Legal Market Overview
As with the majority of global economies, Australia has been affected by the COVID-19 pandemic, but is thought to be one of the countries that has handled the pandemic better than some others. The demand for legal services has however generally been unabated, with firms reporting upticks in work despite the pandemic, although areas of the market have been affected differently.
Generally, the ‘Big Six’ firms – Allens (partnered with Linklaters), Herbert Smith Freehills, Ashurst, King & Wood Mallesons, Clayton Utz, and Minter Ellison – continue to play major roles in the legal market, securing high-profile mandates across key practice areas. Other major firms; Corrs Chambers Westgarth and Gilbert + Tobin have also had solid years, and other international firms such as Clifford Chance, Allen & Overy LLP, and Norton Rose Fulbright maintain a profile in the legal market, utilising their global networks to act on matters across the Asia-Pacific region.
Reflective of the ever-developing legal market, a number of new practice areas have been introduced this year. These include arbitration; data protection; environment and planning; financial services regulation; white-collar crime and immigration. This is also the first year of listing the Australian Bar.
Corporate and M&A work has remained steady, with mid-market deals, in particular, a fertile source of work for powerhouse firms such as Allens, Herbert Smith Freehills, and King & Wood Mallesons. The most notable transaction of the year was the merger of Vodafone Hutchinson and TPG, creating a telecoms giant and seeing many corporate firms instructed to assist on the deal.
Corporate insolvencies were not a huge source of work in Australia prior to the pandemic, and the government saw this continue with a moratorium on insolvencies in March following the declaration of the pandemic. One key development has been the massive Virgin Australia administration in April 2020.
Banks were broadly retreating from property finance, replaced by foreign money and Australian credit funds. There was a continued increase in TLB and unitranche type loans and clients have been increasingly looking abroad for financing. COVID-19 is creating a strong risk of recession and depression, and the virus has reduced the amount of acquisition finance transactions and has led to more restructurings and capital raisings.
A number of IPOs fell through in the latter part of 2019, and post-Covid all IPOs were shelved. The ASX, however, was highly active in secondary capital raisings (half of the world’s equity raisings were handled in this stock exchange) in the months following the arrival of the pandemic. In the latter part of 2020, investors and their legal counsel have been looking at a number of IPOs and a resurgence of the market.
In the field of employment, several continuing trends bubbled over given the pressures of the pandemic. Underpayment of employee wages (so-called ‘wage theft’) has seen employment departments such as those at Ashurst and Baker McKenzie involved in several cases. Additionally, the ruling on casual workers has seen many workers recategorized, at a cost estimated between A$13bn and A$40bn.
Energy and projects work has continued, with major infrastructure developments such as the Sydney Metro keeping the likes of White & Case and Ashurst busy. Energy and minerals work in Western Australia and Queensland has also been steady, bolstered by record gold prices and government initiatives to bolster renewable energy supplies. Large-scale transmission network changes have been a key development.
In real estate, the office and retail markets have understandably suffered due to lockdowns and work-from-home orders. Hotels and leisure were also hit as tourism sharply declined. Industrial and logistics businesses have been doing especially well, with an increase in demand for online retail causing a parallel rise in demand for storage space.
Disputes work has naturally seen an uptick in a number of sectors, with the Legal 500 also recognising Australia’s arbitration-friendly environment and has introduced this as a new section. A great deal of cross-border transactional activity and foreign investment occurs across the Asia-Pacific, and in Australia in particular. Investors place a special emphasis on sectors such as mining, natural resources, construction, engineering, and energy. Corporate clients have also appreciated the procedural flexibility and enforcement advantages that come with Australia being an arbitration-friendly jurisdiction. Reflective of that, Australian arbitration teams have been extremely active.
In shipping, force-majeure related cases arising from the government’s Covid response has generated litigation work, while construction disputes have also increased, in part due to uncertainties in project funding. The Australian Competition and Consumer Commission remains highly active in investigations, while litigation funding and the country’s class action regime remain key areas of activity.
The Legal 500 Client Service Survey
Data extracted from The Legal 500 Client Service Survey. Data point size indicates number of firm rankings in this jurisdiction in The Legal 500 this year. Color strength indicates positive client scoring. All firm scores on display are above the Global Benchmark score for this criteria.