The outlook for Australia’s legal field over the next 5 years until about 2020 is optimistic at present, with more opportunities expected to arise for small to medium players within markets often overlooked by larger firms.
Profit margins are expected to return to the levels experienced prior to the global financial crisis. These elevated margins will be arrived at through cost decreases and improved management, not by strong profit growth.
Wages will climb over the coming 5 years, but they will drop marginally as a proportion of revenue (as part of the attention to expense reduction).
Industry operators will turn their focus to key markets to up profits while dropping their least profitable segments.
The heightened attention to minimizing expenses and upping profits is predicted to intensify employment pressure leading to increased poaching of partners from competing law firms in an attempt to boost their profitable segments.
While partners will be poached in greater numbers, those professionals below the partner level may be reduced as firm’s look to reduce costs.
The litigation funding sector should grow strongly as the triumphs of firms such as Bentham IMF encourage new market entrants. If the growth pans out as expected than litigation funding may eventually have a material effect on the Legal Services Industry.
Personal injuries work is another area expected to perform strongly and grow robustly. Firms such as Slater & Gordon have accomplished excellent results when it comes to such work and are projected to keep the success up thanks to their ‘no win, no fee’ model and their ability to boost the number of legal services work available through advertising to people who may not have otherwise thought of seeking out legal help.
The commercial legal arena on the other hand is a different beast altogether. It runs off a fairly supply driven model where legal firms vie for a shorter supply of work.