Partner Perspectives – FY 23 Q2
Taylor Root is pleased to present our insights into the latest partner moves across Australia for the second quarter of the 2023 financial year, October 2022 to December 2022, via our interactive web-based format, Taylor Root Partner Perspectives.
The below analysis covers most of the lateral partner and team movements in the market in Q2 of the financial year. There were 36 major partner moves for the start of the 2023 financial year which was well down on the rolling 5-year average of 47 for the same quarter.
As we highlighted in our last report, although the demand and interest in lateral partners remained strong across a mix of practice areas, many firms have a cautious eye on the market conditions, and some implementing soft recruitment freezes across the more junior ranks. The reality for partners with strong portable client relationships is that there are always good options in the market, whether that be for improved remuneration, better firm bench strength, firm management, and/or client synergies.
Recent reports indicate law firm leaders remain optimistic about their 2023 financial outlook but there’s no doubt revenue is down for some large firms. The legal market is always competitive and most see opportunities to expand client relationships. Many firms expect growth in insolvency and dispute practices. Again, key strategic partner hires will be important for strengthening and growing in a tight market.
Partner movements in Q2 FY23
As mentioned above, there were 36 lateral partner moves during the second quarter of the financial year, taking that to 89 for the first half of the financial year. This is down from the corresponding period in 2021 which saw 106 partner moves. The spike in 2021 had largely been a covid rebound. The interactive diagram below tracks the partner movements between firms. Use your mouse to explore the data.
The Sydney market dominated the activity with 17 partners making the move including the launch of the debt finance practice for White & Case and a team from HWL Ebsworth moving to K+L Gates. There were 9 announced moves in Melbourne across a broad mix of firms and practice areas, and 5 in Canberra predominantly with the expansion of the Thomson Geer office. There were 3 moves in Perth and subdued activity in Brisbane with only 2 major moves announced.
Breakdown of lateral Partner moves by practice groups in Q1 Q2 of FY23
The chart below shows the partner movements by practice groups throughout the first half of the financial year. The most active practice areas have been property and real estate, banking and finance, and insurance. Apart from a team that joined Dentons in Q1, the bulk of the activity in property was from a mix of mid-tier and international firms with nearly half being elevation moves.
The activity in the insurance market was a shuffling of seats across the mid-tier insurance firms in all locations.
Banking and finance has continued to see plenty of activity across the major international firms, predominately in Sydney.
There has been a softening in activity for corporate/commercial and M&A partners, this seems to be consistent with a bumpy ride for some firms and a bit of a wait-and-see approach to deal pipeline.
We expect that restructuring and insolvency practices to remain active as well as an increase in demand for dispute partners given economic conditions. We also expect more interest and activity in the Energy and Resources, Infrastructure and Project partners as the pipeline of renewable energy projects and general energy market activity continue to ramp up.
Australian firms attracting the most lateral moves in Q1 Q2 of FY23
We mentioned Denton’s moves in our last report for Q1, however, in Q2 it was Thomson Geer that was the standout with 6 partners joining the firm, mainly in the Canberra office. The next on the list for Q2 was White & Case, K+L Gates, and Piper Alderman attracting new talent.
The other activity to note and not captured in the lateral partner data (as opposed to Firm M&A) was Mills Oakley picking up boutique insurance and dispute practices in Sydney and Melbourne respectively to continue the firm’s strategic growth.
Australian firms with the most lateral departures through Q1 & Q2 FY23
The chart shows the firms with the most departures but should be noted that these figures also include Special Counsel departures for a Partner elevation opportunity elsewhere.
In Q1 it was Norton Rose Fulbright that had 4 partners depart and Colin Biggers & Paisley with 3 (and a Special Counsel for an elevation move). In Q2 it was McInnes Wilson that had the most departures with 4, as mentioned most of which moving to Thomson Geer in Canberra. The next on the list was HWL Ebsworth losing 3 in Sydney and Clayton Utz losing 2 for elevation opportunities and a Partner in Melbourne.
As mentioned above, there are numerous reasons and motivations (and a combination of all) that result in Partners moving firms. These often include improved remuneration platforms (but interestingly not always the main driver), stronger bench strength in their own practice areas and across complimentary practices, firm management issues, and better client relationship alignment. Some just like a change!
Partner moves by practice type
Here you can see in more detail, an interactive map of partners that have moved, along with their corresponding practice areas. Hover over, click and drag the discs in the diagram below for more information.
The movement of teams in Q2 FY23 (8 partners) was steady and the same when compared with Q1 FY22.
Our comments from previous reports remain relevant, there is an appetite in the market on both sides for larger group moves, with the usual key drivers being better client synergy, remuneration and better firm profile fit.
Partner move by gender
The balanced start to the financial year in terms of gender split wasn’t maintained through Q2, but diversity at Partner level continues to be in focus.
The visualisation shows the partner movements by practice area over the first half of the financial year. As mentioned above, Property & Real Estate, Insurance and Banking led the charge. There has been some slowdown in Corporate & Commercial but again mixed signals from the market about the pipeline and global outlook. Practice diversification and counter-cyclical practice area is an important balance for firm revenue when market conditions soften.
The next few months are likely to test the optimism of some law firm leaders but the focus will be on keeping a keen eye on pipeline, managing talent and supporting those practice areas that will continue to be active and bolster revenue over the balance of the financial year.
With more than 35 years of experience, the Taylor Root Partners team has long been established as a global market leader. Our recruiters have developed trusted and long-standing relationships with the world’s leading law firms, as well as top talent from around the globe. So, whether you are a firm seeking to grow, or a partner looking for your next role, the team at Taylor Root will be able to lead you through the delicate, and often a complex process.