Insurance practices face numerous challenges this year, and the Australian managing partner for global firm Kennedys is keen to meet those challenges head on as the BigLaw practice looks to grasp the opportunities in front of it and leverage its strengths.
Speaking to Lawyers Weekly recently, Kennedys Australian managing partner Jonathan Wyatt (pictured) reflected on the myriad challenges facing the global practice as it strengthens its foothold in the hyper-competitive Australian insurance market, which continues to thrive even as the economy has tightened.
“Our aim is to build a strong presence nationally,” he explained, while detailing what he sees as the headline hurdles to be navigated, starting with rates and client expectations.
“The rates for insurance matters are much lower than commercial rates. With insurance, there’s much more pressure on rates and in handling cases in a cost-efficient fashion,” he mused, and clients are “very sophisticated and used to dealing with claims, so they know good lawyers from bad lawyers. It’s not like other areas of law, where someone may not conduct litigation regularly”.
The battle for talent is also a significant challenge for insurance practices in 2024, Mr Wyatt went on.
“There is a shortage of solicitors who do insurance,” he said.
“Some of the good insurance solicitors are being poached by the commercial firms, because [the thinking is that] if you do insurance law, you’re effectively doing commercial litigation, and the skills you have can be transferred to commercial firms.”
Because rates at commercial firms “are so much higher”, Mr Wyatt argued, “they tend to be in a good position to pay those staff more”.
As a result, he said, “it's a sort of a balancing act between doing good work at a cost-effective price for our clients, but ensuring that we can pay our staff a competitive rate and keep our staff and attract new staff, bearing in mind the market forces we face”.
However, despite these challenges, the global practice sees a great opportunity to be a major insurance player in Australia, both because of its ongoing investment in software for insurance and through its status as an international business.
When asked if the need for global law firms that specialise in insurance was stronger than ever, Mr Wyatt noted that there is always going to be a need for local practices – many of which do very good work, he added – but that a global perspective is becoming more relevant in insurance matters.
The pressure of rates, and increasing comfort from insurers with having global panels, means there could well be more consolidation in the market, both globally and nationally, he suggested.
“In some cases, you need a global law firm to deal with matters which are cross jurisdictional [and] you can see trends across the world. Sometimes in Australia, the cases which we see are sometimes... there's a lag between what we've seen elsewhere in America and in Europe, and that knowledge is very useful to warn our clients and to say these types of cases are coming, or are you aware of these types of cases.”
“We have an opportunity to be seen as a growing force” as an insurance law firm in Australia, Mr Wyatt surmised.
The conversation followed Kennedys’ appointment, in late November, of then-Australian managing partner at Clyde & Co, Lucinda Lyons, as the former firm’s newest insurance partner, as first reported by Lawyers Weekly.
The following month, eight fee earners and four support staff joined Ms Lyons at Kennedys.
Kennedys – which has been in operation for 125 years this year, and has more than 330 partners and 2,500 staff globally across 71 offices, co-operation agreements and associations across 21 countries – opened its doors in Sydney and Melbourne in 2006 and 2017 respectively.
The firm entered the Perth market in May 2021, and then expanded into Brisbane in July 2022. Speaking at the time to Lawyers Weekly, Kennedys APAC managing partner Matt Andrews (who at the time was the firm’s Australian head) said that Queensland was an “important gateway” for regional growth for the global player.
In Australia – and as of December last year – the firm has 21 partners, two-fifths (60 per cent) of whom are women, tracking well ahead of the BigLaw practice’s goal of 40 per cent of its global partnership being female by 2030.
Remaining progressive in Australia, Mr Wyatt posited, is essential to the firm’s push for success in the country moving forward.
“If we are to thrive as a law firm and an industry, we have to create a platform which is friendly for women,” he argued.
“You see the high rate of women coming into the industry and you then see, traditionally, a low rate of women at the top. If we are to succeed, we need to make sure that the percentages of women coming into the industry are represented as partners.”
Such an approach will be operating in conjunction with continued recruitment in key Australian jurisdictions, namely Perth and Brisbane – albeit in ways that support long-term growth.
“We want to grow, but we want to bring in the right people who are cultural fits and will enhance our business in Australia,” Mr Wyatt stressed.
All this, he concluded, in pursuit of the bigger picture: “We want to be part of the conversation. We want people to think of law firms in Australia that do insurance law and think of Kennedys.”