A year of flux and reflux

Firms still adapting to globalised market ... Mergers completed as firms settle into new skins ... Lean year - time to trim down ... Thriving or surviving ... What's next? ... Law shops - a swift review of the year's activity 

Twenty-thirteen was a demanding year for Australian law firms - slow growth required them to slim down while globalisation forced them to adapt and merge or face competition in an increasingly crowded market.

The unstoppable force of mergers gathered pace to further globalise the Australian legal market.

Ashurst voted for full financial integration in 2013 joining other fully merged firms such as Herbert Smith Freehills, K&L Gates, Allen & Overy and Clifford Chance.

Merging can cause a number of headaches – just ask the barrister who said Ashurst's burned orange and fuchsia colour scheme "reminded him of a bad acid trip".

Now comes the hard work: aligning partner to other fee-earner ratios; lifting billable hours; and negotiating salary expectations in the new global business.

Merged firms that have opted for a verein structure, in which the constituent partnerships remain financially separate, include King & Wood Mallesons, Norton Rose Fulbright and Baker & McKenzie.

It's the kind of separate, but together, structure that leads to gems like this from the Mallies website:

"King & Wood Mallesons refers to the network of firms which are members of the King & Wood Mallesons network." 

What could be clearer? I guess they're hoping it keeps them more "flexible" - time will tell.

Despite general malaise in the legal market this year, Australia is in the right part of the world for growth and international firms are still moving into the now-crowded market.

In 2013 US firm Seyfarth Shaw set up an Australian workplace relations practice in Sydney and Melbourne, and set about raiding Herbert Smith Freehills and Ashurst for recruits.

But, it was a lean year by most standards, with all top-six law firms shedding lawyers except Herbert Smith Freehills, which stayed steady. 

Losing lawyers wasn't the only strategy to cut costs. The trend continued in the use of legal process outsourcing firms like Integreon and Exigent.

Some firms managed to buck the trend, with fast-growing HWL Ebsworth expanding into Perth.

Growth in WA and Queensland demonstrated that the fortune of practice groups rose and fell with the industries they serviced: mining and energy still did fine, thank you very much, mergers and acquisitions was quieter.

The decline in legal work was felt by aspiring lawyers: top tier firms offered about 15 clerkships, half the number offered two years ago.

Several firms were keen for clerks from previous years to defer their offers and paid them for the privilege. They can now travel for a year, find themselves, and just hope they still have a job when they get back. 

Different legal structures and market moves of the firms will be tested in years to come. We will find out whether in 2013 they have done enough to thrive or merely survive.