Demand for legal services has dropped in Australia this year after holding up well during the global pandemic, but firms are still performing well, according to a survey of firms by the Thomson Reuters Institute.
Demand for legal services dropped by 2.1% in the six months to the end of July, after increasing by 6.4% during the final six months of 2021.
“This is noteworthy as Australian firms have largely outperformed their average global peers for most of the last five years,” Thomson Reuters said in its report.
This year’s dip doesn’t necessarily signal a gloomy outlook for Australian firms because they grew solidly throughout the pandemic over the past two years, unlike U.K. and U.S. firms, the report stated.
Overall, the 2021-22 financial year was a strong one for Australian law firms, with revenue up 10%, despite the slower second half.
No single practice in the 16 firms surveyed was the sole driver of success. Tax and real estate practices both grew more than 5% in the 12 months to July, with regulatory work notching significant gains of 6.2% as well.
“If there was a particularly bright light in FY 2022, it would have to be the record-breaking corporate demand—a result of cheap liquidity in capital markets and government stimulus,” the survey found.
“All three of the corporate practices tracked (corporate general, mergers & acquisitions, and banking & finance) showed strong growth throughout the year, enough to overcome the contraction experienced by dispute resolution, the largest practice area tracked.”
However, the survey found a slowdown in mergers and acquisitions, which has helped drive law firms’ strong performances this year. M&A demand grew 19.8% in the six months to December but contracted by 3.1% in the first six months of the current calendar year.
Transaction lawyers told Law.com International earlier this month that while the M&A market might have paused, they are expecting it to pick up in the remaining months of 2022.