Jobs rebound as crisis fears fade

By Chris Merrit

The nation’s leading firms have shaken off the lethargy triggered by the global economic crisis and are in the midst of an employment boom.

Almost half the 35 firms surveyed by The Australian have more lawyers on staff than they did a year ago and the rate of growth at some firms is accelerating. These 16 firms have created 310 new legal jobs in the past year in order to capitalise on what some of them say is a more promising business outlook.

Minter Ellison, the nation’s largest firm, has created an extra 85 legal jobs since June last year, more than twice as many as any other firm.

Other strong performances were recorded by Freehills, which increased its staff numbers by 40 since June last year and by Corrs Chambers Westgarth ,which has employed 49 more lawyers since January.

In percentage terms, the fastest-growing legal employer in the past six months was mid-tier firm Curwoods Lawyers, which has increased its legal staff by 22.6 per cent since January and 35.8 per cent since June.

Jobs growth at the leading 16 firms was strong enough to compensate for job losses elsewhere so the overall number of legal jobs at the 35 firms grew by 76 since January.

This restored most of the 106 job losses that took place in the second half of 2009.

This divergent approach to legal employment is one of the key trends that have been identified by The Australian’s end of financial year survey.

It suggests that almost half of the firms covered by the survey have increased the volume of work, sometimes at the expense of their competitors.

Corrs chief executive John Denton said the growth in legal employment at his firm was part of a plan to grab market share from firms that had adopted more cautious strategies.

“We have taken market share and next year we are anticipating significant growth,” Mr Denton said.

Minters chief executive partner John Weber said his firm had emerged from the global financial crisis in good shape and was still recruiting.

“We’ve taken on lawyers in corporate, finance, dispute resolution, tax, finance, human resources and industrial relations and still have vacancies for senior corporate, government and technology lawyers,” he said.

The firms with the strongest growth in legal employment are a mixture of small and medium-sized practices, along with some of the big national firms.

But a starkly different pattern has emerged when it comes to the allocation of partnerships.

Overall, there was almost no change in the number of partners at the 35 firms in the past six months.

But while partnership numbers at the big national firms were either stable or shrinking, the growth in partner numbers was concentrated among the small and mid-tier practices.

While the 35 firms have restored most of the legal jobs that were lost in the second half of 2009, that is not the case with partner numbers.

After retirements and promotions, the 35 firms lost 57 partnership positions in the six months to December.

And since January, the total number of partnerships at the 35 firms has grown by just seven, which is still 50 short of the total at this time last year.

Just two large firms were among those with strong growth in partner numbers—Gadens Lawyers and HWL Ebsworth.

After retirements are taken into account, the decision of HWL to appoint 12 new partners gave that firm a complement of 111.

In percentage terms, the appointment of two new partners at the 12-partner practice Wotton & Kearney made this the fastest-growing firm.

The sluggish growth in partnership numbers is at odds with major expansions this week by incorporated legal practices whose origins are both in Victoria.

In the same week that Slater & Gordon bought Queensland’s Trilby Misso Lawyers for $57 million, Macpherson + Kelley has revealed it is about to unveil a merger that will boost its number of principals by just over 32 per cent.

Macphersons’ national managing director Damian Paul said the recent expansion of his company could not have happened if it were a traditional partnership.

The merger will mean that the number of principals in this emerging national practice will grow from 31 to 41.

The general caution about appointing more partners is in line with the an overall reduction in the intake of legal graduates.

Compared to this time last year, the 35 firms have cut their graduate intake by 191 positions or 20.9 per cent.

Just eight of the 35 firms increased their graduate intake or held it stable in the past six months.

Allens Arthur Robinson managing partner Michael Rose said the biggest change in the legal services industry in the past year had been the pressure that had been applied to the traditional business model at many firms.

“The model which has applied pretty much for the last twenty-five to thirty years has come under significant pressure,” he said. “The model was that firms could expect to grow and absorb new partners through that growth.

“They could expect to maintain revenue growth and profitability through annual rate increases.

“It was a model that worked pretty well and the shock of the last 12 months has really put pressure on some of the assumptions in that model.”

Mr Rose said clients were changing the way they chose their lawyers and the way they want to pay their lawyers. “This has knock-on effects for the profitability model for law forms and the salary model for law firms,” he said.

At Allens, work levels have been increasing over the past three months and the firm is cautiously optimistic.

But Mr Rose warned that uncertainty had arisen among the firm’s clients due to the federal government’s planned resource super-profits tax and the potential impact of the debt crisis in Greece.

“Our clients are fairly cautious and in those circumstances it is useful for us to be cautious as well,” he said.

“My gut feel is that we might see a year ahead that is marginally better, but it will be characterised by continuing uncertainty — at least in the short term.”

Freehills chief executive and managing partner Gavin Bell said no retrenchments had taken place at his firm during the worst of the global downturn and it had also maintained its approach to graduate recruitment

“We value our people. This applies in good times and bad and we take a long-term view on these sorts of issues,” Mr Bell said.

“Taking a short-term view on such a significant issue is not fair to our people and is a risk that we don’t see as worthwhile.”

Article from The Australian, July, 2010.