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CONFIDENCE is on the rise in the legal industry despite a murky outlook on the economy over the next year, says a national survey.
The quarterly CommBank Legal Market Pulse report shows that overall industry sentiment, while still in touchy territory, has risen from a net negative 37 per cent in the past financial year to a net negative 18 per cent.
The improved mood has lifted expectations of realised rate increases by lawyers over the next year of 0.9 per cent in top-tier firms and 1.2 per cent within mid-tier practices.
Optimism is highest in key areas such as mergers and acquisitions, corporate advisory, construction, major infrastructure and finance.
In contrast, regular challenges to the profession will remain in the year ahead, even though they are expected to deteriorate slightly.
The report shows that law firms are struggling to keep their staff fully utilised, as opposed to accounting firms which tend to successfully diversify revenue sources.
A number of industry leaders also note that issues with management coupled with a lack of fulfilling opportunities and adequate staff recognition are among the top reasons why lawyers are calling it quits at their firms.
Despite these hurdles, business models still continue to evolve within the fixed-fee space.
Larger firms are confident that bolstering capped services will be a lucrative step, with 88 per cent of top-tier respondents indicating their fixed-fee rates to be around the same or higher than standard hourly charges.
Looking toward economic sentiment, top and mid-tier firms are divided with results showing a 29 per cent difference in perceived performance of the Australian economy over the next 12 months.
However, these firms are tackling expenditure in similar ways with expense forecasts for the year ahead in both top and mid-tier firms showing an increase in the business development budget and a decrease in professional indemnity insurance.
For a full outlook on the latest trends impacting the legal industry, visit the CommBank website.
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