REVENUES 2012
This table contains revenue figures for firms in the Australasian top 30 (by partner or lawyer count) list and firms ranked just outside this list. ALB has also collected revenue figures for firms which did not make either of these categories and will reveal the overall fastest growing firms in the market in our Fast 10 feature in December. Some firms do not disclose revenues and this list is therefore not complete.   ALB 30 Revenue table
Firm	2012 revenue	2011 revenue	% change
Arnold Bloch Liebler	$67. 8 million	$58.6 million	15.60%
Ashurst	$ 398 million	$380 million	5%
Clayton Utz	$455 million	$443 million	3%
CBP	$40million	$39 million	4%
Cooper Grace Ward	$33million	$32million	6%
Corrs Chambers Westgarth	$265million	$252million	5%
Freehills	$565 million	$511 million	11%
Gilbert + Tobin	$155 million	$141 million	10%
Hall & Wilcox	$46 million	$42 million	8%
HDY	$98 million	$100 million	-3%
Herbert Geert	$62 million	$61 million	-0.30%
Holding Redlich	$69 million	$63 million	11%
HWL Ebsworth	$140 million	$120 million	17%
Jackson McDonald	(undisclosed)		11%
King&Wood Mallesons**	$424 million		-
Lander & Rogers	$75 million	$67 million	12%
M+K	$52million	$46 million	13%
Maddocks	$114 million	$100 million	13%
McCullough Robertson	$96 million	$83million	16%
Middletons	(undisclosed)		7%
Mills Oakley	$49 million	$42 million	17%
Minter Ellison	$419 million	$389 million	8%
Moray & Agnew	$84 million	$75 million	12%
Piper Alderman	$58 million	$56 million	4%
Sparke Helmore	$105 million	$101 million	4%
Thomsons Lawyers	$93 million	$76 million	22%
Wotton & Kearney	$27 million	$23 million	18%

 

 THE BEARS ARE ON HOLD

Australasian law firms have defied patchy economic conditions by posting solid growth over the past year, according to the results of the 2012 ALB30 Survey. Report: Olivia Collings, Renu Prasad

At the start of the year, Gilbert + Tobin’s Danny Gilbert summed up the sentiments of many in the industry when he predicted that 2012 would be a “bearish” kind of year. It would be hard to disagree with the prognosis either then or now: the sovereign debt crisis continues to grind away in the northern hemisphere, indicators are that the resources boom has peaked and we’re still waiting for that magic moment when the analysts conclude that the equities markets have finally bottomed out. Don’t hold your breath on that one.

What, then, is the impact of this malaise on law firms in New Zealand and Australia? Declining revenues, perhaps? Cut-backs in the number of lawyers? Well, actually no – if there’s one headline to be drawn from this year’s ALB 30 survey, it’s that growth is still the order of the day. In a surprise result, we can reveal that Australia’s largest firms have continued to add lawyer headcount throughout FY2012, and average revenue growth across the survey group was about nine percent. Unfortunately New Zealand firms do not disclose their revenues, so it is not possible to make a corresponding observation about the Kiwi market – however, headcount figures show a significant level of fee-earner growth at some of the larger firms in an otherwise stable market.

How to interpret the ALB 30 survey

The ALB 30 survey identifies the largest 30 firms across Australia and New Zealand as at July each year. This year, two alternative versions are provided: first, largest firms when measured by partnership size and secondly the largest firms when measured by overall fee-earner size. ALB commentary on the 30 is based on the partnership table.

An increasing number of Australian firms have offshore offices or international merger partners or affiliations. We have excluded offshore based lawyers from the main ALB30 lists, which are intended to be a description of the domestic Australian/NZ market only.

For those interesting in tracking the progress and scale of Australian firms in Asia, we have compiled a separate list to this end: clearly the intent behind many of the recent mergers is for Australian firms to build capacity in Asia and it is appropriate that each firm’s depth in Asia be measured independently, rather than having those figures subsumed in the Australian headcount.

Australian trends

Despite uncertain economic times and sporadic hiring freezes and redundancies at some firms, overall hiring patterns have remained surprisingly upbeat. Lawyer headcount in Australasia grew by an average of six percent across the ALB 30 firms over the past year.

There is a familiar narrative that the traditional “big six” is shrinking while the real growth is happening at the mid-size level. This is not at trend which is particularly in evidence at the lawyer headcount level: the big six grew their lawyer headcount by six percent last year, while mid-size firms – measured collectively as the remaining 24 firms in the 30, minus NZ and international firms – averaged eight percent.

These figures seem to suggest that top tier and mid-size firms grew at a similar pace last year. This may be true at an aggregate level, but not necessarily individually:  the firms which experienced truly outstanding growth were all mid-size firms, including HWL Ebsworth (up 20 percent on last year), Colin Biggers & Paisley (up 35 percent) and Moray & Agnew (up 21 percent). As is often the case, the average figure smooths out the more remarkable results within the set.

Partnership numbers are where a difference in strategy begins to appear. ALB30 firms grew their partnerships by an average of 2.8 percent last year. However, the average growth in the “big six” was less than one percent, a result substantially driven by a seven percent increase at Minter Ellison. When Minters is taken out of the equation, the average “big six” partnership shrank by 0.6 percent. This is an interesting contrast to the strong growth in overall fee-earner numbers at these firms and the inference is clear: the “big six” are increasing their leverage, but conserving partnership size in order to protect profitability.

By contrast, mid-size firms grew their partnerships by an average of four percent.  This top tier/mid tier partnership growth differential of approximately five percent  may not seem particularly impressive given the strong media commentary on surging mid-size firm partnerships and shrinking top tier partnerships. Once again, however, the average mid-tier result is understated because of the diversity of the sample.  There is no doubt that the most aggressive recruitment has come from mid-size firms – however, this is a result which is balanced by the fact that some mid-size partnerships have not grown at all. Some of the fastest growing partnerships, such as Mills Oakley and Colin Biggers & Paisley, are just outside the 30 and were not counted in the above analysis.

The ALB30 survey confirms the broad trends which have been established by other commentators. Beaton Consulting, which recently completed the somewhat thankless task of tracking individual partner and special counsel movements, concluded that the top tiers had accumulated a net loss of 47 senior lawyers last year, while the mid-size firms had gained 53. The reasons behind this dynamic – protecting profitability at the top tier by downsizing partner count and opportunistic recruitment by the mid-tiers – are well known. The only additional observation ALB would add is that the picture across the mid-tier is patchier than what might initially be expected. There is certainly some heavy recruitment taking place, but it is clear that some mid-tier firms have been more successful in boosting their numbers than others.

Readers who have been tracking the ALB30 over the years may have expected to see the list topped by Minter Ellison, the market’s most famous behemoth. This year however, the top spot is occupied by Clayton Utz and Minters has dropped to third place. The reason for this is purely in the statistics – in previous years, we have incorporated the figures for both Minter Ellison Rudd Watts (NZ) and Minters Australia into a single entity, whereas this year they appear separately. This is an appropriate outcome given this survey’s stated aim of analysing firms by pure Australian and pure off-shore resourcing and indeed it is notable that ME Rudd Watts has managed to scrape into the 30 on the basis of its NZ headcount alone.

Revenues

Australian firms have defied sub-optimum market conditions and grown revenues over the past year. The average growth percentage across the survey group was nine percent. As might be expected, the “big six” were all below this average, but they still managed to record surprisingly sturdy results, with Freehills in particular leading the way on 11 percent. However, data for the “six” is incomplete: owing to structural changes, KW Mallesons was unable to provide a year on year growth figure and Allens continued its policy of not disclosing revenues. Unfortunately this was also the policy at Allen & Overy and Clifford Chance, two firms often rated the most likely to gain market share at the expense of the traditional top tier.

Overall, this is a very strong set of results. It should be noted that these figures do not always represent pure organic growth – there has been a steady flow of mergers and bloc partner movements over the past year – but there are plenty of high flying firms, such as Queensland’s McCullough Robertson and Melbourne’s Maddocks, who have not been involved in mergers and are simply reaping the rewards of a solid growth strategy. 

ALB has collected growth figures for not only the largest 30 firms, but all firms across Australia. We will reveal the fastest growing firms in the market in our annual ALB Fast 10 feature, which will appear in the December issue.

Top 30 by partner count

Firm	partners July 2012	partners July  2011	% change	lawyers July 2012	lawyers July 2011	% change
Clayton Utz	201	203	-1%	602	569	6%
Freehills	193	193	=	734	716	3%
Minter Ellison	188	176	7%	581	511	14%
Ashurst	178	176	1%	546	524	4%
Allens	165	167	-1%	566	559	1%
King & Wood Mallesons	158	161	-2%	601	562	7%
HWL Ebsworth	146	124	18%	242	201	20%
Norton Rose	139	143	-3%	424	404	5%
Gadens	137	128	7%	354	315	11%
Corrs Chambers Westgarth	126	127	-1%	446	421	6%
DLA Piper	114	113	1%	415	395	5%
Baker & McKenzie	91	90	1%	176	186	-5%
Gilbert + Tobin	67	66	2%	346	318	9%
Maddocks	67	63	6%	215	193	11%
Middletons	67	65	3%	213	209	2%
Moray & Agnew	65	61	6%	145	120	21%
Hunt & Hunt	59	53	11%	139	121	15%
Holding Redlich	58	53	10%	121	106	14%
Thomsons Lawyers	58	56	4%	158	157	1%
M+K Lawyers	56	52	7%	84	88	-5%
Lander & Rogers	55	52	6%	166	148	12%
Chapman Tripp	55	51	8%	145	146	-1%
Henry Davis York	54	57	-6%	159	155	2.5%
Sparke Helmore	54	52	4%	236	241	-2%
Piper Alderman	53	56	-6%	93	81	13%
McCullough Robertson	50	46	9%	164	153	8%
Simpson Grierson	48	48	=	181	163	11%
Bell Gully	45	47	-4%	163	170	-4%
DibbsBarker	45	47	‐ 4%	127	138	-8%
Minter Ellison Rudd Watts	44	43	2%	158	145	9%

 

Top 30 by lawyer count

Firm	partners July 2012	lawyers July 2012	TOTAL
Freehills	193	734	927
Clayton Utz	201	602	803
Minter Ellison	188	581	769
King & Wood Mallesons	158	601	759
Allens	165	566	731
Ashurst	178	546	724
Corrs Chambers Westgarth	126	446	572
Norton Rose	139	424	563
DLA Piper	114	415	529
Gadens	137	354	491
Slater & Gordon	n/a	436	436
Gilbert + Tobin	67	346	413
HWL Ebsworth	146	242	388
Sparke Helmore	54	236	290
Maddocks	67	215	282
Middletons	67	213	280
Baker & McKenzie	91	176	267
Simpson Grierson	48	181	229
Lander & Rogers	55	166	221
Thomsons Lawyers	58	158	216
Russell McVeagh	41	175	216
McCullough Robertson	50	164	214
Henry Davis York	54	159	213
Moray & Agnew	65	145	210
Bell Gully	45	163	208
Minter Ellison Rudd Watts	44	158	202
Chapman Tripp	55	145	200
Hunt & Hunt	59	139	198
Buddle Findlay	41	152	193
Holding Redlich	58	121	179

 

Asia trends

From the outset, it must be said that measuring the scope of Australian firms in Asia can be a fraught process. Firms such as Allens, which have adopted multiple partnership structures and brands in Asia, are difficult to measure. For the purpose of this survey, we have counted firms as single entities even if they use a multi-partnership structure, but we have not aggregated figures where firms use different branding. The result is that Swiss Verein structures such as King & Wood Mallesons count as a single firm, but alliances such as Allens-Linklaters do not. It is therefore important to keep in mind that firms such as Allens may be entitled to claim a more comprehensive footprint in Asia than what the raw figures may indicate.

The Asia headcount table shows that King & Wood Mallesons has achieved its ambition of creating an entity which surpasses its rivals in scale. Firms such as Allens and Minter Ellison have previously been praised for the extent of their investment in Asia, but their efforts have suddenly paled alongside Stuart Fuller’s near 1,000 lawyer behemoth. Remember, that’s 1,000 lawyers in Asia alone – not including Australia.

Importantly, KW Mallesons can now begin to benchmark its Asia capabilities not just against Australian rivals, but international rivals too. The statistics show that KW Mallesons is larger than its nearest rival (Baker & McKenzie) by a margin of nearly 400 lawyers and is over three times the size of Clifford Chance and DLA Piper in Asia.

Other Australian firms have boosted their Asia capacity and the newly combined forces at Ashurst have resulted in the firm more than doubling its presence in Asia to over 160 lawyers. The picture will be complete in October when we are able to add Herbert Smith Freehills to this list. However, it is already clear that Australian firms in Asia are broadly falling into three categories. First, we have firms which have kept their Asia resourcing at a modest level of less than 100 lawyers. This represents a “status quo” strategy, although we may see more action from these firms down the track.  The second category includes firms such as Ashurst and  Norton Rose, who have taken steps to boost their Asia Pacific capabilities via mergers and now boast a considerably more sophisticated offering in Asia than they did pre-merger. However, the King & Wood Mallesons entity stands in a category of its own when it comes to sheer scale and it is difficult to imagine any Australian rival coming close in the foreseeable future.

This is an analysis on the numbers only and rival firms have already begun muttering about the size versus quality trade-off which Mallesons may have inherited. That’s a question for another day – but going on the numbers alone, this is one race that Mallesons has in the bag.