The 2007/08 season turned out to be both extremely disappointing for both Ireland and Ulster. With Ulster, Wallace played the majority of the first half of the season in the number 10 shirt however with the arrival of new coach Matt Williams after Christmas, Wallace cemented his place in the team in the number 12 shirt with the young Niall O'Connor taking over at out-half. It was certainly a season to forget, with Ulster finishing bottom of their Heineken Cup group behind Gloucester, Bourgoin and the Ospreys. They also finished 9th in the Magners League.