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Australia's larger law firms are on track for another strong year, with earnings increasing despite the COVID-19 economic crisis.

Benchmarking data on revenue, hours worked and demand collected by Thomson Reuters Peer Monitor reveals that average fees worked for April and May this year were up a combined 5.4% compared with the previous year.

For the 11 months to the end of May, fees worked—a proxy for revenue—was up 8.1%.

Australia has been insulated, in part because of ongoing work from the fallout of last year's Royal Commission into the banking sector and because Australia has not been as badly affected by COVID-19 as the United States, said Joe Blackwood, senior thought leadership analyst at Thomson Reuters.

Demand for legal services in Australia had slowed in the fourth quarter of the financial year, April to June, from the previous three quarters, although overall, the year was still strong, he said. Data for June is not yet available.

"Firms in other markets would be ecstatic to achieve the 3% growth we have seen in Australia over the last two months, let alone the 7% we have seen thus far in financial year 2020," Blackwood said. "We expect, barring an extremely significant increase in expenditure in June, healthy growth in profitability metrics, including profit margins."

Large firms have said that while some practice areas, such as transactions, had slowed, the work they already had in the words continued. Additionally, Australian companies rushed to raise capital at the start of the COVID-19 crisis and sought more advice on workplace health and safety and employment law.

And in what Blackwood says could be a harbinger of a broader economic slowdown, insolvency and restructuring was the strongest practice area in April and May. Demand was up 20.3% in April from the year before and 18.2% in May.

Several Australian firms have indicated they have continued to perform well, despite the effects of the pandemic.

Norton Rose Fulbright Australian managing partner Alison Deitz said that while transactional work in recent months has been down, other areas, such as restructuring deals, have increased.

Overall, the novel coronavirus pandemic hasn't had much impact on the firm's billings from the current financial year, and Deitz expects the firm will see an increase in its revenue over the previous year.

Separately, Chinese-Australia firm King & Wood Mallesons has not needed to reduce staff hours, cut salaries or reduce partner drawdowns

The data also reveals that partners have been working more hours than associates. Typically, associates work more hours. For instance, in the April to June quarter of last year, partners worked an average of 95 hours per month while associates worked 101 hours.

However, in April and May of this year, partners worked an average of 102 hours, compared with 100 for associates.

Blackwood said a similar trend is emerging in the U.S. and suggested a couple of possible reasons.

"One reason firms have pointed to is an increase in demand for advisory work that requires partners to perform," he said.

"Another theory is that partners are simply funneling less work down to their associates, perhaps in anticipation of demand slowdowns as the year progresses. This way they can ensure they are hitting their billable hour goals despite downturns that may occur within the market itself."

He also noted that by working an average of seven more hours per month when compared with the final quarter of last year, the larger proportion of work done by the higher fee-commanding partners has resulted in a jump in worked rate growth.

Australia, which has a population of around 25 million, has seen just 7,765 confirmed cases of COVID-19 and 104 deaths.

Cases have been declining, and social distancing restrictions have been lifted in most states, although a second surge of cases in the second most populous state of Victoria in recent days has resulted in the reintroduction of restrictions there, such as limiting family gathering numbers to five.

Law firms around the country have been reopening their offices, although many continue to take a cautious approach by giving staff the option of continuing to work at home and limiting the number of people in the office at any one time.

The IMF recently said the Australian economy will perform better than it had predicted near the start of the COVID-19 outbreak. In late June the global financial organization said it expects Australia's gross domestic product to contract by 4.5% this year, compared with its prediction in April of a 6.7% drop.

The IMF expects the rest of the world will suffer a 4.9% drop on average.

The Australian economy has been cushioned by generous government-funded wage subsidies for businesses that have suffered a revenue drop of 20% or more and by banks allowing homeowners to delay their home loan repayments. However, both of these measures are due to finish in September, raising questions about how the economy will continue to perform without that support.

At the same time that Australian firms' revenues were up, their overhead expenses were lower, according to the Peer Monitor data.

Staff pay was down 12.6% in April and May, with office expenses, marketing and business development, and recruiting all down by over 50%.

Thomson Reuters Peer Monitor is a legal industry benchmarking platform drawn from firms' financial and time billing systems. Sixteen Australian firms with an average lawyer head count of 510 took part in the program.