Good neighbours

While Australian and New Zealand law firms are similarly structured to those in the US, Canada or the UK, the profession in Australia and New Zealand has been going through a number of structural changes in recent years.

Australia's federal system, containing at least five significant commercial centres, has encouraged the development of national firms and the recognition of cross-border admission to practice which that involves.

Partners in merged national firms, therefore, find themselves admitted to practise in up to six jurisdictions in Australia. Cross-border admission procedures are largely based on reciprocal recognition and require only limited formalities.

But even a fully-merged national firm, where all interstate partners are members of the same partnership in contrast to a federation where independent firms practise under the same name, has its practice split between a number of cities. And while a national firm may have upwards of 120 partners, it is unlikely to have more than 50 partners in any one city. There is inevitably some duplication of specialisation and resources.

Notwithstanding this, Australian firms can boast significant cost effectiveness in the international scene, with top hourly rates for Australian partners rarely exceeding A$350 (£170), in contrast to the top rates in London which can be as high as £300 per hour.

Australian firms hope this cost-competitiveness will help them make in-roads into the lucrative Asian region, particularly in relation to major projects and infrastructure development; most of Australia's major firms have connections or representation in the region.

Hong Kong and Singapore are the most popular centres, but some Australian firms are expanding into Thailand, Vietnam, China and Taiwan. Asian language skills are now common among Australian graduates and lawyers.

Although in many states there is still a separate Bar (counsel specialising in contentious work in courts or tribunals) the old rules under which it could be instructed only by a firm of solicitors are breaking down as a result of government pressure and the extension of trade practice (competition) laws.

The breaking down of the Bar's monopoly in some areas, and the withdrawal of the traditional monopolies in other areas such as conveyancing tend not to have a significant impact on the larger firms in Australia. Of more interest to them has been the recent “privatisation” of the Attorney-General's office and the invitation to the private profession to tender for government sector work. Recent articles put the potential fees which could be generated as high as A$100 million.

Tendering for legal services has become a fact of life in Australia in both the private and public sectors. Very few major transactions in Australia proceed without a competitive tender and Australian law firms have become accustomed to investing substantial amounts of time in the preparation and presentation of these tenders.

In other areas, Australian firms are matching, and sometimes leading, their overseas counterparts in the development of their practices, such as: accreditation under nationally recognised quality standards; use of office technology (Minter Ellison is presently investing $12 million in a nationwide and international network involving over 1,000 work stations and the use of desktop terminals by all fee earners); de-emphasising partnership status (most major firms now remove partners' names from the letterhead); the adoption of modern management techniques, with dedicated, non-practising managing partners using financial, marketing, structural and human resources techniques; and the use of technologically advanced document management systems for large scale litigation (a recent computerised litigation support system handled courtroom access to over 40,000 pages of documents, 4,000 pages of proceedings transcripts and 350 documentary exhibits).

In New Zealand, the smaller market and the lack of state borders has discouraged mergers, although some medium-sized firms are said to be looking at mergers. New Zealand firms have, however, been keen to embrace more formal relationships with Australian firms and a number of trans-Tasman links have been developed and strengthened over recent years. This trend is likely to continue with more and more of New Zealand's leading companies establishing operations in Australia and further afield as the country's economic recovery gathers pace.

Michael Whalley is a partner at Minter Ellison, London.