Larger profits have made Australian law firms the happiest they have ever been about current business conditions, a new report has revealed.
The Commonwealth Bank of Australia has found that the confidence of the country’s top and mid-tier firms in both current industry and broader economic conditions soared from 20% in 2017 to 85%, the highest recorded in the history of the CommBank Legal Market Pulse series.
The outlook does ebb for the next year, and more so for the next two years, but the firms are still more confident than they were in 2017. A net of 63% had a positive outlook for the coming year, compared to 20% that said the same in 2017. For the next two years, a lower 37% of the firms surveyed remained positive, but that was still higher than the 15% that had the same view last year.
The more optimistic view is driven by stronger profitability, which is underpinned by growing revenues and improving margins because of stronger client demand. CommBank said that overall, firms reported an 8.2% increase in profit between the 2017 and 2018 fiscal years, up from 1.3% profit growth in the 2016-17 year.
Top-tier firms experienced more growth in average profit than mid-tier firms, with five of the 10 top-tier firms surveyed reporting more than 11% profit growth. Four of the five reported 15% or more growth. The survey found that 12 out of the 31 mid-tier firms surveyed reported the same level of profit growth.