Australian law firms offset softening demand in the first half of the financial year of 2023 (FY 2023) with a remarkable comeback in the second, reveals the 2023 Australia: State of the Legal Market Report issued today by the Thomson Reuters Institute.
In the first six months of FY 2023, Australian law firms experienced weakened demand growth of 1.3%, year-on-year. However, they rebounded in the second half with a 6% surge in demand, offsetting the sluggish first half, down by 3.4%. The rates that 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.”Jackie Rhodes, Managing Director – Asia & Emerging Markets for Thomson Reuters
With economic recovery, inflation, and geopolitical uncertainties to contend with, law firms demonstrated resilience and adaptability, added the Managing Director.
Matthew Harding, Dean of the Melbourne Law School, also commented on the overall message for law firms being positive.
“The report paints a picture of robust recovery and resilience in the legal services sector, and this is to be celebrated after the dismal years of lockdowns, border closures and withdrawal from public, commercial and social life,” he said.
Data insights on the legal industry’s performance
The 2023 Australia: State of the Legal Market Report utilises data from 20 participating Australian law firms. It covers their financial performance, productivity, pricing, staffing, and strategy. Participating firms include many of the largest Australian law firms by revenue.
The report includes data from Thomson Reuters Stellar Performance to add further depth. The data set comprises a regular survey of 2,400 standout lawyers (as nominated by clients) of which 79 were Australia based.
The report covers legal trends in Australia, including:
- Australian legal industry performance metrics: The report underscores financial performance in the Australian legal market. Findings include rates of demand by practice area, such as mergers and acquisitions, dispute resolution and employment. Quantitative and qualitative data informs the law firm industry analysis.
- Evolving business of law: The report observes a rise in counter-cyclical practices, and the costs of expansion and the health of private practices.
- Legal innovation and digital transformation: The report addresses how firms can prepare for generative AI and make strategic legal tech investments.
What’s to learn from the legal industry analysis?
The 2023 Australia: State of the Legal Market Report is an essential resource for legal professionals shaping the Australian sector.
The legal market overview provides insights and benchmarks to help inform law firms and corporate counsel buyer strategies. The report will enable you to:
- Identify the best practices and success factors of the leading Australian law firms
- Benchmark your firm’s financial and operational metrics against the industry averages and peers
- Gain insights into the current and future challenges and opportunities facing the Australian legal industry
Thought leader acknowledgements
Thomson Reuters acknowledges the Thomson Reuters Institute, Edge International and ESPconnect for their outstanding contribution to this year’s special report.
How to access the legal trends?
The Australian legal market in 2023 continues to evolve alongside macro market developments. Learn from the experiences and perspectives of the top law firms and stakeholders in the legal services industry. Download your copy today on Legal Insight.