Clifford Chance launches in Australia via double merger

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  • Interesting that CC wants to distance itself from saying this is about Aus as a jurisdiction in itself. Did they think it was all about Asia when the Mallesons deal was on the table?
    Or is this about Asia because they couldn't find bigger firms to do a deal with?
    Have to give them the benefit of the doubt, but still hard to imagine FF or Links following - more evidence of a two-tier magic circle maybe

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  • @ Baron von Munchausen 9.12am
    The issue may be more about client perception - and that will have an impact on Links and FF.
    We now have 2 MC firms in Oz, plus one chasing pack global i.e. Norton Rose, (and little old DLA.)
    Looks like a market trend to me, and clients tend to expect everyone else in a market segment to have the same capability and get upset when they don't. The pressure on others to follow suit will grow and grow. Just look what happened in Europe, or the race to build, arguably pointless, NY offices just because one or two MCs in the UK did it.
    Sheep-like behaviour perhaps, but a fact of life all the same.

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  • This is destined to fail - just like a lot of foreign ventures that CC enters into.

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  • I'm skeptical. Australia is a very overserviced legal market with a number of very large, very sophisticated domestic firms that have very close relationships with he big corporations and banks. I don't see how rebranding two lower-tier, niche players is going to suddenly turn them into real competitors. The only way they will build market share is to offer huge fee discounts, which A&O is doing ... and not that successfully.
    And as for this being an "Asia" play, do these guys realize that Beijing is further from Sydney than Los Angeles is from London?

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  • Having worked in the Australian legal market for a number of years I can safely say that I have never heard of either of these firms. Random.

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  • Australia is a very important market in its own right, with a very high GDP per capita and a massive presence in natural resources. More than that it is English-speaking, common law, culturally similar to the UK, and a perfect launchpad for Asian expansion.
    This is a complete no-brainer. The puzzle is why it has taken UK firms so long to take this step.

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  • CP&S and CLCL are well-respected firms, but neither have a finance practice - finance partners at the Big Six are on notice.

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  • John (10.43am) - these are not lower tier firms. The firm in Perth comprises 2 ex Mallesons partners and a number of other heavy hitters who focus mainly on takeovers and M&A for resources companies and investors - probably the hottest spot in the legal market. The Sydney firm is a boutique break away which again does only high end M&A work. Partners at both firms already earn a lot more $$ than 100 point partners at the "top tier". They are small, nimble and very profitable - why else would a magic circle firm want them?
    The old argument that Aust is overserviced with many big firm and entrenched relationships no longer is true. Plenty of big firm partners will be on the move to join these smaller, but now global firm. The big losers will be the top 6 firms in Aust.

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  • Where A&O lead, CC follow.
    Meanwhile Links and Freshfields ignore them both.
    Says a lot.

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  • Interesting that CC chose to go with boutique firms after ditching the Mallesons plan. Makes sense and if the other magic circle firms follow they'll probably do the same thing.
    They need to be careful though as boutiques are small for a reason, generally because the people running them have spun out of larger firms because they don't like the culture. Look at Germany, where all the boutiques that tied up with the MC in the 90s have begun spinning out to be on their own again.

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  • It's clear that CC and A&O are aligning themselves as closely as possible to the world's fastest growing flow of trade and capital - between China and resource-rich Western Australia. Last century the same strategy explained the rise of the Wall Street firms.

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  • Anonymous (11.10) - when you describe the two firms, you seem to agree that they are not part of the top tier, and where I say "niche", you say "small and nimble". But either way you cut it, we seem to agree that they only compete in a small part of the market. I don't doubt they are very profitable - but it's much easier to be profitable if you're an effective competitor in a good niche than if you're trying to be a full service firm.
    But surely the CC case is based on being able to expand beyond the niche. And i think that will be tough to do.
    It's not like Eastern Europe or the ME where the CC brand carries a promise of higher quality than the local firms can offer, justifying premium pricing. I don't think it follows that if you have a small group of partners making big $ doing mid-cap mining M&A, you can throw a bunch more Freehills or Mallesons refugees on board to do other things and expect PPP to stay the same.

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  • The two Australian firms are high-class enough, there's no problem about that. Far less dead wood there than at some of the bigger firms in Australia. They are, however, quite different animals from each other. Chang Pistilli is a breakaway from Atanaskovic Hartnell, itself a buccaneering corporate boutique. Cochrane Lishman, on the other hand, is peopled by ex-Mallesons (and Blake Dawson) lawyers, experienced in, and, one assumes, comfortable with, big firm culture. Reconciling those differences will be quite an interesting challenge for CC, unless the firm intends to maintain a quite separate type of operation in Perth from the one it now has in Sydney.

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  • James (11.46). The deal nearly fell over because Cochrane Lishman were worried about the big firm issues. They set the firm up apparently because they thought the "big firm" approach to handling M&A work (that is, i) load the file with an army of lawyers for maximum leverage/revenue) and ii) have senior associates run the deal with partner making cameos)was a disservice to clients. So their firm has 7 partners with 7 senior associates - and that's it. The main concern was whether that model fits the magic circle model. Obviously they got over their concerms when they saw the CC top equity drawings. Time will tell.

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  • @ Chris Merritt

    'World's fastest growing flow of trade and capital' between China and WA? Hardly. The lending limits Chinese banks are subject to have plateaued this year, so we should not expect an increased flow of capital from China to WA.

    Firms in Australia need to start cultivating their relationships with potential Indian investors - that is where the next major source of foreign investment will be coming from.

    Can you also flesh out: 'Last century the same strategy explained the rise of the Wall Street firms'?

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  • Interesting. Well, in getting Cochrane Lishman Carson Luscombe, CC didn't just latch onto a corporate boutique, although that was the original main focus of the firm when it was set up. Last year, Jon Carson joined the original Cochrane Lishman from Blake Dawson, giving the firm, and now CC, a strong Perth-based energy practice. It doesn't need much imagination to see CC being, at the very least, able to pick up another energy lawyer or two, a decent tax team and maybe an antitrust practice as well. After all, A&O did it from what was more or less a standing start. Hey presto, you've expanded beyond a niche already (John Nicolay 11.38). No, this move looks smarter the closer one looks at it.

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  • Sympathy goes out to CP&S and CLCL. They have no idea of the misery they've opened their doors to.

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  • @mary
    Simply not true that in Germany the MC merged with boutiques that are now breaking away. Freshfields with Bruckhaus; Clifford with Pünder; Linklaters with Oppenhoff. (Only A&O hasn't merged). 3 big firms and 90% of the profitable partners at those three firms have stayed.
    Oz is interesting for CC and A&O because of the finance work. They will want to build that practice fast and will raid the top Oz firms to do it and can offer better profits. Getting corporate capacity was the most difficult bit. Can't see a reason for Freshfields to go there. But Linklaters may want to defend its energy/mining franchise.

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