Herbert Smith overhauls financial team with two new roles

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  • An interesting time for the newly-merged HSF from a financial perspective.

    Freehills is an Australian business. It has 800+ lawyers of whom 190+ are partners. With only one, small overseas office, 99.5% of its lawyers are based in Australia.

    Therefore, although presumably some fee income is generated outside Australia and is denominated in other currencies, the recent fall in the Australian dollar (10% in the past six weeks alone) in light of weak commodity prices and declining consumer confidence has got to be a huge worry.

    Did the legacy HS partners, who voted for the merger, understand that they "bought" a very Australian business at the very top of the market? Would they dream of having such a sizeable single country overweight in their own investment portfolios?

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  • "Buying Australia" is a proxy for exposure to China and the Asia-Pacific.
    You have to really ask whether or not exposure to a rapidly growing economic powerhouse makes sense.

    1. My take is that it makes perfect sense in the long term*.

    2. Whether it makes sense in the medium term, as far as cash flow, inter-group politics, reputational effects, staff attrition, talent outflow and varying standards of corporate governance is another question.

    *"But this long run is a misleading guide to current affairs. In the long run we are all dead. " A Tract on Monetary Reform

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