“For many, the Australian legal marketplace presents something of a quandary. On the one hand, its close proximity to the fastest growing legal marketplace on Earth – Asia, makes it an extremely attractive jurisdiction to be located in. On the other hand, with a population of little more than 23 million and in excess of 30 law firms earning over A$50 million in revenue each year, the domestic market has to be considered one of the most competitive in the world.”
So says Sydney-based Legal Business Development Professional Richard Smith (RWS_01), in an exclusive report contained in the recently released book by this author entitled: A Comprehensive Guide to the Asia-Pacific Legal Markets.
Here are some excerpts from Smith’s report:
A changing marketplace?
As Smith outlines: “A number of leading industry observers, as well as the legal press itself, have made much of the changing nature of the Australian legal market in the last ten years. While it is absolutely true that only two of Australia’s long-standing ‘Big 6’ law firms (Clayton Utz and Minter Ellison) continue to trade under their own name, to say that entry into the domestic market of such famous international brands as Clifford Chance, Linklaters, Herbert Smith Norton Rose and Ashurst from the UK and K&L Gates from the US has been a ‘game changer’ is likely over simplifying the structural and cultural changes taking place in Australia at the moment.”
Australia in the Asian Century
“The truth is that there is deep structural change going on in the market at the moment between those firms who see their strategic future aligned with Asia and those who continue to define their legal service offering to their local clientele only. These strategic issues have also lead to cultural changes – both the manner in which lawyers in Australia see the way they service their clients and in the type of client they service.
Given that these geographic strategic differences also align largely along service offering lines also leads to a second of the structural changes taking place at the moment: namely a move away from the strategic approach of ‘full service offerings’ to clients of the 1980s, 1990s and early 2000s to one where the strategic alliance of the geographic and practice group align more closely with the needs of clients.”
The make-up of the market hasn’t changed.
Smith also outlines that “a number of international law firms have opened in Australia since 2005…and [that the] market has moved to thinking more regionally [and to] “realigning their service offerings to more closely align themselves with the needs of their clients.”
However, as Smith explains: “None of the new entrant firms have relocated personnel to Australia in the same way as they have for many decades in both Hong Kong and Singapore.” Further, that “None of the new entrants – to-date – has cited a move to the region on the back of a client opening new operations here.”
As such, the Australian legal market, as Smith explains, “continues to have largely the same lawyers practising [there], [with] the same client base [and] largely the same..amount of domestic legal spend (year-on-year as a total amount taking into account inflationary rises).
Going forward
Smith sees Australia’s legal market as having been one where “Trying to balance the fruits of Asia against the competitive nature of the domestic legal market has probably been the major strategic task for most law firm managing partners over the past five years.” But he concludes “that the only real “change” taking place in the Australian legal marketplace is which deck chairs the players are sitting in on the boat!”
