Australasian Legal Business January 2009

ISS

UE

7.1 Employment law

More regulatory change, more work for lawyers

Mid-tier mergers revisitedHow are they faring now?

Rudds infrastructure boostHow it will affect legal work

Still shining... for now brisbane 09

www.legalbusinessonline.com

n DEALS ROUNDUP n LATERAL MOVES n UK, US REPORTS n NEwS REViEw n REgULATORy UPDATES

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1

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2

EDITORIAL >>

Australasian Legal Business ISSUE 6.1222

IN THE FIRST PERSON

Withdrawn M&A deals: not a product of financial turmoil

According to figures released by Thomson Reuters, turmoil in the financial markets is the cause of Australia seeing the highest volume of M&A deals being withdrawn in the Asia-Pacific region. This would amount to a rapid fall from grace, considering that, according to figures

released for January to August 2008, Australian companies were the most favoured M&A targets, with 1,146 deals worth US$84bn. So, the question is: What has changed?

According to Allens Arthur Robinson partner Cameron Price, the answer is: absolutely nothing. Over the past six months, we have been flat out, he said, and, it appears the AAR M&A team are not the only ones. M&A partners right across the top end of town are reportedly very busy working on deals.

So, what do these latest figures really tell us?Apart from the failed Rio TintoBHP deal that the Thompson Reuters survey

excluded, it appears that none of the failed deals listed below were directly affected by the financial turmoil, if at all. The top five Australian M&A deals withdrawn, presented as evidence of the negative effects the financial uncertainty has had on M&A activity are: Origin Energy and BG, Orica and investor group (private equity), Insurance Australia and QBE, Consolidated Media Holdings and investor group (private equity), and Midwest and Murchison.

In the case of Origin Energy and BG, the directors of Origin Energy rejected BGs offer purely on commercial grounds. During the course of the BG takeover bid, they simply received a better offer from US oil major Conoco Phillips. The reluctance of BG to amend its offer did not have anything to do with the financial crisis. In fact, the coal price during this period remained largely unaffected by it, which is one of the key reasons the deal was particularly attractive to both BG and Conoco Phillips.

In the case of private equity approaching Orica, the bid was rejected by the board in April 2007, long before the current financial crisis began. Similarly the Board of Insurance Australia Group rejected the offer by QBE.

The Midwest and Murchison scenario was similar to the case of Origin Energy and another matter in which the bidder, Murchison Metals, was outbid by a more determined rival Chinese steel maker Sinosteel and most certainly had nothing to do with the crisis.

Indeed, the only deal on the list that may actually have been affected by it is Consolidated Media Holdings, which did not go ahead as a result of Lachlan Murdochs failure to get the private equity financing together.

These are some of the reasons that, in spite of the financial crisis, ALB is not quite ready to write off the Australian M&A market just yet.

Apart from the failed Rio TintoBHP deal, it appears that none of the failed deals were directly affected by the financial turmoil, if at all

ISS

UE

7.1 Employment law

More regulatory change, more work for lawyers

Mid-tier mergers revisitedHow are they faring now?

Rudds infrastructure boostHow it will affect legal work

Still shining... for now BRISBANE 09


DEALS ROUNDUP LATERAL MOVES UK, US REPORTS NEWS REVIEW REGULATORY UPDATES

cover.indd 1 28/01/2009 4:42:33 PM

Generation Y lawyers attitude to employers was what are you going to do for me? Now law firms are turning the tables with what are you going to do for us? Signature Recruitment consultant Steve Cole describing the shift in the recruitment landscape

If unfair dismissal is regarded as a matter of sufficient importance that it should attract a legal remedy, youve got to have a procedure for adjudicating that remedy Deacon IR partner David Cross lamenting the exclusion of lawyers from Fair Work Australia

We havent had any projects put on hold the merger puts us in a good position to handle any hits betterCridland MB partner Tony Morgan on the power of merger

02-03 - editors.indd 2 28/01/2009 4:48:56 PM

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4

CONTENTS >>

australasian legal business ISSUE 7.1

contents

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australasian Legal Business can accept no responsibility for loss.

ANALYSIS

10 Infrastructure a winner for 2009Infrastructure projects appear to be high on the Federal governments agenda, and so law firms are expecting a major increase in work

12 Kiwi climate change freeze expectedThe Key governments decision to suspend the carbon emissions trading scheme may be good for business but how will it affect work flows for climate change lawyers?

14 Mid-tier mergers the story so farThree recently merged firms provide some perspective on how to make a law firm merger work in the long term

FEATURES

30 Job marke power swingstThe tables are turned: Generation Y lawyers are now being asked to prove themselves

40 Marketing report ALB investigates how firms need to adjust marketing strategies during a market downturn

42 ALB guide: private equity 09A comprehensive overview of the private equity sector market conditions, major deals and the leading lawyers and firms in the field.

54 Industrial relationsALB speaks to the leading IR lawyers about how the new IR bill will impact clients and employment law practices

60 In-house perspective: Felicity McDowellALB gains insight into Johnson & Johnsons in-house legal department

REGULARS

10 NEWS South Australia: the new frontierAllens, Freehills get slice of Westpac capital raisingCredit crunches BHP-Rio Tinto merger, lawyers still optimisticDust settles on Mallesons, Clifford Chance talksAllens, Mallesons, Blakes all quiet on BA-Qantas merger proposalTrimming the fat: firms review staffing in a slow marketSustainable enterprises: a new type of lawyer

Middletons expands to Perth, merges with two firms

COLUMNS

19 UK report

21 US report

64 Sign off

COMMENTARY

22 NZ update: Buddle Findlay

PROFILES

35 Macdonnells Lawyers

39 Mills Oakley

49 Kemp Strang

ALB ISSUE 7.1

COVER STORY

32

60

10

40

32 ALB Special Report: Brisbane 09 Brisbane is still the land of opportunity for firms with long-term plans.

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NEWS | deals >>


| AustrAliA |

Goodman Group equity raisinGa$955m

Firm: Allens Arthur RobinsonLead lawyer: Stuart McCullochClient: Goodman Group

difficult conditions in the commercial property sector required parties to move quickly

second major capital raising in property sector since GPTs A$1.6bn capital raising in October 2008

Stockland, CFS Retail and FKP tapped into the real estate investment trust market to raise a combined A$525mAllens acted on five of the top equity raisings, including GPTs A$1.6bn accelerated non-renounceable entitlement offer; Wesfarmers A$2.5bn entitlement offer and CSLs A$1.6bn institutional placement, among others

| AustrAliA |

ChaLLenGer FinanCiaL aXa annuity aCquisitiona$1.25bn

Firm: FreehillsLead lawyer: Michael VrisakisClient: Challenger Financial Services Group

Firm: Minter EllisonLead lawyers: Mark Standen, Ken WatsonClient: AXA Australia

Firm: SJ BerwinLead lawyer: Rob DayClient: Qantas Airways

merger negotiations failed after parties were unable to agree on key terms

merger was to take place via a dual-listed company structure; lawyers did receive some due diligence and compliance work

British Airways was limited to acquiring 49% stake in Qantas Qantas would have remained a majority Australian-owned company

merger talks also occurred between BA and Spanish airline Iberia, which would have seen merger create worlds biggest airline

BA previously acquired 25% stake in Qantas during 1993 when Australian carrier began to privatise

terminated mid-December 2008

Firm: Challenger LegalLead lawyer: Blair BeatonClient: Challenger Financial Services Group

Challengers acquisition of AXAs immediate annuity business required the coordination of a large number of work streams, principally M&A, regulatory, actuarial, tax, stamp duty, competition and dispute resolution

because the vendor and purchaser were joint applicants to the proceedings, passage of the scheme called for a high degree of cooperation, coordination and task sharing between the commercial parties and their advisors

scheme was approved on 24 November 2008

| AustrAliA |

nationaL austraLia Bank CapitaL raisinGa$3bn

Firm: Mallesons Stephen JaquesLead lawyers: Craig Semple, Diana NicholsonClient: National Australia Bank (NAB)

NABs A$3bn capital raising was reportedly one of the largest and

| AustrAliA, uK |

terminated Ba qantas merGer proposaLa$10bn

Firm: Allens Arthur RobinsonLead lawyers: Andrew Finch, Fiona CrosbieClient: Qantas Airways

Firm: Mallesons Stephen JaquesLead lawyer: David FriedlanderClient: British Airways

Firm: Blake DawsonLead lawyer: John Field, Matt StottClient: Qantas Airways

Firm: Sullivan & CromwellLead lawyers: Daryl Libow, Andrew Solomon, Frank AquilaClient: British Airways

Firm: Slaughter & MayLead lawyers: Steven Cook, David WhitmanClient: British Airways

deals in brief

Andrew Finch, AAR

David Friedlander, Mallesons

John Field, Blake Dawson

Diana Nicholson, Mallesons

Stuart McCulloch, AAR

Mark Standen, Minter Ellison

most successful in recent times

NAB initially intended to raise A$2bn, but due to significant oversubscription this was increased to A$3bn

conducted through fully underwritten placement, followed by a share purchase plan

[The Goodman Groups] capital raising is the largest non-traditional rights issue that has proceeded in accordance with the disclosure exemptions introduced earlier this year to facilitate such equity raisings without the preparation of a prospectus or product disclosure statement Stuart Mcculloch, allenS arthur robinSon

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NEWS | deals >>

7www.legalbusinessonline.com

your month at a GLanCe Firm Jurisdiction Deal name A$m Practice

Addleshaw Goddard Australia, UK Employment Services Pertemps People Development Group acquisition

110 M&A

AGL Legal Australia BO Auscom stake acquisition 221 M&A

Allens Arthur Robinson New Zealand, Australia Babcock & Brown Communities price discovery 370 Securitisation, M&A

Australia, UK British Airways Qantas merger proposal 10,000 M&A

Australia Goodman Group equity raising 955 Equity

Australia New Hope Resource Pacific takeover bid 591 Energy & resources

Baker & McKenzie Australia New Hope Resource Pacific takeover bid 591 Energy & resources

Blake Dawson Australia, South Africa Aflease Gold BMA Gold merger 100 Resources, M&A

New Zealand, Australia Babcock & Brown Communities price discovery 370 Securitisation, M&A

Australia, UK British Airways Qantas merger proposal 10,000 M&A

Australia, UK Employment Services Pertemps People Development Group acquisition

110 M&A

Challenger Legal Australia Challenger Financial AXA annuity acquisition 1250 Finance, M&A

Debevoise & Plimpton Australia, US QBE Insurance ZC Sterling acquisition 825 M&A

Deneys Reitz Australia, South Africa Aflease Gold BMA Gold merger 100 Resources, M&A

Dibbs Abbott Stillman Australia Marubeni Resource Pacific stake acquisition 230 Equity

DLA Phillips Fox Australia BOC Auscom stake acquisition 221 Equity, M&A

New Zealand Foodstuffs Liquorland acquisition N/A M&A

Australia Stemcor Pellets Savage River mine stake disposal 72 Equity

Edwards Angell Palmer & Dodge

Australia, US QBE Insurance ZC Sterling acquisition 825 M&A

Freehills Australia Challenger Financial AXA annuity acquisition 1,250 Finance, M&A

Australia Stemcor Pellets Savage River mine stake disposal 72 Equity

Australia Transfield capital raising 204 Equity

Gateley Wareing Australia, UK Employment Services-Pertemps People Development Group acquisition

110 M&A

Gilbert + Tobin Australia BOC Auscom stake acquisition 221 Equity, M&A

Mallesons Stephen Jaques Australia, UK British Airways Qantas merger proposal 10,000 M&A

Australia CSR capital raising 482 Equity

Australia Marubeni Resource Pacific stake acquisition 230 Equity

Australia Minara Resources rights issue 210 Equity

Australia National Australia Bank capital raising 3,000 Equity

Minter Ellison Australia Challenger Financial AXA annuity acquisition 1,250 Finance, M&A

Australia, UK Employment Services Pertemps People Development Group acquisition

110 M&A

Australia FKP Property Group placement 179 Equity, property

Moody Rossi & Co. Australia, Singapore Independent Pub Group hotel acquisitions 92 M&A

Mullins Lawyers Australia, Singapore Independent Pub Group hotel acquisitions 92 M&A

QBE Legal Australia, US QBE Insurance ZC Sterling acquisition 825 M&A

Simpson Grierson New Zealand, Australia Babcock & Brown Communities price discovery 370 Securitisation, M&A

New Zealand Foodstuffs Liquorland acquisition N/A M&A

SJ Berwin Australia, UK British Airways Qantas merger proposal 10,000 M&A

Slaughter & May Australia, UK British Airways Qantas merger proposal 10,000 M&A

Sullivan & Cromwell Australia, UK British Airways Qantas merger proposal 10,000 M&A

Does your firms deal information appear in this table? Please contact [email protected] 61 2 8437 4700

| AustrAliA, uK |

qBe insuranCe ZC sterLinG aCquisitiona$825.3m

Firm: Debevoise & PlimptonLead lawyer: Robert QuaintanceClient: Stone Point Capital

Firm: Edwards Angell Palmer & DodgeLead lawyer: Charles Welsh, Bruce RaphaelClient: QBE Insurance Group

Firm: QBE Insurance LegalLead lawyers: Duncan Ramsay, Peter MaloneyClient: QBE Insurance Group

QBE Insurances US$575m acquisition of ZC Sterling was announced at the same time that QBE said it would buy two US underwriting agencies and one in EuropeZC Sterling is owned by private equity firm Stone Point Capital, which invests in financial services and insurance companies

| AustrAliA |

stemCor peLLets savaGe river mine stake disposaLa$72m

Firm: DLA Phillips FoxLead lawyer: Robert TobiasClient: Stemcor Pellets

Firm: FreehillsLead lawyer: Simon ReedClient: Consortium led by Jiangsu Shagang, Pacific Minerals, RGL Group

Stemcor Pellets sold its 10% stake in Savage River mine, operated by Australian Bulk Minerals (ABM)

deal involved exchange for shares in Grange Resources, which agreed to merge with ABM

Grange will acquire holding companies of ABM from Shagang International Holdings, RGL Holdings, Pacific International and Stemcor Pellets by issuing them about 380m shares

DLA Phillips Fox previously acted for Stemcor on its acquisition of Savage River mine in 2005 and its 90% stake sale to the Shangang interests in 2007

Savage River mine has an implied value of A$720m and the merger will create a listed entity worth approximately A$1bn

transaction subject to government and shareholder approval

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NEWS | deals >>


other companies in Stone Point Capitals portfolio include Atlantic Capital Bank of Atlanta and insurance agency Lane McVicker

BBC acquired Retirement by Design business comprising seven retirement villages and one aged care facility from Lend Lease for A$133.4m

BOC, part of Linde Group, acquired the remaining 50% stake of Auscom, owned by Elgas, from its joint venture partner AGL Energy.

deal involved due diligence review, obtaining regulatory consents, preparing and negotiating share purchase agreement

transaction faced environmental, property, competition and workplace issues

G+T previously advised AGL on asset disposals in 2007 including sale of Chilean gas distribution business GasValpo to Australian superannuation fund consortium (US$90m) and a 33% stake in AlintaAGL to Babcock & Brown and Singapore Power (A$500m)

Marubeni acquired a 22.22% stake (US$130m) in Resource Pacifics Ravensworth coal mine from Xstrata

Marubenis stake will double from 10.24%

Deal completed on 21 October 2008

| AustrAliA, uK |

empLoyment serviCes pertemps peopLe deveLopment aCquisitiona$110m

Firm: Blake DawsonLead lawyer: Arthur Apos, Julia Hammon, Sarah GallowayClient: Network Group Holdings

Nick Pappas, Mallesons

Jason Watts, Mallesons

| AustrAliA |

BoC aCquisition oF stake in ausComa$221m

Firm: DLA Phillips FoxLead lawyers: David Morris, Adrian SmithClient: BOC

Firm: Gilbert + TobinLead lawyer: Philip BredenClient: AGL Energy

Firm: AGL LegalLead lawyer: Monique GilbertsonClient: AGL Energy

| AustrAliA |

minara resourCes riGhts issuea$210m

Firm: Mallesons Stephen JaquesLead lawyer: Nick PappasClient: Glencore International

despite volatile commodity markets Minara Resources rights issue hoped to raise approx A$210m by selling 700m ordinary shares at 30c each

raising underwritten by Minaras major shareholder Glencore, which will increase its stake from 56.1% to more than 70% due to shortfall

A$73m will be used to repay short-term funding arrangement by Glencore, A$23m for capital expenditure, A$106m for working capital and A$8m for issue costs

Glencore expected to receive an underwriting fee of A$7.3m

| AustrAliA |

maruBeni resourCe paCiFiC stake aCquisitiona$203.3m

Firm: Mallesons Stephen JaquesLead lawyer: Nick Pappas, Robert GibsonClient: Xstrata

Firm: Dibbs Abbott StillmanLead lawyer: Peter BurdenClient: Marubeni Corporation

[Advising on the sale to Marubeni] demonstrates the strength of our relationship with Xstrata and our ongoing commitment to the resources sector, regardless of the phase in the economic cycle

nicholaS PaPPaS, MalleSonS StePhen JaqueS

| AustrAliA |

transFieLd CapitaL raisinG a$204m

Firm: FreehillsLead lawyer: Philippa Stone, Tony SparksClient: Transfield Holdings

equity raising includes A$204m institutional component through a A$58.9m placement and 1-1 rights issue at A$1.25 per share 60% less than its last trading price

raising includes a A$102.2m rights issue for retail investors

Macquarie Capital and ABN Amro to share fee of A$5.61m and may also receive an incentive fee of A$1m

Freehills expected to receive A$350,000 and PricewaterhouseCoopers A$850,000 in fees

| AustrAliA |

Fkp property Group pLaCementa$179m

Firm: Minter EllisonLead lawyer: Bruce Cowley, Gary GoldmanClient: FKP Property Group

FKP Property Group announced partially underwritten non-renounceable entitlement offer of stapled securities to raise A$151m

funds being raised to provide funding capacity for FKPs development and land pipelines

Stockland Corporation will acquire a 5% stake in FKP for a total consideration of about A$28m

| New ZeAlANd, AustrAliA |

BaBCoCk & Brown Communities priCe disCoverya$370.5m

Firm: Blake DawsonLead lawyers: Sarah Dulhunty, Stephen Menzies, Peter StirlingClient: Babcock & Brown Communities Group

Firm: Allens Arthur Robinson Lead lawyer: Tom Story, Stuart McCullochClient: Lend Lease Corporation

Firm: Simpson GriersonLead lawyer: Michael PollardClient: Babcock & Brown Communities

ASX-listed retirement village operator Babcock & Brown Communities (BBC) undertook a strategic review and price discovery process

included cash injection of A$195m in the form of subscription for new stapled securities in BBC and the issue of convertible notes by BBC

Lend Lease acquired management rights of BBC from Babcock & Brown (B&B) for A$17.5m and acquired B&Bs stake in BBC for A$24.6m

| AustrAliA |

Csr CapitaL raisinG a$482m

Firm: Mallesons Stephen JaquesLead lawyer: Jason WattsClient: CSR Group

CSR Group is raising A$482m of capital

raising includes A$125m in institutional placements, A$179m in a one-for-four rights issue to institutions and retail offer also pitched at a one-to-four ratio to raise A$179m

dividend reinvestment plan will not be underwritten

UBS, ABN Amro and Mallesons are expected to share in A$9.1m of fees, depending on how well retail offer is received

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NEWS | deals >>


| AustrAliA, south AfricA |

aFLease GoLd Bma GoLd merGera$100m

Firm: Blake DawsonLead lawyers: Roger Davies, Antonella Pacitti, Lisa Le FaucheurClient: BMA Gold

Firm: Deneys ReitzLead lawyer: Theuns SteynClient: Aflease Gold

BMA Golds merger with Aflease Gold will create dual-listed (ASX and JSE) entity called Gold One International

involves inward listing of BMA on JSE and subsequent acquisition of Aflease via scheme of arrangement

transaction approved by shareholders on 21 January 2009

also subject to regulatory approval

Firm: Minter EllisonLead lawyer: Callen OBrien, Ricky CasaliClient: Employment Services Holdings

Firm: Addleshaw GoddardLead lawyer: Clare ThomasClient: Employment Services Holdings

Firm: Gateley WareingLead lawyer: Paul Cliff, Katie Silvester, Andrew CowanClient: Pertemps People Development Group

43m consideration to be paid by Employment Services Holdings (ESH) to Pertemps People Development Groups shareholders comprises 18.16m in cash and 24.84m in shares

ESH required Minter Ellison to conduct due diligence, advise on drafting and negotiation of the transaction documentation, and obtain FIRB approval

| AustrAliA, siNgApore |

independent puB Group hoteL aCquisitionsa$92m

Firm: Mullins LawyersLead lawyer: Curt SchatzClient: Independent Pub Group

Firm: Moody Rossi & Co.Lead lawyer: Bill MoodyClient: Lasseters International Holdings

despite economic downturn Independent Pub Group (IPG) acquired 12 hotels Singapore-listed Lasseters International Holdings

hotels in Queensland, NSW and South Australia were acquired via freehold and share purchase

largest transaction of Australian hotels sold in a row for past year

| New ZeAlANd |

FoodstuFFs LiquorLand aCquisition

Firm: Simpson GriersonLead lawyer: Mike SageClient: DB Breweries

Firm: DLA Phillips FoxLead lawyers: Martin Wiseman, Sarah SmithClient: Foodstuffs

grocery co-op Foodstuffs acquired Liquorland from DB Breweries

after a competitive bidding process Foodstuffs was selected as preferred bidder due to it being most suitable to support and grow national chain

change of ownership took effect on 31 October 2008

DLA Phillips Fox acted for all three of Foodstuffs co-operatives on significant strategic matters

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10

NEWS | analysis >>


interest from China and India. It is something often pursued, although most mineral reserves have many types of ore. The deciding factor will be the projected price of that ore for the next 1015 years. If it drops, production of that commodity could be unfeasible, Mitchell says.

Due to the ongoing drought in most parts of the country, there could also be water projects, including grey water and desalination plants, and dams.

Cash injection boosts hospital workWood believes there could very well be hospital and other health infrastructure work, pointing to his recent work on the Royal North Shore Hospital. There is no doubt that this could go ahead. However, a difficulty remains that road and PPP projects are required to gain 100%

Infrastructure and projects appear to be high on the Rudd governments agenda and law firms can soon expect a major increase in work.

Government body Infrastructure Australia has allocated A$20bn in funds for major projects starting from February 2009.

Submissions are still being considered, but Mallesons Stephen Jaques partner Geoff Wood believes upcoming projects are likely to include social infrastructure and a freight railway line to transport coal from the Hunter region.

Blake Dawson partner Chris Mitchell agrees that rail links between natural resources and the sea are likely to be upcoming projects. He says they could also occur in Western Australia and Queensland, particularly the Gladstone region.

There is likely to be uranium mining work, since there is acquisition

Geoff Wood, Mallesons

ANALYSIS

Although some large firms were not turned on by the first round of the federal governments infrastructure spending spree, major infrastructure projects on the way for 2009 may lift their spirits. Richard Szabo finds out what type of work will be in demand

Show me the money Infrastructure Australia will allocate A$20bn in funds for major projects starting from February 2009, with some capital projects lasting 1824 months

Federal government recently agreed to provide public hospitals with A$6.5bn in funding over the next five years

Proposed projects announced include Sydneys West Metro (A$8bn), M5 motorway widening (A$3bn) and North Strathfield to Hornsby railway quadruplication (A$1.8bn)

Firms specialising in construction, financing, planning, corporate commercial, property and government likely to observe increased work flows

Infrastructure work: A winner for 2009

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NEWS | analysis >>


Some indigenous projects are likely to be longer jobs, involving construction of health facilities and clinics for Aboriginal communities, and also longer-running programs, he says.

The government has budgeted for a A$1bn increase in funding for a range of agreements, including hospitals, housing and disabilities. The increase would boost confidence in the health sector, according to Boyce, and this could see reconsideration of major projects that had previously not proceeded due to a lack of funding.

There could also be an increase in privately financed infrastructure, he says, and, some public infrastructure projects may need additional private capital, so we will probably see public and private partnerships forming.

Law firms that specialise in construction, corporate commercial, property and government are likely to observe increased work flows. Projects could begin in early 2009 and some capital projects might last up to two years, he states.

Dwindling funds bring mixed reactionAlthough the global financial crisis has shrunk the federal governments Building Australia fund from the A$20bn expected initially to just A$12.6bn, firms still believe it will bring more work.

Allens Arthur Robinsons Emma Warren is one partner who feels the outlook is positive for infrastructure work. Even though the dollars have decreased, they are big projects. It certainly shows an incredible commitment, she says.

Some of the projects announced include the completion of Sydneys West Metro (A$8bn), the widening of the M5 motorway (A$3bn) and the quadruplication of the North Strathfield to Hornsby railway line (A$1.8bn).

Freehills partner Bill Napier believes each of these projects would provide lawyers with work for about six to 18 months. However, although these proposals could offer good work for

PoSSible ProjectS Social infrastructure and freight railway lines to transport coal from the Hunter region, Western Australia and Queensland

Uranium mining work due to acquisition interest from China and India

Water projects due to the ongoing drought, including dams, grey water and desalination plants

Hospital projects with special focus on indigenous health centres

financial commitment from institutions this is quite difficult at the moment and the government will need to look into it, he added.

He was spot-on. The federal government recently agreed to provide public hospitals with A$6.5bn in funding over the next five years, including A$1.7bn in payments for meeting performance standards. Another A$800m will be allocated for indigenous health.

Thomson Playford Cutlers partner Tom Boyce says indigenous health projects would possibly involve setting up structures in the countryside.

two receNt INfrAStructure hIghLIghtS

briSbAne AirPort linK PPP Project Value: A$4.8bn

Firm: Corrs Chambers Westgarthlead lawyer: David Warrenclient: BrisConnections Consortium

Firm: Clayton Utzlead lawyers: Doug Jones, Alan Macguire, David Lesterclient: BrisConnections Consortium

Firm: Freehillslead lawyer: David Templemanclient: Northconnect Motorway Consortium

Firm: Mallesons Stephen Jaqueslead lawyer: David Storrclient: Northern Motorway Consortium

Reportedly largest PPP project undertaken to date in Australia

Project includes seven kilometre toll road linking Brisbanes northern suburbs to airport, with fly-over road and section for Northern Busway

Financial close was expected in August 2008, construction due to complete mid-2012

newcAStle coAl inFrAStrUctUre FinAnceValue: A$1.55bn

Firm: Allens Arthur Robinsonlead lawyers: Rob Watt, Phillip Cornwell, Thomas Millerclient: SMBC, Suncorp-Metway, OCBC Capital Investment Private, KBC, DZ Bank, Dexia, ANZ

Firm: Blake Dawsonlead lawyers: David Mason, Matthew Stottclient: Newcastle Coal Infrastructure

Firm: Clayton Utzlead lawyer: Sergio Capelliclient: Newcastle Coal Infrastructure

Financing involved A$1.3bn senior debt and A$250m junior debt, senior funding was provided by ANZ Bank, Dexia, KBC, Suncorp-Metway, DZ Bank, OCBC and SMBC

Debt funded through a variety of instruments, including a construction facility converting to term facility, cost overrun facility, liquidity facility, working capital facility, letter of credit facility and junior notes

Sponsors of project were coal companies in the Hunter Valley forming the Newcastle Coal Infrastructure Group

Sought government approval and reached financial completion in a relatively short time, by April 2007

Transaction required innovative structure and complexity since were multiple layers of debt and equity as well as off-take involvement

Bill Napier, Freehills

Emma Warren, AAR


12

NEWS | analysis >>


The Kiwi legal community has been in lengthy discussions over the new John Key governments decision to postpone the

emissions trading scheme. But what exactly would this mean for lawyers and their work flows?

Kensington Swan partner Bryan Gundersen says the review lasting until September 2009 will be a setback for environment and commercial lawyers, if clients delay external legal expenditure.

While its a setback, its not a disaster, he said. I remain very positive for work flow in the area as there are risks to be managed and opportunities to pursue. Well still end up with an emission trading scheme, perhaps modified with agriculture carved out and a carbon tax.

Forestry work provides shelterWhile there is a slow-down in climate change work, areas of forestry are still in demand. Craig Nelson of Simpson Grierson says the pause in climate change work should not prevent clients participating in emissions trading.

Its only natural that there will be a pause. Whether they are an emitter or a forester, NZ is still party to the Kyoto Protocol and needs to meet its obligations, he says.

Nelson points to a niche area of forestry involving the Permanent Forests Sink Initiative (PFSI) that is increasing in popularity. He says there

is no suggestion that the New Zealand government would postpone it.

Historically PFSI has not received a large following due to commercial interests of timber production; however, the firm has begun to see some interest.

We began working on PFSI deals even before the initiative was passed by parliament, he says. There is the first-mover advantage, when clients take opportunities and secure deals while other players wait for the is to be dotted and ts to be crossed. Namely, the best land and forests will be snapped up by those who move first.

Emissions lobbying brings more workBell Gully partner Simon Watt says some of the firms clients have shown increasing interest in shaping the Climate Change Response (Emissions Trading) Amendment Act 2008.

Some clients could ask for the policy to be dropped, some might want a carbon tax and others want it tweaked, he says. The scheme is going to keep the same framework, more likely than not, but it will be made more business-friendly.

Watt believes carbon and emissions trading work flows will remain steady. Its business as usual and our carbon trading work is certainly most likely to continue next year, he states.

Chris Bougen of Chapman Tripp agrees that the policy development and submission process for the scheme would create work for firms. He expects

Most lawyers are pleased with the outcome of New Zealands general election; however, some climate change practices are concerned that the National governments move to postpone and review the Climate Change Response (Emissions Trading) Amendment Act 2008 could hit work flows

How lawyers can turn Kiwi climate change freeze into a positive

Craig Nelson, Simpson Grierson

Simon Watt, Bell Gully

construction lawyers, banking lawyers would not have much involvement as little bank or private equity debt funding is anticipated.

It isnt much relief for banking lawyers in light of the credit crunch, he says. We always expected the fund to bring in some work, but were modest in our expectation of its volume.

Napier said that because the West Metro might be financed only by public funding, external law firms may miss out on a significant amount of PPP work. Now that the government has taken it from becoming a PPP and made it a public project, it will involve some external legal advice. But its a smaller slice of the pie and likely to go to government-side legal advisers, he says.

To this end, Allens, a member of various government panels, believes the outlook is positive. Warren says construction, project and finance lawyers alike will benefit from a mix of publicly and privately funded projects.

Full speed aheadSince the government has shown interest in fast-tracking projects, it is likely that lawyers will need to work more productively. If the government wants projects done quickly, its good as long as lawyers can handle them. It usually sets realistic and achievable timeframes, says Mitchell.

He believes areas of legal expertise such as construction, financing, planning and environment will be in greatest demand. ALB

There could also be an increase in privately financed infrastructure, and some public infrastructure projects may need additional private capital, so we will probably see public and private partnerships forming

Tom Boyce, Thomson Playford cuTlers

ANALYSIS


NEWS | analysis >>


to work closely with clients to engage with the government on the scheme.

There is a sense that policy debate has been opened for a principle review of the scheme and carbon tax. At the end of the process there will be some form of policy response and that means work for firms, he says.

Voluntary emissions bring paid workThere has also been a substantial increase in voluntary emissions scheme work for firms. Bougen says they have realised that clients are increasingly interested in green credentials, carbon neutrality and sustainability. This has led to an increase in work flow over the past few years.

Work in the voluntary carbon markets is likely to continue, although the focus may shift away from emission-reduction projects to mechanisms that businesses can use to demonstrate their green credentials voluntarily, he says.

However, compliance required by the emissions trading scheme may ultimately lead to a drop in voluntary emissions work, once the scheme is enacted. Nevertheless, Bougen is relaxed about work flows.

There is still going to be trading activity going on in the voluntary markets. There will still be international organisations measuring client emissions and issuing some with carbon credits there is a market for them. We are also seeing trading of existing credits, he explains.

Chris Bougen, Chapman Tripp

Keeping in touchGunderson believes Kiwi firms could play a more active role in encouraging clients to give more careful consideration to the scheme. We tell clients not to use this as an excuse to slack off, but instead to be even better informed about how its going to affect their business. It is still possible to do transactions, because there are always means of allocating risk to protect both parties given the current regulatory uncertainty, he said.

To this end, climate change seminars have helped the firm. We held a client update on where things are at on a weekly basis, he said. We also went to see them to find out how their business would be affected by emissions trading and other climate change issues. He added that lawyers can also provide

broader legal advice, including both technical and strategic expertise for submissions, legal technical changes required for the scheme, opportunities for brand enhancement and work on procurement or supply contracts, to ensure carbon costs are recovered and passed through.

Bougen says his firm has sent regular alerts to clients and this has been effective in helping them recognise the impact of the legislation. They are also keen to know how the Select Committee process will unfold and how to participate.

Watt suggests firms could encourage clients to participate in the review by communicating with them regularly about how it would affect them. Nelson, on the other hand, says law firms could increase their work flow by publishing articles and running workshops about how clients would need to adapt to the emissions scheme. ALB

Bryan Gundersen, Kensington Swan


14

NEWS | analysis >>


Back in July 2008, the mid-tier was on a roll. Four major firm mergers in the space of a month seemed to herald a new era of

consolidation and they all went into them with optimism, aiming for that elusive point of critical mass. So, how are they faring six months down the track? And what lessons can they offer to other merger-aspirants?

Business modelUnlike listed companies, the traditional law firm partnership is a rather private affair and it is precisely this lack of transparency that can put a merger in dangerous territory. Margaret Fitzsimons, general manager of Thynne & Macartney, says that her firm would not have been in a position to even consider it, had it operated according to a traditional legal business model. She attributes the success of the merger to the firms strong corporate approach, which means the business is run by a team of specialist managers.

The firms equity partner remuneration system has also stood the test of the process. We are prepared to make challenging business decisions if we need to because we

have comprehensive management information at hand to assist us, said Fitzsimons. Our business is based on meritocracy. There are no free rides at Thynne & Macartney conversely, everything is fair here and that culture encourages us all to achieve to the highest level we can in accordance with our lifestyle decisions.

Same firm, different name?Some mergers start with a bang, with new lawyers and their support staff arriving on the doorstep of their adoptive firm and a flurry of activity as they settle in. The disruption sends a useful signal to all involved that a new world order is here, and that an adjustment needs to be made.

But the challenge was different when Herbert Geer merged with NRH in Brisbane. The original Herbert Geer lawyers left to form their own boutique insurance firm and the NRH team became Herbert Geers Brisbane presence. The NRH team had a new name, but hardly any other physical

evidence of the merger. Managing partner Bill Fazios task was to foster a sense that the merger was more than just a change of name and logo.

You cant ram change down peoples throats, said Fazio. You need to help it along and encourage it to happen naturally. That means giving people the chance to get to know each other and thats a process that doesnt happen overnight.

There are two keys to facilitating it, however technology and travel. In the current climate, people are more cautious about spending money on travel, said Fazio. Thats why weve allocated partners a travel budget so that they can meet their colleagues in other cities. And we want them to use that budget not save it. Herbert Geer has also invested in new technology to afford easier communication between offices.

At Cridlands MB, technology was also a key part of fostering a united firm culture. With Morgan Buckley lawyers predominant in the Alice Springs office and Cridlands lawyers likewise in the Darwin premises, there

Three firms that merged recently provide some perspective on how to make a law firm merger work in the long term

Now the honeymoons over.

ANALYSIS

Tony Morgan, Cridlands

Bill Fazio, Herbert Geer


NEWS | analysis >>


recent mid-tier mergerS Firms: Cridlands, Morgan BuckleyNew name: Cridlands MBTerritory: Northern TerritoryDate: August 2008

Firms: Herbert Geer , Nicol Robinson HallettsNew name: Herbert GeerState: Queensland Date: July 2008

Firms: Middletons, Salter Power, Franklyn LegalNew name: MiddletonsState: Western AustraliaDate: December 2008

Firms: Thomson Playford, Cutler Hughes & HarrisNew name: Thomson Playford CutlersState: NSWDate: August 2008

Firm: Thynne & Macartney and Biggs & BiggsNew name: Thynne & MacartneyState: BrisbaneDate: August 2008

Note: Location denotes state where merger took place, not firm headquarters.

Economic downturnNo-one could have predicted Septembers dramatic events in the world economy least of all the firms that had merged only months earlier. High-targeted growth strategies are particularly vulnerable, as the right time to enter a market often dictates the ventures success or failure. But a broad growth strategy is a different matter far from making a firm more vulnerable, a merger can strengthen it.

Herbert Geer is a case in point. It gave us that extra depth and talent that helped attract clients and retain them, says Fazio. His ambitions extend beyond simply weathering the storm, however he sees the current climate as an opportunity to grow. Were still looking at adding partners in Sydney and Brisbane and it will be easier to recruit, he adds.

Tony Morgan says that hes noticed a higher calibre of lawyer applying to join his firm since the merger a change that he attributes to its increased attractiveness. The other possible explanation could be a loosening of the employment market, but Morgan points out that his observation preceded the present economic turmoil. He says the effects of the downturn are yet to be felt in the Northern Territory and they certainly have not led to any lawyer dislocation.

We havent had any projects put on hold and the NT market is still strong, he states. In any event, the merger puts it in a good position to handle any potential hits better. ALB

THRee-qUARTeRS oF US LAW FiRMS To CHANGe BiLLiNG PRACTiCeSMost large US firms believe they will change their billing practices over the next decade, a recent survey revealed.

The annual Am Law 200 survey received about 140 responses, 84 of which were from firms with revenues of US$1bn or more.

When asked whether firms would change their billing practices, about 75% of them said they would over the next 10 years, and 66% of them agreed that fixed-fee deals are likely.

A similar survey prepared by social networking website Legal OnRamp revealed that 84% of lawyers, working for firms with revenues of at least US$1bn, thought there would be more value billing.

When quizzed, respondents were divided about whether fees would represent more than 10% of total transaction costs; however, they agreed collectively that billable hours would be diminished.

CLieNTS DiSSATiSFieD WiTH FiRMS, SURvey ReveALSMore than 60% of Australian clients are dissatisfied with their legal adviser, a recent sample survey revealed.

Consulting firm Julian Midwinter & Associates conducted a series of focus groups and one-on-one interviews with in-house lawyers and business executives. It revealed that 65% of clients felt that at least some of their legal work should be serviced at lower cost, while only 25% believed their lawyer actively tried to reduce legal expenses.

Consultant Linda Julian suggested that firms should make better use of technology and document creation systems to reduce costs. She pointed out that partners in some firms have created templates and automatic information exchanges that paralegals can use to minimise senior-level involvement and fees in some work.

news in brief >>

was a danger of them both operating at a metaphorical distance from each other. The unifying point turned out to be technology. Morgan Buckley had superior systems to Cridlands, so we ended up adopting the Morgan Buckley ones, says partner Tony Morgan. He says that integrating those systems technology, software and quality assurance proved to be the most challenging part of the merger.


16 Australasian Legal Business ISSUE 7.1

The epicentre of Australias resources boom might have been Western Australia but, according to Blake Dawson partner Simon Fraser, South Australia is the new frontier.

We are firm believers in the future of the South Australian economy. We think there will be a mining boom. Although its been in the doldrums for a while and the current economic crisis has slowed the pace of it a little bit, we believe it will happen, Fraser said.

Fraser, who specialises in energy & resources, has led Blake Dawsons expansion into South Australia. He said commitment by the state government to infrastructure development combined with a streamlining of the approvals process has helped to make South Australia an attractive destination for junior miners, even more so than WA.

The government and bureaucracy in WA have become tired and they are not that interested in new projects because they have so much going on, he said. However, in SA the government have their ears pulled back. There is quite a lot of focus on junior miners, and the sentiment is that junior miners are currently getting more bang for their buck in SA then they are in WA.

The state is very keen to realise the wealth that it has in the ground. So from

a lawyers perspective that means more work, he added.

Although Fraser noted the lack of available funds necessary for drilling may stall some mining projects, the current slump in commodity prices will not be a long-term deterrent.

Most exploration work in SA is in its early stages it takes years to develop a project. They need to find the ore, develop the resources, get all the approvals then build the project most projects are at least five to 10 years away from production thats outside the current commodity cycle. I would expect commodities to resume their more normal trajectory within the next two to three years. So, current commodities are not impacting peoples views about how they should spend money on developing projects, Fraser explained.

There is a strong feeling that a number of those exploration tenements will yield world-class resources of some description, so the prevailing feeling is that in the next 10 years or so there is going to be number of large projects developed in SA, he continued. ALB

THRee-qUARTeRS oF US LAW FiRMS To CHANGe BiLLiNG PRACTiCeSMost large US firms believe they will change their billing practices over the next 10 years, a recent survey revealed.

The annual Am Law 200 survey received about 140 responses, 84 of which were from firms with revenues of US$1bn or more.

When asked whether firms would change their billing practices, about 75% of them said they would over the next 10 years, and 66% of them agreed that fixed-fee deals are likely.

A similar survey prepared by social networking web site Legal OnRamp revealed that 84% of lawyers, working for firms with revenues of at least US$1bn, thought there would be more value billing.

Respondents were divided when quizzed about whether fees would represent more than 10% of total transaction costs. However, they collectively agreed that billable hours would diminish.

CLieNTS DiSSATiSFieD WiTH FiRMS, SURvey ReveALSMore than 60% of Australian clients are dissatisfied with their legal advisor, a recent sample survey revealed.

Consulting firm Julian Midwinter & Associates conducted a series of focus groups and one-on-one interviews with in-house lawyers and business executives. It revealed that 65% of clients felt that at least some of their legal work should be serviced at lower cost, while only 25% believed their lawyer actively tried to reduce legal expenses.

Consultant Linda Julian suggested that firms should make better use of technology and document creation systems to reduce costs. She pointed out that partners in some firms have created templates and automatic information exchanges that paralegals can use to minimise senior-level involvement and fees in some work.

MACDoNNeLLS LAW GoeS GLoBAL WiTH MeRiTASQueensland firm MacDonnells Law has joined global business law firm alliance Meritas.

The alliance aims to provide clients with a simple, localised and comprehensive search service for firms. It has a membership of about 170 law firms and 5,700 lawyers located in 60 countries. In Australia member firms are including Madgwicks, Snedden Hall & Gallop, Downings Legal and Rudkin Hitchcock.

The alliance is expected to allow the Queensland firm to expand its client base, legal talent pool and scope. MacDonnells Law partner Terry Karydas said the opportunities created in such an alliance include sharing information and expertise with other lawyers within the group.

news in brief >>

Terry Karydas, Macdonnels Law

Simon Fraser, Buddle Findlay

AuStrALIA

South Australia: the new frontier

NEWS >>



Amid global economic turmoil and dwindling workflows, US lawyers are showing good spirit and using their spare time to do more pro bono work.

According to Dechert chairman Barton Winokur, at least seven of that firms associates are expected do full-time pro bono work for about three to six months.

The associates have extra capacity due to a slowdown in structured finance work.

Cadwalader, Wickersham and Taft has similarly increased pro bono hours, while Akin Gump partner Steven Schulman said his firms annual pro bono hours rose from 69 to 85 hours per attorney in 200708.

In most parts of Asia, international firms chose to leave their pro bono work to their US headquarters. One of the few exceptions was Tokyo-based Paul Hastings partner Alexander Jampel, who said that there had been a steady

flow of pro bono work.It has been consistent with previous

years. We dont plan to make staff work solely on pro bono; we just want all attorneys to work on some matters. About half of our lawyers work on pro bono and most of the partners do it, too, he said.

The move has been welcomed by the Pro Bono Institute in Washington, DC, whose president, Esther Lardent, said the increase is a change from how some firms tended to discourage pro bono before the 2001 recession. Apparently, some firms stopped giving equal credit for pro bono time and increased billable hour quotas.

The Association of the Bar of the City of New York observed increased attendance for a pro bono training session in October. Instead of an expected attendance of 80, there were 245 guests. ALB

uS, AuStrALIA, MIddLe eASt, ASIA

Pro bono popularity holds steadyAuStrALIA

Melbourne: law firm space race settles down

There may be a light at the end of the tunnel for AARs deal to secure office space at the 567 Collins St Melbourne development, which was subject to speculation earlier this year that it would be shelved owing to low levels of precommitment from tenants.

Unconfirmed reports now indicate that BP is set to sign up as a tenant in the development, finally putting to rest doubts as to the future of the project.

Other firms have also been making plans for their Melbourne offices. Last month Mills Oakley signed on for premium space at 530 Collins St, to be occupied late next year, while Minter Ellison has renewed its lease at the Rialto office building. ALB

NEWS >>


18

NEWS >>


Geothermal investment rocks, says Dla PhilliPs FoxAustralian geothermal power developer Geodynamics completed three successful capital raisings in 2008 A$37.5m (May), A$33.5m (June) and A$44.1m (September). This came after a successful joint venture with Origin Energy in late 2007 that raised A$115m for Geodynamics flagship Cooper Basin hot dry rock project.

DLA Phillips Fox partner Eugene Fung advised on the joint venture and capital raisings. He said that the investment showed that despite a difficult market, there was still capital available for quality renewable energy projects.

A report recently released by professional advisory firm Ernst & Young tipped investment in the sector to soar to A$2.3bn per year by 2020.

Uk comPany revamPs Panel, eliminates time-baseD billinGMajor UK company ITV has announced a new panel and, according to a report in Legal Week, is claiming to be the very first UK company to eliminate time-based billing by its panel firms.

General counsel have always encouraged alternative billing structures. Now that work flow is starting to tighten up for firms, that gentle encouragement might begin to take a more strident note, as GCs look to gain some leverage from their improved bargaining positioning.

Firms on ITVs panel are Slaughter and May, Lovells, Addleshaw Goddard, DLA Piper, Olswang, Charles Russell and Goodman Derrick. Erstwhile advisor Freshfields, however, missed out on a seat.

blasteD: lawyer accUseD oF UsinG mUmbai traGeDy to Promote FirmA partner of a European firm who was caught in the Mumbai cross-fire is still ducking for cover even after returning to the UK. The partner, who was interviewed by The Lawyer and UK mainstream media, attracted the ire of readers by reportedly namedropping his firm and its India practice and allegedly boasting that the siege had not prevented him from participating in a teleconference board meeting from his hotel room.

The reports drew protest from readers on The Lawyers reader forum, who accused the partner of shameless self-promotion and being an embarrassment to the legal profession. One reader, who claimed to be a former employee working under the partner, wrote in to express amusement at the thought of the partner cowering behind closed doors.

news in brief >>

Right in the thick of the global financial crisis and after months of decline in the capital markets, Allens Arthur Robinson, Freehills and Sullivan & Cromwell have successfully pulled off a A$2.5bn capital raising for Westpac. Could this be an early sign that other banks may follow suit?

Allens Stuart McCulloch, Freehills Philippa Stone and the Sullivan & Cromwell team successfully placed the A$2.5bn through an institutional book build, with a further A$500m to retail investors through a non-underwritten share purchase plan.

The bank undertook the raising taking into consideration a number of factors, including the slowing economy and the expected further deterioration of the credit market.

Freehills partner Philippa Stone said a number of issuers, including banks, are strengthening their balance sheets through capital raisings. Westpac has done it. And Commonwealth Bank recently announced a A$750m raising to redeem its PERLS II securities and of course there are other non-bank issuers currently in the market for capital, she said.

At the moment it is unlikely that banks would consider undertaking a

capital Markets

Allens, Freehills get slice of Westpac capital raising

hybrid capital raising, since Westpac has indicated its reluctance to replace St.Georges hybrids. The bank felt that the hybrid equity markets were becoming increasingly challenging and because of this success was uncertain in the present economic conditions.

However, Stone is still positive about hybrid work: Banks are very scientific in managing their capital and I am sure they will continue to look at the hybrid market, she said. ALB

CorreCtion Please note that incorrect information regarding the Oakajee Port & Rail Project appeared on p47 of ALB issue 6.12 within the ALB Guide: infrastructure 2008 section. The correct information is as follows:

During 2008 the Western Australian government ran a competitive process to select the developer of the new deep water iron ore export at Oakajee, north of Geraldton. Oakajee Port and Rail Pty Ltd (OPR) (as agent for a joint venture comprising Mitsubishi Development Pty Ltd, Crosslands Resources Pty Ltd and Murchison Ports Pty Ltd) and Yilgarn Infrastructure (Yilgarn) both lodged bids to become the developer and operator of the port. OPR (as agent for the Joint Venture) was selected as the preferred developer. Yilgarns bid was rejected. OPRs bid was considered by the Western Australian Government to be superior to that of Yilgarn in every respect. The Western Australian government has declined to appoint Yilgarn as a reserve proponent and Yilgarn currently has no right to build any part of the Port Infrastructure and no right to build any Rail Infrastructure. There is no continuing competitive process for the right to build the port. It follows that the project will not be partly funded by the five Chinese companies named in the article and there is no current proposal for the Chinese EXIM bank and China Development Bank to provide debt financing for the project. OPR is currently finalising the development agreement with the Western Australian Government confirming its selection as the preferred developer of the project. That agreement is expected to be finalised shortly. The primary legal advisors involved in the project are: DLA Phillips Fox (lead lawyer: Robert Edel (client: Oakajee Port and Rail Joint Ventures); State Solicitors Office of Western Australia (lead lawyer: Geoffrey Grice) (client: State of Western Australia); Mallesons Stephen Jaques (lead lawyer: Geoff Rogers) (client: Mitsubishi Development Pty Ltd); and Freehills (lead lawyer: Rob Merrick) (client: Murchison Metals Limited)

18-25 - news.indd 18 28/01/2009 3:58:09 PM

NEWS >>


uk report

of its departments to move to a four-day week and put the entire corporate team on two weeks unpaid leave in the run-up to Christmas.

no new staff for cadwaladerCadwalader Wickersham & Taft will have to break its impressive 100% trainee retention rate, which has remained steady for the last two-and-a-half years, due to worsening market conditions. The firm recently announced that it will not be offering jobs to any of its City trainees due to qualify in March 2009. The intake freeze will affect three trainee solicitors and makes Cadwalader one of the first leading firms in the City to make this move.

Deloitte survey reveals slow growth for firms It may not come as a surprise, but recent research from Deloitte reveals that UK firms are struggling with growth in light of the economic crisis. The report noted that fee income across the countrys 100 largest firms had increased by only 5.8% during the second quarter of 200809 compared with the same period the previous year. Firms in the top 10 are faring slightly better than their smaller rivals, reporting an average rise in fee income of 11.1% for Q2, but large firms have still been affected, posting only modest increases in revenue.

hey big spender norton flashes the cash While most UK firms are having to cut corners in most cost centres, it seems Norton Rose is sailing along just fine having just spent more than 8m on improvements to its offices. According to the firms 200708 annual report, 8.6m was spent on additions to its offices worldwide and a further 1.5m has been set aside for IT in the new year.

roUnDUPDavid Harris will start his second four-year term as Lovells managing partner in May. He was recently re-elected, despite stiff competition from European head Harald Seisler Bryan Cave recently launched its Paris office, with former Dechert partners Kathie Claret, Jilali Maazouz and Joseph Smallhoover and five other associates on boardAustrian firm Schoenherr is set to take over Herbert Smith ally firm Gleiss Lutz in the New Year. Schoenherr will obtain Gleiss Lutzs Prague and Warsaw branches while simultaneously launching its own office in Bratislava, SlovakiaEversheds, Allen & Overy and Ashurst are just a few of the top-tier firms to receive gongs for their work and employees at the recent 2008 British Legal Awards. Eversheds won firm of the year and lawyers from Allen & Overy and Ashurst picked up the lifetime achievement and senior partner awards respectively

london lay-offs rifeIt has been a bad few months for lawyers in London and beyond. Firms in the UK have been hit hard by the credit crunch, triggering a number of layoffs in quick succession.

Among the firms to dismiss City staff in recent months are Eversheds, Orrick, Mayer Brown, Reed Smith, DLA Piper, Taylor Wessing and Squire Sanders.

Eversheds is up to its second redundancy consultation, with the latest round tipped to include 45 lawyers and related support staff.

Fresh from making cuts across its US network, White & Case has now turned its focus on to its UK offices, where it is reportedly aiming to reduce its legal and non-legal headcount by about 3%.

Meanwhile 40 associates across the real estate, structured finance and corporate practices of Orrick Herrington & Sutcliffe are said to be facing redundancy.

Mayer Brown recently launched a redundancy consultation for 11 lawyers working in its London office, while DLA Piper has launched a redundancy consultation likely to result in up to 40 job losses across its UK offices. Partners have been told they will be out of the firing line.

And the latest bombshelll? Linklaters is looking to cut no fewer than 70 partners from its worldwide operation.

crisis turns focus to strategy While many firms are taking to redundancy consultations to balance the financial fallout from the economic downturn, a few UK establishments are also initiating other tactics to stay afloat. Following a June redundancy consultation, Milton Keynes firm Kimbells recently told lawyers in three

singaporeBlakes Singapore office off to a good start

The Singapore legal market became a little more crowded after Blake Dawson commenced operations in the Lion nation, a move designed to strengthen its Asia presence.

The Singapore office, headed by partner Rhonda Hare and staffed by lawyers Rhiannon Barnard and Ari Fox, will focus on hotel, tourism and gaming-related issues. The move makes Blakes only the fifth Australian law firm and the 86th foreign law firm to enter the saturated Singapore legal market.

In 2008, as part of its commitment to liberalising its legal market to support its financial services sectors, Singapores Ministry of Law announced the introduction of a Qualifying Foreign Law Firm (QFLF) licence, whereby six selected foreign law practices would be allowed to practise Singapore law in permitted areas and employ Singapore-qualified lawyers.

After applications were processed, the Singapore authorities named the successful firms as Allen & Overy, Clifford Chance, Herbert Smith, Latham & Watkins, Norton Rose and White & Case.

Until recently, foreign law firms were allowed to practise Singapore law only through a joint law venture (JLV) with a domestic firm.

While Blakes may have missed out on a QFLF licence, watch for the firm to look to lateral hires and maybe even its own JLV to shore up its market position in 2009. ALB

18-25 - news.indd 19 28/01/2009 3:58:11 PM

20

NEWS >>


What merger talks? we hear you ask. Rumours of a major top tier merger have been circulating since July, but for the first time Mallesons and Clifford Chance have been identified as the firms in question.

Talks never reached a formal stage, and the firms mutually agreed to put the discussion on hold following Septembers dramatic events in the world economy.

However, it is understood that the firms remain interested in reopening the dialogue when more felicitous conditions return, although the

continuing economic uncertainty makes it difficult to predict a specific timeframe.

The implications of such a merger will be food for thought for rival top-tier firms: the combined strength of a Magic Circle firm with Mallesons large Australasia footprint would have created a formidable regional presence. But this is not the first time such as union has been mooted merger talks between the two firms were first broached back in 1999. Its a fair bet that it wont be another 10 years before talks resume. ALB

Dla PiPer asks salarieD Partners to contribUte caPitalUS salaried partners of DLA Piper will contribute capital to the firm under a proposal to be voted upon by partners next month, according to the US National Law Journal.

The firm said that it is aiming to reduce its credit exposure by 30%, with joint chief executive officer Frank Burch commenting that the firm thought it would be prudent to finance more of its operations with its own money instead of lines of credit.

The proposal, which will give salaried partners a limited stake in the firms profits, is also intended to encourage an ownership culture rather than an employee culture for salaried partners.

DLA Piper operations outside the US will not be affected by the proposal, with the status quo to be maintained.

aPPle to DraG anD Delete Us law Firms From PreFerreD listThe in-house legal team at Apple is currently compiling a newer and leaner list of preferred legal advisors. The move follows similar moves by competing IT companies to shape up their legal departments.

According to Apples general counsel, Daniel Cooperman, the company has historically used a large number of firms since it has been difficult for any single firm to have an adequate understanding of its technology, markets and culture to perform at peak efficiency.

It is currently unclear which firms will end up on the shortlist. However, they are likely to include previous advisors such as Orrick, Morrison & Foerster, OMelveny & Myers and Howrey Wilson who helped Apple go public in 1980.

The list is expected to be finalised by early 2009.

Dla PhilliPs Fox aDDs another Deal to the basketDLA Phillips Fox has advised NZ supermarket group Foodstuffs on its successful purchase of the Liquorland retail liquor chain. Foodstuffs outbid some stiff competition including Australian supermarket giant Woolworths to close the deal.

The DLA Phillips Fox team was led by partner Martin Wiseman and included senior associate Reuben Woods and senior solicitor Julie Harper.

The transaction involved the purchase of all of the shares in Liquorland from DB Breweries. Wiseman said the transaction went smoothly due to Foodstuffs deep understanding of the needs of owner-operators and DBs desire to look after the long-term needs of the Liquorland franchisees.

news in brief >>

industryDust settles over Mallesons, Clifford Chance talks

After 18 months of tirelessly acting on the failed BHP Billiton and Rio Tinto merger, Allens Arthur Robinson partner Ewen Crouch is still optimistic.

It was a terrific effort our team has been working incredibly hard for the past 12 months. We are optimistic about M&A and capital markets work in 2009 that should get underway from around February, he said.

The two mining giants decided to call off the deal most recently valued at US$66bn, after the fall in metal prices and global financial crisis was feared to have created too much risk for the deal to proceed.

Crouch believes the BHP-Rio takeover bid was unique partly due to the number of jurisdictions involved and nature of the proposal.

This was a unique deal. There are few dual-listed companies and this was the first proposal to acquire a dual-listed company by way of takeover, he said.

Complexities included Rios repeated rejection of BHPs offer and reportedly little interaction between parties. The European Unions antitrust authority also demanded that BHP divest several assets, while both Japan and China were against the deal due to their reliance on both parties iron ore and other raw materials.

On a brighter note some firms are likely to benefit from the cancelled merger, since Chinalco has recently shown interest in increasing its stake in Rio by at least 9% (US$14bn). This could mean more work for Mallesons Stephen Jaques, Simpson Thacher, Clifford Chance and Sullivan & Cromwell, which formerly acted on Chinalcos initial 12% (US$14bn) stake acquisition in Rio.

Other firms that worked on the BHP-Rio merger include Linklaters, Slaughter & May, and Skadden, Arps, Slate, Meagher & Flom. ALB

australia

Lawyers optimistic in wake of aborted BHPRio deal

18-25 - news.indd 20 28/01/2009 3:58:17 PM

NEWS >>


us report

roUnDUPKirkland & Ellis has promoted 67 of its lawyers to partner across its US and London offices. In the US, the corporate practice alone saw 23 promotions, while litigation had 20Cleary Gottlieb has promoted 10 lawyers to partner recently six in the New York office, two in Rome and one in BrusselsNew York-based corporate head Tim Goodell has left troubled White & Case to join US oil company Hess Corporation as general counsel King & Spalding is close to reaching an agreement with Thacher Proffitt regarding the acquisition of around 100 of the latters 195 lawyers White & Case chairman Hugh Verrier has voiced his commitment to expanding and further developing the firms existing international network, in the wake of a management shake-up that saw firm power split among 14 regional groups and a 16-member global practice council set up. Verrier confirmed Latin America and Asia as prime targets for investment

among the firms whose US associates are receiving reduced bonuses at the end of the year.

At Cravath, year-end bonuses for 2008 will range from $17,500 to $30,000, and the firm has canned the special bonus element of its 2008 payments. Simpson Thacher has also cancelled the additional special bonus for its associates, which last year ranged from $10,000 to $50,000, and junior lawyers will receive $17,500 a severe drop from last years payout of $35,000.

Clifford Chance associates will receive between $17,500 and $32,500 a far cry from last years $32,000 to $65,000. The story is similarly austere at Davis Polk, and Cleary Gottlieb and Dewey & LeBoeuf are two more firms to have slashed associates bonuses.

Skadden Arps, however, has decided to go against the grain and has actually matched 2007 figures minus supplemental bonuses.

Partners at Dla Piper share financial load Partners at DLA Piper have been asked to contribute capital to the firm from next year. The strategy a bid by the firm to reduce its reliance on bank credit and simplify its compensation structure will only affect the 275 salaried partners at the international firms US offices who now receive an income rather than hold an equity stake at the firm. The amount to be contributed will depend on seniority and will give the partners a stake in the firms profits less than that of full equity partners.

Firms slash staff to battle credit crunch UK firms arent the only ones turning to redundancy to counter the effects of the economic downturn. US firms across the board including Squire Sanders & Dempsey, Proskauer Rose and Reed Smith have also been engaging in some pruning of the payroll.

Squire Sanders dismissed a total of 30 associate and support staff following its annual employment reviews, citing current and projected business conditions as the major reason. Proskauer Rose, meanwhile, made 35 associates and 25 support staff redundant in its US offices, despite major advances in developing its international network. But perhaps the most dramatic culler of staff has been Reed Smith, who made 115 redundancies across its US offices.

Other firms to have cut staff include: Buchanan Ingersoll & Rooney (25 secretarial and administrative staff); Duane Morris (22 marketing and administrative staff); Ballard Spahr Andrews & Ingersoll (13 support staff); boutique IP firm Synnestvedt & Lechner (seven staff has since disbanded); and Blank Rome (nine associates).

christmas bonuses hit by downturnFirms are increasingly having to display Scrooge-like tactics in a bid to soften the blow of the credit crunch on their finances. Cravath Swaine, Simpson Thacher, Clifford Chance and Davis Polk are

industryDust settles over Mallesons, Clifford Chance talks

australia

Lawyers optimistic in wake of aborted BHPRio deal

M&a

Firms quiet on BA-Qantas merger

Law firms that previously acted on British Airways (BA) failed proposal to merge with Qantas Airways (A$10bn) appear to be at a loss for words.

Allens Arthur Robinson, Blake Dawson, Mallesons Stephen Jaques, Slaughter & May, SJ Berwin and Sullivan & Cromwell confirmed they were acting on the merger. But none of them commented on whether talks could have developed into any concrete agreement.

If the merger had been successful, it would most likely have proceeded via a dual-listed company structure and involved an additional merger.

However, the deal still faced a range of complications and regulatory concerns, when Australian federal transport minister Anthony Albanese announced that Qantas would remain a majority Australian-owned company. This limited BA to acquiring no more than a 49% stake in Qantas.

Allens partner Andrew Finch, Blakes John Field, Mallesons David Friedlander and Sullivan & Cromwells Daryl Libow have at the very least received some due diligence and compliance work.

BA acquired a 25% stake in Qantas during the Australian carriers 1993 privatisation. ALB

18-25 - news.indd 21 28/01/2009 3:58:23 PM

22

NEWS >>


Firm Profile Buddle Findlay

The National government took office in November 2008 on the back of promises to make New Zealand globally competitive, reduce taxes

and improve productivity. One of its key policy planks, and to be started as part of its first 100 days programme, was commencing significant reforms of the Resource Management Act (RMA).

Faced with a gravely wounded economy, the timely delivery of infrastructure projects to deliver fiscal life-blood and save New Zealand from recession has taken on new significance.

Prior to its election National claimed its first phase of amendments to the RMA would:

Simplify the Act by reducing the number of consent categories, getting rid of vexatious and frivolous objections, making it easier for Councils to update plans, clarifying Treaty of Waitangi references, and scrapping the Ministerial veto over coastal consentsAddress perceived frustrations over minor consenting issues by establishing a new complaints mechanism with the power to discount or waive fees where statutory timeframes are breached Establish an Environmental Protection Authority (EPA) responsible for more effectively propagating National Policy Statements (NPS) and National Environmental Standards (NES) designed to increase national consistency and reduce duplication of work by local authorities. It also suggested that an EPA would be responsible for initiating a priority consenting process for major consents.

National also promised a second tranche of more wide-ranging reforms further into its term to address more complicated issues, such as the interaction between the Resource Management Act and the outmoded Public Works Act, water allocation, urban design and address issues around infrastructure.

RMA advisory groupIn December the new government appointed a multi-disciplinary advisory group, with members from local government, legal, planning and business professions. The group has

been tasked with formulating RMA amendments that largely correspond with what was promised prior to the election and has been asked to provide its advice in sufficient time to facilitate the introduction of a RMA reform bill by the end of February 2009. Unsurprisingly the establishment of an EPA has been considered to be too large a task to complete within this tight timeframe, and has been deferred.

Notwithstanding the EPAs deferral, the advisory group has still been asked to provide provisions for priority consenting for major projects. What is meant by priority consenting or major projects is unclear, but it is these changes that, at least in the short-term, are most likely to provide for reduced time required to deliver large infrastructure projects. The government has confirmed that it will continue to work towards a set of wide-ranging reforms to further address more complex issues, including addressing deeper issues around the delivery of infrastructure projects.

Will there be real change? While these changes may result in practical measures to speed up the decision making process for large infrastructure projects, and indeed run of the mill consents, they do not represent a radical departure from the many rounds of reforms to the RMA that have been implemented by every new government since 1991. For example, for a number of years a proliferation of NPS and NES has been promised, but little has been delivered. Implementation of policy rather than new policy is what is required.

An area which is to be reformed is the issue of allocation of resources where resources are approaching or are at full allocation. This issue has been particularly pressing with space for aquaculture and fresh water allocation. The RMAs environmental effects focus does not comfortably address the competing economic claims of different sector groups.

These reforms could result, for example, in a question of allocation of water resources being assessed by a central agency better able to directly assess and

balance the competing and strategic economic claims for these resources, rather than being solely assessed on environmental grounds.

To deliver the radical change the new government has intimated it will deliver, will require fundamental changes to the participation focused approach of the RMA. The ability to participate in resource consent applications and to have almost complete judicial oversight of the process, is far more extensive than the equivalent processes in other jurisdictions such as Australia and the UK. Had the benign economic conditions of the last 15 years continued for the new government, one suspects it would have had little political impetus to radically recalibrate the balance between timely development and public participation. However, now that the prospect of economic collapse looms, the value of extensive public participation is more likely to be critically examined. One only has to recall Think Big to conclude that, in times of economic crisis, decision-making in regard to large infrastructure projects can quickly become a great deal less inclusive.

This article was written by Patrick Mulligan, a partner

in the Auckland office of Buddle Findlay, one of New

Zealands leading law firms.

Patrick specialises in environmental and local

government law. Patrick can be contacted by phone:

+64 9 357 9396 or email:

[email protected].

RMA Reforms will economic crisis lead to major reforms?

Patrick Mulligan, Buddle Findlay

NZ COMMENTARY


18-25 - news.indd 22 28/01/2009 3:58:25 PM

NEWS >>


Deacons, allens on hUnGry monsters JvUS-based recruitment firm Monster Worldwide and media corporation News Limited have engaged Deacons and Allens Arthur Robinson as advisors on their 50/50 joint venture deal, which will see the global component of Monster combine with News print and online recruitment subsidiary, CareerOne.

Monster was advised by Deacons corporate partner Tim Flahvin.

The Allens team advising News Limited included M&A partner Kylie Brown assisted by la

Documents

Australasian Legal Business January 2009