#Auslaw issues

Report: ‘HSF bets growth on Asia’

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The Australian‘s weekly Legal Affairs section is reporting (subscription required) today that global law firm “Herbert Smith Freehills will seek to more closely integrate its Australia and Asia practices.

Sorry to be blunt, but what!?!

According to the Lawyers Weekly website, HSF officially merged on 1 October 2012 to open as the “largest fully integrated law firm in Asia Pacific based on number of lawyers“.

That was 3 years ago.

This begs the question: are all of the recent global law firm entrants to Australia going through the same issues?

My guess here is “yes”. Even though nearly all of them (arguable K&L Gates used US-Australia as its strategic reason for opening in Australia) made specific mention of using Australia as a springboard into Asia, pretty much none of them – to my knowledge – has a specific liaison Business Development Manger person (or higher) located in Australia who assists with joint business development activities.

As I understand it, there may be cost related issues involved in this (who pays for the resourcing – Australia or Asia). There may also be personnel issues involved.

Who knows; but the short answer is that for the life me I cannot understand how 3 years or more (in some cases) on from when the global firms arrived in Australia they still don’t seem to:

  • have dedicated Asia-wide practice and support teams
  • be able to tell you the number of referrals across jurisdictions (inbound and outbound)
  • be able to tell you which partners are referring work [championing] across jurisdictions
  • be able to tell you how many referrals are going to other firms within the jurisdiction where they have an office – particularly where there may have been a relationship prior to the merger (in Australia’s case, would you like to take a punt that Gilbert & Tobin gets referrals from international firms with an on the ground presence in Australia?)
  • know which of their clients are referring work to them across multiple jurisdictions.

To me, this says that both the back-end and front-end operations of the merged firm are still working in geographic and practice group silos (which they most certainly would appear to be from today’s article).

Don’t get me wrong, it’s great that HSFs is seeking to more closely integrate its Australia and Asia practices. I hope other firms follow suit. I’m just frustrated that this initiative is probably about 2 and half years late!

Survey: One in four Australian law students are not sure about their future intentions

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We often talk about the lack of opportunities that current Australian law students face when looking for work in what counts as the ‘New Normal’ in the world of legal in  Australia.

It was interesting to read, then, in a recently published survey of the 1,403 law students undertaken on behalf the Women Lawyers’ Association of NSW that:

“One in four law students were not sure about their future intentions, and one in ten intended not to practise as a lawyer.”

Of those students who did intend to practise as a lawyer (61%), only half (both female and male) anticipated working as a solicitor in private practice; while close to one third intend to work as a government lawyer, in-house corporate lawyer or as a barrister.

Those law students who do not intend practising law after graduation said they anticipated working in banking and financial services, government/politics or in corporate strategy.

Interestingly, given the cut backs in this area, one in five law students were proposing to work as a community-based legal service lawyer, with female law students the more likely to be studying law for altruistic reasons; including “having an interest in social justice“.

Less surprisingly, male law students were more likely to cite “a good income that a career in the law offers” and “the prestige and status that a career in the law would bring” as being their main drivers for studying the subject. Which probably proves beyond any reasonable doubt that females are smarter than males!

All in all, I’m not sure the outcome of this survey would have varied dramatically in my days studying law at university 20 years ago. That said, I know that my aspirations – in studying the subject – were to be a lot more like Geoffrey Robertson QC than the partner of a Magic Circle law firm.

As it turns out, I ended up being neither. Which is why survey’s like this are important in reminding us that we probably need to hold off telling law students that it’s all doom and gloom in the world of the “New Normal” and start with actually asking them what they want to do with their lives.

3 more surveys on the state of the legal market were published this week

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Hot on the heels of a post I posted two weeks ago summarising three reports on the state of the legal market, the last week of August has seen the publication of a further three survey reports.

  1.  The US Survey Report 

The first survey report (Surveys Find Mixed Demand, Moderate Pay for Corporate Counsel) is out of the USA and summarises the findings from a questionnaire sent to 1,300 chief legal officers (CLOs) of the Association of Corporate Counsel (ACC) – who now have a Chapter in Australia.

This ACC survey covered wide ground, including pay rises (3%) and areas of in-house recruiting growth (compliance, contracts and corporate generalists), but probably my favourite take-out was the following two paragraphs:

“Organizations are looking for corporate counsel who can facilitate the business process, according to Peters. Counsel should become familiar with what the company does, take an interest and act as a support, instead of simply focusing on the legalities of whatever is presented to them, she said.

For example, corporate counsel might tour the company’s plant and observe the manufacturing process to better understand how the company works, according to Peters. This might allow the lawyer to help get the product to market quicker. “It behooves the lawyer to be involved and become an integral part of the company. Partnering with the business, you add and keep value,” she said.”

Private practice lawyers could move a lot further along the trusted advisor paradigm just by following that piece of advice.

2.  The UK Survey Report

The second survey report (Mind the Gap: GCs, Firms Wide Apart in Perception)  is actually a one-page infographic [downloadable here] done by the team at Briefing Magazine in the UK and provides further evidence, if ever we needed it, that there is a growing ‘value gap’ in the perception of the relationship between in-house counsel and their outside law firms & law firm managers.

This survey polled 125 GCs, 67% from companies with more than £1.1 Billion in revenue a year and more than 1000 employees, along with 86 managers (NB: Briefing Magazine‘s target readership is law firm leaders and managers) from the top 120 law firms in the UK.

Two take-outs from this survey of note are:

  • on whether the process of buying legal services had moved to the in-house legal team’s procurement department, 80% of in-house GCs said they – and not the procurement department – had the say on who to send legal work to, whereas almost three quarters (74%) of law firms said exactly the opposite (ie, procurement had the say here).
  • on the issue of AFAs (alternative fee arrangements), 76% of law firms believe that in-house GCs want to move away from the billable hour, whereas only 58% of GCs said they do.

Interesting as they are, both of these responses really highlight to me that most law firms out there are not having proper conversations with their clients around how legal services are being procured and, importantly, paid for.

3.  The Australian Survey Report

The third survey report of the week was the most comprehensive.

Authored by Joel Barolsky and published by The Melbourne Law School and Thomson Reuters Peer Monitor, the 2015 Australia: State of the Legal Market report sets out the dominant trends impacting the Australian legal market in 2015 and the key issues likely to influence the market in 2016 and beyond [a copy of which is downloadable here].

As you would imagine, a survey report of this nature (15 pages) packs a punch and there are way too many take-outs to summarises them all here so if you are interested in the finding of this report, but don’t have the time to read the whole thing, I would like to suggest you take a look at Joel’s post on LinkedIn – Key takeouts from major new legal market report – summarising the findings.

For me, it was interesting to see the survey confirm a trend I identified last year in the market, namely that the biggest competition private practising lawyers have these days is actually in-house counsel. I think this is further evidence that private practice lawyers are not doing enough to explain to their in-house counsel the benefits of using outside counsel.

In short, to my mind the conversation should not simply be: “I’m spending $150,000 on external legal each year, I can hire a lawyer and bring this work in-house“. Although I very much fear that is exactly the conversation that is taking place. And when you keep in mind that the two principal areas of concern for in-house counsel are compliance and risk, you’d think this provides external legal with exactly the right platform to have the conversation around why taking work in-house should not be a growing trend.

#BigLaw is far from dead

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Has the death knell of #BigLaw been rung too early?

Despite all rhetoric to the contrary, three reports published within the past week would suggest that the business model of #BigLaw is far from dead.

  1.  Citi Private Bank’s Law Firm Group report*

The first, published in the American Lawyer, was Citi Private Bank’s Law Firm Group‘s quarterly report on financial performance in the legal industry.

While this report headlined as ‘Despite Growth, Law Firm Forecast Dims for 2015‘, it is worth noting the following three paragraphs from the report:

“Looking at the results by firm size, the Am Law 100 firms saw demand and revenue momentum build. For the Am Law 1-50, part of the positive momentum is due to some moderation in 2014 results from the first quarter to the first half. The Am Law 100 firms are also better poised than smaller firms for near-term revenue growth, given that they had comparably larger inventory increases (especially in accounts receivable) at the end of the second quarter.

The Second Hundred was the only segment that saw a drop in demand. It also had the lowest increase in inventory (2.3 percent), so the third quarter will likely be particularly challenging for these firms.

Despite the momentum generated by the largest firms, it was the niche/boutique firms that had the strongest first half overall. Revenue was up 7.0 percent on the strength of a shortened collection cycle (compared with a lengthening for the Am Law 100 and Second Hundred segments), as well as modest increases in demand and rates. The niche/boutique firms also posted the smallest increase in expenses, 1.9 percent, creating a substantial widening of the profit margin. Because of the accelerated inventory turnover and only modest improvement in demand, however, inventory for these firms was up only 2.8 percent. These smaller firms may therefore find the second half of the year more challenging than the first half.”

So, while mid-tier firms appear to see revenue in decline, the top-end of town was actually seeing demand and revenue momentum build.

[* The results of this report are based on a sample of 177 firms (83 Am Law 100 firms, 45 Second Hundred firms and 49 niche/boutique firms)]

2.  BTI Consulting report**

The second report is a snippet from BTI’s Annual Survey of General Counsel and goes under the bye-line: ‘Large Law Edges Out Mid-Sized Firms for New Work, with Higher Rates‘.

Here, BTI Consulting’s research found that:

“60% of law firm hires went to larger law firms (650 lawyers or more) in the last year. Clients report hiring large law as a result of increased and more pointed attention—think industry knowledge and more specific discussion of company issues. Think less about your firm statistics and more about the people to whom you are talking.”

Possibly more damning, however, was the observation that:

“The onus is on mid-sized firms to do better. Clients expect mid-sized firms to bring more client focus and more business understanding than large law—but are not always getting what they expect. And, mid‑sized firms have to demonstrate vastly better understanding of their potential clients’ targeted objectives than large law.”

[** Research is based on 280 in-depth interviews with corporate counsel at companies larger than $750 million in revenue as part of BTI’s ongoing Annual Survey of General Counsel.]

3. CommBank Legal Market Pulse Conducted by Beaton Research + Consulting

The last report is a little closer to home, Q4 2014 results from CommBank’s Legal Market Pulse conducted by Beaton Research + Consulting.

I’ll most likely review the findings of this report more closely in a post later this week – and it may even be interesting to compare them against previous Q2  & Q3 reports – but for the purposes of this post I believe we don’t really need to go past the following infographic from the report:

CBA Q42014 Graph

which would certainly seem to indicate that “top-tier” firms are far happier with overall FY2014 results than their “mid-tier” cousins.

Bringing it all together

So, what does this mean?

To my mind what these three reports cumulatively evidence is this:- while #NewLaw may have arrived, and while it may be here to stay, what is increasingly clear is that #BigLaw is not the market segment that needs to be concerned with this development.

Nope, dig a little deeper and I think you’ll find that it is actually Managing Partners in firms with revenue in the A$20-A$70 million range who will be having a lot more restless nights sleep…

China, #Auslaw firms, and the $400 billion lost opportunity

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Last week I blogged that Australian law firms were missing out on a massive opportunity by not being better at selling Australian law, and Australia more broadly, as an alternative venue to London and New York. One of the things that I commented on in the post was how Australian law firms were falling short on their ability to sell venues such as the National Stock Exchange (NSX) and Australian Stock Exchange (ASX) as alternative venues on which Asian, and Chinese in particular, companies could look to to raise capital.

It could not have been more timely then that later in the same week Reserve Bank of Australia (RBA) Governor Glenn Stevens added a monetary value to the opportunity being missed here – $400 billion.

Yeap, Stevens is quoted in this article as saying:

“…capital markets should prepare for a world where China invests $400 billion a year offshore.”

So, the question I asked in my blog last week remains:

“What is your law firm doing to capitalize on this opportunity?”

Because there is absolutely no doubt in my mind that while we ponder this question others in the region are touting the benefits of Singapore, Hong Kong or a whole raft of other suitable offshore venues.

Australian-based law firms are failing to sell Australia as a forum to Asian clients

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Today [29 July] the Australasian Lawyer has a post detailing a recent report by Baker & McKenzie that:

“cross border IPOs in the Asia Pacific region have increased by 75 per cent in the first half of this year.”

 Wow, Capital Markets and Corporate teams across the Region have really struggled since the GFC and seen a lot of layoffs in their teams so this must be music to their ears!

But what about Australia?

Well, it appears the news here is not so good. According to David Holland, head of Baker & McKenzie Corporate Practice in Australia:

“Australia didn’t see much activity and the regional boom is unlikely to have any significant effect on the Australian market specifically”.

Sorry but this is not acceptable.

Australia not only has a robust principal stock exchange in the ASX, but we can also offer traditionally family run Asian companies access to a very friendly IPO forum in form of the National Stock Exchange (NSX) of Australia, pitched as being:

the market of choice for SME and growth style Australian and International companies.”

Listing and reporting rules for both are pitched as being much less onerous than is the case with other stock exchanges across the region.

So, why are we missing the boat here?

To my mind the answer to this question is this:-

Australian law firms and government bodies are failing in their duty to sell Australian law as a viable forum for international business.

Yes we missed the boat on selling Australian law as the governing law for international agreements – the English and Americans (New York) beat us at to that. But in this case we have a very distinct advantage that we are simply not pursuing or pushing.

To be clear, we’ve known for some time that Asian governments (particularly China) have been advocating for their domestic companies to list overseas in order to show transparency. We’ve known for a long time that control remains a massive issue for Asian companies (particularly family run businesses) and IPOs are, as their name suggests, capital raising exercises.

And what have we done about it?

Pretty much nothing. Few, if any roadshows. The occasional newsletter. Maybe the odd seminar.

In short, nothing.

Looking for a silver lining?

Luckily for us there is one in an ABC article from February of this year “China-based companies to list on ASX to avoid Asian stock market costs and free float requirements“, which points out that:

“Smaller Chinese companies are looking to list on Australian stock market operator the ASX to avoid the cost and free float requirements of larger Asian exchanges.”

All we need to do now is get out there and spread the message!

“A bridge too far” : When international law firm mergers turn sour

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“There were a lot of people who thought there wasn’t a very deliberative process around the decision, and a lot of people wondering how it would help us,” one partner said. “And when it didn’t go well, there were a lot of people who thought it was a bridge too far.”

The above quote is attributed to a K&L Gates partner in a recent Above The Law post by David Lat (‘Barbarians At The K&L Gates?‘), which was then linked to in Bloomberg BNA’s Business of Law overnight (‘Wake Up Call: What’s Going On At K&L Gates?‘), and is said to relate to the firm’s biggest single merger to-date, its deal with Middletons two years ago, which, apparently, has “has failed to bear fruit.

First off, I don’t think K&L Gates’ merger with Middletons is alone here. Market chatter would indicate that a number of partners at international law firms who merged with prominent Australian law firm brands have since wondered what they got themselves into. On the flip-side, a number of the partners in the prominent law firms who merged with the international firms have felt likewise and since moved on.

So while not unique, what probably differentiates the K&L Gates situation is also, in my opinion, one of its greatest strengths – its transparency and openness.

In any event, to my mind what this story highlights is two issues:

  1. mergers between international law firms are akin to the courting stage in any joint venture arrangement: a lot of trust is given on both sides without much due diligence.
  2. when things turn sour in international law firm mergers, lots of reasons get cited by all parties; but rarely, if ever, is the reason that they hadn’t discussed the merger properly with the clients of both (all) firms to see if the client had  any perspective on this merger (e.g., commercial conflicts, lack of trust, etc.) and whether they would support (financially) the merger.

I will add that it would be a great shame if the K&L Gates / Middletons merger turned into a public spat, because I really liked the legacy Australian firm of Middletons and given Australia’s interaction with the US market I believe there is a place for K&L Gates here.

That said with the A$ tipped to go below US70¢, its lowest level since the merger, the partners on both sides of the Pacific need to:

  • reiterate why they merged,
  • communicate this with their clients,

and move forward on that basis.

And do this quickly [preferably at, or before, the next global partners’ meeting] – something law firms are not known for!

Again though, I doubt very much that K&L Gates will be alone among international law firms in Australia having these discussions.

The battle for Asia’s inbound investment

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I was interested to see that The Lawyer has an article today [27 July] by David Rennick, the head of Pinsent Masons’ relatively new Australian outlet, on the competition between English and Australian law firms for prize Chinese’s infrastructure investment work (‘Never mind the Ashes: England and Australia are battling for the Chinese investment prize‘).

When I first arrived in Asia back in the early 1990s, most of the conversations we had with governments and businesses around “investment” in the region nearly always took the path of inbound [into Asia] investment: in that investments largely moved in one direction, from West to East, and appropriately attractive and protective legislatively schemes around those investments were always being sought.

Possibly due to the GFC, although I would be more inclined to say as the likely result of a progression in time and a growth in Asian economies post the Asian Financial Crisis troubles, a shift has taken place: today when we are in conversations around “investment”, this conversation has taken on a new life and we are just as likely to be discussing outbound [from Asian] investments into the West or into other developing nations/areas (such as Africa) as we are about inbound [into Asia] foreign direct investment.

I love infographics and clear evidence (if it was ever needed) of the shift taking place in the conversation taking place here can clearly be seen in two amazing recently published infographics: one by the South China Morning Herald (‘Chinese outbound investment to rise to another record‘) and the New York Times (‘The World According to China‘).

And while both of these show a massive increase in outbound direct investment by China and Chinese companies (and people) over the past decade, decade and half, what they don’t necessarily show is the different reasons/discussions that are taking place for/around these investments.

To be clear, while Asian (including Chinese) companies and governments are investing overseas for a multitude of reasons, they largely centre around two principal reasons:

On the one hand, the governments – including State Owned Corporations – need better returns on their investments than they would otherwise be getting at home or else they need to diversify this investment. We typically see this type of investment with Singapore’s Temasek and GIC (Government of Singapore Investment Corporation). More recently we have seen foreign pension funds investing in Australian infrastructure in this way.

On the other hand, we see investments in western businesses by Asian companies and organisations looking to purchase technical knowhow in order to up-skill themselves. An example of this can be seen with today’s announcement that: “A major Chinese venture firm has launched a US$5 billion fund devoted to buying up Western technology, internet and biotech firms that are looking to enter the Chinese market.

And it is for this reason that unlike David Rennick I don’t believe English or Australian law firms should be strategically looking at the Chinese for inbound infrastructure investment work (with the caveat that this doesn’t include strategies around the Chinese-led Asian Infrastructure Investment Bank (AIIB)), because I believe that type of inbound infrastructure investment work (once Australia can work out a suitably attractive investment vehicle for foreigners to invest in infrastructure) from Asia will more likely come from Korea, Japan and Singapore (under relevant FTA provisions with these countries).

For Chinese related inbound investment work, English and Australian law firms would do far better to be courting M&A and R&D work, and in this field they will find a much hungrier and more sophisticated competitor – the US law firm.

“We’re serious about this,” says the head of EY’s Australian legal services

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“We’re serious about this,” EY’s head of legal services Howard Adams said

Finally, despite all protests to the contrary, the head of one of the country’s leading accounting firms has come out and said what we all know to be true – the Big 4 want in on law firm turf!

And if you doubted this, you need look no further than yesterday’s article in the Australian Financial Review (‘Big four accounting firms push into legal services‘) from which the quote that opens this post is taken and which also included the following gems:

  • “In Asia Pacific, EY has hired 206 lawyers since January last year. Sixteen of them are based in Australia, focused purely on transaction, corporate commercial and employment law.”
  • “PwC legal services – which just recruited K&L Gates’ national head of antitrust, competition and trade regulation, Murray Deakin – has about 340 lawyers throughout Asia Pacific. About 120 of these are based in Australia, of which approximately a quarter are dedicated solely to legal work.”
  • “In the last six weeks alone, PwC has hired 13 qualified lawyers to its Australian practice.”
  • “EY recently admitted a Hong Kong law practice to the EY network and expects to be open for business in HK by the end of August, after which it will target Indonesia and Malaysia. Its ultimate goal is a pan-Asia boutique law practice with hubs in every commercial centre across Asia.”
  • “KPMG Legal has an ambitious target of doubling revenue in fiscal 2016 under the leadership of David Morris, who previously co-led the Asia-Pacific corporate practice of global firm DLA Piper.”

So we now know that not only do the Big 4 want in, they also want to be Top 10 legal providers in Asia [any doubt about that? PwC is quoted as saying they are looking for revenues north of A$75 million a year by 2019].

Thanks to this same article, we also get insight into how they [Big 4] hope to achieve their lofty aims, with Howard Adams being quoted as saying:

“We’re going to market with our advisory team in health care, government, financial services, procurement and supply chain. It’s a new, more hands-on approach, to providing legal services,”

Should law firms be concerned?

Well, not according to quotes attributed to Baker & McKenzie’s national managing partner Chris Freeland. Nor Ashurst vice chairman Mary Padbury.

My own take?

If you are the Managing Partner of law firm with a pan-Asia practice, then you need to be keeping a very close eye on who your fellow partners are talking to. After all, where do you think these accountancy firms are getting their staff from?

In KPMG Australia’s case, alumni.

“Berlin is closer to Beijing than Brisbane is”

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“Berlin is closer to Beijing than Brisbane is. And it will always be so.”

– Andrea Myles, CEO China Australia Millennial Project (CHAMP)

I recently had the great fortune and pleasure to attend the opening ceremony of the inaugural CHAMP. Unlike many other events I attend, this one was driven by a group of young adults looking for ways to improve cooperation between China and Australia, principally from what I can tell in the areas of research and development (R&D).

Leaving aside the fascinating work being done under the CHAMP banner, two comments that Andrea Myles, CEO of CHAMP, said in her opening remarks really resonated with me.

The first was the opening quote to this post: “Berlin is closer to Beijing then Brisbane is.”

The second was this:

“China is Australia’s largest trading partner, but also the largest trading partner of 124 other nations.”

Yep, 124 other nations can claim that China is their largest trading partner.

So if Australia isn’t geographically closer to “Asia” than Europe is (and flying time from the UK to Thailand is roughly the same as Sydney to Bangkok), and if economically (from both a trade and investment perspective) Australia isn’t streets ahead of the rest of the world in the eyes of those conducting business in Asia, why in the world would so many law firms be “Driven here by the lure of Asia” – as the Australian reported last Friday (3 July) [“International legal firms see Australia as a hub for Asia” NB: subscription may be required to read this]?

Personally I’m not 100 per cent sure I understand the need for global firms to be in Australia if the only reason they are doing this is to create a hub for entry into the Asian market more broadly. I rather suspect better cases to that type of strategy could be made for Singapore (which historically it has been) and even Hong Kong.

Nonetheless, Patrick Sherrington, Hogan Lovells’ regional managing partner for Asia and the Middle East and author of the said article in last Friday’s Australian sets out his case for why he thinks this might be so.

These include:

“The Australian legal services market is characterised by its ­concentration, innovation and sophistication. Although globally the sector is generally characterised by low concentration, the market shares of the major players in ­Australia have been and remain particularly high, especially compared with the US, where no law firm accounts for more than 1 per cent of the industry.

This concentration yielded high levels of competition between those leading firms, which spurred innovation and sophistication throughout the market.”

Sorry, but having worked in the English, Asian and Australian legal markets during the course of my working life I can categorically say that the Australian legal market is no more innovative nor sophisticated than any other. While this might have been the case in the 1990s, I would venture that the US market is probably more innovative than the Australian market is at the moment and the stuff that the likes of A&O, Lawyers on Demand, Eversheds, and Riverview Law – to name but a few – are doing in the UK is streets ahead of where the Australian market currently is.

Sherrington then goes on to write:

“More critically, it [the GFC – my comment] affected the faith many leading national firms had in their business models. The hitherto boundless belief in the limitless growth of legal services in a country accounting for nearly 40 per cent of the Asia-Pacific legal services market was lost to the ­existential and strategic dilemma of how and where Australian law firms should operate in an increasingly global market.

Suddenly, market entry became a practical proposition for the major international firms. Since then we have seen the large national firms scramble for Asian and global exposure through ­alliances and combinations of varying intimacy.”

I’m of the view that flat, depressed markets in the UK and Europe more widely made the bigger English firms look up and think of other markets where they could still get growth. The mining boom that was going on in Australia at the time, plus historic highs of almost parity in exchange rates between the Australian and US dollars, meant that the Australian market looked very attractive at the time.

Ironically, a shift in the sands have now made these much less favourable reasons to be in Australia (the Australian dollar has fallen off to somewhere in the region of 75 cents now) and one has to wonder if the internationals would still be clambering to get here if the current market existed then.

Sherrington also notes that:

“We [Hogan Lovells] concluded that not having a focused high-end legal practice in Australia would be strategically detrimental to the ambitions of our long established practice in Asia and would have an impact on our ability to service global clients.

Australia is uniquely positioned to assist international law firms achieve growth in Asia. With the third largest pool of investment funds under management in the world, the largest stockmarket in Asia (ex-Japan) and the fourth largest economy in Asia, as well as being the single largest beneficiary of Chinese foreign direct investment since 2005, Australia is an ­integral part of the Asia region and also a global player.”

I think there is a lot to be said for the second part of this quote. Much less so for the first part. Having an Australian practice is one thing; having an Australian presence as a hub to Asia is a completely different issue.

If you have an Australian practice for all the reasons Sherrington sets out in the second part of the quote above, and you have a core client-base operating in Australia, then I commend you and wish you well.

But if what you are saying is this [Australia] is your hub for Asia, then I ask: “where does your senior Asian management sit?” Because one firm aside, nearly all of the senior “Asian” management teams I’ve seen sit offshore (ie, outside Australia).

A final comment of Sherrington’s is that:

“While the manner and mode of market entry will continue to ­differ between international law firms, it is a trend that will not be reversed.

The regional and global economic case for an Australian presence is too strong. It remains to be seen whether the flood of international entrants will reduce the concentration of the Australian legal service market.”

Sherrington and I will have to disagree on this one. I think it is a trend that could very easily be reversed – and to some extent already is.

And we should always remember that law is a very fickly business – who knows what might happen if you had a downturn in the Chinese economy and a European nation that was refusing to pay its debts.

Oh wait…