Quarter 1 of 2024 saw the top six Australian firms[1] hiring twice as many lawyers as they’re losing. The main sources of talent were other top firms and in-house, with a sprinkling of overseas returnees but not as many as previous quarters. There is also a significant drop in the market movement as a whole.
Sources of talent for the top six firms
The largest source of hires for these firms was from other top six firms or Australia’s Top 55 firms – together making up 40% of the Q1 hires. The top six firms also hired 28% of their lawyers from in-house roles (including from government) continuing the trend of in-house lawyers returning to private practice that we’ve seen over the last year (although to a lesser extent than previously).[2] Overseas returnees made up 13% of the new hires as well as 4% coming from non-top 55 firms. There is also continuing demand for specialist lawyers but a lack of them within the market with just 6% of hires coming from specialist law firms.
Lawyers leaving top six firms
Conversely, of the lawyers who left the top six firms in quarter 1, only 29% went to a top 55 firm (including a top 6 firm) and 29% moved in-house. Others went to boutique or specialist firms (12%), overseas (12%), and to other non-top 55 firms (9%).
On the whole, the sources of talent for the top six firms are not being replenished with the same number of leavers from those firms.
Softening legal recruitment market
As reported recently by Lawyers Weekly, there has been a softening of the market and a shift towards an employer driven market.
This is supported by our Insource data showing that compared to 2023 quarter 1 hiring is down 48% and the number of lawyers leaving is down 57%. Comparing quarter 1 2024 to 2022 (the year of the ‘Great Resignation’) is even more of a drop, with hires down 62% and lawyers leaving down 78%. This shows the market has re-adjusted to a much lower level of hiring after a hectic couple of years of labour movement.
That being said, it is still a candidate’s market. Firms are hiring. There is an increase in work and project activity with a very candidate-short market. As Jesse Shah – nrol Director said in an interview with The HR Leader on 10 April:
“Every week there are more and more roles. I don’t see this slowing down. Talent shortages are not over. It is a very competitive talent market and firms are still recruiting and continue to struggle to fill roles they were trying to fill in 2023”.
Drilling into those quarter 1 hires
Breaking down the quarter 1 hires further, 30% were alumni returning to their ‘home’ firms. Staying in touch with quality alumni is critical for firms as, among other reasons, they are trained your way, often make great referrals if they’re not on the market and are a cost-effective way to recruit.
Insource customers are able to track their alumni in real time making it easy to remain connected particularly to those offshore on their OE or studying. In addition, Insource also connects Insource customers to a pool of talent that has previously worked with their employees at another firm. Firms that utilise their referral and alumni networks effectively are able to backfill live roles more quickly with the right talent that is known to them.
Additionally, corporate and commercial, and litigation were noticeably the practice areas in highest demand followed by finance and property and real estate to lesser extents. Overwhelmingly, the PAE levels in highest demand were the junior/intermediate levels. The 3-7 PAE bracket made up 33% of the quarter 1 hires. And, although it may not surprise you, those with 2 years PAE made up 20% of the total hires. The competition for those ‘unicorn’ PAE levels continues even in a softer market and shows the need to understand what this next generation of lawyers (Gen Z) are looking for in an employer.
As reported by Lawyers Weekly, these lawyers value flexibility above all else as well as good organisational culture and wellbeing offering. A better work/life balance as well as salary increases are real drivers for lawyers to change roles at the moment. There is a lot of projects and work on currently, and lawyers are leaving and leveraging a 15% salary increase on average. Candidates are also aware of the talent short market so they know they can achieve significant salary increases in moving firms.
In short, the top Australian firms are having success hiring from within Australia and from the top firms. Hires from in-house, overseas returnees or non-top 55 firms are noticeable but at much lower numbers than in previous years.
To take control of your own recruitment, Insource gives firms direct visibility of the complete talent pool of lawyers. 50+ top tier, mid-tier and boutique specialist law firms have a birds eye view of the complete talent pool of Australian lawyers. If you are still struggling to backfill roles from 2023 and find the specialist and quality talent that is a fit with your business needs get in touch with Insource for a demo.
[1] Allens, Ashurst, Clayton Utz, Herbert Smith Freehills, King & Wood Mallesons, Minter Ellison.
