Mid-tier firms on the up Down Under
3 October 2011 | By Yun Kriegler
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The increasing number of partners joining mid-tier practices in Australia is a reflection of the strong growth recently witnessed in mid-market domestic work.
It also signals a structural change in the legal market Down Under.
The most recent and eye-catching personnel movement has involved international firm Norton Rose and Australian independent outfit Gadens.
In the middle of last month, the UK firm’s 13-member retail leasing team led by partner Cameron Cooling left to join Gadens in Brisbane. The departures marked the closure of Norton Rose’s Brisbane retail leasing practice.
Norton Rose Australia managing partner elect Wayne Spanner said this was a managed transfer of his firm’s high-volume leasing business in Brisbane to Gadens.
“It’s a part of our strategy of wanting to focus on high-end, complex real estate work,” said Spanner.
While top-tier firms, both newly entered global firms and traditional national leaders, are realigning their practices to reflect intensifying competition at the higher-end, established mid-tier firms are reaping the benefits and luring in quality partners.
“Many larger firms are realigning their practice mix and moving away from areas such as property and workplace relations to focus on large corporate deals,” noted Gadens chairman Ian Clarke. “This means that many partners at larger firms are looking to take their practices to firms such as ours that are genuinely committed to servicing all our clients’ legal needs.”
Clarke expects the trend to continue, adding that his firm is always in the market to make strategic partner acquisitions.
Leading mid-tier players’ financial well-being is confirmed by Australian magazine BRW’s 2011 Top 30 Law Firms survey. The survey results showed that the 10 firms with the fastest revenue growth rate are either mid-tier players or speciality boutique firms.
Gadens came fifth in the list, with revenue growth of almost 15 per cent in the two years to 2011. Annual turnover in the 2010-11 financial year reached A$188m (£118.14m), which also made it Australia’s ninth-largest firm by revenue.
In addition to the Brisbane team, in the same month Gadens also appointed Urban Taskforce chief executive Aaron Gadiel as the director of its planning, environment and government team, and has added two senior lawyers in its Sydney employment team.
HWL Ebsworth is another mid-tier firm that has expanded its partnership in addition to achieving a double-digit revenue growth rate.
In August 2011, the firm opened its Canberra office after poaching six partners from DLA Piper. Earlier this year, it hired numerous lawyers from rival firms including Herbert Geer, Mallesons Stephen Jaques and Freehills.
HWL Ebsworth managing partner Juan Martinez sees competitive pressures and rates as a pivotal issue.
“In recent years, clients have focused much more on the true value provided by their external lawyers,” he said. “The top-tier tradition of significant pricing increases year-on-year, without due regard to the value that they’re delivering to clients, can place enormous pressure on client relationships.”
Generally, mid-tier firms that have hired partners from top-tier competitors are in a position to offer clients access to market-leading technical advice at a half or two-thirds of top-tier rates.
“I believe this will continue to lead partners at top-tier firms to consider whether a different business model would offer greater opportunities to them, their teams and their clients,” added Martinez. “There is, of course, a structural reorganisation in the legal services market that will also drive decisions, such as new overseas entrants, downsizing by top tiers and growth by mid tiers.”