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A talent war and increased demand for Australian lawyers is leading to an Australian legal brain drain.

A looming talent war and increased offshore demand for Australian lawyers in the UK and Asia could lead to a brain drain in the local market, the Australian Financial Review reported yesterday citing a salary survey.

China beckons: large UK and US firms are setting up satellite offices in Shanghai and Beijing that are being staffed with Australians

According to the 2004 Michael Page Legal salary survey, the buoyant international economy has meant increased demand for Australian lawyers from the ‘magic circle’ firms in London and Hong Kong.

The talent outflow is being exacerbated by growing demand for lawyers to service the booming Chinese economy, with large UK and US firms setting up satellite offices in Shanghai and Beijing staffed with Australians, the AFR report said.

The demand has increased pressure on Australia’s top-tier firms, which are struggling to retain top talent, it cited the survey as saying.

‘This is escalating the requirement for quality candidates through increased competition between top-tier Australian firms and firms based in the UK,’ the survey says.

The survey reveals Australian lawyers are no longer prepared to keep their heads down as they did during the lacklustre market and are agitating for better salaries or moving on.

‘Early indicators in 2004 reveal that due to improved business confidence, lawyers who have been sitting tight over the past few years are more open to making a move,’ it says. ‘As a consequence, there is increased activity as firms seek to attract quality candidates and others are forced to make replacements.’

Michael Page Legal’s manager, Oliver Cunliffe, recommended law firms cement top performers or risk losing them overseas or in a talent war.

‘Now that the market is more active, we are starting to witness the very early signs of an impending talent war, which is a warning sign for employers to start looking at their star performers and make sure they are well looked after,’ he said. ‘There is going to be a shortage of candidates and a brain drain of talent in transactional areas.’

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