As the financial crisis begins to end, there is an air of optimism in law firms, and a feeling that everywhere things are looking up. Areas to watch include restructuring and insolvency, insurance, industrial relations and, of course, climate change, writes Michael Pollak.

The nation is simultaneously recovering from its economic shock and is on the threshold of an uncharted environmental future to be decided this month at Copenhagen - all of which are creating hot spots for legal practice in the coming year.

Market sentiment going into 2010 has improved significantly compared with six months ago, and the larger firms are beginning to see increased demand in several practice areas which are expected to grow, reports the director of Burgess Paluch Legal Recruitment, Paul Burgess.

"Some national firms now have vacancies or have been hiring in areas that have remained dormant for 12 months," says Burgess.

Insolvency, insurance and litigation are seen by Burgess as the strongest areas for the first six months of next year, and when the economy picks up further areas such as corporate, finance, property and tax should follow, with momentum expected to build in late 2010.

Burgess emphasises that the top-tier firms are braced for a big turnaround, having been he hardest hit by the GFC, with large transaction-driven work being the most affected, in turn leading to decreased revenue in areas such as corporate, finance and tax.

Mid-tier firms, which provide services on lesser-sized transactions and to a broader client base, are better placed to avoid a massive downturn in work, he says.

"Furthermore, mid-tier and smaller firms also undertake work less affected by the GFC - in particular areas such as insurance, general commercial litigation and private client work," Burgess reports.

Despite waves of optimism being evident everywhere, Burgess offers a note of caution, warning that the legal market is "challenging", one that is "laced with initial uncertainty but presumably improving as the economic data flows through positively in the third and fourth quarters of next year ... Essentially we have a climate of opportunity for savvy firms to increase market share while cautious firms sit on the sidelines," he says.

Also pointing to a renewed climate of opportunity is Mahlab Recruitment (NSW) managing director Lisa Gazis, who believes firms across all sectors "are now more open to hiring".

"Some recruitment freezes remain, but there's a lot more optimism out there," says Gazis, who also sees more work coming on stream, led by the increasing demand for commercial activities such as restructuring, financial services and matters related to regulation. Climate change, infrastructure and telecommunications are all expected to experience growth, according to Gazis, who describes the current situation as "not back to buoyant - but things are looking up" and overturning the slowdown of nine months ago.

Unlike Burgess, Gazis sees litigation as "not experiencing the same level of growth" as many other sectors, and law firms at every tier differ on what lies ahead for this big-ticket area.

Another identifiable hot area for 2010 is insurance, which Naiman Clarke Recruitment managing director Elvira Naiman believes "has rescued some firms". "There has been an enormous demand for insurance lawyers which contrasts with areas of quiet elsewhere," she says.

Insurance lawyers are likely to be continuing to operate in an economic environment where potential clients are losing their jobs, money is hard to come by and are keen to pursue all avenues of relief, including workers' compensation, Naiman comments.

"As a result, areas like professional indemnity are expected to be much busier," she adds.

Naiman expresses quiet optimism across the board for 2010 amid a "feeling in the marketplace that there's nowhere to go but up". She agrees that industrial relations will also become an active sector amid "very major changes in the practice of employment law".

Similarly, experts in climate change are likely to "come into their own" in 2010 although at the moment "people are sitting and waiting" to see what emerges from the Copenhagen summit, she says.

Among the firms bracing for the post-Copenhagen era is Baker & McKenzie, whose national managing partner, Mark Chapple, expects the need for "quite discrete skills in the areas of climate change specialisation combined with financial products, financial structuring and commodities expertise".

"Lawyers with global skills and solid crossjurisdictional experience are essential to providing advice to Australian companies on aspects like an emissions trading scheme," Chapple says.

He speaks of "significant reorganisation" in the GFC's aftermath, resulting in continuing growth in restructuring/insolvency, while predicting that the rollout of the national broadband network and government-supported infrastructure projects will bring increased activity through the infrastructure and telecommunications supply chain.

Cross-border inbound investment is another hot spot identified by Chapple, especially related to the increased activity by SOEs in the resources sector. "Work in this area requires lawyers who are multi-skilled in financial, project, corporate and resources areas, and who have strong cross-jurisdictional experience, especially in Asia and the Middle East," he says.

"We expect to see an increasing amount of movement in the market at the more experienced, specialised level in all of these areas."

At Blake Dawson, an increasingly optimistic tone has been evident in all segments connected either with post-GFC recovery and the yet unseen upshot of Copenhagen, with deputy managing partner Helen McKenzie commenting that "pipelines are looking good following monthly improvements since workflows picked up last March".

"Money has been freeing up, people are doing a lot more, and there's been a greater commitment to activities across many sectors," she says.

Energy and resources are pinpointed by McKenzie as a key area to watch because the economy is "dependent on the resources sector performing well in 2010".

Because of the nature of the beast that was the GFC, an explosion of work surrounds disciplines such as restructuring/insolvency, a sector which embraces an array of specialised tasks such as receiverships, workouts, bankruptcy and liquidation; corporate reconstructions; voluntary administrations; securities enforcement; corporate fraud investigation and asset tracing; schemes of arrangement; cross-border insolvency work - and the list goes on.

Firms such as Lander & Rogers are expecting an upturn over the short to medium term in many of these areas of restructuring/insolvency. Landers partner Craig Higginbotham expects a "big change" by the banks which are "starting to feel more comfortable that buyers are emerging to buy the assets which are being unloaded".

Higginbotham also envisages a flurry of work resulting from efforts by the Australian Taxation Office to "mop up tax debt" which they had been "soft" on recovering since the GFC.

At the mid-tier, litigation and dispute resolution is one of the growth areas for Brisbane firm Cooper Grace Ward, with managing partner Chris Ward defining LDR as "hot, and remaining hot for the next two years as issues left over from the GFC become resolved".

Ward sees LDR as inextricably linked with the need for corporate governance, as well as the financial losses and the "blame game" from last year's economic meltdown.

Another sector Ward sees as heating up following the GFC is insurance, because "companies become more attuned to fraud in difficult economic times, and claims are an integral part of the process".

A third hot area identified by Ward is industrial relations, following the legislative changes coming into force next year, with the wash-up expected to last for at least the next two years.

Cooper Grace Ward avoided layoffs during the past year and the firm envisages continuing growth as exemplified by its merger with fellow Queensland outfit Bain Gasteen, whereby about 40 lawyers (including four partners) will be added to CGW's current strength of 70 lawyers (including 18 partners). Across the nation and law firms great and smaller, as economic recovery beckons and as the consequences of Copenhagen are being digested, lawyers are assembling to guide clients through an exciting, albeit uncertain, historical phase.

On the boil

TOP-TIER LAW FIRMS

Having been hit hard by a downturn in work, top tier firms should brace for a big turnaround, according to Burgess Palluch Legal Recruitment

LAWYER LOOKING TO MOVE

Law firms are more open to hiring than they have been in a long time, according to Mahlab Recruitment, which means lawyers who have been putting off a move might finally be able to change jobs

CLIMATE CHANGE

Baker & McKenzie believes lawyers with skills in climate change - as well as financial products, financial structuring and commodities expertise - will be well placed for 2010

INSURANCE

Naiman Clarke believes that insurance work has rescued some firms, with a large demand for insurance lawyers to continue into 2010

EMPLOYMENT AND INDUSTRIAL RELATIONS

It's been a good year for employment lawyers, and with major legislative changes in employment law still rolling out across organisations, the good times should continue

RESTRUCTURING AND INSOLVENCY

With the GFC sparking "significant reorganisation", according to Baker & McKenzie, demand will continue for restructuring and insolvency work

INFRASTRUCTURE AND TELECOMMUNICATIONS

The rollout of the national broadband network and government-supported infrastructure projects will bring increased levels of legal activity in these areas

ENERGY AND RESOURCES

Blake Dawson cited energy and resources as a key area to watch, given that the performance of the economy in 2010 is so dependent on growth in this sector

LITIGATION AND DISPUTE RESOLUTION

Cooper Grace Ward reported that this area will remain hot over the next two years as issues left over from the GFC are resolved - ultimately also influencing the need for corporate governance

Related article >> Part 2: 2010 Predictions ... and what's not hot