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More law firm mergers on the horizon
As part of a bid to remain competitive and nab greater market share, law firms will increasingly need to consider consolidating their offering with that of another, a new report has found.
Emma Musgrave
The 2018 Mahlab Report, showcasing information regarding remuneration and rewards, trends and employment experiences of lawyers both in private practice and in-house, has detailed that a continuing market trend will be the need for firms to merge their practices and/or talent into the one fold.
It explained partners with practices and established were the most highly sought after, with big bosses perceiving them as less risky in terms of integration into a new firm and client
transitioning.
“In a six-week period to May 2018, Mills Oakley added five new partners to grow the partnership to 100 as part of a strategy to become a top-five Australian law firm. Hall & Wilcox in Brisbane acquired a team of 20 from DibbsBarker; and Dentons in Sydney acquired 18 partners from the same firm, resulting in the cessation of that practice,” the Mahlab report said.
“Mergers, acquisitions and partnership moves will continue in the Australian legal market for the foreseeable future.”
Further, the report noted that managing the financial performance of individual partners remains a pivotal focus for many firms, as does the pressure for individual partners to perform.
“Consequently, some partners feel disgruntled that individual benchmarks set by firm management are not realistic in a highly competitive market undergoing rapid transformation, and in circumstances where resourcing is lean, whether due to market conditions or a focus on controlling costs,” it said.
“For these partners, the options are to change their equity status or move on to a more compatible environment in terms of performance measures, clients, work, pricing and culture.”
Compensation remains a key issue for many partners as well, the report showed.
“Consultation with partners regarding compensation has become more important than ever, particularly in firms with multiple offices,” the report said.
“With firms now much more corporatised and centrally managed than in the past, partners are feeling more removed from decision-making. Some feel they are not always heard; others feel ignored.”
For partners who are meeting the targets set for them, the report noted that more are seeking greater reward, and those firms who do not or cannot reward high performers are ultimately creating a risk of losing key partners and practices.
“This is an issue for even some of the largest and most successful firms, in which high-performing partners and practices may in some circumstances need to financially support niche or less profitable practices to provide the seamless service demanded by many clients,” the report explained.
“While many partners who made moves this year achieved a comparable guaranteed base to the compensation they had previously been earning, many firms offered a significant upside for exceeding benchmarks.
“Senior associates and special counsel who have moved into partnership roles have generally brought a small client following, offering mid-size or boutique firms the opportunity to grow. The number of partners offered partnerships this year remained steady, however the path to partnership remains long, with many structural and situational challenges and high overall benchmarks.
“Bottlenecks in law firms and the inherent difficulties achieving partnership means many senior lawyers opt out of a career in private practice, which was consistent with trends in previous years.”
The Mahlab Report also broke down the bonus figures among law firms, revealing that “high-achieving senior associates” can be earning a boost as high as 20 per cent.
The report also offered insight into varying salaries among corporate lawyers, dependent on where their work is carried out.
Emma Musgrave
Emma Musgrave (née Ryan) is the managing editor, professional services at Momentum Media.
Emma has worked for Momentum Media since 2015, including five years spent as the editor of the company's legal brand - Lawyers Weekly. Throughout her time at Momentum, she has been responsible for breaking some of the biggest stories in corporate Australia. In addition, she has produced exclusive multimedia and event content related to the company's respective brands and audiences.
Prior to joining Momentum Media, Emma worked in breakfast radio, delivering news to the Central West region of NSW, before taking on a radio journalist role at Southern Cross Austereo, based in Townsville, North Queensland.
She holds a Bachelor of Communications (Journalism) degree from Charles Sturt University.
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