Master builder

Minter Ellison managing partner Phil Clark has taken not one but two Australian firms from relative obscurity to international stardom. Nicole Maley talks to 'the man who made Mallesons'

Talking to Phil Clark is like spending a day in the company of a Mensa-rated boy child. His enthusiasm and energy are boundless and his knowledge is mind-boggling, but when push comes to shove, nothing gives him more pleasure than building things. The only difference is that while little lads muck around with Lego in their sandpits, Clark's building blocks are law firms and his playground is an office in Sydney's central business district.
Often cited as the 'man who made Mallesons', Clark is a constructor of businesses. In 1976 he walked through the doors of his former alma mater, Sydney's small but successful Stephen Jaques & Stephen, and spent the ensuing 16 years guiding the firm into and out of the boom and bust 1980s and developing it into a multimillion-dollar practice along the way.
By his own admission, the firm was taking a gamble. With only three years of articles under his belt and little knowledge of life in law firms outside that, Clark was somewhat of a novice to the legal arena when he was brought in on a six-month contract to advise the firm on business strategy.
It was his 14 years in the corporate world that attracted his old colleagues. After leaving the profession, Clark had worked everywhere from the ski fields to the oil industry, but it was his time working in management with billionaire cardboard king Richard Pratt that really honed his skills. His armoury also included an MBA from Columbia University, and it was not long before Stephen Jaques installed him in the managing partner's hotseat, the first such appointment for a non-practising lawyer in Australia.
“I'd kept in touch with Stephen Jaques and used them a bit when I was in business. The managing partner there asked me if I'd come in for six months, just as a consultant, to sort out some business planning issues they had,” recalls Clark. “I went in, took a look at it and decided it was a terrific place to be. Then I joined them as managing partner in 1977.
“It was a pretty bold step for them – at the time, everybody said they were mad. I was probably the first professional full-time managing partner appointed by an Australian firm.”
For a couple of years, the role was mainly administrative, with Clark negotiating the firm's move to new premises and introducing the partnership to modern financial and strategic planning. It was not until 1980 that he truly started to manage.
At the time, the firm had 13 partners, two offices (Canberra's Davies Bailey & Cater having joined in 1974) and an annual turnover in the region of A$5m (£1.8m). It was heavily dependent on key client AMP, and although the work it carried out was known to be top-notch, Stephen Jaques had nevertheless slipped some way behind its competitors.
“They were AMP's lawyers, they had a very heavy property practice and they'd done some good corporate work, but they were just drifting behind the market leaders,” says Clark.
Clark explains that much of the early 1980s was spent “catching up with the Joneses”, and to this end the partnership identified the resources-rich Perth market as a key area for growth. In 1982, Stephen Jaques added western Australia's Stone James to its stable, becoming Stephen Jaques Stone James.
For the next few years, Clark and his partners focused on building their talent base by rewriting their graduate recruitment plan to try to attract the best law students. On the back of this, Clark decided that the firm was failing to personalise the hiring process, so he went about changing it. He introduced a raft of measures, which ranged from putting the partners with whom they would work across the table from candidates to telephoning regularly to keep in touch with potential recruits. In some cases, he even telephoned their mothers.
“I got really excited about graduate recruitment in about 1982 because we weren't pulling the best graduates out of the universities,” says Clark. “At that stage, it was pretty much a case of 'grow your own', so if you didn't get the best graduates, you didn't grow the best people. It was pretty important.
“I spent nearly the whole of '82-'83 just doing graduate recruitment, and we went from being the last firm on the list to being the top firm, and that was really exciting. I really got a buzz out of that.”
In the late 1980s, with its house by then in order, the partnership recognised that Melbourne was a gaping hole in its national ambitions. At the time, cross-border tie-ups were far from the norm, and while corporates were going through a phase of radical growth, law firms were more reserved. True, Stephen Jaques had successfully incorporated other practices into the partnership, but there was little doubt that a Melbourne addition would change the face of the firm.
In 1987, after a lengthy period of courting, Clark signed up Victorian legal darling Mallesons, offering the legal profession its first real bite of the corporate world's expansionist cherry. The newly merged practice housed some 450 lawyers, a figure which was to grow further with the 1989 addition of a Brisbane office.
Colleagues recall that while many firms at the time were privately holding boardroom discussions about strategic growth, it was Clark who actually managed to seal the deal.
“The thing I like about Phil is that he doesn't just talk about things, he gets on and does them,” says John Churchill, the former head of PricewaterhouseCoopers (PwC) Legal and an ex-colleague of Clark. “That was one of the first ever big interstate mergers, and since then he's been through it all. He's been in firms that have grown nationally and expanded internationally, and they've been run very efficiently. All that stuff's become invisible now, but Phil introduced a lot of things at Stephen Jaques that were very new.”
With the combined partnership up and running, Clark and his then joint managing partner, former Mallesons leader Tony D'Aloisio, went off in search of a new challenge. They found it in Asia.
The firm's London office was already well established, but Mallesons was looking to increase its global spread and Asia seemed the obvious answer. Only a handful of foreign firms had ventured into the market at the time and it appeared ripe for the picking.
In 1989, the firm had bought out the Denton Hall office in Hong Kong, but with the recession hitting, something swiftly went wrong. It is difficult to assess whether it was overzealous partner ambition, a lack of due diligence or simply a case of being in the wrong place at the wrong time, but it is evident that what was meant to be Mallesons' dream run in Asia soon became a nightmare. The firm was also bleeding from its Australian offices and it became apparent that cuts would have to be made.
“Any major development in a firm is signed off by partners,” says Churchill. “But if you look down the job description of any law firm manager, you'll find a clause which says, 'To be blamed'.”
By 1992, having tried to resolve the Asia debacle, Clark admits he had had enough, and it was then that he decided to fulfil a long-held ambition to work with a merchant bank. Leaving behind the 200-partner, A$200m (£72.9m) turnover of Mallesons, he quit for ABN Amro.
“I'm much better at building businesses than demolishing them,” he says. “It was a difficult time because we went through that huge market downturn, made a pretty big investment in Asia and the partners were getting iffy and I was getting bored.”
However, within three years he was back at the helm of a law firm, called in by up-and-coming national operation Minter Ellison to bring its Sydney office up to pace.
“When I left Mallesons I really was bored out of my skull,” admits Clark. “They were sick of me and I was sick of them, because I think 16 years is too long. I wasn't really interested in going back and running another law firm.
“What changed that for me was that I actually missed the lawyers. I missed the intellect, I missed the robustness of debate, and I missed managing too. I'm much better at building businesses than I am at doing deals.”
At Minters, Clark rapidly made his mark. After returning to Sydney from Brisbane, where he had been filling the vacant managing partner's seat, he set about addressing the issues faced by the New South Wales operation, quickly identifying the need to focus on priority clients and build the firm's talent base by ensuring that its culture made it attractive to potential recruits.
Within months of returning to Sydney, Clark had installed a key client programme and rapidly won over the sceptics with his securing of the Qantas legal portfolio. Two years later, when national managing partner Rob Stewart departed, Clark was elected unopposed.
Clark claims that it is likely his “energy and roughness” got him elected to the role, along with a strategic plan which he and Stewart presented to the partnership. The two felt the firm should continue to focus on key clients and expand the business organically, and both were confident that profits would, in turn, increase.
“Profit wasn't something that this firm had focused on; it was sort of a dirty word before I came along,” he says. “As a result, their profits weren't up to where they should have been.
“I brought in a plan which Rob and I had developed, and which the partners were happy with – they knew where we were going. It was a base case which basically said, 'We're going to do it ourselves, we're not going to merge with somebody else to do it'.”
He must have got it right. In the years that have followed Clark's election, Minters has seen its compound growth in Sydney increase by some 30 per cent in terms of revenue and 50 per cent in profit. Nationally, the firm has experienced a 20 per cent upturn in revenue and 30 per cent rise in profit.
Those who know Clark say that while he presents his partners with clear and targeted plans for strategic growth, it is his ability to persuade people of a common goal that is his greatest strength.
“Phil Clark has two outstanding attributes,” says ex-Stephen Jaques partner Bill Beerworth. “The first is an understanding of national and global trends in the delivery of legal service, and the second is his ability to create consensus among a group of highly intelligent individuals who often have separate goals. The end result is strategic goal-setting and powerful corporate purpose within the vehicle of a traditional partnership. “All of this is done in a very friendly but effective sheepdog fashion, without people knowing what's going on.”
Since taking over as national managing partner, Clark has worked with each of his practice group heads, focusing on a list of the firm's top Australian and state-based clients.
Alongside Sydney managing partner Alan McArthur and his Melbourne counterpart Barry McGuiness, Clark has transformed Minters from a transactional practice to one that is supported by a client relationship strategy, and the rewards are rich. Numbered among core clients are some of the country's leading corporates, including Westpac, SingTel Optus and AMP.
“We get more revenue out of our top 10 clients percentage-wise than any other firm,” says Clark. “Among the top eight firms in Australia, we used to be down the bottom – now we're up with the top.
“Client relationship strategy isn't sexy, and it doesn't put you at the top of the M&A league tables, but that's all bullshit anyway. What it does – and it's showing up now – is make things very good in tough times, because work keeps coming in.
“I think what's happened to a couple of local firms, which are more transactional-based, is that their industry mix has got way out of kilter. In good times it doesn't matter, but in bad times it really does matter a lot.”
With profits being raised year on year, the partnership has now decided to throw down another challenge to Clark – a global expansion plan aimed at doubling Minters' international annual office revenue from A$50.8m (£18.6m) to $115m (£42.1m) (The Lawyer Australia, 19 November 2001).
Placing Clark and former London-based partner Robert Hanley at the helm, the firm has set up a legal network spanning three Asian hubs, as well as boosting staff numbers in its London and New York offices, and the two men are now tasked with identifying new opportunities for business.
For now, Clark is ruling out the likelihood of merging with a foreign firm, saying that Minters will stick to its strategy of going it alone. The partnership, he says, has no immediate plans to open offices abroad, and in addition to representing Australian clients in Asia, it is intended that much of the firm's work will come on the back of the portfolios handled by UK and US lawyers.
Minters' strategy is different from the current approaches of its competitors – Allens Arthur Robinson has formed a best friends relationship with UK magic circle practice Slaughter and May, while Mallesons has made no secret of the fact that it would love to merge with a foreign partnership. Minters, though, seems content to remain aloof – though whether that will work in the long run is seriously debatable in an ever-globalising market.
But for the moment Clark seems perfectly happy with the status quo. “We're positioning ourselves as a non-US, non-UK firm that's happy to work with anybody and which will provide sophisticated, consistent, quality advice – and it's going to be bloody cheap,” he says. “We can provide a level of service that's way up there in world standards and way down there in terms of pricing, and we'll be working for exactly the same people or corporations as we're working for here. To me, it emerges as a no-brainer.”
After the Australian legal profession's history of being burnt by foreign forays, it will certainly be interesting to see how Clark goes. If energy and drive are anything to go by, there are few who would doubt his chances.