Eden Brown: My predictions for the NZ legal market in 2023

 

Let’s make one thing clear from the outset; I am guessing.

Who really knows what will happen this year when it comes to the market for legal professionals. No one correctly predicted the market conditions we experienced in 2020-2022, nor will they for 2023 I expect.

But I am going to give it a crack anyway.

 

Lost your gravy?

 

The residential property market has softened and the gravy train for the majority of general law firms in NZ has taken a temporary dive. Property lawyers without other significant commercial or private client skillsets are now relatively less attractive than they were twelve months ago during the post-covid boom. They’ll struggle moving laterally in the short term.

 

Brain drain part two

 

Similar to last year, there are another lot of talented young kiwi lawyers with one eye on the contract they’re drafting, and Sail Croatia tickets open in a separate window. My team and I are well qualified to comment on this, as we talk to hundreds of 2-5-year PQE lawyers every week, and there are more set to go this year than went last year – trust me – you will lose staff overseas – you just may not know it yet – guaranteed. Oh, and bugger all kiwi expats are coming home, so expect the net outflow to continue for a while yet. This will create gaps.

 

Money, Money, Money

 

Continuous, brutal increases in market salaries as a result of a highly competitive talent market, coupled with record inflation and increasing operational costs, has squeezed law firm margins. I can’t see current salary trends being sustainable and if it comes to it, I think some firms will look to pull back on costs. This will mean not everyone will get the raise they are after in the next review cycle, which will inevitably create lateral movement.

 

The practice areas with enduring long term talent shortages

 

There are partners who will snap my arm off for a good 5-year PQE in lawyer in these spaces, and I don’t see that changing anytime soon. There simply isn’t enough of them for everyone to have as many money-spinners as they’d like.

 

e.g. Corporate/Commercial. M+A. Tax. Banking & Finance. Resource Management/Environmental.

 

Many firms still have stacks of trust reviews to get through, so trusts work may become an interim source of easy revenue. Securing quality senior talent in the trusts space is still very tricky.

 

Doom means boom? I expect litigation may also pick up in demand if economic headwinds do prevail. Insolvency, debt recovery etc…

 

 

Value in quality

 

Some things don’t change, they say that great vision without great people is irrelevant. Key strategic hires will continue to be crucial, as are the mechanisms and organisations which deliver them (e.g. me and my team).

Candidates who deliver exceptional soft skills, business development nous, and commercial acumen (in addition to technical ability, of course) will be highly sought-after.

There is an expression I adore, from the book Beyond Entrepreneurship 2.0 by Jim Collins, in which he explains that businesses should constantly be assessing one metric above all others “the percentage of key seats on the bus filled with the right people for those seats”.

As long as that number isn’t 100, I’ve got a job.

 

 

The wrap up – my best guess:

• Residential property lawyers on a whole will struggle in the short term.
• Not everyone will get the raise they want this year as firm’s take a more cautious approach to costs – this will generate movement.
• Loads of talented kiwis will go overseas and far less will come back anytime soon – creating gaps through the middle (2-5 years PQE).
• Some areas of the market will continue to have a prevailing lack of talent.
• Very little will change in making key strategic hires with quality people.

 

These are the personal views of Fluid Legal Managing Consultant Eden Brown. Based purely on observations of the market and conversations with lawyers, HR teams and law firm partners across NZ.

If you are seeking legal talent, or looking to make a move in 2023 – get in touch with Fluid Legal.