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After a year where legal recruitment in Australia virtually halted on most fronts, there are definite signs of a slow but sure recovery  which bodes well for the first half of 2010. Overall, the Australian economy survived the crisis relatively unscathed vis a vis other first world countries with only short term, small negative growth recorded. It never dived into full scale recession. Official Australian Reserve Bank interest rates went through a downward spiral in the first part of 2009 down to their lowest point in decades, around 3%, but for the last three consecutive months have consistently risen and unemployment did not balloon out as expected. Transactional practice areas such as banking, corporate and property were the hardest hit, like in other locations but practice areas like employment / workplace relations, litigation and insolvency remained relatively buoyant. That didn’t result in more recruitment though as firms tended to utilise their existing resources before going to market.  As business confidence and foreign interest continues to grow in Australia and new transactional instructions gain added momentum in terms of volume, firms will begin to require adequate leveraging again resulting in more recruitment. Many of those made redundant were those lawyers at the mid level. There will also be some effect to the recruitment market of lawyers who would have normally moved in 2009, but couldn’t, leaving gaps as they move on to other opportunities as they arise. That is yet to be seen. Australian client firms that Marsden International has recently spoken to have generally expressed cautious optimism for legal recruitment in 2010. For the short term at least as things begin to balance out Australian qualified lawyers who do not require sponsorship into Australia will be preferred as firms consider that "local" talent is abundant and can’t justify the added cost that sponsorship and requalification brings. However, exceptional foreign qualified lawyers will be at least considered if they have a particular "value ad" in terms of experience. So, overall it is well worth exploring Australian options as the market is likely to recover relatively quickly particularly in the transactional practice areas. Other practice areas that will become very much in demand across states will be litigation, insolvency, environment and planning, energy, employment and insolvency. 

It has been a very significant year for Marsden International in Australia. In November, Greg Plummer a senior manager from a leading Australian legal recruitment agency, became our on the ground representative. His role is to assist lawyers seeking a move within Australia, Australian qualified lawyers wanting to gain international experience, Australian returners and also working with foreign qualified lawyers into Australia. He has many years of experience working across all of these areas. Greg is well connected in Australia and overseas and works closely with our offices in London, Singapore and Canada to ensure candidates and clients are very well looked after through a professional and responsive approach. Plus, as a New Zealander he also works extensively with New Zealand qualified lawyers as well! This all means that Marsden is very well placed in the Australian domestic market than ever before.

Following recent conversations with US law firm partners, the sense of optimism for 2010 continues to grow.  The year that began with significant layoffs for lawyers across the globe appears to be ending with some US law firms treating the down market as an opportunity to expand internationally.  We all know that firms such as Latham laid off over a 150 lawyers across their network but it is less well known that this year saw firms such as Ropes & Gray and Greenberg Traurig open in the City of London.   This is not to say that the hey day of the international markets is back but at least there are signs that US law firms are once again thinking about international options.

Some recruiters would have you believe that the legal world has somehow totally changed; that the recession will have such a lasting impact that lawyers, particularly partners at law firms, need to completely rethink their personal game plan. I personally do not believe this to be the case. Sure there will be some changes, the law and the business of law is constantly evolving. For example, maybe the job security that partners have previously enjoyed may have lessened, but the fundamental principles of operating a law firm remain largely unchanged. Sure, being a lawyer is being part of a profession but being a partner in a law firm is also about being and behaving like a business owner. Law firms know that their clients have suffered and many have taken steps such as lowering billing rates to accommodate. Business owners learn from downturns and as such, law firms across the world have been taught a thing or two from this recession and have taken innovative steps and countermeasures to attract new business and manage cashflow. That, in itself, does not mean that the fundamental premise on which managing partners or executive committees run a firm will change all that much. Having just returned from meeting with senior partners in firms in Singapore and Hong Kong, I am reminded of the necessity of the need to return to business "as usual". The consolidated message from each and every partner with whom I met was quite simple: 2009 was tough but there is cautious optimism for a return to doing business in 2010.

PwC reports that “this year has seen the greatest turmoil in the law firm sector since our survey began in 1991…” The recently released report states that profit at the 100 highest-grossing U.K. law firms fell 30% on average during the past year as deal work declined with the recession. The large law firms in the U.S. and U.K. have responded to the economic crisis by cutting costs across the board and at times, doing so in an innovative fashion. For example, this year has seen lawyers being let go, reducing pay and granting extra vacation time in return, deferring the hiring of first-year attorneys, secondment at cost to clients of the firm and unpaid or part paid sabbaticals. For most lawyers this has proved to be an obstacle in moving their careers forward but some lawyers have embraced the opportunity to travel, gain additional qualifications and explore other opportunities.

Law firms across the world continue to look for growth opportunities in the slow market.  Traditional growth opportunities are marketing externally and cross-selling internally but something that has been in vogue through this tough market has been growth by merger.  Clearly there is a feeling of insecurity amongst partners of law firms as smaller law firms who do not have the resources of the large institutional practices worry about where their next deals will com from.  Many smaller firms have niche expertise and it is this experience that is valued by the larger firms.  One should not necessarily see a merger of two law firms as a sign that one or both firms are in trouble.  More often than not, the firms see the merger as a consolidation of resources and moreover, it is more likely that a larger firm will only want to merge with a firm that is not in trouble.

It seems very much like investments in small private companies are beginning to flow again, but US and European venture capitalists I have spoken with remain cautious and do not expect much of a sustained uptick until 2010. Each quarter of 2009 has seen VC funding on the rise as investors continue to gain faith in the market and come to realize that the sky is not falling in on their heads after all. KPMG reported that in the US, investors put US$4.8 billion into 637 deals in the third quarter, up from US$4.1 billion in the second quarter but down from US$7.16 billion for the same period a year ago. Longer term investment in areas such as clean technology is up at the expense of investment in software. This signals that VCs are prepared to make long-term investments in environment related technology and products which generally require more money and more time to reach a successful exit.

Reed Smith is the latest among international law firms to drop the traditional lockstep pay system setup for associates.  As early as January 2009, Skadden had already proposed taking such a step, arguing that in many ways associates are already rewarded in line with their efforts – in reality high performing associates are already paid at the top of the pay scale whereas lower performing ones are paid at the lower end.  From the recruitment perspective, this will likely give firms adopting merit based pay structures an advantage to attract and indeed retain the very best associates in an ever increasing competitive market for talent.

Kensington Swan, a full service law firm, based in New Zealand has just announced they will be launching an office in Abu Dhabi. As such, they will be first the New Zealand law firm to open in the Middle East. The managing partner of the office will be Quentin Lowcay, whose practice is in the telecom areas. The firm has decided to staff the office with lawyers from New Zealand and will not be hiring lawyers locally at this point. It seems their strategy is going to be to help Australasian companies looking to invest in the Middle East region and seek local advice from local law firms. Once again, this shows that whilst the Middle East market has been down for the past twelve or more months, there is still room for key strategic growth in the region.

The most common complaint from manufacturing in India is that the power industry has failed to keep pace with their demands.  This complaint is often repeated top down to the individual consumer who faces “load-shedding” on a daily basis.  In recent years power projects in India have been growing exponentially but financing them has proved to be difficult.  However, it seems that local institutional investors have finally woken up to the need, growth and development of new power plants in India and are finally working alongside domestic banks to share the risk.  That said, 2010 will hopefully see an influx of foreign investment into Indian power projects and provide new work for professional advisors looking to grow their practices in India.