Fallout from the government-initiated inquiry into Australia's financial sector has led to a rise in demand for regulatory advice from lawyers, according to a report by legal recruiter Mahlab, which also notes that this work will eventually inevitably taper off.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which found gross misconduct and dishonesty in many parts of the financial sector, including in Australia's major banks, has spurred increased work at law firms, noticeably lifting their revenue.

The government has since agreed to a wide range of changes to regulations governing consumer and small business lending, the provision of financial advice, insurance and investment management, and a strengthening of the regulation and supervision of financial institutions.

"The repercussions of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry have led to a rise in regulatory advice as financial institutions rejig their processes and systems and strive to comply with the inevitable heavier compliance burden," the Mahlab Report 2019 states.

Some of the banks are also planning to sell, or considering selling, their wealth management arms, which Mahlab says "means attractive M&A work for the larger firms", with a focus in Melbourne and Sydney.

The Royal Commission has also led to a focus on compliance and risk management processes and to more demand for in-house lawyers.

"Increasingly, senior management view compliance as being a corporate and personal responsibility," Mahlab states. "This has all resulted in an increase in roles for regulatory lawyers particularly in the financial services sector."

The report states that overall, the legal profession has enjoyed strong profitability and growth, particularly the larger global firms, national firms and high-performing midsize firms.

Commercial transactional work, litigation and infrastructure have led the way, with infrastructure being particularly strong in Victoria and New South Wales. Property and property development lawyers are in demand in Melbourne. In Sydney, demand for employment lawyers is high, as it is for data security, IT and governance experts.

Despite the strong competition for lawyers, salaries have not risen markedly, Mahlab notes.

However, some foreign firms are an exception.

"Relative newcomers from the U.S. tend to reward their partners and staff at much higher levels than their competitors, and attract practice groups as they build their presence in the capital cities," Mahlab states.