Too often the magic circle firms are lumped together as if they were strategically homogenous. Allen & Overy’s (A&O) decision to open in Australia, taking 17 partners, mostly from Clayton Utz, is a tacit endorsement of Clifford Chance’s world view.
Clifford Chance has made strength in Asia a paramount goal - hence its merger talks 18 months ago with Mallesons, derailed only by the recession.
As we explore today, the A&O and Clifford Chance world view is not shared by Freshfields, and not, it seems, by Linklaters, which has made something of a specialism in ditching unprofitable overseas offices in the past two years. There’s certainly no reason to suspect that Clifford Chance has altered its ambition to be the most prominent power in Asia, despite its reticence on the subject. “David won’t answer questions on Mallesons you know,” snapped a protective PR from Clifford Chance, thereby allowing us to imagine all sorts of lurid strategic possibilities. We’re still waiting for some movement from Clifford Chance here - not necessarily a reactivation of Australian talks, but across the region generally. Peter Charlton’s term as head of Asia has not seen anything like the boldness one normally associates with Clifford Chance.
Some are seeing A&O’s Australian venture, along with the Norton Rose-Deacons deal, as heralding a rerun of the Continental land grab 10 years ago. It could certainly set the Australian market alight, but China’s a long way off. You can’t help thinking that it’s rather like trying to launch in Germany by taking over a bunch of Belgians.
That’s not entirely facetious, by the way. In a way this is what A&O actually did a decade ago. Its merger with (most of) Loeff Claeys Verbeke gave it a little breathing space on the Continent and the time to build a credible practice in Germany. It also gave it a top-class practice in Benelux, which did it no harm at all in the M&A league tables.
So the big question is whether bulking up in Australia can deliver benefits in the Asia region as a whole, and particularly China. It seems a well-founded enough strategic gamble, but then so was Clifford Chance’s launch in California with 17 partners from Brobeck - and we all know what happened there. A&O’s will be fascinating to watch.