21 Jul Melbourne, the “distancing” phase
What a funny old year 2020 has been. The bushfires threatened to burn us to the ground, but we rose like the phoenix; the floods attempted to dampen our spirits, but by heck, we weathered that storm; the worst of it was over we thought – cue our friendly, furry, flying fox, some doe-eyed globetrotters and those pesky little virions, and suddenly the world is on its knees!
Naturally with the effects of social isolation, quarantining and the uncertainty around the economic impact of the pandemic, most law firms saw a tailing-off of work in more traditional “transactional” areas (e.g. Banking & Finance, Corporate, Real Estate etc). With deals falling over or pausing indefinitely, and in a lot of cases, financial liquidities of corporates dropping to such levels that saw many entities struggling to not contravene their covenants on borrowings, there was a concomitant rise in the need for restructuring, turnaround and insolvency lawyers.
Naturally with commercial and contractual obligations failing to be met (think supply chain arrangements, and the failure to meet delivery deadlines for example), and the subsequent spike in litigation, there was an initial interest in bolstering contentious teams. However, the larger and international firms quickly cottoned on to the fact that junior support could be redeployed from certain “underutilised” areas (e.g. Real Estate) and used within the litigation teams. This subsequently led to a decline in the appetite for hiring.
Our discussions with litigators across the top and mid-tiers tended to yield the same sentiments: “…we are still billing 10 hours per day, but we’ve had our pay cut [by over 15% in some cases], and that’s the same drop in salary that corporate/banking lawyers, who are billing next to nothing, have had”. To be fair to the majority of law firms, partners reduced their drawings (by up to 50% in some cases) to ensure that the business had enough liquidity to retain the vast majority of staff, and this is highly commendable. The issues have more centred upon the employee experience, with those in more contentious disciplines (e.g. Employment, Litigation, Construction Litigation) feeling hard done by, given the matters they are working on (which often run over several months or years), remaining largely unaffected by COVID-19, and them having to put in five days’ work for four days’ pay.
Interestingly, throughout this entire period, we also saw the insurance and reinsurance industry continue in its dealings with the fallout from the pandemic, and more long-standing infrastructure, liability, coverage and property damage matters. This has led to an omnipresent (or arguably heightened) need for insurance litigators across professional indemnity, general liability and large-scale property loss. In the same vain, and seemingly linked to an increase in the technological developments that have been prevalent this year, there has also been heightened activity in the cyberlaw/incident response space.
The “closening” phase
Fast-forward to July and it appears that the world is threatening to turn a new leaf.
The financial year is afresh, there’s a new moon to see in the winter, social distancing has become a long-forgotten concept (!), and wait….what is this we see…..an instruction in the Corporate Tax space?!
With the Government having initially relaxed lockdown measures, and providing a purported sense of economic recovery, the first three weeks of July saw firms taking a bipartite approach to recruiting: firstly there was interest to see stellar candidates for certain “difficult to recruit for areas” (e.g. IP/Trademarks) in the knowledge that finding these skillsets is nigh-on impossible, and secondly transactional-type roles that were temporarily paused have gotten approval on the premise that there will be a significant rush to complete stalled deals before the end of the calendar year.
Cue some security (ahem) “indiscretions”, some social (and amorous) “closening”, and a rather unfortunate family gathering, and the “second wave” of COVID has dampened spirits ever so slightly. Our analysis suggests that things are heading into a recovery phase, with areas such as Real Estate coming to the fore, but as with everything, it’s about timing. (Watch this space…)