Mahlab’s Annual Report On Australian Legal Industry Predicts Slowdown

No major surprises there…

In a report dated today and written by Chris Merritt the legal editor at the Australian newspaper analyses the report.

He writes:

Downturn helps small firms grab clients, lawyers

THE downturn in the market for legal services is helping small firms grab clients and lawyers from larger practices that have been forced to cut legal bills.

While the big firms are slashing costs, smaller practices are using their lower overheads and cheaper hourly rates to win more work from corporate clients.

The rise of these specialised boutiques has been identified by legal recruiter Mahlab in its latest update on the state of the market for legal services.

"Some firms with lower overheads and lower charge-out rates report an increase in new client activity as clients vote with their feet (and their wallets) and move to cheaper firms," Mahlab says.

"Changes in the legal market offer opportunities to many firms, often in the second and third tier, to ‘cherry pick’ outstanding lawyers who may not otherwise be on the market or open to a call."

Mahlab’s market update also predicts:

* More retrenchments at law firms;

* Pay rises this year of just 5 per cent "if at all";

* Growing demand for lawyers in selected practice areas;

* The return of large numbers of expatriates from the ravaged legal markets in London and New York;

* Waning demand for lawyers from resources companies.

Mahlab’s analysis comes soon after last week’s study of the US legal market that predicted a decline of up to 15 per cent in profits per partner at US firms.

That study, by law firm consultant Hildebrandt and Citi Private Bank, predicted more sackings at US firms this year as the legal services industry struggles to adjust to falling demand.

Mahlab’s overall assessment of the Australian legal market says business activity has slowed and there will be more retrenchments at Australian law firms in the first half of this year despite the "creative solutions" that many are using to cut their costs.

The market update says some overstaffed firms have tried to avoid retrenchments by offering lawyers a year’s leave of absence, a lump-sum payment of as much as $25,000 and a guaranteed job when they return.

Some law graduates who had been due to start work this year had been encouraged to defer their start date; new recruits were not being retained after completing their probation period; and some employed solicitors had been offering to work part-time in order to keep their jobs.

Despite the downturn in the Australian market, Mahlab’s Victorian managing director Katherine Sampson said the overall state of the legal market in this country was still stronger than in London or New York.

Full Report Here:,28124,25079004-17044,00.html


As yet we agree that we haven’t heard of retrenchments at Australian law firms to the scale that we’ve heard from New York or London.

Yet at the same time AALE partly believes that this is due to the nature of Australian law firms who tend not too like to share bad news publically. We think we will find the true extent of the downturn’s effect on the Australian market come May & June.

The 2008 Mahlab Survey