire teams will strategically complement their new firms but will also leave significant gaps in the firms they exit.
  • Those firms with lower levels of profitability and/or poor leadership are particularly exposed and will be the losers.

 

Corporate in 2021-2022

Recruitment
  • This is a candidate-led market with plenty of choice due to an increase in business activity, emphasis on managing risk in a highly regulated world, and pent-up demand after 2020 saw a stall in recruitment, especially in Victoria. The high volume of transactional work as businesses across various sectors are scoping potential acquisitions/mergers and investments/PE interest led to a desire for more internal resources.
  • Lawyers are juggling multiple offers so employers must move fast to secure their preferred candidates. A rise in counter-offers has been observed but are rarely successful: candidate are keen to move to a new environment after a constrained 2020.
  • Despite this activity, mid year movement stalled slightly as law firm candidates looking to move in-house await EOFY reviews (captured in this Report) and bonus payments before taking the plunge. Similarly, lawyers wanting to move from one company to another will generally wait on bonus payments being confirmed and paid before resigning.
  • Areas of demand in NSW and Victoria include employment, property, general commercial, consumer, technology/data privacy, funds/superannuation.
  • Additional demand in Victoria is coming from aged care and health, COVID-19 related government bodies and investments.
  • An increased focus on insourcing: building capabilities within in-house teams to reduce the external spend on BAU legal work is reflected in increased demand for new team members. Disputes, investigations and high value corporate transactions are still being briefed to the firms.
  • A tight candidate market means employers are more openminded about candidate experience and will now consider lawyers with litigation, project finance and infrastructure experience for a general commercial role rather than M&A as was previously the strong preference.

At the senior level…

  • In NSW there was a net increase in roles for general counsel combined with company secretary and stand alone roles.
  • In Victoria, general counsel roles tend to be replacements after a tough year. Some general counsel retired, some took time out.
  • General counsel roles have continued to broaden to include compliance, risk, governance and other functions
Remuneration
  • Modest annual increases continue: typically CPI or a little above and are directly linked to broader business performance after a tough 2020 for most companies. Bonus/Short Term Incentive payments are at acceptable levels and remain linked to individual and corporate performance, although the latter is
    predominant.
  • There remains little difference between private practice and in-house remuneration at junior to mid levels. In-house employers compete strongly to recruit but find it harder to compete on per annum increases, in contrast to the firms that move lawyers up a level based on post admission experience.
    This gap reduces for more senior recruits e.g. senior associate level.
  • There has been an increased emphasis on performance related pay (bonuses) at a senior level and in certain sectors (e.g. financial services, funds management, private equity) where the value of legal is clearly demonstrated.
  • Other benefits are on the rise e.g. discounted health insurance, company-provided phone and laptop, on site parking, ADOs, leave loading, extra days leave between Christmas and New Year, subsidised gym membership. Some companies offer COVID-19 vaccination leave of up to two days.

Trends

  • Legal operations management is growing as in-house teams see increasing value in automation, workflow management, resource management with dedicated staff (often legally qualified) responsible for this function.
  • General counsel are increasingly relying on operational processes and systems to gain greater insight into the value and utilisation rates of in-house lawyers and management of turnaround times. It is easier to plot and plan where value can be created in-house or where work needs to be outsourced.
  • Legal technology is key to achieving efficiencies and where gaps have emerged, ‘New Law’ have inserted themselves, offering “all you can eat” models for lower-level work, legal technology and short term/secondment models.

 

Company secretaries 

Recruitment
  • There is increased demand as regulators bite, especially on smaller funds, and business activity increases.
  • The candidate market is very tight as employers seek specific skillsets e.g. in an ASX-listed environment and expand teams to assistant and deputy company
    secretaries, the majority requiring legal qualifications as well as directly on-point experience.
  • Expectations on company secretariats seem to have increased, but this is not always matched by increased resources. Many secretarial teams are doing more with less, or more with no more support.
Remuneration
  • Tends to echo general counsel remuneration i.e. modest and based on company performance.
  • Bonuses are generally more limited than for the general counsel function.
Retention
  • A return to the pure company secretary role (in Victoria at least) may enhance job satisfaction for specialists in this field.
  • Companies slow to resource the function adequately face retention problems in a market rich with alternatives.
Trends
  • Governance Institute of Australia qualifications are not enough: organisations increasingly expect relevant practical experience, especially in the listed market.
  • In NSW, we observed an increase in general counsel/company secretary combined roles whereas in Victoria, there was a rise in ‘pure’ company secretary roles, especially in larger ASXlisted companies, evidencing a recognition that they are both very large roles and that a fused role carries too much risk. This recognises the skills required of a general counsel technically and stylistically can be quite different to those required of a company secretary.

Sydney Office

Level 5, 25 Bligh Street
Sydney NSW 2000
syd@mahlab.com.au

+61 2 9241 1199

Melbourne Office

Level 2, 535 Bourke Street
Melbourne VIC 3000
melb@mahlab.com.au

+61 3 9629 2111  

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