ILSAC's second International Legal Services Statistics Survey (2006-07)
Overview
ILSAC’s Second Survey of International Legal Services revealed total legal services export and cross-border income of $675 million for the financial year of 2006-07. This figure includes income from overseas offices of Australian law firms and Patent and Trademark attorneys, and some ‘resident to resident’ earnings (eg where Australian law firms act for Australian clients in respect of overseas work). These kinds of earnings are not regarded as an export under Australian Bureau of Statistics (ABS) and international statistics conventions.
North America (United States and Canada) remains the largest legal services market for Australia (28% of all earnings), with China/Hong Kong (16%) emerging as the second largest market, displacing the United Kingdom, which is now the third largest market followed by Europe in fourth place. Overall, Asia as a market for Australian legal services providers has grown twice as fast as the rest of the world over the period from 2004-05 to 2006-07 (56% compared to 26% growth).
The most significant area of international legal practice was in the area of Corporate legal services, including Mergers & Acquisitions (32%), followed by services in the area of Intellectual Property, Information Technology and Telecommunications (23%).
As for the mode of service delivery, 22% of income was generated through a commercial presence such as a branch office overseas, and 18% by fly-in, fly-out. In some markets, including Singapore, the United Kingdom and China, firms have adopted a clear ‘hub and spokes’ approach, establishing a significant commercial presence in a central market to provide legal services to the surrounding region.
Overall, international work is still concentrated, with ten firms accounting for almost 80% of cross-border/export earnings.
ABS comparison
ABS-comparable statistics have been calculated from the ILSAC figure, showing total exports (resident to non-resident transactions, and excluding earnings of overseas offices) of $391.7 million. The discrepancy with the ABS figure of $278 million for the same period is being investigated and may lead to changes in the ABS legal services estimates.
The Survey
ILSAC undertakes the International Legal Services Statistics project as a collaborative exercise with the Australian Government Attorney‑General’s Department, the Law Council of Australia, Austrade and eight leading Australian law firms, all of which contributed financially to the project. FMRC Legal conducted the survey for ILSAC.
The survey was sent out to 170 Australian law firms, legal practices, patent and trademark practices, international arbitrators and mediators and other legal and related services providers. Of this number, 86 (51%) returned the survey with 61 (36%) providing a positive response.
Results: the 2006-07 legal services cross-border and export market
Export and cross-border trade in legal services: Overview and comparisons
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Export and cross-border trade in legal services: 2006-07 detail
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Export and cross-border trade in legal services 2006-07: Commercial presence income
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Charts 16-18 show the source of income for Australian firms with a commercial presence China, Singapore or the UK. This illustrates where firms have adopted the 'hub and spokes' approach, establishing a presence in a convenient location to provide services to the surrounding regions.
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Export and cross-border trade in legal services 2006-07: Fly-in, fly-out
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Export and cross-border trade in legal services 2006-07: Australian projects
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Definitions
Australian Projects covers transactions that are not totally or predominantly characterised as ‘Fly-in, Fly-out’ or Commercial Presence (see below). They include both resident to resident transactions involving a cross-border element (which are not exports according to international definitions) and resident to non-resident transactions (which are exports according to international definitions), including the following:
work done for Australian resident individuals or companies relative to projects or activities undertaken for those client/corporations in an overseas country;
work done for overseas resident individuals or companies relating to projects or activities undertaken by those clients/corporations in an overseas country; and
work done for overseas resident individuals or companies relating to projects or activities undertaken by those clients/corporations in Australia.
‘Fly-in, Fly-out’: Work that is only undertaken by legal service providers normally resident in Australia, either on a ‘fly in/fly-out’ basis or from their “desk” in Australia if it is not necessary to actually fly in to undertake the work.
Commercial Presence: Work that is undertaken by a practice having an actual commercial presence (office or joint venture, etc) in the location/region concerned.