New Financial Year Legal market update – July 2017

It’s hard to believe another financial year is underway. 2017 is quickly flashing before our eyes! In this post, I present my latest insights on the Perth legal market, including key market changes, latest recruitment trends and areas of demand for the year ahead. I hope you enjoy my latest quarterly legal market update. 

new financial year, july 2017, legal market update, Perth

Key market changes
Reflecting on nearly a decade of recruiting in the Perth legal market, it’s fair to say I’ve witnessed our industry and local economy undergo significant change. I returned to Perth from London in 2008 during the ‘boom times’, where legal salaries in Western Australia had been increasing by 20% consistently year on year and we had a more simplified market of the ‘Big Six’ top-tier Australian firms, mid-tiers and local boutiques.

Since this time, we’ve seen numerous mergers, the establishment of major global players, national mid-tiers expanding into Perth, rising numbers of boutiques and ‘NewLaw’ firms. Employees, clients and technology have led to changes in traditional working practices, including a growing contractor market, greater flexibility and innovation. The WA market has experienced a downturn in the mining industry and a re-adjustment to our local economy.

2017 so far
The theme for 2017 so far has been about increased business confidence and activity in Western Australia. According to ABS stats, WA’s unemployment rate in November 2016 was at the highest it had been in 15 years, at 6.9%. Fast forward to June 2017 and that figure has decreased to 5.6%, which is consistent with the national average and just slightly up from a low of 5.5% in May. Whilst our market may be slower than Sydney and Melbourne, there’s no doubt employers are feeling more positive this year and that hiring activity has increased as 2017 has gone on. This has continued so far into the new financial year.

Current legal market trends

Changes to traditional business models and practices
The Perth market is currently undergoing an interesting time of change. With clients looking to improve efficiency and save on cost, private law firms are under increased pressure to deliver high quality work, at cost-effective prices. In response, ‘NewLaw’ firms offering alternative pricing models and greater flexibility to clients with the work they are engaged to perform, have emerged and are on the rise. Larger law firms are more increasingly offering alternative pricing to remain competitive.

In Perth, we’ve also seen several established partners or senior lawyers leaving larger firms to set up their own sole or boutique practices. Their decision to do so is on the basis that their clients can engage them directly, at more cost-effective rates and be guaranteed high quality work and service. We’ve recently seen such movements from some of Perth’s leading larger Employment practices, for example. Some senior in-house lawyers have also established their own boutique legal practices in recent times, usually in niche, specialist areas of practice.

Innovation, technology and flexible working practices
Other trends for both private law firms and in-house legal teams include the rise of flexible working practices and investment in technology.  Legal firms are progressively offering part-time or flexible hours, remote access or other flexibility to existing employees. However, this can be a little more difficult to achieve for new hires in some firms, without a proven employment history. Firms are heavily investing in technology to innovate, reduce costs and stay on top of the latest market developments.

The contractor market is growing, with many lawyers enjoying the flexibility of working the hours they want and not being tied to one employer. Some major law firms have even established new services, such as A&O’s Peerpoint, or MinterEllison Flex, providing senior lawyers on a contract or consultancy basis to in-house clients. This also has the added benefit of allowing firms to retain quality senior lawyers, especially if they’re not necessarily seeking a traditional path of partnership.

What practice areas in demand?
Back-end Construction specialists are in high demand, as resources projects in WA transition from construction to production and complex construction disputes continue to unfold.

Corporate lawyers with specialist M&A and capital markets experience are also in demand from both boutiques and major law firms. Competition in this area is fierce, with many firms seeking the same skillset. The reason? A limited supply of candidates in the Perth market, as teams haven’t settled significant numbers of juniors into Corporate teams or made substantial lateral hires in recent years. Corporate lawyers are also more likely to be attracted to locations like Sydney, London or Asia where their skills are in demand, or picked up by in-house legal teams.

Vacancies in insolvency and commercial litigation remain steady and opportunities exist for experienced insurance, family or employment law specialists. Energy & resources has seen more activity in recent months, with interest in candidates with oil & gas, general projects and infrastructure experience (in addition to mining). Commercial, property and banking & finance law areas are generally quieter, although opportunities do exist for high-calibre candidates.

One of the biggest trends is that mid-level lawyers with circa 3-5 years PAE – experienced Associate or junior Senior Associate level – are in high demand. This is due to natural attrition, with lawyers often moving jobs, going in-house or relocating interstate or overseas at this stage in their careers. Candidates at this level are often on track to Senior Associate level and awaiting promotion and a significant uplift in pay before considering a lateral move. Additionally, there is also competition from in-house teams for lawyers at this level.

Partnership opportunities exist, although many firms require a transportable client base and following, which can be challenging in a competitive market. Many senior private practice lawyers are seeking alternative career paths, going in-house or into commercial roles.

Private practice
As business confidence continues to pick up, the newer mid-tier firms in Perth remain busy and are looking to expand. Specialist boutique law firms with niche areas of expertise are also in demand. New global entrants continue to expand into Perth and the more recently established global firms are looking to grow their teams by actively recruiting established partners and experienced lawyers from the local legal talent pool.

More established international firms are using internal resources where possible to manage short term needs. For example, some Perth lawyers are working on matters managed from the eastern states, or Perth teams are utilising internal secondees to fill any local gaps. However, these requirements are often difficult to fill internally (corporate specialists may be needed in Sydney or Asia, for example) and at that stage global firms are actively going to market.

Despite Brexit and concerns over the UK market, London is still calling and I’ve certainly seen some movement of Australian lawyers to the UK, particularly those with major firm experience in corporate, finance or projects. Overseas firms remain interested in candidates with at least 2-3 years PAE in these areas. Asia and the Middle East are also attracting WA lawyers. However, the exodus of lawyers is minimal compared to previous years and firms with a global presence can retain top employees by offering international or interstate secondments or transfers.

With the new restrictions to visa requirements, many legal employers are becoming reluctant to hire foreign lawyers. Instead, they are preferring to wait and find the right locally qualified candidate, or opting to train up junior candidates. Although many Australian lawyers returning from overseas continue to be attracted to opportunities in the eastern states, we’re still seeing plenty of WA lawyers choosing to return home to settle in Perth. This includes candidates relocating back after spending time overseas or interstate.

What are legal salaries doing?
Legal salaries appear to have remained stable this financial year, with many firms indicating they were making increases in July in line with or marginally above CPI level again this year. Salary increases were around 3-5% on average, although in some cases much higher for top performers. Discretionary bonuses continue to be used to reward high performance.

Candidate salary expectations remain realistic, with most candidates not expecting a significant increase to move roles and happy to accept an offer at or slightly above their current package. However, I’ve seen that employers are willing to pay for top talent, particularly in areas where there are skills shortages or competition for talent exists.

What’s happening in-house?
The in-house market has continued to pick up since July, with an increase in mid-level vacancies. Senior level in-house opportunities are rare. Positions have presented across a range of industry sectors, including mining, which is a promising sign. Although opportunities exist, roles are highly competitive to secure and recruitment processes can be lengthy, so candidates are advised to be realistic about their timeframe to move.

Traditionally, most in-house teams recruited corporate commercial generalists to fill operational roles, or front-end specialists for project based positions. As a litigator, if you asked me 5+ years ago about a move in-house, I would have said that you’d struggle. Now, as the construction phase of WA based projects has ended, demand for litigation expertise is on the rise. Back-end construction or insurance experience is particularly of interest, as companies look to manage as much legal work as possible in-house.

To improve efficiency and save costs, in-house teams are keeping as much work as possible in-house, tending only to brief out complex litigation or larger deals to major firms, or specialist matters requiring niche expertise, to market specialists or boutique firms.

Conclusion – the year ahead
In summary, law firms are recruiting in similar practice areas and levels, so competition exists for top talent. Additionally, the in-house market is improving, with many organisations also seeking mid-level lawyers with corporate or back-end construction experience. Looking ahead for the new financial year, we expect skills shortages to grow in these areas and for competition for high-calibre candidates to remain fierce.

Despite emerging skills shortages and competition for talent, many firms have had vacancies open for some time, the majority are prepared to take their time and wait for the right person. Firms are only going to market if they have business case approval and are confident there is sufficient work available. Legal employers continue to place greater importance on personal skills, such as communication and the ability to build client relationships, in addition to technical ability. Therefore, employers are carefully assessing personality and cultural fit for their organisation and individual teams to ensure they get the hiring decision right.

Latest Posts
How to stand out and get your legal resume noticed
Imagine never dreading Monday mornings again. Here’s how…

Browse