The Brief:
Australia's legal market looks healthy on paper. Beneath the surface, three very different stories are playing out.
Large firms are winning the growth race. Midsize firms are stuck. And the Big 8 may have a fight on their hands.
Australia's legal market looks healthy on paper. Firms are seeing an uptick in demand at 4.8%, with fees worked soaring 9.8%
But market averages are hiding something.
New data from Thomson Reuters breaks the market into three distinct segments: the Big 8, Large Firms and Midsize Firms.
And once you look closely at the data, the story changes.
Take profits per lawyer.
Large firms have grown profits by 27.4% since FY22.
The Big 8 managed 7.1% growth.
Midsize firms scraped in at 3.1%.
For demand, it's a similar picture.
Large firms are growing at 6.9% year-to-date.
That’s roughly double the Big 8's 2.7%.
And well ahead of Midsize firms at 2.4%.
Large firms are pulling away from that pack, and that growth hasn’t come cheap. They’re spending big with an equally sized bet on expansion, with direct expenses up 47.3% and overheads up 51.1% since 2022.
Yet, the Big 8 are playing a different game entirely.
Australia’s most established firms are leaning on rate rises and cost discipline rather than chasing headcount. Their direct expenses have risen just 32.9% since 2022, the most restrained of any segment.
What's emerging is an uprising — a small group of ambitious large firms pulling away from their peers and closing in on the elite.
Firms like Gadens, Mills Oakley and Hall & Wilcox have grown their partnerships by more than 30% in three years, outpacing most top tiers on headcount growth. The firms scaling their partnerships are also scaling their market share.
Source: Thomson Reuters