Australian law firms see strong second half, but lawyers aren’t necessarily happy
19 September 2023
Australian law firms have experienced a strong second half, a Thomson Reuters report released this month says.
In its 2023 Australia: State of the Legal Market Report, the Thomson Reuters Institute-produced report shows that Australian law firms weathered softening demand and rising expenses well. Still, longer-term challenges of expense growth, keeping lawyers happy and the rise of generative AI remain on the horizon.
During financial year (FY) 2023, law firms in Australia saw demand growth averaging 1.3% year-on-year. The 6% surge in demand during the second half of the year offset the decline in demand in the first half, down by 3.4%. In addition, worked rates – rates clients agree to pay – grew by 5.3% year-on-year, compounding record-holding growth from the previous year.
“The 2023 financial year was a remarkable comeback story for Australian law firms, who managed to overcome a difficult first half and achieve positive growth in demand, ending the year near the profitability levels of last year,” said Jackie Rhodes, managing director, Asia & Emerging Markets, Thomson Reuters. “Firms demonstrated resilience and adaptability in the face of continued economic recovery, inflation, and geopolitical uncertainties, leveraging technology and innovation to deliver value to their clients and stakeholders.”
Australian lawyers appear dissatisfied with critical aspects of their firms compared to their global peers and less positive in the net promoter score, giving their firm +56% compared to the global average of +68%. Australian standout lawyers also pose a much higher flight risk than global lawyers, with 65% responding they were “somewhat unlikely/highly unlikely” to leave their current firm vs. 80% globally. Discontent among lawyers suggests the potential for pushback if firms decide to make too aggressive moves that lawyers disagree with.