Articles
Latest news Demand falls for legal services artificial intelligence on the rise modest starting salary rises for law firm workers
Legal services demand drops slightly
Demand for commercial legal services fell 2 per cent last financial year, continuing a five-year slide, according to new research. A white paper by Melbourne Law School and Thomson Reuters Peer Monitor, entitled 2015 Australia: State of the Legal Market, has reported the finding, attributing the decrease in activity to trends in the three biggest practice groups: dispute resolution, banking and finance, and corporate general. However, there is a potential silver lining, with the final quarter of last year recording a slight lift in demand for services. This represents the first quarter in almost three years to return a positive result.
While still experiencing falling demand for their services, the report noted that the ‘big eight’ firms (Allens, Ashurst, Clayton Utz, Corrs Chambers Westgarth, Herbert Smith Freehills, King & Wood Mallesons, Minter Ellison and Norton Rose Fulbright) fared better than the ‘large’ firms during the year (-1.1 per cent and -2.4 per cent, respectively). The researchers put this down to the more substantial decline in demand for the dispute resolution services of the large firms compared with the big eight 8 firms, as well as a disproportionate fall in demand for banking and finance advice within the large firms. The report noted that HWL Ebsworth was an anomaly in the large firms category, with a revenue rise from $102 million to $219 million over the past three years.
For 2015, the industry saw a decline of 3.8 per cent in the number of lawyers employed. Consequently, the lawyers retained by each firm had to service a greater proportion of the total demanded legal work. As a result, productivity increased by 1.3 per cent over the 12 months.
Smart money is on artificial intelligence
New research indicates that law firms will have to keep a close watch on developments in artificial intelligence, with resources such as IBM’s supercomputer, Watson, set to have a major influence in the legal sector. Survey findings from the International Legal Technology Association and InsideLegal suggest that, artificial intelligence aside, other big technologies that will continue to have a major impact include cloud computing, mobile devices, virtualisation, big data analytics and advances in data security and digital dictation.
The 10th annual legal technology survey found that the top five technology purchases made by law firms in 2014-15 were: laptops and notebooks (67 per cent); desktop hardware (60 per cent); network upgrades (51 per cent); printers and multifunctional devices (49 per cent); and antivirus and anti-spam software (40 per cent). Almost half of the respondents indicated that they had no plans to use big data technologies. Data security appears to be an increasingly significant issue for respondents. Security software and assessments ranked highly among respondents’ technology purchases last year.
Pay hikes lag for law firm workers
Next year’s starting salaries for legal workers are likely to increase at a lower level than for workers in most other professional occupations, according to a new US survey. The 2016 Salary Guides from recruitment consultancy Robert Half indicate that starting salaries for professional jobs are set to rise by an average of 4.1 per cent. The technology sector is tipped to see the greatest pay gains, with base salaries jumping an average of 5.3 per cent. Accounting and finance roles (4.7 per cent) follow, along with creative and administrative professions (3.8 per cent) and then the legal field (3.1 per cent). “Organisations continue to compete fiercely for skilled talent, particularly in the areas of big data, compliance and mobile applications development,” says Paul McDonald, Robert Half senior executive director. “Managers who keep current on the latest salary and hiring trends can create more attractive job offers and improve their retention efforts.”
When it comes to keeping the best and brightest, benchmarking compensation is essential, suggests Robert Half. Among more than 1000 professionals polled, 83 per cent said a bigger salary would be a top factor prompting them to move to another company. The research also revealed that it would take a 26 per cent salary increase, on average, to compel employees to head for greener pastures. Robert Half reported that increased litigation is driving up demand for lawyers and paralegals with backgrounds in insurance defence, commercial litigation and medical malpractice. Commercial law and compliance are particularly strong areas for legal hiring.