But small firms are grabbing up both those clients and laid off lawyers, according to Australian legal recruitment firm Mahlab.

Smaller practices are using their lower overheads and cheaper hourly rates to win more work from corporate clients, according to the report.

“Some firms with lower overheads and lower charge-out rates report an increase in new client activity as clients vote with their feet (and their wallets) and move to cheaper firms,” Mahlab says.

“Changes in the legal market offer opportunities to many firms, often in the second and third tier, to ‘cherry pick’ outstanding lawyers who may not otherwise be on the market or open to a call.”

Mahlab’s analysis comes soon after last week’s study of the US legal market that predicted a decline of up to 15% in profits per partner at US firms. That study, by law firm consultant Hildebrandt and Citi Private Bank, predicted more firings at US firms this year as the legal services industry struggles to adjust to falling demand.

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• Mallesons to Cut 100 Lawyers, Staff
• Keddies Lays Off 40 Lawyers & Staff
• Allens Arthur Robinson Sees 114 Voluntary Redundancies

The numbers include lawyers, paralegals, public relations specialists, secretaries and other positions; and reflect layoffs by firms nationwide over the last few months, and the dissolutions of Am Law 100 firms Heller Ehrman, Thelen, and Thacher Proffitt & Wood.

In all, 2.6 million US jobs were lost in 2008, the biggest fall in more than six decades.

But the number of legal services jobs actually increased in December by 1,300.

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