Mills Oakley bucks the trend
In a domestic market that, on the face of it, seems unlikely to deliver strong growth and appealing prospects for practitioners of commercial legal services, Mills Oakley has differentiated itself by flawlessly executing a growth strategy over several years.
The firm, founded in Melbourne’s Swanston Street 152 years ago by Irish solicitor John Scott Mills, ranked 14th in absolute partner numbers in the Australian Financial Review’s 2015 Law Partnership Survey of major Australian firms. Mills Oakley also ranked number five by percentage increase in partnership numbers in The Australian newspaper’s latest Partnership Survey .
“Stability in partner ranks and growth of equity partner numbers are generally an indication of the health and profitability of law firms,” says Joel Barolsky, Managing Director at Barolsky Advisors and lead author of a 2015 report issued by The University of Melbourne’s Law School on the Australian commercial legal services market. “But the partnership numbers need to be read in conjunction with an understanding of the firm’s overall strategy.”
The partner numbers reported in the newspapers above do not distinguish equity from non-equity partners, but Chris Merritt, Legal Affairs Editor for The Australian, says total partnership numbers, which include salaried partners, provide a forward view of the industry, as any changes are likely to affect the salaried partner category first.
The University of Melbourne analysis, published in 2015, says demand for commercial legal services has been on a downward trajectory for the past five years. In 2015 demand fell 2 per cent, although it blipped up in the final quarter. The report attributes the overall decline to a drop in demand for the industry’s three biggest services: dispute resolution, banking and finance, and corporate general.
“Other than a substantive lift in general economic activity or major regulatory change, it is hard to see what will accelerate demand in the short to near term,” the report says.
Going for growth
Not all law firms have clear expansion strategies, but Mills Oakley does. “We are focused on being a leading national firm,” says CEO John Nerurker.
“We see particular opportunities in our newest offices, Canberra and Perth, which opened in 2014 and 2015, respectively. And, in particular practice areas, we have recently made significant hires in the planning and environment, corporate and commercial litigation teams.
“We believe the Australian market will evolve into two distinct groupings – global and domestic – and we plan to be in the top echelon of the domestic group.”
So, how has the firm been so successful so far? Mills Oakley, says Nerurker, has successfully adapted to what he describes as the new world order.
“The key is to have a point of differentiation that resonates with clients. In our case, we offer clients access to partners with top-tier firm experience at rates that, on average, are about 15–20 per cent lower than our top-tier competitors,” he says.
In fact, Mills Oakley has managed to turn the internationalisation of the Australian legal services market to its advantage, acquiring clients who are unhappy about the high costs of the global firms, and lawyers who are unhappy about working for the merged firms.
“Over time we’ve found the benefits of attracting new clients through value pricing have consistently outweighed any short-term implications for revenue caused by our competitive pricing,” Nerurker says. “It’s also worth pointing out that our value pricing has not affected profitability because we don’t maintain the expensive overhead structures of tier-one firms.”
What can never be in question, he stresses, is the quality of the advice. Having large, demanding companies such as Telstra, Leighton Holdings, Suncorp and Wesfarmers among its clients is proof that Mills Oakley is meeting exacting standards, and the firm has no intention to lower either its sights or its standards.
Keeping lawyers happy
Mills Oakley discovered early – and remembers often – that in an industry that needs high-calibre human brains working at peak performance for long periods, happy lawyers are essential. Nerurker rebuts the claim that lower rates are a turn-off for its lawyers.
“Laterals [lateral hires – lawyers looking to change employer and enter the new firm at the same level as their existing position] approach us because they are concerned that the prescribed rates at their current firm are unsustainably high and they are losing work as a result,” he says.
“The attraction of our firm is a remuneration model that is fair and transparent and rewards performance. We also have clear performance thresholds for lawyers who want to progress to partnership.”
Putting money on it
According to The Australian newspaper, Mills Oakley increased its hiring rate of non-partner fee-earners in 2015 by almost 50 per cent, from 144 in December 2014 to 212 in December 2015. That’s only about half the size of the squads of non-partners at well-known names King & Wood Mallesons (528 in December 2015), Clayton Utz (577) and Allens (477). However, hiring at King & Wood Mallesons grew only 2.3 per cent and hiring at the latter two went backwards.
On the spectres of automation and offshoring, which haunt even professional services industries today, Nerurker says it’s too early to say with any certainty what automation will mean for the legal profession.
“Change is coming, but technology is evolving at such a rate that the practical implications may be beyond the realm of what anyone can predict today,” he says.
“We have been quick to adopt legal process outsourcing in situations where there is a genuine, sustainable client benefit and where this is consistent with the client’s own preferences.”
Mills Oakley intends to keep navigating ways to keep both clients and lawyers happy in a rapidly changing world.
Written by Dana Worth
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