A necessity or an extravagance?

Patrick Stewart examines the case for retaining a London base as Australian firms reassess the value of their overseas offices. London has long been a popular destination for Australian firms, but, with the recent withdrawal of Freehill Hollingdale & Page, Allen Allen & Hemsley and Arthur Robinson & Hedderwicks from the capital, the consensus appears to be shifting away from maintaining a presence in London.

“All businesses open and close offices depending on the climate at the time,” says Allens managing partner Steven Walker.

Certainly, at the start of the decade, when international aspirations were running high among Australian firms, London was seen as an essential base. Three big-hitters – Blake Dawson Waldron, Freehills and Corrs Chambers Westgarth – opened offices in the City, doubling the number of Australian firms represented in the Square Mile. A few years later, Arthur Robinson joined Allens to run its London operation jointly.

But since then the recession has forced firms to look hard at their foreign strategies and where they allocate resources. Greg Hammond, Mallesons Stephen Jaques London resident partner, says: “Law firms assess the viability of foreign offices much more regularly.”

New York was the first to go under the scalpel with both Mallesons and Allens shutting offices there. Then Mallesons and Blake Dawson pulled out of Singapore.

Is London next in line? Allens' Walker says it is concentrating its resources on the Asian market where it wants to position itself as a major regional firm. “It made sense for us to concentrate on our strengths,” he explains.

Allens and its associate firm Arthur Robinson are now represented in six Asia-Pacific cities, including Bangkok, where its link with local firm Siam Premier International was announced at the same time as the closure of its London office. Arthur Robinson, meanwhile, had the added preoccupation of a Perth office, which was set up last October.

In this context, the London shutdown represented a way to save money by closing what had come to be regarded as a redundant office.

Walker says that a London office is not really necessary. If UK-based clients need help, he says, they will normally go straight to offices in Australia. Conversely, Australian companies investing in the UK want to use a local firm.

This view is not widely held by the Australian lawyers remaining in London, some of whom are surprised by the recent office closures. Justin Shmith, resident partner at Blake Dawson's London office, says it is an odd time for the firms to shut given that the market is booming.

He says that his firm reviewed its London office earlier this year, looking at such matters as direct billing and the value of referrals created. He adds: “If it is analysed properly, you can make a good case for a London office.” His firm, with three full-time lawyers based in London, is considering expanding in the capital.

Similarly, Michael Whalley, Minter Ellison London resident partner, reports a good year in the city. He says that the firm is set to take on a new partner, Robert Hanley, bringing the number of lawyers stationed in London to six.

Greg Hammond, Mallesons resident partner in London, does not see the firm closing in London in the foreseeable future. It, too, is discussing bringing in a second partner, although no final decision has been made.

Some suggest that there may have been special factors at play behind the recent closures. Whatever the case, the moves highlight the cost-conscious mood of Australian firms and, with the consensus that foreign offices must pay their way, the debate over whether a London office is a necessity or an extravagance is set to continue.

uk/australia law group

Although the historic legal tie between the UK and Australia through appeals to the Privy Council has now been severed, it has been replaced by a more important cross-fertilisation of ideas and legal reasoning.

Decisions of Australian courts are now frequently cited in English courts, as English decisions have always been in Australian courts. At the same time, trade ties between Australia and the UK are increasing. The two countries' lawyers are dealing with one another more than ever before.

In these circumstances two silks, Ian Hunter QC from the UK and Garry Downes QC from Australia, are forming a British Australian Lawyers' Society. The two are members of both the Australian bar and the English Bar and practise in both countries.

Lord Alexander of Weedon QC and Peter Goldsmith QC have agreed to be patrons of the society in England, and the Hon Daryl Williams QC MP, Australian attorney general, has agreed to be a patron of the society in Australia.

When launched, the society will hold occasional lunchtime and evening meetings with guest speakers. It will also look at a social programme and facilitate and encourage visits by Australian lawyers to the UK and vice versa.

It is expected that the bulk of the members will not be dual-qualified. Solicitors are likely to form the backbone of the membership.

If you are interested in the proposed society, contact David Grief, senior clerk at Essex Court Chambers, on 0171 8000.