Rising demand for legal staff high depression rate baffling efficiency gains the key for law firms

Rising demand for legal professionals
Recruitment in the legal profession looks set to soar if the figures from the Q2 2015 Hudson Report: Employment Trends are any guide. The study suggests that almost one in three legal sector employers – a net 30.9 per cent – are looking to increase their legal headcount in the second quarter of 2015. Hudson reveals a broadly positive outlook for the general jobs market, with a net 17.1 per cent of Australian employers expecting to lift permanent staffing levels between April and June this year, compared with 18.7 per cent in the first quarter and well up from just 11.2 per cent a year ago. However, the likely increases in legal recruitment area clearly outstrip those figures. Professionals in sales, marketing and communications are also in strong demand, with a net 26.6 per cent of employers set to increase permanent staffing numbers in these areas. A net 31.5 per cent of employers and hiring managers in professional services are expecting to hire in the second quarter. “Employers in sectors such as these are hungry for the right talent to support structural transformation projects and underpin future business growth,” says Dean Davidson, of Hudson Recruitment Australia. NSW and Victoria are likely to have the strongest jobs sectors.

Reasons unclear for high depression rate
A survey conducted by corporate advisory firm Eaton Capital Partners underlines the complexity law firms face when dealing with the high rate of depression in the legal profession. The study indicates that more than a fifth of managing partners surveyed were “not sure” why so many lawyers suffered from depression. Among the possibilities contributing to the problem, the respondents cited “long working hours” (20.7 per cent), the “adversarial nature of legal practice” (20.7 per cent) and “it is something intrinsic in the nature of lawyers” (20.7 per cent). The “demands of clients” was another factor they raised. A range of studies have shown that lawyers have a high rate of mental illness compared with other professions. With regard to tackling high depression rates, the respondents called for widespread profession reforms, such as nationalisation; lifestyle changes, such as getting more exercise; and raising awareness of mental health issues within firms. There was also support for significant structural reforms, including the abolition of time sheets and providing more training for partners. Justin Whealing, associate director at Eaton Capital Partners, believes firms need to ensure mental health policies are supported by a proper analysis of the structural, cultural and financial factors that may be contributing to mental ill-health. Such factors include billable hour targets, expected face time in the office and performance review procedures. Eaton Capital Partners surveyed 34 managing partners in February and early in March this year.

Efficiency gains the key to higher profit margins
A new British financial benchmarking report points to the difficulty of translating higher fees into higher profit margins. The 2015 Financial Benchmarking Report – Law Firms, conducted by NatWest and RBS, found that small to mid-sized UK law firms enjoyed a year of sustained economic improvement. However, while fees and profits were up across the board, firms had failed to convert these into higher profit margins. The authors of the report suggest that such an outcome is the result of firms failing to address efficiency improvements. The third annual benchmarking survey received responses from 339 law firms from across the United Kingdom and with revenues below £35 million. The research found that there is sustained optimism among law firms about their performance prospects over the next 12 months.