With seven years of aggressive economic growth under their belts, the governments of Australia, at all levels, have been promoting the country – and in particular Sydney – as an opportunity for the establishment of regional and financial centres supported by a strong and transparent regulatory regime.
In support of this, the New South Wales (NSW) federal government has embarked upon a consistent programme of law reform, touching upon taxation, employment, industrial relations, banking industry/financial services, competition law, privatisation of public utilities, and soon superannuation/ retirement funding.
The legal profession has not been immune to the winds of reform, and within the larger law firms this reform has actually been actively embraced.
Consistent with the Australian government’s view of world trade and a level playing field, progressive reform of the regulation of the legal profession allows greater access to foreign law firms, and consequently a greater opportunity for Australian firms to compete outside their jurisdiction. Large Australian law firms see themselves as having to compete on a global basis.
The major challenge facing all of the leading Australian firms is recruiting the best and the brightest. With the level of commercial activity at record levels, there is a shortage of good-quality lawyers. The attraction of joining a firm with a global reach and workflow will undoubtedly be a major consideration for all lawyers, whether seeking to relocate from offshore or from their existing firms.
As time will tell, there are only a limited number of seats at the global table. Australia will not be relying upon the fact that it is a nice place to live – it also wants to promote itself as an exciting place to work.
Parliament is considering a bill to allow the incorporation of law firms, which would provide for unlimited equity to non-lawyers and a potential listing on the stock exchange, with the requirement that only one solicitor should be on the board, with partners occupying the positions of shareholders and employees.
The concept of a multidisciplinary practice has been a fact of life in the Australian economy for some time. A recognition by the regulators and the profession is that the best interests of clients and competition are served by allowing a number of opportunities and structures to provide services.
The Australian market is well serviced, with a number of firms either approaching or exceeding 200 partners, and the challenge for all these firms is the size of the Australian economy, with a population of only 18 million. There is no other choice but for major players to consider the options of globalisation.
Globalisation is seen by many as a threat as well as an opportunity, and with the entry of the major accountancy firms into the legal market, there is increasing competition for global clients and the major Australian corporations.
In December last year, the largest transaction of its kind in the common law world created 140-lawyer-strong PricewaterhouseCoopers (PwC) Legal when the Sydney office of a well-established firm merged with PwC’s legal arm.
The law firms associated with the accounting firms are all growing aggressively and are able to establish themselves by relying on the strong support and networks of the large global professional services firms.
The next few years will see significant change to the legal profession in Australia as the major impact of globalisation and competition forces more firms to make significant strategic choices.
The major beneficiaries of all the reforms, of course, will be the clients, and that is as it should be.
John Churchill is the chairman of PwC Legal, Australia