19 September 2011
With global firms stepping up their Australian capabilities, Joanne Harris examines their prospects against those of the domestic powerhouses
Over the past year Australia has once again become the land of opportunity for immigrants from the UK. But while historically those travelling to the continent were settlers looking for a new life, the modern-day immigrants include some of the world’s biggest law firms, all trying to boost their profiles in the Asia-Pacific region.
Allen & Overy, Clifford Chance, DLA Piper, Norton Rose and most recently Ashurst are among the UK-headquartered firms opening in Australia through mergers or acquisitions. Local firms have lost partners or even whole offices to the newcomers.
Despite this, Australian firms remain confident that their sheer size and knowledge of the local market will secure their continued dominance in the face of the invasion from the northern hemisphere.
“I think we’re respectful of them, but we’re not scared of them,” says Stuart Fuller, managing partner at Mallesons Stephens Jacques.
“There’ve been foreign firms in Australia in different guises now for about 25 years or more,” says Allens Arthur Robinson (AAR) chief executive Michael Rose. “The arrival of a couple of firms in the past couple of years is perhaps not as significant a development as people might have thought. We’ve been competing with these firms for lawyers for many years, as Australian lawyers always had the opportunity if they wanted to start their careers somewhere else.
“Having said that, the firms that have come here in the past couple of years are good firms with really global networks, so we regard their arrival as a real change in the Australian market.”
The generally small scale of the international firms’ operations is one of the main reasons for domestic players’ insouciance. Some think that the main change is not in market activity, but in attitude.
“The effect has really not so much been on the activity of the market, it’s probably been more on the thinking of the market,” says Minter Ellison chief executive John Weber. Weber says the arrival of international firms has refocused Australian minds on the globalisation of the legal profession.
As a result, several Australian firms are considering their own futures internationally. Blake Dawson is the most recent to take the plunge, agreeing a merger with Ashurst (see City column, page 10). Meanwhile, Fuller says Mallesons is actively considering “joining or creating” some sort of international network. Among the firms it is talking to is Chinese giant King & Wood. Fuller adds that Mallesons’ plans are part of a strategy taking the firm through to 2015, in which time it wants to maintain its position in Australia or even pull away from its competitors.
Rose reveals that AAR is open to discussions about joining an international firm or network. “We have a very clear view about the kind of work we want to do and the kind of clients we want to act for. If we think it’s better for us to be part of an international alignment, then we’ll certainly consider it,” he says.
But not every firm in Australia wants to team up that closely with an international outfit. Corrs Chambers Westgarth, one of the few large Australian firms without its own offices overseas, is content to follow a best friends strategy.
Corrs chief executive John Denton stresses that his firm’s relationships with other firms in China, Hong Kong, India and other South East Asia countries is currently working well. “Globalisation isn’t a new phenomenon and there’s a multiplicity of strategies to deal with it,” he insists.
Australian firms, with their national reach in the country’s main states (all of which have their own systems and sector specialities) think they have the edge in terms of depth.
While there is not necessarily a need for UK or US firms to have offices in all of Australia’s major cities, there could be an advantage for firms pursuing the biggest instructions.
“If you want to do major work for international clients, it’s pretty hard to do that unless you’ve got a presence in most of these cities,” says Weber at Minter Ellison. “People who are coming to the Australian market need to work out what their objectives are.”
The position of Australia within the wider Asia region is key. “It’s the time in the sun for the region, being the place that’s got the focus for the world,” says Fuller.
“The capital flows between Australia and Asia are strong, and the resources industry in Australia’s strong, so there are opportunities here,” Rose states. “I think that’s why firms have come; but in terms of their ability to work these opportunities, it really requires them to have both a platform in Asia and the necessary strength and depth to do the work here in Australia.”
“Our future is in Asia-Pacific,” affirms Corrs’ Denton, “and the road to Asia-Pacific doesn’t run through London, it doesn’t run through Pittsburgh and it doesn’t run through Michigan, it runs through Asia.”