A fine romance

The recently merged Allens Arthur Robinson has surprised many in the Australian legal world – hardly anybody has left and it actually seems to be working. Nicole Maley reports

There was no great aspiration to be the equivalent of Rumpole, or to fight for truth, justice and the Australian way. That never came into it. I just wanted something that would keep me challenged throughout my life, and it has certainly done that for me.”
As the patriarch of newly-merged megafirm Allens Arthur Robinson (AAR), Tom Poulton has recently taken up one of the biggest challenges of his 30-year legal career. In the past four months, the 51-year-old has guided more than 1,800 staff through a staggering period of change which has included a merger, the formation of a national partnership, and the establishment of an Anglo-Australasian best friends relationship.
Such frenetic activity would knock some men for six, but AAR's modest new managing partner appears to take it effortlessly in his stride. He is at pains to acknowledge the work of his colleagues in successfully bringing together top-tier practices Allen Allen & Hemsley and Arthur Robinson & Hedderwicks (ARH).
“This is something new and exciting that we've done together, and we're all pleased to be in on it,” says Poulton. “So while I'm thoroughly enjoying leading the team, it's the collective efforts of the 200 partners and another 600 lawyers that are going to deliver the results. At this stage, it is quite clear to me that we can really make it work. If I'm the managing partner for the time being, that's great, but we're creating a very long-term structure here that is going to far outlive even the first 10 managing partners.”
Poulton is one of Australia's best known mining and resources lawyers, and is a key adviser to the mining sector world leader Rio Tinto group. He chose to study law because it was “intellectually challenging” and fitted with his family's professional services background. In 1971, he began his career with Arthur Robinson & Co (which merged with Hedderwicks in 1984) and, aside from a one-year posting to the Federal Attorney General's Department, he has worked with the same firm ever since.
At the age of 26, he became the youngest lawyer ever admitted to the Arthur Robinson & Co partnership. Despite protesting that there was “no particular magic” in the achievement, a quarter of a century later, Poulton retains the record.
In the late 1980s Poulton was instrumental in the establishment of the Australian Legal Group (ALG), a multi-state team of firms convened to pitch jointly for work. The original ALG members were dotted around the country, but as time went on the group was whittled down to four core practices – Allen Allen & Hemsley, ARH, Adelaide firm Finlaysons and Brisbane's Fez Ruthning, which later merged with Allens.
Much of the ALG's work had an Asian bias, and the group soon established offices in the region, starting with Singapore. The Singapore operation – and subsequent ALG offices in Jakarta, Hong Kong, Shanghai, Bangkok, Port Moresby and Phnom Penh – gave the firms their first taste of merged life, but before more formal steps could be taken, there was one more move to make.
“As time went on, Adelaide unfortunately became more and more of a sideshow to what was going on in the rest of Australia and we just didn't feel the need to have an office in Adelaide,” says Poulton.
With Brisbane merged into Allens, and the South Australians now out of the ALG, only the two principal members remained. At that stage, the legal profession was going through something of a cultural revolution, with firms increasingly being called upon to provide an integrated national service to clients.
In an effort to meet demand, every other top-tier firm in Australia had switched to a national partnership structure, and the market was eagerly awaiting the next move by Allens and ARH, which between them had offices in Sydney, Melbourne, Perth and Brisbane.
Both firms were hugely successful in their own right – each with around 800 staff – but the one thing they seemed to be lacking was the ability to provide clients with a seamless service across all Australian jurisdictions. To a point, the ALG had met this need, but the firms acknowledged that the alliance was fast outgrowing its original purpose.
In the third quarter of 1999, despite cries from some quarters of “if it ain't broke, don't fix it”, Poulton and Allens' managing partner Ian McGill sat down to talk.
“As time went on, business became much less respecting of state boundaries. To be able to provide a full service to your clients, you really had to be everywhere your client was. It was no longer enough to be able to refer somebody to a sister firm in another jurisdiction,” says Poulton.
The merger negotiations took 18 months to hammer out, during which time the firms continued to work on joint venture projects, including transactions for Telstra and SA Electricity. As the deal drew to a close, client surveys were carried out with key corporates such as Rio Tinto and WestPac Banking. With AAR representing 55 of the top 100 Australian corporations by capital, there is no doubt that clients were a crucial factor in the decision to merge, but so were staff. Management consultants were brought in to complete a cultural study, examining the fit of the teams from the two proposed partners.
“It was a merger which had been a long time coming, as the two firms had had a close relationship for many years,” says former ARH lawyer Peter Caillard, now an in-house lawyer and the president of the Victorian chapter of the Australian Corporate Lawyers Association (ACLA).
And so, on 1 July this year, Allens Arthur Robinson was born.
McGill, who had only recently been elected to head his firm, became senior executive partner in charge of integration and client services, while Poulton – the more experienced of the two law firm heads – assumed the title of managing partner.
So successful has been the pairing of the two men that, during a recent partnership dinner, a cast of lawyers staged a skit about the courtship, proposal, and idyllic marriage of Poulton and McGill. So far, there has not been a divorce lawyer in sight.
“Much to our delight, we find that we work together very well,” says McGill. “Frankly, management of law firms is sometimes a little challenging, and the mutual support we can offer each other is a very positive aspect of our working relationship.
“Tom is a very good leader, right on top of his brief. He has his own strongly-held views on all of the strategic issues we face, but he is a great listener, with very strong emotional intelligence. The major decisions we've taken have all been on the basis that Tom is in the centre of the decision-making process, thinking through the implications for us – short and long-term.”
When the firms announced their decision to join forces, competitors were rubbing their hands with glee at the thought of the partner defections and client conflicts, the things that are so often associated with mergers. It appears they have been disappointed.
In the first half of the year, three partners left AAR's constituent firms. Tony Hiscock retired, Ian Renard, who remains a consultant to AAR, left private practice to concentrate on his numerous roles with company boards, and Lachie Donaldson set up his own property practice, leasing office space from his former partners. Not one partner has left since 1 July.
As far as clients go, Poulton says he is not aware of any losses since the merger, although he confesses that “sometimes you find these things out slowly”. True, there have been a handful of 'knotty' conflicts to resolve, but these have been dealt with by the newly-formed conflicts committee, and apparently all clients have been retained.
The reason for the lack of problems is likely to be found in the fact that the two firms brought very different things to the table – Allens had a strong banking and finance reputation, while ARH was known for its expertise in advising the manufacturing and resources sectors. This meant few clients, if any, were in competition.
“The clientele meant that we started off with less problems than one might otherwise have. Also, we'd been foreseeing that the merger might take place for at least a year, possibly even longer, and had been starting to make decisions about matters that we took on,” says Poulton.
“From March, when we announced that we'd be merging, no matter was taken on by either firm except with a full firm conflicts search. That meant that we had about three months where matters were not being taken on if they would have caused a conflict. We were controlling the number of situations in which we'd have a conflict problem.”
One of the core clients retained by the firm was resources heavyweight BHP, which had recently gone through its own high-profile merger with Billiton. The deal brought AAR closer to BHP's UK advisers Slaughter and May, and in September the two firms announced their best friends relationship to the world. The link offers AAR much-needed UK law capability, while Slaughters gains access to lawyers on the ground in Asia.
While both firms have publicly stated that their intention is to concentrate efforts on Asia, the move has sparked debate about where the alliance will lead. In the past year, AAR rival Mallesons Stephen Jaques has reportedly participated in fruitless discussions with two UK firms – Linklaters & Alliance and Clifford Chance – and the global market is awaiting the next move.
Poulton admits that the prospect of a cross-border merger is attractive, but believes the cards on such matters are firmly held by firms in the US and UK. In the meantime, he seems more than happy with the benefits that the alliance with Slaughters will bring.
“By melding the two firms together, we create a pretty powerful combination,” he says. “There are all sorts of possibilities as to whether our relationship with Slaughters could go more formal, and one shouldn't read into history. What I mean by that is that the relationship between Allens and ARH started off in a similar sort of way, and then ultimately it developed into financial integration, but there is no suggestion that this is a necessary or intended outcome of this relationship.”
He adds: “We'll just take every day as it comes and just see how it goes. If it goes well, and if the legal market develops in a way that requires the firms to be global, well then no doubt it is a possibility, but certainly it's not something we're working on at the moment.”