Australasian Legal Business May 2009

RedundanciesNow the pain really begins

International firms in AustraliaIs Australia yesterday’s frontier?

Insolvency and restructuringStill more to come

ISS

UE

7.5

n DEALS ROUNDUP n LATERAL MOVES n UK, US REPORTS n NEwS ANALySIS n MARKET STATS

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new zealand 2009: Firms step up to the challenge

ALB AUSTRALASIAN LEGAL BUSINESS

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Editorial rEsEarchEr

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Cover image: (left to right) Rob Fisher, Simpson Grierson; Roger Partridge, Bell Gully; Gary McDiarmid, Russell McVeagh; Clayton Kimpton, Kensington Swan; and Peter Chemis, Buddle Findlay

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EDITORIAL >>

Australasian Legal Business ISSUE 7.422

IN THE FIRST PERSON

Here’s to big personalities

As a famous hamburger chain once unwisely put it, people are our most important ingredient. That statement might not involve the most felicitous choice of words, but the sentiment is one that rings true across all areas of business: a company is nothing more than the sum of

the efforts of its people. The same principle applies to law firms, but it is almost inevitably a “top down”

observation: management speaking about their employees, or their team. That is a valid proposition, but perhaps the emphasis on “team” ideology has come at the expense of recognising the individual – particularly in leadership.

This is not a conventional proposition and one which is unlikely to be publicly embraced by managing partners. One cannot imagine Danny Gilbert, for example, eschewing the efforts of his lawyers in order to promote himself. But would Gilbert + Tobin, that peculiar melting pot of social conscience and commercial acumen, be the same firm without Gilbert?

The issue comes to the fore in New Zealand. The Kiwis do not represent the largest market in the region, but they do have some of the biggest personalities that have added colour and distinction to the firms they represent: Bell Gully has its avowed free marketeer Roger Partridge, who is also this month’s LexisNexis feature profile; Chapman Tripp has the engaging and passionate Andrew Poole; and Russell McVeagh has the inimitable Gary McDiarmid, ever-ready with a new industry metaphor. “There are a few green shoots showing,” McDiarmid says in this issue’s New Zealand report, referring to the revival of M&A activity.

And there are many others, not necessarily managing partners or CEOs, who have contributed to the identity of their firms. It may not be correct to say their contribution is greater than those of their less-heralded colleagues. But one thing is clear – the legal industry would be a far less interesting place without them.

The Kiwis do not represent the largest market in the region, but they do have some of the biggest personalities that have added colour and distinction to the firms they represent

RedundanciesNow the pain really begins

International firms in AustraliaIs Australia yesterday’s frontier?

Insolvency and restructuringStill more to come

ISS

UE

7.5

DEALS ROUNDUP LATERAL MOVES UK, US REPORTS NEWS ANALYSIS MARKET STATS


NEW ZEALAND 2009: FIRMS STEP UP TO THE CHALLENGE


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“It is almost inconceivable that we will not see some more highly geared companies forced to undergo a major restructure or go into voluntary administration” Henry Davis York partner Roger Dobson

“I make it clear to firms that unless they are competitive and they keep me happy with the level of service and the costs, I will move work to another firm” Cadbury Australia-NZ general counsel Karen Perret

“The firms involved [in cut-throat pricing] are doing damage to themselves in the long term. When the recovery comes, it will be difficult to raise those rates back to previous levels” Andrew Poole, Chapman Tripp


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“It is almost inconceivable that we will not see some more highly geared companies forced to undergo a major restructure or go into voluntary administration” Henry Davis York partner Roger Dobson

“I make it clear to firms that unless they are competitive and they keep me happy with the level of service and the costs, I will move work to another firm” Cadbury Australia-NZ general counsel Karen Perret

“The firms involved [in cut-throat pricing] are doing damage to themselves in the long term. When the recovery comes, it will be difficult to raise those rates back to previous levels” Andrew Poole, Chapman Tripp

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CONTENTS >>

australasian legal business ISSUE 7.5

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

14 RedundanciesLayoffs lurk but opportunities still exist for self-starting lawyers

17 Insolvency: Saving the worst for lastAre the current collection of distressed companies just the tip of the iceberg?

FEATURES

44 ALB-LexisNexis Managing Partner Series: Roger Partridge, Bell Gully

Having taken the reins at one of New Zealand’s biggest firms just as the credit crunch began to bite, Roger Partridge had his work cut out for him at Bell Gully

48 International firms in AustraliaAs Dorsey & Whitney arrives on Australian shores, we ask if investment Down Under is paying dividends for international firms

52 In-house profile: Karen Perret, CadburyCadbury Australia-NZ General Counsel Karen Perret talks to ALB about getting the best value and service from law firms – and it’s not necessarily via a panel model

56 Case managementALB talks to experts about the smartest ways to optimise your case management systems

60 China FDI: A two-way street?There is no doubting the potency of outbound Chinese FDI, but what about investment flowing in the opposite direction?

REGULARS

8 DEALS

18 NEWSStaff “relieved” at Allens Arthur Robinson •salary freezeFreehills salary freeze to last beyond 30 June•Minter Ellison adamant there will be no ‘GFC’ •graduate redundanciesNew firm strikes balance with tailored fees•Companies not living up to audit standards•No clerk cuts at Middletons, says firm•Lawyers and barristers to the fore as Victorian •bushfire hearing gets under way

COLUMNS

19 UK Report

21 US Report

25 Mergermarket M&A Update

64 Sign Off

COMMENTARY

22 Buddle Findlay

ALB ISSUE 7.5

COVER STORY

30

52

44

60

30 ALB Special Report: New Zealand 2009 Diversification, cut-throat pricing, more competition for government work: these are just some of the outcomes as New Zealand firms adjust to a new world order

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NEWS | deals >>


| TECHNOLOGY/GOVERNMENT |

NatioNal BroadBaNd ►Network plaNa$43bn

Firm: Mallesons Stephen Jaqueslead lawyer: Neil CarabineClient: Telstra

Firm: Clayton Utzlead lawyers: Caroline Lovell, Michael ReedeClient: Optus

Firm: Holding Redlichlead lawyer: Chris LovellClient: Acacia consortium

Firm: Allens Arthur Robinsonlead lawyer: Ian McGillClient: Axia NetMedia

Firm: Corrs Chambers Westgarthlead lawyer: Andrew MessengerClient: Department of Broadband, Communications and the Digital Economy’s independent expert panel

Firm: Australian Government Solicitorlead lawyer: John Scala, Garth CookeClient: Department of Broadband, Communications and the Digital Economy’s independent expert panel

Deal sees establishment of •

government-owned company and fibre optic cable roll out to 90% of Australian homes and businesses, and remainder connected via next generation wireless and satellite technology

Funding to be part public and •part private, and network will be wholesale and independent of Telstra

Partners from firms acting on the •bid believe new plan will give Telstra a second chance at involvement, after being excluded from tendering for failing to submit business participation plan

Federal government expected •to publish results of its implementation study, revealing CEO, COO and board

Deal involved B&B Japan Property •Trust’s breakaway from Babcock & Brown, internalisation of trust management rights and arrangements with Japanese asset manager

Internalisation to bring substantial •fee reductions and arrangements designed to retain Japanese management

Freehills recently acted on Abacus’ •recapitalisation and low doc rights offering

lead lawyer: Tim McEwenClient: Macquarie Communications Infrastructure Management

Firm: Clifford Chancelead lawyer: Brendan MoylanClient: Macquarie Communications Infrastructure Management

CPP Investment •Board, comprising of Colonial First State, Industry Funds Management and 3i Infrastructure, previously acquired UK utilities group AWG in 2006

Deal sees CPP offering to purchase •all Macquarie stapled securities, by way of a separate inter-conditional offer

CPP has agreed to transitional •services agreement and ongoing advisory with Macquarie

Offer recommended by the •independent directors of Macquarie but subject to shareholder approval

deals in brief

Ian McGillAAR

Caroline LovellClayton Utz

Shunpei TanakaNO&T

Brendan MoylanClifford Chance

Tim McEwenFreehills

“Freehills has a long association with Macquarie Communications and really knows its assets. We acted on its 2002 float [A$300m] and have acted on its 2004 move from double to triple staple in establishing a Bermudan company, and its associated equity raising [A$800m]”

Tim mcEwEn, FrEEhills

| PROPERTY, TRUSTS |

BaBCoCk & BrowN JapaN ►property trust Breakawaya$2.3bn

Firm: Freehillslead lawyer: Justin O’Farrell, Damien Hazard (Australian law)Client: Babcock & Brown Japan Property Trust

Firm: Nagashima Ohno & Tsunematsulead lawyer: Shunpei Tanaka (Japanese law)Client: Babcock & Brown Japan Property Trust

| FINANCE/M&A |

Cpp iNvestmeNt- maCquarie ►CommuNiCatioNs aCquisitioNa$2bn

Firm: Freshfields Bruckhaus Deringerlead lawyers: David Higgins, Simon WellerClient: CPP Investment Board

Firm: Allens Arthur Robinsonlead lawyer: Wendy RaeClient: CPP Investment Board

Firm: Freehills

| CAPITAL MARKETS |

westpaC tier oNe hyBrid ►raisiNga$900m

Firm: Gilbert + Tobinlead lawyers: Janine Ryan, John Williamson-NobleClient: Westpac Banking Corporation

Raising sees A$900m non-•innovative tier one hybrid offer in conjunction with existing St George Bank hybrids

Deal follows Westpac’s A$47bn •merger with St George, the largest corporate merger in Australian history

Cou

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y of

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| MANUFACTURING/EQUITY |

oNesteel NoN-reNouNCeaBle ►rights issuea$878m

Firm: Allens Arthur Robinsonlead lawyers: Vijay Cugati, Tom Story, Andrew FinchClient: OneSteel

Firm: Mallesons Stephen Jaqueslead lawyer: David FriedlanderClient: UBS (underwriter)

Firm: Sullivan & Cromwelllead lawyer: Waldo JonesClient: OneSteel (US law)

Deal sees OneSteel’s accelerated •non-renounceable rights issue with A$240m institutional placement, and non-renounceable two-for-five pro-rata entitlement offer

Offer has a fully underwritten •institutional component of A$319m and a retail component of not underwritten A$319m

Allens Arthur Robinson also •recently advised on Wesfarmers’ A$4.6bn capital raising and Qantas’ A$500m raising

Vijay CugatiAAR

Marko MiskoClayton Utz

David FriedlanderMallesons

| PROJECT |

peNiNsula liNk proJeCt ►a$750m

Firm: Clayton Utzlead lawyers: Brad Vann, Marko MiskoClient: Victorian State Government

Peninsula Link •project will see 25km road link between EastLink in Victoria’s Carrum Downs, and the Mornington Peninsula Freeway in Mount Martha

Project represents first availability •style PPP road project in Victoria and involves preparing request for tender and project documents, as well as providing strategic and commercial advice

| PROPERTY, EQUITY |

dexus property ►eNtitlemeNt oFFer/ Capital raisiNga$749m

Firm: Freehillslead lawyer: Tony Sparks, Philippa StoneClient: Credit Suisse, Deutsche Bank AG (underwriters)

Firm: Mallesons Stephen Jaqueslead lawyer: Susan HilliardClient: Dexus Property Group

Offer made to investors in the US •and marketed in New Zealand, the UK, Hong Kong, Singapore, Belgium, Denmark, France, Germany, Ireland, Holland, Norway, Sweden, Switzerland and the UAE

Proceeds expected to be used to pay •down debt and fund acquisitions and developments

Tony SparksFreehills

| ENERGY/EQUITY |

CoNtaCt eNergy ►BoNd oFFerNZ$550m (a$434m)

Firm: Bell Gullylead lawyers: Andrew Brown, Hugh KettleClient: Contact Energy

Bond offer involved raising •NZ$550m (A$434m) through five-year unsecured, unsubordinated fixed rate bond offer

Offer received applications in excess •of the original sought

Capital raised to support capital •investment programme

| FINANCE |

amp retail Notes oFFer ►a$293m

Firm: Mallesons Stephen Jaqueslead lawyer: Evie Bruce, Greg Golding, Greg HammondClient: AMP

Offer one of first listed retail debt •issues undertaken in recent times

Deal consists of A$202m in •Australian notes and NZ$115m (A$90.8m) in Kiwi notes, under new trans-Tasman mutual recognition scheme that allows issuers to

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“We enjoyed the challenge of successfully finalising the institutional raising in such a short time frame. Low documented and accelerated raisings are becoming increasingly popular with our clients, as they provide the flexibility to raise capital quickly in a volatile market” AndrEw shEArwood, FrEEhills

| FORESTRY, M&A |

gmo reNewaBle resourCes- ►greeN triaNgle aCquisitioNa$172m

Firm: DLA Phillips Foxlead lawyer: Carrie Follas, Martin ThomsonClient: GMO Renewable Resources

Firm: Auspine Legallead lawyer: Tri Duc NguyenClient: Auspine

US-Australian cross-border deal •involved acquisition of 33,000 hectares of Victorian and South Australia softwood plantations (the Green Triangle Region)

Ownership of the trees is secured •by registered forest property agreements and the transaction included wood supply and management arrangements, negotiation, and purchase documentation, regulatory compliance and due diligence

Deal required lawyers from Sydney, •Melbourne, Adelaide and Auckland

offer notes in NZ using Australian prospectus

| M&A |

ChiNa light aNd power- ►roariNg 40s aCquisitioNa$132m

Firm: Clayton Utzlead lawyer: Nick MillerClient: Hydro Tasmania

Strategic •acquisition sees China Light and Power acquire Roaring 40s China wind farm portfolio from joint venture partner Hydro Tasmania

Cross-border nature of deal, •economic climate, and renewable energy market in China still being in early stages of development, created challenges for lawyers

Clayton Utz previously advised •Hydro Tasmania on initial establishment of Roaring 40s joint venture in 2005 and 2007 acquisition of Momentum Energy

Taylor, Catherine MerityClient: Nuplex (Kiwi and Australian law)

Firm: Freehillslead lawyer: Tony SparksClient: First NZ Capital Securities (Australian law)

Offer includes seven-for-one •rights issue

Nuplex entered into a call option •arrangement with First NZ with respect to further new shares to be issued upon completion of rights issue

First NZ to place new shares under •top-up placement with institutional investors, who provided sub-underwriting commitments under rights issue

Client: Prime Media Group

Raising comprises of a 10 for seven •renounceable accelerated pro rata entitlement offer and share placement to Seven Network

Prime’s major shareholder Paul •Ramsay Holdings committed A$25m and Seven Network’s Network Investment Holdings has committed to subscribe up to 14.9% of Prime's capital base (A$25m)

Carrie FollasDLA Phillips Fox

Nick MillerClayton Utz

Martin ThomsonDLA Phillips Fox

Timothy WatkinMinter Ellison

Barry McWilliamsMallesons

| MANUFACTURING/EQUITY |

Nuplex rights oFFer ►a$122.8m

Firm: Bell Gullylead lawyer: James GibsonClient: First NZ Capital Securities (underwriter)

Firm: DLA Phillips Foxlead lawyers: Martin Wiseman, Rachel

| MEDIA/EQUITY |

prime media Capital raisiNg ►a$110m

Firm: Blake Dawsonlead lawyers: Bill Koeck, Anton Harris, Crystal Antica

| FINANCE/EQUITY |

peet Capital raisiNg ►a$81.5m

Firm: Freehillslead lawyer: Andrew ShearwoodClient: Peet

Firm: Mallesons Stephen Jaqueslead lawyer: Barry McWilliamsClient: UBS (lead manager)

Raising included •low-doc, accelerated rights issue

Institutional component of the deal •completed within three days on 30 March, raising A$64.4m, while retail component of offer at closed end of April

| EQUITY/M&A |

wCB-australiaN Cheese ►CompaNy aCquisitioN/rights issuea$105m

Firm: Minter Ellisonlead lawyer: Timothy WatkinClient: Warrnambool Cheese & Butter

Firm: Freehillslead lawyer: Baden FurphyClient: National Foods

Deal includes 50% stake •

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acquisition in ACC, consisting of A$50.6m equity raising as a fully underwritten 2 for three renounceable pro-rata offer

Balance of funding provided through •new debt facilities with National Australia Bank

Craig AndradeBaker & McKenzie

your moNth at a glaNCe ►Firm Jurisdiction Deal Name A$m Practice

Allens Arthur Robinson Australia, UK CPP Investment-Macquarie Communications acquisition

2,000 Finance, M&A

Australia National Broadband Network plan 43,000 Technology, government

Australia, US OneSteel non-renounceable rights issue 878 Manufacturing, equity

Auspine Legal Australia, US GMO Renewable Resources-Green Triangle acquisition

172 Forestry, M&A

Australian Government Solicitor


Baker & McKenzie Australia Eastern Star Gas equity placement 50 Energy, M&A

Australia STW Communications rights issue 80 Equity

Australia, Thailand TCC Land-Hyatt Regency acquisition 75 Property, M&A

Bell Gully New Zealand Contact Energy bond offer 434 Energy, equity

New Zealand, US Freightways capital management initiatives 36 Transport, equity

New Zealand ITOCHU/Daiken Carter-Holt Harvey Kiwi MDF business acquisition

N/A Resources, M&A

New Zealand, US Kiwi Income Properties raising 40 Property, equity

Australia, New Zealand Nuplex rights offer 123 Manufacturing, equity

Blake Dawson Australia Prime Media capital raising 110 Media, equity

Australia, Thailand TCC Land-Hyatt Regency acquisition 75 Property, M&A

Buddle Findlay New Zealand ITOCHU/Daiken Carter-Holt Harvey Kiwi MDF business acquisition

N/A Resources, M&A

Carter Newell Australia AGL Energy-Innamincka Petroleum farm-in 20 Energy, M&A

Clayton Utz Australia, China China Light and Power-Roaring 40s acquisition 132 Energy, M&A


Australia Peninsula Link project 750 Project

Australia, UK Terra Firma-Consolidated Pastoral acquisition N/A Finance, M&A

Clifford Chance Australia, UK CPP Investment- Macquarie Communications acquisition

2,000 Finance, M&A

Corrs Chambers Westgarth


DLA Phillips Fox Australia, US GMO Renewable Resources-Green Triangle acquisition

172 Forestry, M&A

Australia, Philippines, Thailand

Fujitsu Australia-Supply Chain Consulting acquisition

48 Technology, M&A

New Zealand, US Gilbarco-Postec equity acquisition N/A Energy, M&A


DLA Piper Australia, Philippines, Thailand


48 Technology, M&A

New Zealand, US Gilbarco-Postec equity acquisition N/A Energy, M&A

CorreCtioN ►In issue 7.4’s Insurance practice area guide Mark Radford was listed as a leading lawyer from Baker & McKenzie. The correct text is as follows: Mark Radford; Colin Biggers & Paisley; Sydney; practice areas: insurance, reinsurance, compliance, products, M&A, government; reputation for providing practical, high quality, cost effective and innovative advice to clients; works closely with government and regulators on legislative changes, authorisations and licences, compliance breaches and developing codes of practice and dispute resolution facilities. It was also stated that in Sydney Jocelyn Helen was mentioned for her product liability knowledge. This should have read as: Jocelyn Kellam was mentioned for her product liability knowledge.

| EQUITY |

stw CommuNiCatioNs ►rights issuea$80m

Firm: Baker & McKenzielead lawyers: Craig Andrade, Andrew Reilly (US law)Client: UBS (lead manager)

Firm: Freehillslead lawyers: Tony Sparks, Philippa StoneClient: STW Communications Group

Accelerated rights issue included •A$60m institutional component that was successfully completed on 23 April

Deal comes after Bakers’ recent •work for Macquarie and UBS, the joint underwriters and lead managers to ConnectEast’s A$450m equity raising; Credit Suisse, Citi, JP Morgan and CommSec as placement agents to Commonwealth Bank’s A$2bn equity raising to acquire BankWest and St Andrews Australia

| PROPERTY/M&A |

tCC laNd-hyatt regeNCy ►aCquisitioNa$75m

Firm: Baker & McKenzielead lawyer: Caroline HoClient: TCC Land (Bangkok)

Firm: Blake Dawsonlead lawyer: John StawyskyjClient: Grand Hotel Group

Cross-border acquisition of •Adelaide-based hotel from Bangkok hotel group

Australia’s first major hotel •transaction this year and follows TCC’s acquisitions of Novotel Rockford, the Pumphouse tavern and the Hyatt Canberra in late 2008

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| ENERGY/EQUITY |

easterN star gas ►equity plaCemeNta$50m

Firm: Baker & McKenzielead lawyer: David Holland, David Ryan, Andrew ReillyClient: Eastern Star Gas

Placement •announced on 17 March comprises of underwritten placement to institutional and sophisticated investors in Australia and overseas

Deal coincided with the company •entering the ASX200

Bakers recently advised Eastern Star •on establishing level one American Depositary Receipt program, with a quotation on the International OTCQX

| FINANCE/M&A |

terra Firma-CoNsolidated ►pastoral aCquisitioN

Firm: Gilbert + Tobinlead lawyer: Charles BogleClient: CPH Management

your moNth at a glaNCe (CoNt) ►Firm Jurisdiction Deal Name A$m Practice

Freehills Australia AGL Energy-Innamincka Petroleum farm-in 20 Energy, M&A

Australia, Japan Babcock & Brown Japan Property Trust breakaway

2,300 Property, trusts

Australia, UK CPP Investment- Macquarie Communications acquisition

2,000 Finance, M&A

Australia Dexus Property entitlement offer/capital raising

749 Property, equity


Australia Peet capital raising 82 Finance, equity

Australia STW Communications rights issue 80 Equity

Australia WCB-Australian Cheese Company acquisition/rights issue

105 Equity, M&A

Freshfields Bruckhaus Deringer

Australia, UK CPP Investment- Macquarie Communications acquisition

2,000 Finance, M&A

Gilbert + Tobin Australia, UK Terra Firma-Consolidated Pastoral acquisition N/A Finance, M&A

Australia Westpac tier one hybrid raising 900 Banking, equity

HerbertGeer Australia, US WHK-Macquarie Group strategic partnership 30 Resources, M&A

Holding Redlich Australia, Philippines, Thailand


48 Technology, M&A


Mallesons Stephen Jaques

Australia AMP retail notes offer 293 Finance

Australia Avexa pro-rata renounceable rights issue 15 Health, equity

Australia Dexus Property entitlement offer/capital raising

749 Property, equity



Australia Peet capital raising 82 Finance, equity

Australia Unimin-Consolidate Rutile takeover bid N/A Resources, M&A

Minter Ellison Australia Thomas Bryson ASX listing 7 Securitisation

Australia WCB-Australian Cheese Company acquisition/rights issue

105 Equity, M&A

Australia, US WHK-Macquarie Group strategic partnership 30 Resources, M&A

Nagashima Ohno & Tsunematsu

Australia, Japan Babcock & Brown Japan Property Trust breakaway

2,300 Property, trusts

Russell McVeagh New Zealand, US Freightways capital management initiatives 36 Transport, equity


Sidley Austin New Zealand, US Freightways capital management initiatives 36 Transport, equity


Simpson Grierson New Zealand, US Gilbarco-Postec equity acquisition N/A Energy, M&A

Skadden Arps New Zealand, US Kiwi Income Properties raising 40 Property, equity

Sullivan & Cromwell New Zealand, US Freightways capital management initiatives 36 Transport, equity


Australia, US WHK-Macquarie Group strategic partnership 30 Resources, M&A

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

Andrew ReillyBaker & McKenzie

| TECHNOLOGY/M&A |

FuJitsu australia-supply ►ChaiN CoNsultiNg aCquisitioNa$48m

Firm: DLA Phillips Foxlead lawyer: Mark Burger (Australian law)Client: Fujitsu Australia

Firm: DLA Piperlead lawyer: Chanvitaya Suvarnapunya (Thai law)Client: Fujitsu Australia

Firm: Holding Redlichlead lawyer: Dan PearceClient: Supply Chain Consulting

Deal involved the acquisition of •the entire issued share capital of Supply Chain Technologies and due diligence across Australia, Thailand and the Philippines

Follows on from Fujitsu’s acquisition •of Telstra’s KAZ computer services business in March, which DLA Phillips Fox advised on

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| RESOURCES/M&A |

itoChu/daikeN Carter holt ►harvey kiwi mdF BusiNess aCquisitioN

Firm: Bell Gullylead lawyer: David BoswellClient: Carter Holt Harvey

Firm: Buddle Findlaylead lawyer: Simon VodanovichClients: ITOCHU Corporation, Daiken Corporation

Competitive sale process included •joint purchase of both Carter Holt Harvey’s medium density fibreboard (MDF) business and Rangiora-based manufacturing plant

Regulatory approval obtained •from Overseas Investment Office on 22 January

| PROPERTY/EQUITY |

kiwi iNCome ►properties raisiNga$39.5m

Firm: Bell Gullylead lawyer: Anna BuchlyClient: Goldman Sachs JBWere

Firm: Sidley AustinClient: Goldman Sachs JBWere (US law)

Firm: Russell McVeaghClient: Kiwi Income Properties

Firm: SkaddenClient: Kiwi Income Properties (US law)

Raising proceeded through issuing new •units in Kiwi Income Property Trust

Goldman Sachs JBWere acted as •sole lead manager, placement agent, book runner and underwriter

Firm: Clayton Utzlead lawyer: Heath LewisClient: Terra Firma

Deal saw UK investment group •Terra Firma’s acquisition of Northern Territory-based Consolidated Pastoral Company from CPH Management

Deal was M&A “highlight” for •Gilbert + Tobin, after its recent work on Westpac’s A$47bn merger with St George

David BoswellBell Gully

| TRANSPORT/EQUITY |

Freightways Capital ►maNagemeNt iNitiatives a$35.5m

Firm: Bell Gullylead lawyer: Anna BuchlyClient: Goldman Sachs JBWere

Firm: Sullivan & CromwellClient: Goldman Sachs JBWere (US law)Firm: Russell McVeaghClient: FreightwaysFirm: Sidley AustinClient: Freightways

Raising part of Freightways’ •capital management programme to reduce bank debt and strengthen balance sheets

“The success of the [Eastern Star Gas] offering shows that emerging companies can effectively tap equity markets during these challenging times” dAvid hollAnd, BAkEr & mckEnziE

p6-13 deals.indd 13 20/05/2009 2:24:29 PM

www.caseflow.com.au

14 Australasian Legal Business ISSUE 7.5

NEWS | analysis >>

When Allens Arthur Robinson (AAR) recently announced its firm-wide salary freeze, it was simply

due to a shrinking Australian legal market. Managing partner Michael Rose expects fewer firms to remain on legal services panels, and the focus to shift from billable hours to fixed fees. “We have predicted, and been preparing for, a downturn in the legal services market. No business is immune to one of the largest recessions in living memory,” he says.

At the end of the day, firms are resorting to staff cuts because every 1% drop in revenue typically results in a 2.5–3% drop in firm profits. “Many city law firms have high fixed-cost structures, consisting of about 60% labour costs, 25% occupancy costs and 15% for other expenses. Occupancy is usually fixed and a 10% saving from the ‘other’ category is not going to make much of difference. So if revenue drops off, then savings have to come from the labour costs,” says Joel Barolsky of Beaton Consulting.

Deep cutsBlake Dawson’s March review of its business, where it moved to lay off 89 staff (23 lawyers and 66 support staff), has perhaps been the most dramatic move so far. Earlier this year, the firm retrenched at least four property and finance lawyers. “We believe that the measures we have taken will ensure the business remains competitive with the right

Redundancies roundup: lay-offs lurking, but opportunity still knocks

Westgarth delayed the start date for 2009 recruits from February to April, and paid graduates A$2,300 in compensation. M+K opted to reduce its annual graduate intake from seven to four, while Minter Ellison and Middletons were both the subject of rumours regarding cuts in graduate and seasonal clerk numbers, but have dismissed them.

Some firms have responded by providing more flexible working arrangements, purchased annual leave and career breaks to cut costs. AAR has offered voluntary redundancy packages, which include up to one year’s pay for long-serving staff, but the firm is resolute about having no redundancy targets. M+K has explored subletting surplus office space to reduce rent, bringing an annual saving of A$250,000. The firm has saved A$120,000 through reducing use of external consultants, and a further A$80,000 per year on other operational expenses, such as library, entertainment and sponsorships. Maddocks, on the other hand, has implemented firm-wide policies to minimise waste and duplication, changed recruitment processes to maximise the value of head-hunters, and more sparingly used external consultants, taxis, stationery, catering and subscriptions.

“We have made cost savings in excess of A$1m,” says the firm’s CEO David Rennick. “We have also looked hard at discretionary spending and encouraged our staff to make sacrifices and do everything possible to ensure the business’ survival. Our partners have said they are prepared to reduce profit expectations in favour of the long-term sustainability of the business.”

Other lawyers appear to be going solo and working remotely as in-house lawyers. “We are seeing that… a lot in the resources sector and the mid-cap of the sector has been quite hard hit. These companies are not looking to employ but get people in with contracts to assist,” says Ken Jagger of Balance Legal. ALB

Minter Ellison’s recent bombshell indicates 35 staff will lose their jobs in the latest wave of redundancies, but news and rumours of salary freezes and lay-offs have also reached other firms in recent months

mix of skills and experience for the current environment,” a spokesperson for the firm says.

Minter Ellison’s recent retrenchment of 35 staff (11 legal and 24 support staff) came swiftly in response to what its chief executive partner John Weber called a recent “softening” in demand for legal services. “The next financial year is going to be tough for our clients and the firm; we expect parts of the market to be soft and partner incomes to be lower next financial year. We regret the reduction in staff numbers but the decision was made to protect the firm’s position. We do not expect to have any further GFC-related redundancies,” he said in a written statement.

Other firms have also had to make staff cuts. Deacons laid off 15 property and finance lawyers, DLA Phillips Fox retrenched 12 Australian and Kiwi lawyers, while Macpherson + Kelley (M+K) made two commercial senior associates and one commercial junior lawyer redundant due to “poor performance” and insufficient work. HWL Ebsworth laid off 17 staff – six lawyers, two graduates, three property paralegals and six personal assistants. Hicksons Lawyers retrenched eight staff from across the firm, Herbert Geer has confirmed that it made “two or three” redundancies at its Brisbane and Melbourne offices, while Thomson Playford Cutlers (TPC) has laid off 19 legal staff and five non-legal staff in both Sydney and Adelaide offices. There are also rumours that Tresscox Lawyers’ recent redundancies have affected more than one dozen staff, largely M&A junior lawyers.

Other firms have responded to the economic crisis by changing their graduate program. DLA Phillips Fox has cut its graduate intake, from 66 in 2008 to 43 in 2009, across its Australian and New Zealand offices. TPC, on the other hand, has deferred its 2009 graduate intake to 2010, while Corrs Chambers

AnAlysis >>

p15-17 news analysis.indd 14 20/05/2009 10:18:56 AM


NEWS | analysis >>

2009 Winner BRW Client Choice Awards Best Australian Law Firm (Under $20 million) 2009 Winner Exceptional Services (All Australian Professional Service Firms)2009 Finalist BRW-ANZ Private Business Award, Excellence in Customer Service

Swaab AttorneysLevel 1 , 20 Hunter Street, Sydney NSW 2000Ph 02 9233 5544www.swaab.com.au

Law firm redundancies in numbers ►

Allens Arthur RobinsonRedundancies: Voluntary redundancy package offered, including up to one year’s pay for long-serving staff but no redundancy targetsGraduates: 77 starting in MarchOther measures taken: Firm-wide salary freeze effective from 1 July, profit share for partners expected to drop, flexible working arrangements, purchased annual leave, career breaks

Blake DawsonRedundancies: 93 (27 lawyers and 66 support staff)

Corrs Chambers WestgarthGraduates: Delayed start date for 09 recruits from February to April, A$2,300 paid in compensation

DeaconsRedundancies: 15 property and finance lawyersGraduates: 43Other measures taken: Continues to invest in pro bono and sustainability initiatives

DLA Phillips FoxRedundancies: 12 Australian and Kiwi lawyersGraduates: 43 in Australia and New Zealand – down from 66 in 2008

FreehillsRedundancies: No plans for retrenchmentsGraduates: 116 Other measures taken: Firm-wide salary freeze effective since 20 March to remain in place, partners advised to expect drop in income drop in firm’s profitability, cancelled annual national partners’ conference, offered career breaks, flexible hours and purchased leave

Herbert GeerRedundancies: “Two or three” redundancies in Brisbane and MelbourneGraduates: Nine across Sydney, Melbourne and Brisbane officesOther measures taken: Flexible arrangements, staff leave, reduced spending on social events and cateringg

Hicksons LawyersRedundancies: Eight staff across the firm

HWL EbsworthRedundancies: 17 staff (six lawyers, three property paralegals, three graduates, six personal assistants)Graduates: 16

Macpherson + KelleyRedundancies: ThreeGraduates: Down from seven to fourOther measures taken: Sub-let surplus office space, saved A$120,000 by reducing use of external consultants, saved A$80,000 per year on other operational expenses

MaddocksGraduates: Four in Sydney and 24 seasonal clerks in MelbourneOther measures taken: Flexible work options, job sharing, reduced profit expectations, more than A$1m saved from cut discretionary spending

Minter EllisonRedundancies: 35 (11 legal and 24 support staff)Graduates: UnaffectedOther measures taken: Cost reduction program

Thomson Playford CutlersRedundancies: 24 (five non-legal and 19 legal) in Adelaide and SydneyGraduate: Deferred 2009 graduate intake to 2010

Note: this table contains information available to ALB at time of publishing. Other firms may have taken similar measures that are not presented here.


www.swaab.com.au


NEWS | analysis >>

When will the next wave of insolvency work hit Australian practices?

While a number of high profile companies have undergone restructuring or entered voluntary

administration, for the most part they were already experiencing significant financial distress in early or mid-2008 – ominously, before the global economic downturn fully took effect. The implication is that the current batch of restructurings and corporate collapses are victims of the credit crunch and the full effects of the economic downturn remain to be seen.

“Companies such as Babcock & Brown, Allco and Centro were heavily geared and the credit crunch was enough to get them,” says Henry Davis York partner Roger Dobson. “In Australia, the economic downturn is only just getting underway.”

Exactly when we will see the next wave of restructuring is guesswork, although Dobson says it is likely that there will be more activity by the third or fourth quarter of this year. “I would be surprised if it didn’t happen. There are a lot of companies that will need to refinance significant amounts of debt in the next 12 to 24 months, asset prices are under pressure and revenues are dramatically impacted. It is almost inconceivable that we

will not see some more highly geared companies forced to undergo a major restructure or go into voluntary administration.”

Restructuring and insolvencyA feature of the Australian market has been the absence, thus far, of any high profile company going into liquidation. Babcock & Brown, Allco, Centro and PBL have all thus far been on the restructuring or administration side of the equation and although they are not out of woods just yet, they have evaded liquidation.

“Banks are all about maximising returns,” Dobson says. “In every instance I’ve seen, banks will try where they can to assist in a restructure. There may, of course,

Stephen Eno, Baker & McKenzie

be more cases in future where a restructure is not feasible.”

This is in contrast to the situation in Asia, where lawyers report that distressed companies have been heading towards insolvency more rapidly. Stephen Eno, head of Baker & McKenzie’s Asia Pacific banking & finance practice group, says the current climate is seeing struggling companies go from restructuring to insolvency far more quickly than they did during the last financial crisis to hit Asia. Part of the reason is that banks are less tolerant in the current climate because they have other, bigger, challenges. “If you look at some of the companies which have recently faced financial difficulties, it is remarkable – and slightly disturbing – how quickly provisional liquidators have been appointed,” he says.

However, Australia is in a slightly different situation, Dobson states. “In Australia, directors can be held liable for insolvent trading and that’s in contrast to a lot of Asian jurisdictions which don’t have such legislation,” he says. “Most of the time it’s the directors themselves who are appointing administrators and the banks don’t have a say in the decision to pull the pin – other than to then take steps to protect their own position as best they can.”

Some have gone so far as to suggest that Australia’s insolvent trading laws are contributing to the rate of corporate failures. McCullough Robertson partner Scott Butler recently called for Australian regulators to provide greater flexibility to directors, pointing to initiatives in Britain where directors have a greater opportunity to continue trading if there is a reasonable prospect of avoiding insolvency.

“The [current Australian] legislation means that directors are walking a legal tightrope if they attempt to keep their businesses afloat rather than declaring insolvency,” he says. ALB

worst for lastSaving the

AnAlysis >>

“It is almost inconceivable that we will not see some more highly geared companies forced to undergo a major restructure or go into voluntary administration”

RogeR Dobson, HenRy Davis yoRk



NEWS | analysis >>


www.litsupport.com.au

18

NEWS | news >>


number of joint ventures with local firms across the region. In Singapore the firm is in a formal joint-law venture with TSMP Law Corporation, in Thailand it has an alliance with Siam Premier, and in Indonesia it is allied with Widyawan & Partners.

The steps being taken by the firm are all about maintaining growth in the long run according to Rose, who cited the firm’s recent intake of graduates as evidence. “We just took on 77 graduates last month and we have a pipeline running out for the next two years and we

AustrAlAsiAn bodies condemn Fiji crisis Australian and New Zealand law bodies have condemned the legal crisis unfolding in Fiji and called for the reinstatement of the rule of law on the island.

The governing military regime has dismissed the country’s constitution as well as the judiciary and detained Fiji’s Law Society (FLS) president, Dorsami Naidu, after he publicly criticised the regime’s moves. John Corcoran, the president of the Law Council of Australia (LCA), said that President Iloilo’s actions pose a direct threat to rule of law in Fiji and cannot be justified on any basis. He also expressed concern that, instead of calling an election, the president had suspended the constitution, dismissed the entire judiciary and reappointed Commodore Bainimarama as prime minister.

The LCA announced its support for Naidu following recent news of his arrest. Naidu was released after 24 hours in custody and said the dismissal of Fiji’s judiciary and challenge to free speech posed a threat to FLS’ members. The New Zealand Law Society has called for New Zealand lawyers to refuse appointments to any offices under the regime, as they often fill government legal posts in Fiji.

lAwyer chAtter prompts new legAl oFFer At commonweAlth bAnkCommonwealth Bank has recently introduced a new Legal Offer, which includes a customised cash-flow lending service that complements the bank’s existing deposit base products.

The service is simple and flexible, allowing firms to borrow funds against their cash flow for a variety of purposes, said Stewart Creighton, the bank’s market specialists general manager. He said the offer enables firms to reinvest in their business or grow by acquisition by using their own assets. This assists smaller firms with personal wealth management opportunities for partners and simplifies financial arrangements between partners and the firm, he said.

Law firms of varying sizes have expressed interest in the offer, but mid-tier players appear to be the most avid users. A ‘pilot’ offer during the past six months received positive feedback. The offer is currently available to Australian customers through Commonwealth Bank’s business banking network.

news in brief >>

It could have been worse. That seems to be the prevailing sentiment at

Allens Arthur Robinson (AAR) following revelations that the firm intends to freeze salaries and offer redundancies on a voluntary basis.

“I’ve been speaking to other staff about it and there was a fair degree of relief about the announcement. [Managing partner] Michael [Rose] has been visiting and briefing offices in person, and video recordings are posted on our intranet, so all our staff knows what’s happening. He’s doing a remarkable job and has our admiration,” one anonymous source told ALB.

Salary freezes will be effective from 1 July and profit share for partners is expected to drop. Policy changes have been made to encourage flexible working arrangements, purchased annual leave and career breaks to further cut costs. There is also a voluntary redundancy package being offered, which includes up to one year’s pay for long-serving staff.

The firm has not specified how long the salary freeze will last, but ruled out any redundancy targets. “The voluntary redundancy program has absolutely no targets in terms of numbers, positions or any specific roles in the firm – it is just one of a number of options being made available,” Rose said.

He said the firm’s plans across the Asia region would vary from country to country. “In Asia our response will most likely vary from office to office and country to country, depending on the nature of our practice, whether or not we have a joint venture and the impact of the downturn on the country concerned.” AAR is currently in a

Staff relieved at AAR pay freezeindustry >>

Michael RoseAAR

Stewart CreightonCBA

CorreCtion ►In the Energy and Resources Deal of the Year section of the ALB Australasian Law Awards 2009 feature in issue 7.4 of ALB, reference is made to Freehills and Vinson and Elkins as the firms acting on the Santos Petronas transaction. Those firms acted for Santos. The sole firm acting for Petronas in both the acquisition and the joint venture arrangements, Addisons, was omitted.

“the steps we are taking are positioning the firm for the long term and inevitable recovery in the economy. these steps are not about enhancing short-term profitability”michAel rose, Allens Arthur robinson

p18-25 news.indd 18 20/05/2009 9:53:59 AM

NEWS | news >>


Staff relieved at AAR pay freeze uk report

Magic Circle firm Linklaters also recently asked 15 volunteers to defer their start dates from September 2009 and March 2010, saying it would like to “fine tune” its trainee intakes.

cameron mckenna welcomes new partners CMS Cameron McKenna has added 17 new partners to its ranks the new ‘office partner’ salary rung.

The new office partner position, which allows the firm three levels of partnership, was introduced last month as part of a shake-up and represents the first stage of progression for senior associates, followed by a three-year salaried gateway level before partners join the equity.

The office partner role has been used in Eastern Europe for several years but this is the first year it has been introduced in the City.

herbert smith swings the axe Herbert Smith has announced it is to slash up to 84 members of its City office and will be reversing all associate pay bands, with salaries to remain at 2008-09 levels as an added cost-cutting measure.

The cuts will reportedly be made across the firm’s corporate and real estate practice, with fee earners, professional support lawyers and paralegals all likely to be affected. Secretarial roles across all fee-earning areas and up to 21 support staff will also be at risk.

Middle East-focused firm, Trowers & Hamlins also made 17 members of staff redundant recently – all in its London office. This is the third consultation at the firm and brings the total number of redundancies at the firm to 28, with the cuts affecting both fee-earning and support departments.

roundupLinklaters project finance partner Stuart Salt is set to take over as managing partner of Emerging •Europe, Middle East and North Africa (EEMENA) following the retirement of Nick Eastwell from the role after 20 years of serviceEric Schwartz – Dewey & LeBoeuf’s Paris former managing partner – will soon join arbitration senior •counsel James Castello of King & Spalding to launch the Atlanta-based firm’s first office in FranceNorton Rose has offered staff a part-time option of working four-day weeks on 85% of pay, or taking a •sabbatical of up to 12 weeks on 30% of paySJ Berwin has its eye on an international title. The firm recently set up an office in Dubai less than a month •after launching in Hong KongAshurst recently unveiled its 2009 promotions, revealing a decrease in partner promotions – only 10 •lawyers were made up this year compared with 17 in 2008 Berwin Leighton Paisner has welcomed seven to its partnership, with real estate the biggest beneficiary•

Firms still floundering in credit crunchUK firms are still feeling the pressure to cost cut in the midst of the global recession and even Magic Circle firms have been forced to implement salary freezes across offices.

Clifford Chance recently reversed salary bands for its junior lawyers, with all associate pay frozen at current levels until the end of the 2009-10 financial year.

The move to effectively reduce salary rates across the firm will affect all non-partner lawyers and support staff across the firm’s global network, with the exception of trainees, who will still have their pay increased come their second year.

The initiative follows in the footsteps of Slaughter and May, and Freshfields Bruckhaus Deringer, who made a similar announcement in February, reversing salary bands for all junior lawyers with the exception of trainees.

Lovells has also jumped on the pay freeze bandwagon and will keep salaries for all lawyers, support staff and legal PAs at this year’s levels.

Only trainees who qualified in March will not see a reduction in their salaries, with the level remaining at £65,000.

double cutbacks at evershedsEversheds has asked forthcoming trainees to defer their start dates, while simultaneously slashing numbers from its real estate practice group in a bid to cut costs in the economic slowdown.

The firm has offered 31 out of 73 of its September 2009 trainees £5,000 to defer entry or be employed as a paid paralegal for one year and soon afterwards cut 10 lawyers from its real estate division.

don’t intend to make any changes to that pipeline. The steps we are taking are positioning the firm for the long-term and inevitable recovery in the economy. These steps are not about enhancing short term profitability. We have a partnership that is very much focused on the longer term,” he said.

“Our firm has been one of the strongest performers in the Australian legal market over the last year and in Asia we’ve seen good work in a number of our offices, including Cambodia and Indonesia. However, we have predicted, and been preparing for, a downturn in the legal services market,” he said. “It’s a good plan, it’s working and it’s helping us grow in a softening market.” ALB

p18-25 news.indd 19 20/05/2009 9:54:00 AM

20

NEWS | news >>


kensington swAn tops legAl Aid listIn terms of recipients of fees paid by Legal Aid, Kensington Swan has been the top earning Kiwi firm for the past two-and-a-half years, having received NZ$5.6m (A$4.6m) for various Maori and treaty claims.

Treaty work also brought a healthy NZ$3.7m (A$3.02m) for Wellington firm Rainey Collins, while human rights litigation brought boutique firm Cooper Lawyers scooped an impressive NZ$4.4m (A$3.6m) in the same period.

The Legal Aid regime is expected to be reviewed, following complaints that the program is flawed and that Legal Aid rates are too low. Solicitor Sonja Cooper told ALB that the profit firms make from the fees is relatively small due to “huge” trial expenses that take away a “big chunk” of it.

Last year Coopers collected NZ$1.5m (A$1.2m) in legal aid fees, Kensington Swan received NZ$2.1m (A$1.7m), while Auckland barrister Charl Hirschfeld of Jamaica Chambers was at the front of the pack with NZ$2.3m (A$1.9m).

innovAtion centre proves populArIn Queensland, the Innovation Centre Sunshine Coast has received considerable interest from entrepreneurs who wish to realise their business plans. Brisbane firms Redchip Lawyers, Hemming + Hart Lawyers and Fisher Adams Kelly are just a few of the many law firms who have recently shown interest in basing themselves at the centre. They have already gained new clients and established referral networks across the region, according to the centre’s CEO Colin Graham.

Law firms have shown interest in contacting start-up companies for possible work opportunities as well. So far the centre has been in touch with eight to 10 large Brisbane firms and there is increasing interest from Sydney and Melbourne firms as well.

news in brief >> industry >>

WA >>

New firm strikes Balance with tailored fees

Partner Ken Jagger left Freehills last year to start up his own Western

Australian firm called Balance Legal. In response to increasing scrutiny

of “surprise bills” and high demand for certainty of fees, the firm tailors fees to its clients’ budgets, with a range of fixed rate options. It offers both external and internal seconded legal services to its clients, and employs 11 lawyers. His inspiration came from positive feedback that clients gave after seconded Freehills lawyers began working in their offices.

“On the flip side, our lawyers enjoyed the secondment too, and it struck me as a potential gap in the Australian legal market that needed to be filled,” he said.

Jagger said this fee structure makes the firm more appealing to corporate

clients, who now have fewer resources at their disposal due to the global financial crisis. The recession has, in fact, helped the firm to find more short-term work and “leave its mark”.

In addition to this, many Australian lawyers appear to be going solo and working remotely as in-house lawyers. “We are seeing that happening a lot in the resources sector and the mid-cap of the sector has been quite hard hit. These companies are not looking to employ but to get people in with contracts to assist,” Jagger said. ALB

Ken JaggerBalance Legal

“We are seeing that happening a lot in the resources sector and the mid-cap of the sector has been quite hard hit. these companies are not looking to employ but to get people in with contracts to assist”ken jAgger, bAlAnce legAl

Foreign investors bought US$4.4bn of Asian equities in the week to 10 May, the biggest inflow since 2004 and the eighth largest eversource: merrill lynch

Freehills salary freeze to last beyond end of JuneThe Freehills staff salary freezes,

which have been in effect since 20 March, will remain in place into the new financial year.

According to an internal email recently sent by Freehills managing partner Gavin Bell, the freeze affects all staff, business services and lawyers. “After considering our forecast for next year and conducting a review, we have decided to place a freeze on all salaries, effective immediately, including this year’s 30 June review,” he said.

Partners have been advised to expect a drop in income due to a forecasted drop in the firm’s profitability for the next financial year. If the firm’s profit does not fall in 2010 the ‘upside’ will be shared with colleagues in an “equitable way”, but if the decline continues then tighter measures are expected.

Freehills has already cancelled its annual national partners’ conference, and offered voluntary flexible working options, such as career breaks, flexible hours and purchased leave. However, the firm said it has no plans to retrench

anyone as it has already invested significant “effort” in recruitment.

Meanwhile, a spokesperson for the firm dismissed recent blog comments that Freehills had not offered jobs to any summer clerks. “It was untrue and

completely wrong that we didn’t make offers,” the spokesperson said.

A number of top-tier firms have laid off staff in recent months, as the economic downturn has hit hard. ALB

Gavin BellFreehills

p18-25 news.indd 20 20/05/2009 9:54:04 AM

NEWS | news >>


Surprised” is how Minter Ellison partner Mark Standen described

his reaction to new figures indicating that several listed companies are not complying with governance standards by failing to establish an independent internal audit function.

About 15% of listed companies surveyed said the final decision to hire or retrench the head of internal auditing rested with the chief financial officer, according to the 2009 Internal Audit Benchmarking Study. Standen said he was surprised there had not been more compliance and suggested there should be more communication between internal auditors and the Audit Committee.

The survey, from the Institute of Internal Auditors and Protiviti, also revealed the top three priorities of Australian internal audit teams for the next three years: fraud investigations, risk management attestation in accordance with new ASX Corporate Governance Principles and major project implementations. The findings also state that compliance standards need to be higher. ALB

Middletons Lawyers has dismissed a rumour that the firm

had allegedly halved seasonal clerk numbers for 2009/10 due to the global financial crisis.

The response comes after someone claiming to be the friend of a seasonal clerk applicant wrote to Lawyers Weekly, accusing Middletons’ human resources manager of saying that “all the law firms were doing it [halving seasonal clerk numbers]” since work was “drying up”.

A spokesperson for the firm said the rumour was “incorrect”, adding: “Our firm has no plans for redundancies at the present time and has made none to date.” ALB

Companies not living up to audit standards

Clerk cuts claim denied by Middletons Lawyers

governAnce >>

industry >>

us report

roundupUS firm McGuireWoods is to merge with the 36-lawyer firm of Grundberg Mocatta Rakison, gaining a •London presence and adding to its 900 lawyers in 17 officesChicago firm Arnstein & Lehr has taken over seven-lawyer, Florida-based firm Fieldstone Shear & Denberg •Clifford Chance has made 24 transactional attorneys in New York redundant •Boston-based Edwards Angell Palmer & Dodge aid off approximately 25 lawyers and 35 staffers across six •offices due to declining work Jeffrey Stone and Peter Sacripanti will begin their roles as joint chairman of McDermott Will & Emery in •January 2010, replacing incumbent chairman Harvey Freishtat who has held the position since 2003Linklaters recently hired UBS managing director Lewis Steinberg to co-head its US practice and head up its tax •practice group Chicago private equity partner Bert Krueger was recently nominated to succeed James Holzhauer as •chairman of Mayer Brown. Holzhauer is stepping down after two years at the helm Fried Frank Harris Shriver & Jacobson has confirmed it is to reduce its US workforce by a total of 99 people, •losing 41 associates and 58 administrative staff

finance practices in the City following the hire of former Mourant chief executive Stephen Ball.

redundancies comntinue at bakersBaker & McKenzie has continued its slashing spree, recently making 38 associates and 86 support staff redundant in the US. The latest cuts come shortly after the firm initiated a second consultation in London, which is likely to lead to the loss of 85 jobs, including between 20 and 30 lawyers.

Six New York associates were already made redundant this year as the firm reviews its salary bill in response to the economic downturn.

Another US firm, Mayer Brown, also recently initiated a second round of job cuts, with 45 lawyers and 90 support across its US offices losing their jobs as a result of a review of its global operations.

skadden loses lawyers to boutique Recent redundancies at Skadden, Arps, Slate, Meagher & Flom have reportedly prompted the departure of 11 of the US firm’s attorneys for new boutique BuckleySandler.

The Washington DC office of Skadden and the US offices of Gibson, Dunn & Crutcher both confirmed employee layoffs – 25 staff positions at Skadden’s DC office and 36 staff members across the nine US offices of Gibson, Dunn & Crutcher.

Fresh wave of layoffs hit us firms US firms continue to crumble under the weight of the credit crunch, with O’Melveny & Myers, Pillsbury Winthrop Shaw Pittman, King & Spalding, Paul, Hastings, Janofsky & Walker, New York-based Chadbourne & Parke and Venable all recently announcing layoffs across their offices in response to the economic instability.

O’Melveny & Myers bid farewell to 90 lawyers, including associates and counsel, and 110 staffers in March, while King & Spalding laid off 37 associates and counsel as well as 85 staff firmwide, and Pillsbury saw 55 lawyers and 100 staff lose their jobs.

Paul Hastings, Chadbourne & Parke and Venable also slashed numbers by 131, 25 and 64 employees respectively.

bryan cave hunts for london merger US firm Bryan Cave has revealed it is searching for a UK counterpart to expand its budding presence in London.

The firm launched in the UK in 1982, but is reportedly keen to enter into a merger with a London-headquartered firm as a way to develop its standing in the European legal market.

The UK merger will be one of many changes to develop this year. The firm announced job cuts totaling 134 in February, and has been working to revamp its restructuring and outsourcing and

p18-25 news.indd 21 20/05/2009 9:54:05 AM

22

NEWS | news >>


Firm Profile Buddle Findlay

Most organisations now have email and internet policies in place. Many policies, however, have not

been adapted to deal with the realities and sophistication of the Web 2.0 environment – the second generation of internet technology. Web 2.0 technology includes social networking websites such as Twitter, Face Book, My Space and YouTube, “commercial” internet websites such as eBay and Trade Me and other technologies (such as iPods and memory sticks) that allow employees to connect with work place equipment.

An illustration of the damage that can be caused was seen last month when a senior Telstra employee created a satirical Twitter page in the name of Australian Communications Minister, Stephen Conroy. Adverse media reports suggested that Telstra’s silencing of the employee backfired on Telstra (despite Telstra denying that it had done so). Telstra has subsequently introduced guidelines for using such sites but the damage could have been avoided if they had been in place earlier.

Firms face two options to deal with the new technology: impose a blanket ban, or allow access on certain terms.

Imposing a banSome employers have chosen to deal with the proliferation of Web 2.0 sites by imposing an outright ban on their use on work equipment. For example, in March this year Television New Zealand announced they were adopting this policy. Reasons can include:

Loss of staff productivity•Cost of broadband connection•Risk of slowing down the network and •interfering with business activitiesPotential civil and criminal liabilities•Risk to security and potential disclosure •of corporate dataRisk to the employer’s professional •reputation.However, some commentators suggest

that employers may eventually need to adjust these policies to reflect the expectations of the younger generation, arguing that taking a restrictive approach may make it difficult to recruit younger workers.

Allowing conditional access Other employers have embraced new Web 2.0 technologies by allowing employees to access them at work under certain circumstances. Some businesses see social networking sites as having invaluable global business networking capabilities and professional merits that are instant, convenient and cost efficient. In particular, businesses that work closely with technology and young people may see these sites as a way to promote their forward-thinking, youthful image. But even if a business is not in that category, Web 2.0 technologies – and what follows them – will likely become the norm at some point.

Where employers choose to allow access to Web 2.0, it is critical that appropriate policies and procedures are implemented which specifically deal with this technology. Decisions affecting work place technology, and the access to and use of it, are too important to be made by default.

What should a sound Web 2.0 policy contain?

The policy should specifically set out •the employer’s policy on blogging, social networking sites and commercial sites such as Trade Me. Are they allowed or not? If reasonable use is permitted, define and give examples of “reasonable”.Clarify if separate user names and •passwords are used, whether these are shared or secret. Employees should be notified if they are responsible for activities under their account and whether they must notify the employer of any breach in security.The section of the policy dealing with •communication or general behaviour should explicitly deal with texting as well as computer usage.Set out what is permitted in terms of •interconnection between employer’s equipment and software and the employee’s own portable devices such as iPods.The policy should cover the extent to •which it is permissible for employees to refer to their work and colleagues in blogs or social networking sites. For example, Telstra’s new guidelines

state that employees are expected to identify themselves as an employee of Telstra but disclaim that they are speaking on Telstra’s behalf.Employers might want to consider •whether or not union related activity is permissible and appropriate on the workplace computer systems. If employees are encouraged to •produce blogs as part of “marketing” and “advertising”, the employer may wish to obtain marketing/editorial control of such staff blogs.While specific considerations apply

to any new technology, overall, the ground rules for internet and email policies remain the same in the Web 2.0 environment. The policy should be well defined, easily accessible and, where possible, contained in one document. The policy, and any changes to it, should be adequately communicated to staff including training where possible. Finally, technology use should be monitored regularly and policies enforced consistently to ensure compliance and avoid unnecessary and costly grievances.

Is your internet policy web 2.0 proof?NZ COMMENTARY


This article was written by Sherridan Cook, a partner in

the Auckland office and Alastair Sherriff a consultant

in the Wellington office of Buddle Findlay, one of New

Zealand’s leading law firms.

Sherridan specialises in all aspects

of employment law and commercial

dispute resolution.

Sherridan can be contacted by

phone +64 9 357 1858 or

email: sherridan.cook@

buddlefindlay.com.

Alastair advises on employment,

health and safety in employment

and can be contacted by

phone: +64 4 498 7327 or

email: alastair.sherrif@

buddlefindlay.com.

Sherridan Cook, Buddle Findlay

Alastair Sherriff, Buddle Findlay

p18-25 news.indd 22 20/05/2009 9:54:06 AM

NEWS | news >>


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Autonomy bring out connectors for idol Autonomy have followed up the integration of their IDOL platform with iManage by releasing a bunch of IDOL connectors for popular legal software.

The move makes sense. Their engineers have already done the hard work while constructing the integration components for Vivisimo and it gives law firms an incentive to move across to the new platform.

The reality of the announcement is that it is really just the first stage of building connectors for legal software. So far we have a LexisNexis Interaction connector (useful to may firms), a Carpe Diem Time and Expense connector (less so for this region) and one for Practical Law Company’s Legal Knowhow Services which is relatively unheard of in the Asia Pacific region.

billback merges Billback, the legal focussed expense management and cost recovery firm has merged with APS (Advanced Professional Solutions), a company specialising in practice management systems for accounting firms.

The merger occurred due to Billback being purchased by APS’s parent, Reckon Limited in January 2009 for AU$18 million.

Although most of us in the legal world have never heard of them, APS apparently is “the primary practice software supplier to 22% of the Top 100 accounting firms in the UK, over 60% of the Top 50 firms in New Zealand and over 70% of the Australia’s Top 100 firms.”

It will be interesting to see where this move takes Billback. They may expand their business model into the accounting world, or re-deploy their legal sales force to sell software to accountants.

microsoft announce exchange 2010 Microsoft have unveiled the latest incarnation of their Exchange mail and calendar server, Exchange 2010, and announced the commencement of a public beta program.

The intention is to release an integrated suite of office products at roughly the same time, including Microsoft Office 2010, Microsoft SharePoint Server 2010, Microsoft Visio 2010 and Microsoft Project 2010. The cynics amongst us would say that Microsoft are attempting to lock everyone in, with an integrated server/client strategy, now that their file formats have been opened up by the EU and others. Microsoft on the other hand, prefer to see it as giving “people a consistent experience

across devices, making it easier to create and edit documents and collaborate from any location”.

Exchange will be the first of the new products, becoming available in late 2009. Microsoft Office 2010 and related products will hopefully reach the technical preview stage in the third quarter of 2009 and become available in the first half of 2010.

The new features in Exchange include:Better performance on SANs and increased •redundancy options Mention of the availability of Microsoft hosted •solutions Better archiving •A new concept called MailTips to warn users •“before they commit an e-mail faux pas such as sending mail to large distribution groups, to recipients who are out of the office or to recipients outside the organisation, helping protect against information leaks and reduce unnecessary e-mail messages”. Although this sounds like a nice idea, being warned every time you send an external email may become a tad annoying. But if it can stop people replying to all it accidentally it gets our vote Ignore conversation. The ability to “mute” an •email conversation where everyone is replying to all and you really don’t care. Better integration with voicemail •As usual with Microsoft, we’ll wait and see if

they can hit their own deadline.

bighand tout super roi BigHand are talking up one of the bigger digital dictation implementations in the region, with New Zealand firm Simpson Grierson moving across to their platform.

The move sees the software being rolled out to 220 layers and 90 secretaries, and the firm has espoused the usual benefits of being able to move jobs between offices and obtain visibilities of work queues.

The firm’s Information Services Director, Valerie Fogg, believes that the system will pay for itself within the year, although we’d love to see the calculations, as digital dictation is an area for which it is notoriously difficult to get accurate ROI figures.

Chris McLean is a specialist in legal technology having worked for numerous law firms both as a lawyer and support services director. You can find his website here: www.auslegal.com and contact him here: [email protected]

IT report

p18-25 news.indd 23 20/05/2009 9:54:12 AM

www.caseflow.com.au

24

NEWS | news >>


mAllesons tAkes bite out oF krispy kreme Mallesons Stephen Jaques recently sent a letter on behalf of client Arnott’s, threatening legal action against the local arm of US-based donut company Krispy Kreme, after a ‘limited edition’ donut named ‘Iced Dough-Vo’ was claimed to be a “blatant infringement” of an Arnotts’ biscuit brand.

Arnott’s was extremely concerned by this infringement of its Vo-Vo trademarks and was prepared to take all steps necessary in order to protect its Australian trademark rights and its extensive reputation in its brands, read the letter issued by Mallesons. The letter also stated that Krispy Kreme had until 24 April to cease selling the product or legal action will be taken.

However, the managing director of Krispy Kreme Australia, John McGuigan, a former Baker & McKenzie lawyer, said the company had sought legal advice and initially vowed to continue selling the product. In the end the parties settled their dispute by having Krispy Kreme will rename the product effective from 11 May.

Firm: corrs chambers westgarthLead lawyer: Val Gostencnik, Janet WhitingClient: 2009 Victorian Bushfires Royal Commission

Firm: owen dixon chambers westLead lawyer: Jack Rush, Jonathon RedwoodClients: Corrs Chambers Westgarth, 77 Victorian Councils, Municipal Association of Victoria

Firm: Australian government solicitorLead lawyer: Tim BegbieClient: Australian Commonwealth Government

Firm: slater & gordonLead lawyer: Toby BorgeestClient: United Firefighters Union of Australia

Firm: public interest law clearing houseLead lawyers: Mat Tinkler, Caroline AdlerClients: Bushfire victims

Firm: melbourne chambersLead lawyers: Allan Myers, Chris Archibald, Neil YoungClients: Victorian State Government, SP Ausnet, 77 Victorian Councils, Municipal Association of Victoria

Firm: Flagstaff chambersLead lawyer: Neil Clelland, Garry LivermoreClient: Victorian State Government

Firm: Aickin chambers Lead lawyer: Jonathan Beach, Darren BrackenClient: SP Ausnet, Victorian Police

Firm: william crockett chambersLead lawyer: Gregory Lyon, Ian HillClients: 77 Victorian Councils, Municipal Association of Victoria, Victoria Police

Firm: joan rosanove chambersLead lawyer: Wendy HarrisClient: Insurance Council of Australia

Key legAl AdviSorS on royAl ►CoMMiSSion into BlACK SAtUrdAyThe Royal Commission into the

tragic Black Saturday Victorian bushfires is under way, and sat for its first directions hearing in Melbourne’s County Court on 20 April.

So far, there have also been 26 community consultation sessions in 14 different areas affected by the blaze. Corrs Chambers Westgarth partners Val Gostencnik and Janet Whiting are instructing Owen Dixon Chambers West senior counsel Jack Rush, who is assisting the inquiry. Corrs was chosen for its “expertise, resources and value for money”, according to Royal Commission chief executive Jane Brockington. She said the firm was selected from Melbourne firms by a three-step process to identify all possible conflicts of interest, and knowledge of public sector procurement and probity standards.

Australian Government Solicitor general counsel Tim Begbie is acting for the federal government, while Slater & Gordon litigation group leader Toby Borgeest is advising the United Firefighters Union of Australia. Public Interest Law Clearing House lawyers Mat Tinkler and Caroline Adler are acting for about 30 individuals and community groups affected by the bushfires. There are also several Victorian barristers involved, including Melbourne Chambers barrister Allan Myers, and Flagstaff Chambers’ Neil Clelland and Garry Livermore, who are all acting for the Victorian State Government. ALB

Black Saturday hearing brings lawyers and barristers to the fore

victoriA >>

clients up For bid on new legAl websiteJust as eBay revolutionalised online product auctioning, a new web portal aims to follow its example by helping lawyers defy geographic barriers to win new clients. Getalawyer provides an interactive interface for lawyers to communicate with clients who need legal advice and also gives them an opportunity to tender for work. A lawyer needs only to glance at the ‘help someone’ section or the detailed brief to find key information about the nature of the problem, how much the client is willing to spend and how many parties are bidding.

The website also provides lawyers with a ‘vehicle’ to source work and compete for it outside immediate geographic constraints, according to Getalawyer founder Ben Beukes. He said that a property lawyer based in the Sydney suburb of Randwick might end up getting conveyancing work from all over New South Wales and that junior barristers can compete with the more senior barristers – who tend to rely on well-established connections.

Annual subscription fees are still to be finalised before the website’s launch in May, but could be in the order of A$250. The site will be launched at: www.getalawyer.com.au

news in brief >>

For all the breaking legal news and opinion go to our website at www.legalbusinessonline.com

the latest legal news

p18-25 news.indd 24 20/05/2009 9:54:18 AM

NEWS | news >>


mergermarket M&A deals update

p18-25 news.indd 25 20/05/2009 9:54:20 AM

26

NEWS | appointments >>


Promotions ►name Area of law organisation

Daniel French Technology, IT Anthony Harper

Mark Leemen Finance, equity Skadden Arps

Adrian Tembel Corporate, media Thomson Playford Cutlers

AppoIntmEntS

Thomson Playford Cutlers

LAtErAL HirEs ►name Area of law organisation coming from organisation going to

Richard Best Property Professional Legal Group Moray & Agnew

Michael Chaaya Corporate, finance Mallesons Stephen Jaques Corrs Chambers Westgarth

Craig Hailes Property, litigation Mills Oakley Macpherson + Kelley

Noela L’Estrange Planning, employment Australian Government Solicitor

Queensland Law Society

Kerree McIvor Property Professional Legal Group Moray & Agnew

Graham Harold Murphy

Trade practices, health Independent Bar Western Australian Supreme Court

David Nolan Litigation Herceg Lawyers Mills Oakley

Leanne Stewart Alcohol beverages, corporate Nixon Peabody Piper Alderman

Athena Zissiadis Property Professional Legal Group Moray & Agnew

Professional Legal Group moves to Moray & AgnewWhen Professional Legal Group (PLG) founder and principal Richard Best decided to move his team to Moray & Agnew’s Melbourne office, he was looking for a good fit for his client base.

Best, who has been appointed as a property partner, had established the boutique firm after having worked as an in-house property lawyer at Coles Myer, but Moray & Agnew’s technology and working environment influenced his decision to abandon the solo route. He said he liked the firm’s extensive precedent systems, time recording practices and automated client reporting practices but, more importantly, was impressed with Moray & Agnew’s “holistic approach” to client service.

Property paralegals Athena Zissiadis and Kerree McIvor have also moved to Moray & Agnew, adding 14 years’ experience in property and conveyancing work. Best tops this with an additional four years’ experience in leasing, deal structuring, government projects and joint venture work. He recently acted on an A$8m residential development project in Yarrawonga, Victoria.

Tembel unveiled as new TPC chief executive partnerAfter 17 years at Thomson Playford Cutlers (TPC), Adrian Tembel has been named the firm’s new chief executive partner. The move sees the former national head of corporate succeed outgoing Brett Goodridge, who leaves the firm to pursue other legal and non-legal business interests in Perth.

Tembel was voted in unanimously by his fellow partners who chose him for his experience, leadership skills, intimate knowledge of the firm and business acumen. Chairperson Loretta Reynolds said it was the board’s view that appointing someone who has built a career with the firm – and has an unrivalled understanding of its business – was critical.

In his new role, Tembel’s first priority will be to capitalise on the firm’s Melbourne, Sydney and Adelaide presence. “These are markets where we see long-term growth potential for the firm. The integration and expansion of our Melbourne office will no doubt be a focus for him,” Reynolds said.

Tembel plans to continue the firm’s transformation from an Adelaide firm to a “respected” mid-tier firm in the Australian marketplace.

Richard BestAdrian Tembel

Professional Legal Moray & Agnew

KIWI FIRMS STILL HAvE THE RESOuRCESThe global financial crisis has not stopped New Zealand law firms getting a slice of work arising out of increased prosecution under the Kiwi Resource Management Act (RMA).

While the economic downturn has affected aspects of the firm’s RMA practice, overall RMA litigation work flows are still strong, said Buddle Findlay partner Paul Beverley. The firm is involved in consenting for infrastructure development, including two windfarms for Contact Energy and RMA water-related litigation – the Central Plains water cases in the South Island. There is also RMA work from the insolvency area, he said.

Figures from the Kiwi Environment Ministry reveal that between 1 May 2005 and 30 June 2008, there were 260 prosecutions – 52% up on the 171 prosecutions from 1 July 2001 to 30 April 2005. However, the rise is due to tighter regulation rather than more felonies. Beverley pointed out a recent trend among some regional councils which are shifting their focus from educating delinquents to prosecuting them.

AuSSIE PAIR DRINK TO KIRIN-LION NATHAN DEAL Mallesons Stephen Jaques and Blake Dawson have played a hand in helping Japanese brewer Kirin to finalise its acquisition of Australian-based Lion Nathan.

The deal, which will be effected by a scheme of arrangement and has the unanimous support of Lion Nathan’s independent directors, will see Kirin acquire the 54% of the Australian company it does not already own for A$2.5bn in cash. It is described as the company’s second largest acquisition in Australia, slightly behind the A$2.9bn acquisition of National Foods in 2008.

A Mallesons team led by Meredith Paynter, Greg Golding, Sharon Henrick, Judy Sullivan and Nuncio D’Angelo acted for Lion Nathan on the deal, while Ian Williams, Carl Della-Bosca, David Ryan and Vivian Chang from Blake Dawson represented Kirin.

NEW ExECuTIvE COuNSEL ROLES FOR FREEHILLSSome senior lawyers wish to progress further in their career, but prefer to steer clear of partnership. Freehills has noticed this trend and responded by creating the new role of executive counsel.

The salaried position is separate from special counsel – a popular choice for senior lawyers aspiring for a higher non-partner role – and includes duties such as team leadership, legal management, practice management, client relationships and project management.

Freehills believes the role is an Australian first. Bell pointed to the firm’s research into other firms, which revealed that while equivalent roles exist in large international law firms, there is currently no such position at Australian firms. “We see the role as vital in ensuring that we keep our talented people and provide a variety of options for career fulfilment,” said managing partner Gavin Bell.

news in brief >>

Paul BeverleyBuddle Findlay

p26-28 appts.indd 26 19/05/2009 4:16:56 PM



Skadden Arps

Anthony Harper

Mallesons lawyer jumps ship for CorrsMichael Chaaya is not one to shy away from an opportunity and, after working as a senior associate at Mallesons Stephen Jaques for more than 11 years, he decided that moving to Corrs Chambers Westgarth would be his next challenge.

Already well acquainted with Corrs partners Christine Maher, Megan O’Rourke, Andrew Lumsden and Andrew Galvin, Chaaya was eventually approached about a corporate partner role by CEO John Denton. The main attraction was the firm’s plans to grow its financial services group; “strong” staff, client relationships and community involvement; and the management’s collaborative approach.

Corrs’ client base also attracted him, which includes financial institutions Suncorp and ANZ, among others. Most of Chaaya’s clients have been positive about his move, some of which are financial service entities and product providers, including: AXA, which he advised on the development; and National Australia Bank (NAB)/MLC, which he advised on its rationalisation project for life insurance and its legacy superannuation products. He has also formerly been seconded as an in-house lawyer for Westpac, BT Financial Group, AMP and NAB/MLC.

Mills Oakley partner returns to his rootsCraig Hailes used to work at Macpherson + Kelley (M+K) as a young lawyer, but then moved to other firms, notably Mills Oakley’s Melbourne office,

Herceg principal leaves for Mills OakleyDavid Nolan, one of Herceg Lawyers’ principals, had often referred litigation work to Mills Oakley. As time passed he developed a fondness for the firm and, after a meeting with the firm’s CEO John Nerurker, realised that working for Mills Oakley as a partner was the next step in his career.

When Nerurker approached Nolan about work opportunities, he seemed passionate about – and committed to – developing Mills Oakley into a full service firm, spanning across the Eastern Sea Board.

Law Society snaps up top AGS lawyerAustralian Government Solicitor’s (AGS) Noela L’Estrange has always considered herself a Queenslander, so she found the opportunity to become CEO of the Queensland Law Society too good to pass up.

The position was advertised and L’Estrange applied for it because she saw it as a good opportunity to work

Lend Lease lead lawyer joins Skadden partnershipWhen Skadden counsel Mark Leemen acted for Lend Lease on its recent A$302.5m equity raising, he did not realise he would soon be entering partnership.

The promotion sees Leemen become just the second Australian partner at the US firm’s Sydney office, which has historically tended to hire US expatriates. He said it was a “big vote of confidence” by the firm’s management – not only in himself, but in the office and the Australian market.

Having worked for Skadden’s New York office, Leemen advised Lend Lease on US aspects of the raising, completing the deal in a tight timeframe despite fluctuations in the Australian and US markets. He has also advised BHP on its US$3.3bn SEC-registered shelf senior notes offering and Westfield on US securities law issues (A$2.9bn). Anthony Harper lawyer logs on

for technology partnership roleDaniel French is quite the technological whiz when it comes to advising on IT outsourcing, software development and e-commerce contracts. His desire to specialise made him swap his job as in-house lawyer at AXA’s UK group for a technology senior associate role at Anthony Harper during 2003.

French has recently been promoted to partnership and will head the firm’s technology group. A key factor in his appointment has been his practical experience in the technology sector, given that many South Island lawyers do not have a specialisation in technology because most Kiwi lawyers are ‘generalists’.

In his new role, French will give special attention to increasing and accelerating the size and number of software and technology providers that the firm acts for. He has previously acted for EziBuy and Max Fashions on customising and licensing core retail systems from SAP and Ciber Novasoft.

Michael Chaaya

Craig Hailes

David Nolan

Noela L’estrange

Mark Leemen

Daniel French

Mallesons Corrs

Mills Oakley M+K

Herceg Lawyers Mills Oakley

AgS Qld Law Society

Chapman Tripp

Chapman Tripp partner to look at Overseas Investment ActFollowing Chapman Tripp’s push for Kiwi tax rule changes to encourage more Asia-Pacific financial investment and transactions into New Zealand, partner Tim Williams has been appointed to review New Zealand’s Overseas Investment Act.

The Technical Reference Group will also consist of Simpson Grierson’s Don Holborow, Russell McVeagh’s Garth Sinclair, Minter Ellison Rudd Watts’ Andrew Monteith and Bell Gully’s Andrew Petersen. They will advise the Kiwi Government on the review, which is aimed at making foreign investment easier and more attractive, while ensuring the protection of land, assets and resources.

Williams previously advised the NZX on law and rule reforms, News Corporation on consent to hold 43% of Sky Network Television, and on an exemption for consolidation between INL and Sky, which was announced as ALB’s 2006 New Zealand Deal of the Year. He believes he was chosen for his experience as a regular applicant for Overseas Investment Office (OIO) consents, and procuring policy statements that saved OIO from making an “unnecessary” application. Williams has also made submissions on the treatment of New Zealand unit trusts.

Tim Williams

Don Holborow

where he worked his way up to partnership. Eight years later his former workplace ‘grew’ on him and he decided to rejoin as property principal.

A few factors contributed to his return, the main ones being M+K’s culture, values, practice areas, plans for national expansion and its “loyal” and “growing” client base. The average length of stay for a lawyer at M+K is 10 years and this fact alone is “remarkable”, Hailes said.

Hailes has advised a number of mining companies, developers, multi-storey buildings, landlords, and tenants on transactions, dispute resolution and leasing matters. His most recent transaction involved advising on the development and leasing of two bulk goods centres.

in the profession, but more on the “representative, lobbying and service side”, she said.

Having worked for AGS for 11 years, L’Estrange more recently served as director of legal practice support in Canberra. Before that she was a law lecturer at Queensland University of Technology, human resources lawyer at Deacons’ Brisbane office and headed her own legal management consultancy called The Quality Curve. L’Estrange returned to her home state in May to begin her three-year contract with the Queensland Law Society, where she was reunited with fellow former students Terry O’Gorman of Brisbane firm Robinson O’Gorman and Queensland Court of Appeal justice Margaret McMurdo.

p26-28 appts.indd 27 19/05/2009 4:17:08 PM

28



Wine, beer and spirits work lures Nixon Peabody lawyerWhen it comes to beverage alcohol law, Piper Alderman’s new corporate special counsel Leanne Stewart is a pro. She recently joined the firm after working as professional specialist at US firm Nixon Peabody’s beverage alcohol group.

Stewart’s choice of Piper Alderman was influenced by her previous interactions with the firm in her former capacity as counsel at the Australian Wine and Brandy Corporation. She had “great respect” for the firm’s reputation, client focus, working culture, and quality of work on offer in the wine, beer, spirits and food industries.

Former Bell Gully partner to chair New Zealand Commerce CommissionMark Berry has had quite a career. He has been a Bell Gully partner, a Chapman Tripp consultant, and has practised at the Kiwi independent bar – now he has been appointed to chair the Kiwi Commerce Commission.

New Zealand’s minister of commerce, Simon Power, announced Berry’s appointment for a term of 18 months. Berry will lead an “extensive” work program, implementing the new regulatory regimes, following the passing of the Commerce Amendment Act late last year, according to Power.

Berry has been deputy chair of the Commerce Commission (1999–2001) and advised on the Goodman Fielder/Wattie merger, the BIL/Qantas/JAL/American Airlines consortium’s initial stake in Air New Zealand, and various competition matters.

Ex-Blakes partner appointed to Western Australian Supreme Court Graham Harold Murphy, previously a partner with Blake Dawson in both Sydney and Perth, has been appointed to the Western Australian Supreme Court. Murphy, who has also spent time with Clifford Chance in Europe, left Blakes in 1994 to join the Independent Bar.

Christian Porter said that Murphy’s vast career spans many facets of the law, including trade practices, administration, maritime, medical negligence and contractual, statutory and constitutional interpretation. He has specialised in commercial litigation, principally in banks, mining companies and other public companies.

Murphy started his new role on 28 April.

Leanne Stewart

Nixon Peabody Piper Alderman

Bell gully NZCC

Independent Bar WA Supreme CourtThe firm also seemed to be able to outmanoeuvre its competitors, Nolan said.

Although still in discussion with clients about the move, Nolan said they have responded very positively and see it as a “great opportunity”. He has previously acted on Capital Play’s US$1.8bn bid for three racetracks and associated gaming facilities in New York, Fluorotechnics’ recent IPO and rights issue and the sale of Gujarat NRE Resources (A$1.1bn).

In addition to her liquor expertise, Stewart is well versed in M&A, regulatory compliance, licensing, international trade and intellectual property. She formerly represented a major US wine exporter in releasing product containers seized in Europe due to labelling issues, and acted for a US private equity firm on licensing issues arising from its acquisition of a US- and Canada-based restaurant chain.

For all the latest legal news and opinions log on to our website at www.legalbusinessonline.com

p26-28 appts.indd 28 19/05/2009 4:17:52 PM

www.expertopinion.com.au

Commercial Litigator - 6+ Yrs PQE - AucklandBoutique New Zealand law firm is looking to add a senior litigator to its Auckland team. Working in a collegial and team orientated environment you will be dealing with a broad range of commercial litigation including commercial contracts, construction, insurance and insolvency. Ideally you’ll have broad experience, excellent networking and client facing skills and at lest 6 years experience gained at a mid tier or top tier law firm. This position offers excellent career progression for the right candidate. Ref 74518

Commercial Litigator (Intermediate/ Senior level) +4 Yrs PQE - WellingtonHighly reputed and well established NZ law firm seek a commercial litigator with at least 4 years PQE to add to its litigation team in Wellington. The team acts for large corporate, state sector and local government clients. You will be advising on a wide range of commercial disputes in the areas including energy, networks and utilities; financial services; insolvency; trade practices, IP and commercial property as well as regulatory issues and judicial review. We are seeking lawyers at Senior Associate and Associate level with excellent academics, good drafting skills and the ability to work under pressure and make an impact in a high performing environment. The excellent working environment, non hierarchical structure and diverse range of work on offer make this a fantastic opportunity. Ref 73557

Middle East Litigator UAE - Competitive tax free salaryOur client is an international firm with a well established office and reputation in the Gulf. They have a broad range of clients form a variety of different industries. With the economic downturn many of these clients are being forced to turn to the firm’s litigation department. To cope with the increasing demand they are looking to add a mid-level associate to their litigation department. Applicants must have at least 4 years post qualified experience working in the field of litigation, working for a reputable firm with an international standing. Previous experience of working in the Gulf and/or the ability to speak Arabic would be preferred. Ref: 74666

Construction Litigation - 3+ Yrs PQE - Dubai The Dubai office of a highly reputable British firm is seeking a mid-level construction litigator to join their busy team. The economic downturn has caused a dramatic increase in workload. Applicants should have at least four years post-qualified experience in construction litigation. Previous experience of working in the Gulf and/or the ability to speak Arabic would be preferred. Ref: 74667

Commercial Litigation - Partner Level - Boutique Firm - SydneyThis well established and highly regarded boutique firm currently seek a partner level Commercial Litigation lawyer to join their team. Working in a boutique and specialised environment you can utilise your skills and really make your mark. With a large commercial dispute resolution practice, this is an excellent opportunity for a career focused and motivated lawyer to play an integral role in shaping the future of the firm. Ref:74660

Workplace/Industrial Relations - 5+ Yrs PQE - MelbourneMid tier firm in Melbourne seeks a Senior Employment Lawyer to join its busy team. Acting for businesses in employment law, discrimination, industrial relations, and occupational health and safety matters, this role promises to be stimulating and challenging. You will be a senior work place relations lawyer with a client base or someone with local market knowledge and strong business development skills. You will enjoy working in a great environment where work/life balance is not just an ideal, but a reality. Ref 74467

Call Kellie-Jane Baker in our Sydney office on (02) 9220 4400, Anna Wech in our New Zealand office on +64 4 972 3109 or Penny Forsyth or Iain Rainey in our London office on 02072208111 for more information today!

p26-28 appts.indd 29 19/05/2009 4:17:56 PM

www.grlaw.com.au

30

ALB speciAL report | New Zealand 09 >>


new zealand2009




p30-43special report nz.indd 30 20/05/2009 11:56:04 AM



There’s a new flavour of the month in New Zealand. While firms are still keeping an eye on the M&A scene, what they

would really like to talk about in 2009 is how much their practice does not rely on big corporate transactions. Diversity of practice areas has become the theme du jour – although firms point out that this diversity was present all along.

“The big deals were the icing on the cake,” says Russell McVeagh CEO Gary McDiarmid. “But we are highly diversified and have a very stable base of clients and practice areas.”

Undoubtedly, firms who have built up genuine depth across a range of practice areas are now reaping the rewards for their investment. Chapman Tripp, Buddle Findlay and Kensington Swan are regarded as being particularly well placed in this respect.

“We don’t put our eggs in one basket,” says Buddle Findlay national chairman Peter Chemis. “We have focused on building the size and quality of particular specialisations, such as insolvency, public law, health and environment. Other firms may have teams in these areas, but we believe the depth and quality of our client base in health, for example, is pre-eminent.”

At Bell Gully, the feeling was that the firm had become “a little skinny”, according to chairman Roger Partridge, so it moved last year to bring in six new partners in areas such as litigation, competition, resource management and energy. “Strengthening the team at a time of economic uncertainty was a significant achievement,” he says.

Price warAs competition for work hots up, fees have become a key battleground. Cost may not have been a major issue in the boom times of recent years, but clients are increasingly squeezing firms for more value for money. It is not an easy transition for those that

Diversify or perishDiversification, cut-throat pricing, more competition for government work: these are just some of the outcomes as New Zealand firms adjust to a new world order

have become accustomed to the healthy fees associated with large M&A deals – particularly when tendering for government work.

“In Wellington, margins are lower and clients are more price sensitive,” said one source. “There were some firms that didn’t take that into account in the past and billed the same in Wellington as they did in Auckland. Now that the big corporate transactions work has slowed down, they’re going to have to battle to find work in other areas.” The result, says the source, is some firms “ruthlessly cutting their own throats” when tendering for work.

Kensington Swan chairman Clayton Kimpton says that tendering for government work has become more competitive. However, he adds that his firm has not lost any work to rival firms through the tender process – rather, the firm’s tender success rate has increased. “You don’t just walk in and get the work – you need to have been there, built relationships with central government, and developed a deep understanding of the relevant industry, business and environment. This is why Kensington Swan is one of the few large firms to continue to invest in its Wellington office,” Kimpton says. He believes a strong Wellington office is essential to building relationships, although he says that local and regional government work is also extremely important.

However, it is not just government work where firms are jostling for position. Chapman Tripp’s Andrew Poole says he has heard of “very unusual”

“A lot of our growth is expected to come from an increased awareness of the firm’s existence and its involvement in a number of high-profile transactions”

Wayne Hudson, Hudson Gavin Martin


32



pricing across the entire industry. “I can only surmise that this is a reflection of overcapacity and a need to secure revenue,” he says. Poole suspects this overcapacity may be linked to the promotion of salaried partners which occurred in prosperous years at some firms. “It may have been a smart thing to do in boom times, but it would presumably put pressure on the firm when times are lean,” he says. Whatever the reason, Poole says the cut-throat pricing is unsustainable. “The firms involved are doing damage to themselves in the long term. When the recovery comes, it will be difficult to raise those rates back to previous levels.”

RevenuesNew Zealand firms do not release revenue figures, but they are prepared

“The firms involved are doing damage to themselves in the long term. When the recovery comes, it will be difficult to raise those rates back to previous levels”

andreW Poole, CHaPMan triPP

Other firms also paint a picture which is generally positive given the economic climate – indeed, in certain firms the word “buoyant” comes to mind. However, there was a reticence to speak on the record about success. “There is a lot of hardship out there at the moment – we would consider it in poor taste to be seen to be boasting about revenue,” Buddle Findlay’s Chemis says.

Lay-offsAt Simpson Grierson, there have been no redundancies. “In our commercial property team there were a few vacancies we didn’t fill after people left through natural attrition – but there have been no redundancies and we’re still hiring,” Fisher says. “We recently welcomed back three senior associates

to discuss the comparison between this year’s revenue performance to date and last year’s.

At Simpson Grierson, revenue is only down by a modest 3%, which chairman Rob Fisher attributes in part to the firm’s decision to pursue a broad range of specialisations. “Firms that have narrowed their area of practice don’t get the counterbalance of being broad based,” he says. “Our litigation team is flat out and we’re also extremely busy in the insolvency and construction disputes space.”

Gary McDiarmid says it is early days to make revenue predictions, but his prediction at present is that Russell McVeagh will be “slightly” down on last year. “M&A is well down, but other areas are well up – the net result is that we’ll be down slightly overall,” he says.




from the UK – two from Linklaters and one from a US firm.”

At Kensington Swan, the focus is on retraining lawyers in more resilient practice areas. “We don’t want to lose lawyers,” Kimpton says. “We want to make this investment in people. However, one question on all law firms’ minds is: ‘How long can we continue to invest? ’”

It is the same story across the major firms – while hiring and particularly the replacement of departing lawyers has become more conservative, all managing partners who spoke to ALB said they had no plans to make redundancies. However, certain smaller firms are rumoured to have retrenched lawyers.

That does not mean overcapacity doesn’t exist. Russell McVeagh is reportedly encouraging the undertaking of more pro bono work as a way of keeping lawyers stimulated. Chemis says he expects that other firms will also go down the same path. “It’s law firm culture to stay busy – not having work is bad for morale. We’re all neurotic actors waiting for a part,” he says.

The downturn has meant some

New ZealaNd’s largest law firms ►Name Led by Partners Lawyers

(excluding partners and paralegals)

Total number of lawyers

Offices

Bell Gully Stephen Macliver (CEO), Roger Partridge (Chairman)

46 191 237 Auckland, Wellington

Buddle Findlay Peter Chemis (National Chairman of Partners)

43 130 173 Auckland, Wellington, Christchurch

Chapman Tripp Andrew Poole, Mark Reese (managing partners) Alastair Carruthers (CEO)

54 158 212 Auckland, Wellington, Christchurch

DLA Phillips Fox Tony Crawford (CEO) 26 66 92 Auckland, Wellington

Duncan Cotterill Janice Fredric (CEO) 33 85 118 Sydney, Auckland, Wellington, Christchurch, Nelson

Kensington Swan Chris Heilbronn, (CEO) Clayton Kimpton (Chairman)

40 118 158 Auckland, Wellington

Minter Ellison Rudd Watts

Mark Weenink (CEO) 43 138 181 Auckland, Wellington

Russell McVeagh Gary McDiarmid (CEO) 41 195 236 Auckland, Wellington

Simpson Grierson Rob Fisher (Chairman) 47 194 241 Auckland, Wellington, Christchurch

* Figures supplied by firms themselves


34



“You don’t just walk in and get the work – you need to have been there, built relationships with central government, and developed a deep understanding of the relevant industry, business and environment”

Clayton KiMPton, KensinGton sWan

relief from the salary pressures of recent times. “For a long time wage inflation was higher than charge out inflation,” Kimpton says. “That is no longer the case, which is a much needed correction.”

Boutique perspectiveAs the times get tougher, should we spare a thought for the last batch of partners who left top-tier firms in order to start their own practice? IP and technology firm Hudson Gavin Martin, which opened its doors just before the start of the downturn, might seem vulnerable, but partner Wayne Hudson says that business has been strong. “Workflow for the firm has generally been on the increase since November 2008, which suggests there is still a fair bit of activity in the commercialisation and protection of innovation. Indeed, the firm is

currently recruiting and has grown in total numbers since opening,” he says.

The challenge for new boutique firms is, to use a cliché, to grab a larger slice of the pie: “A lot of our growth is expected to come from an increased awareness of the firm’s existence and its involvement in a number of high-profile transactions,” Hudson says. “Likewise we see ourselves providing an offering in the current market that will be attractive to large corporates looking for alternate models to undertake their work in the current climate.”


www.bellgully.com/alottobesaid



An increasingly competitive market and claims of a ‘flight to quality’ have reignited the ever-smouldering rivalry between New Zealand’s ‘Big Three’ and their local competitors

Tiers ofT

he UK has its ‘Magic Circle’, Australia has its ‘Big Six’ and the conventional view is that New Zealand has its ‘Big

Three’ – Bell Gully, Russell McVeagh and Chapman Tripp. But as far as Simpson Grierson’s Rob Fisher is concerned, that ‘three’ should be a ‘four’. “If you look at the industry awards – including ALB’s own awards – and the fact that Simpson Grierson was the only New Zealand law firm to be featured on the Mergermarket legal advisory table for Australasian M&A transactions – it is clear that we are regarded by the market as top-tier,” he says.

One can sense a weariness in the voice of Buddle Findlay national chairman Peter Chemis when the subject comes up. “The [Big Three concept] is the perpetuation of a myth which has been part of the landscape for years,” he says. “We can accept that some firms may be pre-eminent in particular areas, but we take exception to the suggestion that [the three] are pre-eminent across the board.”


www.bellgully.com/alottobesaid

36



Russell McVeagh CEO Gary McDiarmid says it is unfair to classify lawyers outside the ‘Big Three’ as somehow inferior, although he says that market opinion places the trio in a class of their own. “Across the various practice areas – the lawyers we see across the other side of the table are more often than not from two particular firms,” he says diplomatically.

Client perceptionIn June 2008, the NZ Corporate Lawyers Association (CLANZ) released key results from a survey undertaken by professional services consultancy Team Factors and Thomson-Reuters in which nearly 1,900 lawyers participated. Team Factors estimated that approximately 30% of the NZ in-house legal profession and 21% of the overall NZ legal profession participated in the research.

It involved detailed brand analysis – how the biggest firms are perceived by corporate and government clients across key brand attributes – with a high-level objective also to rank New Zealand’s 14 largest commercial firms against performance and pricing criteria. Respondents singled out Russell McVeagh, Chapman Tripp and Bell Gully as the firms delivering the highest overall performance, although Chapman Tripp was perceived to be less expensive than the other two. Other firms such as Kensington Swan, Simpson Grierson and Buddle Findlay were also well regarded, but collectively

ranked distinctly below the first group. Is it possible that these results

reflect the self-reinforcing nature of market perception?

Chemis says that they are a function of “size and brand awareness”. “It’s not an observation on quality,” he says. “You take the amount of shopping around that’s happening on panels for example. We are increasingly picking

up work at the expense of the top-tier firms because clients are realising that our quality of work is just as high.”

Ronald Pol, director of Team Factors, agrees that perception matters. “If you want to get new clients, you need to know what prospective clients think about you too,” he says. “What clients and prospective clients say about the firm is part of its brand. What these people think about a firm’s brand will determine whether they instruct a firm, or not. Sophisticated clients will also select some firms perceived as absolute top quality for some work and will use other good firms for different work, often at a lower price.”

Flight to qualityWhile there is a consensus that clients are on the move, there are two variations of the story. One has clients abandoning the ‘Big Three’ in search of better value

for money. The other has the ‘Big Three’ actually increasing market share as clients take flight to the safety of top tier and peace of mind, which is apparently unobtainable elsewhere.

Chapman Tripp managing partner Andrew Poole says there has been a distinct flight to the top-tier. “Clients don’t just want legal advice – they want a trusted legal adviser and have become

more conservative in their choice,” he says. “They want the Chapman Tripp badge and the [advising] partner badge.”

Poole says he has seen more pitch activity from clients in the past two months than he saw in the previous two years. “There is some price pressure, but this is not uniform. There is also the view that it is worth paying more to get trusted advice,’ he says.

McDiarmid says his firm has also picked up new clients in recent times. “Some of them are quite large and we know they have previously dealt elsewhere – generally the mid-tier,” he says. Russell McVeagh has attracted both transaction and corporate advisory work and has also observed a maturing in the market.

“Clients don’t tend to put work to tender as much,” McDiarmid says. “They have worked out who they want to deal with and where the value is. So you’ll see existing clients wanting to continue with the arrangement, maybe asking to deal with a particular partner or a volume discount in return. The market has become increasingly sophisticated.”

The other side of the story, of course, is firms like Buddle Findlay, who say they have picked up additional work from clients looking to maximise value. Is this position irreconcilable with the ‘flight to quality’ theory? Perhaps not. As Kensington Swan chairman Clayton Kimpton points out, a ‘flight to quality’ does not necessarily mean a flight to the ‘Big Three’.

“Every large firm is pre-eminent in a particular area,” he says. “For example, we are known for our construction and infrastructure practice and we are getting a huge boost in that area, among others.”

“You’ll see existing clients wanting to continue with the arrangement, maybe asking to deal with a particular partner or a volume discount in return. The market has become increasingly sophisticated”

Gary MCdiarMid, russell MCveaGH





www.buddlefindlay.com

38



The latest M&A statistics for New Zealand make grim reading for firms who rely on this activity as a key revenue source. Recent

figures from Thomson-Reuters show the value of local mid-market deals were down by 85% in the first quarter of this year.

However, Russell McVeagh CEO Gary McDiarmid says there are a few “green shoots” starting to emerge, particularly around distressed M&A. “There is evidence of a fair bit of cash around and buying something often creates the need to sell something else,” he says.

While activity is clearly depressed, firms are reporting a surprisingly steady flow of work, perhaps driven by overseas investment. Buddle

Findlay started the year by advising on two major transactions – Suntory’s NZ$1.4bn acquisition of Frucor Beverages and Daiken’s purchase of Carter Holt Harvey’s Rangiora MDF plant – both, perhaps not coincidentally, involving Japanese buyers. “What this demonstrates is that there is money around and people willing to spend it,” says Peter Chemis, Buddle Findlay’s national chairman.

As with Australia, foreign investment can be a emotive issue, but there seems to have been a change of political heart. John Key’s National Party government, which came to power last November, is reviewing the Overseas Investment Act with the idea of creating more avenues to encourage foreign investment. A

technical reference group – which includes lawyers from Chapman Tripp, Simpson Grierson, Russell McVeagh, Minter Ellison Rudd Watts and Bell Gully – is advising on the review. This step is seen by some as a considerable change from the previous government’s position on foreign investment and an indication of a more welcoming stance. Indeed, the Clark government’s intervention in last year’s NZ$1.7bn proposed stake acquisition by the Canada Pension Plan Investment Board in Auckland International Airport has not been quickly forgotten, with some lawyers believing that New Zealand’s international reputation has suffered.

Participation on the technical reference group was by government invitation only, but some firms have taken a more activist role. Chapman Tripp recently proposed changes to tax provisions outlined in New Zealand’s Portfolio Investment Entity (PIE) rules, part of a broader strategy to pursue what managing partner Andrew Poole describes as “thought leadership” in the market and to work

Adjustments in New Zealand market conditions and government regulation are making their presence felt on law firm workflows

The winds of change


www.minterellison.co.nz




www.russellmcveagh.com

40



alongside the business community to achieve legislative reform.

New playing fieldThe New Zealand Government is forging ahead with a radical plan to replace Auckland’s seven local authorities with a single region-wide body. It is a move that has significant ramifications for firms and particularly Simpson Grierson, which has dominated the local government market and currently advises many of the local authorities which face the axe.

“We expect the new entity to test the market and we’re not taking anything for granted,” says Simpson Grierson chairman Rob Fisher. “That said, given our considerable experience we believe we’re well placed to continue providing services to the new council.” Fisher concedes that the volume of local government work may well decline as a result of the amalgamation. “Certainly the rate payers would be hoping for cost savings, and that would include savings on legal spending,”

he says. Simpson Grierson will look to balance any loss of workflow with local government work from outside of Auckland, including from both Christchurch and New Plymouth.

New Zealand’s Resource Management Act is also up for review, with an aim to streamline the development approval process – an honourable objective, although one which might have a tendency to reduce lawyer involvement in the process. “There is still going to be legal advice required, particularly of a strategic nature,” Fisher says. “We are very supportive of the objectives of [the reform]. If it can expedite the process and keep our clients out of courtroom battles, that is a positive thing.”

Emissions statementLast year, New Zealand was at the forefront of the global push towards the introduction of emissions trading schemes, but with the change of government this position may be up for review.

“As it stands, the current scheme

covers forestry only,” Chemis says. “Other aspects are on hold and under review. However, there is a general belief that the government is leaning towards have an emissions trading scheme of some description.” The result, he says, is that there is still some advisory activity on this front as clients prepare for the introduction of a scheme.

Bell Gully chairman Roger Partridge says he expects the main framework of the scheme will, to an extent, stay in place in the form passed by the previous government. Bell Gully remains busy advising clients in relation to other aspects of emissions trading, such as the acquisition of other forms of Kyoto-compliant units

New Zealand’s PIE – or portfolio investment entity – regime is also continuing to generate work for firms. “We’ve been quite busy restructuring existing funds into PIEs,” Chemis says. “There’s been a lot of client interest – it’s an obvious cash advantage which everyone is keen to benefit from.” ALB


www.hollows.org.au

speciAL focus | Chapman Tripp

Restructuring and insolvency professionals in New Zealand anticipate some big waves – but they just aren’t here yet. While

finance company failures dominated the previous two years, 2009 has not been characterised by any major collapse. Instead, the major news has been listed company rights issues (Nuplex, Fisher & Paykel Appliances, Sky City, Fletcher building) with proceeds being used to reduce bank debt. Nevertheless, the big waves will come. They will be propelled by:

Failure of some of the finance •company moratoriums; Borrower’s inability to refinance •maturing term debt; andDistressed businesses increased •demand for working capital as a consequence of adverse trading conditions.

The New Zealand market will also need to deal with a number of important issues:

Expiry of the Crown retail guaranteed •in October 2010 – the guarantee has been extended to deposits with finance companies as well as banks. Many of these finance companies would have not survived without the benefit of the guarantee. Two Crown guaranteed finance companies have already failed;Review and reform of financial •regulations and regulatory agencies – Commerce Minister Simon Power has called for a significant review of the Securities Act. A Select Committee Inquiry into the collapse of the finance companies is also likely. Following a critical report by the Registrar of Companies, any inquiry is likely to scrutinize the performance of the corporate trustees;Regulation of insolvency practitioners •– in contrast to Australia, New Zealand’s insolvency practitioners are not regulated. If you cannot get a job as a taxi driver, you can still be an insolvency practitioner. There is a real problem with “cowboy” operators who often prefer the interests of the failed companies’ directors. Legislative attempts (section 280 Companies Act) to deal with the issue were poorly drafted, have failed to deal with the

issue and require reform. We have seen these “cowboy” liquidators reject the proofs of debt of significant Australian creditors on flimsy grounds. The rejection of these claims has advantaged related party creditors. On investigation it has become readily apparent that the liquidators expected the Australian creditors would conclude that cost and distance outweighed the benefits of challenge.

From a legal perspective, the economic downturn will see a sustained test of the Companies Act 1993 and the Personal Property Securities Act 1999 (PPSA). New Zealand has enjoyed relatively benign economic conditions since that legislation was introduced. However, commentators are concerned that anomalies between the Companies Act, the PPSA and the Property Law Act 2007 may result in legal uncertainty and high enforcement costs for secured creditors. Many Australian companies exporting to New Zealand are unaware of the PPSA and the need to register a retention of title claim within 10 days of supplying the relevant goods. In fact, it is quite rare that Australian suppliers properly register their security interests and obtain the priority position that they expect on receivership, liquidation or voluntary administration of a New Zealand company.

Opinion is also divided on whether New Zealand’s voluntary administration regime (introduced November 2007) will replicate the Australian success. In the first 18 months only 42 companies entered voluntary administration, resulting in 16 deeds of company arrangement. The key difference between the Australian and New Zealand regimes is New Zealand’s retention of the Crown preference for certain tax debts (GST and PAYE). Accordingly, New Zealand company directors do not have the prospect of personal liability for unpaid tax debt and are therefore not similarly incentivised to take action when a company is unable to meet its tax debt. Australian creditors involved in New Zealand voluntary administrations may be surprised that the directors have allowed the company’s position to deteriorate so markedly before calling in

the administrators. They should also be aware that directors are rarely pursued by liquidators for reckless or insolvent trading, primarily because liquidators do not have sufficient funding to advance such claims. However, as part of the November 2007 law change, a creditor that funds a liquidator can now gain priority for 100% of its claim from any recovery, as well as the funding that it provided.

Finally, distressed debt investors have begun to show some interest in New Zealand. Primarily that interest is focused on distressed property assets but there is still a wide difference in the bid-ask spread. However, if the distressed debt market in Australia develops (as some commentators predict), there will undoubtedly be activity in New Zealand.

Michael Harper is a Finance Partner at Chapman

Tripp and is recognised as a leading lawyer in the

restructuring and insolvency area.

Business restructuring – a New Zealand update



Firm Profile Duncan Cotterill.

Plenty of law firms talk the talk about closer economic ties and the instrinsic links between New Zealand and Australia. But few

demonstrate their knowledge on both sides of the Tasman.

Duncan Cotterill is one of the exceptions, having successfully established a high-powered trans-Tasman taxation team headed by Bruce Patterson (Auckland), Grant Pearson (Wellington) and Special Counsel Mike Aitken (Sydney).

Patterson: “We always had our sights on the trans-Tasman tax market, because there was no one else in that space. While others have talked about closer economic relations and many a word has been written about a common heritage, few professional firms have staked out this complex area of law and regulation.”

It’s an impressive line-up. Patterson is regarded as a pragmatic and commercially savvy practitioner, Pearson joined the team in 2004 from an extensive consulting and tax litigation background, while the addition of Aitken, ex Minter Ellison, is a real coup and provides much needed tax dispute support in Sydney.

Pearson says that while New Zealand and Australia look much the same, it is surprising just how far apart they are from a legal and regulatory perspective. “It’s a common trap; assuming life is the same on the other side. It’s not!”

For a start, there are the unexpected taxes.

New Zealand has a unitary system of government whereas Australia has a federal system. “New Zealanders don’t intuitively understand the impact of the federal system. It can be an expensive learning process,” according to Patterson.

For example, all Australian States impose significant stamp duty on property transactions and each state is different. And then there’s payroll tax, duty on new cars, land tax, even a parking space levy for the owners of “liable spaces”.

New Zealand has some surprises as well. Although New Zealand doesn’t have a comprehensive Capital Gains Tax,

it does have a selective capital gains system waiting for the unprepared. There are also fundamental differences, for example in New Zealand Unit Trusts are taxed as companies and Limited Liability Partnerships are not. Completely the opposite to Australia.

GST has the same name, but its implementation has major differences.

Aitken: “There’s no integration between the two systems, other than information sharing – so it’s no surprise that issues arise. The ATO has no sympathy for unprepared New Zealanders and I’m sure the IRD in New Zealand has the same attitude to Australians – it’s not a competitive thing, just the way it is”.

The need to be savvy in both jurisdictions was underlined when New Zealand Revenue Minister Hon Peter Dunne recently warned that he will be keeping a close eye on international tax arrangements, allocation of debt and equity, and transfer pricing – all of which have become more important in determining the ability of the tax system to deliver the revenues needed to fund government programmes.

There are rules in place in both countries to prevent the movement of profit to the other disguised as capital or deductible expenses. Loans are subject to thin capitalisation rules. Trading between related parties is affected by the transfer pricing rules and there is a complex inter-relationship between the Australian debt/equity rules and the New Zealand financial arrangement rules.

Pearson says businesses must nail these issues early or else double or unfunded tax will result. We spend a lot of time straddling the two systems – we advise clients how to organise their affairs tailored to legislation on both sides of the Tasman. There’s no one-sided template for this type of work.”

SummaryTrans-tasman trade and the movement of people and capital are increasing. The scale of opportunity is unparalleled. But clearly capturing those opportunities requires planning, cunning and good advice. www.DuncanCotterill.com

Duncan Cotterill on ANZAC Tax

Mike Aitken

Grant Pearson

Bruce Patterson




www.duncancotterill.com

44

profile | managing partner >>


BELL GULLY – QUICK FACTS ►CEO: Stephen MacliverChairman: Roger PartridgeNumber of partners: 46Number of lawyers: 191Offices: Auckland and Wellington

p44-46 man partner.indd 44 19/05/2009 4:12:00 PM



Packing fruit and vegetables in a grocery was how the chairman of one of New Zealand’s largest corporate law firms started his

working life. “I was a card-carrying union member – but union membership was compulsory then,” says Roger Partridge. “I’m not sure I would have joined otherwise.”

The erstwhile grocery storeman has come a long way since then. After joining Bell Gully in 1982 and working his way up through the management ranks, Partridge now finds himself at the helm of one of New Zealand’s top law firms. Or should that be New Zealand’s top law firm?

“We strive to be the best of the best,” Partridge says. “There is a real passion within Bell Gully to work with the best and to be the best: to set the standard. We are a competitive lot and in a market of this size you cannot rest on your laurels for even a moment.”

‘The best’ can be a subjective concept and particularly so in a market where firms traditionally do not disclose their revenues. One industry review recently estimated that Bell Gully pulled in NZ$105m in revenue last year, in second place behind Russell McVeagh, but Partridge says the Bell Gully figure is inaccurate.

“In terms of what differentiates Bell Gully – clients tell us the distinguishing point is that we are easy to work with, practical and have a solution focus,” he says.

TransformationPartridge has been at the helm of Bell Gully for 18 months, in which time the economic environment has undergone a drastic transformation. “There’s been a paradigm change for the firm,” Partridge says. “It means an end to annual increases in charge-out rates and a focus on expenses that has not in the past been a strategic need for professional services firms. On the other hand, there has been an easing off in the pressures to increase staff numbers and gearing to cope with ever-increasing work levels.”

Like many other firms, Bell Gully has compensated for a drop in M&A work by turning its attention to litigation, insolvency, and equity and debt capital markets work. “We are also gearing up in other growth areas in the New Zealand market including, importantly, projects and infrastructure,” Partridge says. Like his counterparts at Chapman Tripp and Russell McVeagh, Patridge says that he has also observed the “flight to quality” syndrome.

Having taken on the Bell Gully chairmanship just as the credit crunch was beginning to bite, Roger Partridge has had to lead the firm towards a new business criterion. He shares the story with ALB

alb/lEXISNEXIS 2009 maNagINg partNErS SErIES

The Partridge paradigmRoger Partridge, Bell Gully:

Under Partridge’s leadership, Bell Gully has made a concerted effort to build up particular areas of specialisation. Last year the firm brought in six new partners – “the biggest number we’ve brought into the firm in a decade” – specialising in areas such as litigation, competition, resource management and energy, resulting in a net gain of four partners or nearly a 10% increase in the partnership.

“Overall, there was a feeling that we had become a little skinny, and we needed to refresh and look at the medium term,” Partridge says. He is proud that the firm has made this investment in people and strengthened its team at a time of economic uncertainty. But was this also an acknowledgment that the firm might have neglected certain practice areas during the boom years and was in need of reorientation? Partridge prefers to describe the appointments as an expansion. “Our litigation practice, for example, was already comparatively large – we’re building on one of our strengths,” he says.

Carbon trading schemeBell Gully has maintained a high profile in the emissions trading space,

<design note>Please see if this can be put near the NZ report as this managing partner is from NZ.

<images>Note: no photo set from Thilo this month because Roger is from

NZ. The firm have supplied two decent quality photos as below.

INCOMING: Roger Partridge – Bell GullyINCOMING: Roger Partridge – Bell Gully lecturn

<box>

<standfirst>


46



particularly courtesy of the presence of prominent specialist Simon Watt. This time last year, New Zealand was at the vanguard of emissions trading policy and looked set to beat Australia to the punch in introducing a comprehensive scheme, but a change of government has led some observers to fear the scheme will be put on the back burner.

But Partridge says he does not expect the scheme to be canned. “The ETS is still currently in place in the form in which it was passed under the Labour-led government – so in that respect there has not yet been a change in tack,” he says. “The National [government] set up a select committee to review the scheme and underlying principles – it is likely to lead to some change, but we expect the main framework of the ETS will to an extent stay in place in its current form.”

Bell Gully’s emissions trading practice is still ticking over. “Many clients have decided to await the outcome of the Select Committee Review before acquiring further units and pushing ahead on all of their commercial strategies for minimising the impact of the ETS,” Partridge says. “However, we have continued to be instructed throughout this period on matters associated with the review, advising on the acquisition of GIS (Green Investment Scheme) AAUs from Eastern European countries, the acquisition of other Kyoto-compliant units, establishment of other projects and carbon funds and development of standardised ISDA-documentation for use in New Zealand.”

Technology and ideologyThe IT budgets of many firms have been the first casualties of an industry-wide push to curtail expenditure. Bell Gully has moved in the opposite direction. “In 2008 we replaced every desktop and laptop, and upgraded our document management system,” Partridge says. “We are currently implementing the second phase of that project which will provide a total matter-centric framework for managing information.”

“It means an end to annual increases in charge-out rates and a focus on expenses that has not in the past been a strategic need for professional services firms”

Partridge is a believer in free market ideology and is a director of the Legal Research Foundation, a private law reform body, as well as a member of the NZ Business Roundtable. He believes that New Zealand is over-regulated and less regulation would promote more job growth and economic prosperity. Partridge nominates resource management and employment law as two areas in

particular need of reform. “With the new government, we are starting to see a more facilitative environment which will encourage [economic] activity,” he says.

When he’s not saving the world from over-regulation, Partridge pursues other hobbies including skiing, fishing, contemporary NZ art and photography. “But Bell Gully and my family are my major focus,” he says. ALB



www.lexisnexis.com

48

FEATURE | international firms >>


To practice Australian law, or not to practice Australian law, that seems to be the question. While the range of work undertaken by

international firms varies greatly, the key distinction is whether they enter the Australian market as a domestic service provider, or as a satellite of their homeland operations.

Tony O’Reilly, a partner at UK export Kennedys, says his firm’s largely Australian clientele was one of the reasons for expanding into the southern hemisphere, and hence the practise of Australian law was a natural progression. On the other

hand, the latest US recruit, Dorsey & Whitney, will follow its American predecessors Skadden, Sullivan Cromwell and Sidley Austin in practising US law only. Their primary focus in the Australian market involves representing Australian clients in cross-border transactions such as M&A and corporate finance.

For firms whose US and UK counterparts pull in some of the largest revenues in the world, this tendency towards boutique operations in Australia is a notable contrast. Most international firms have carved out a niche in the Australian market, such as

What does the future hold for Australia’s small community of international firms? That’s the question many commentators found themselves asking when Dorsey & Whitney slipped into Sydney earlier this year. ALB talks to the main players to find out

Think local, act global

p48-51 international.indd 48 20/05/2009 3:56:53 PM



the Canadian import Stikeman Elliot. “Our Canadian offices have some US capabilities, but we’re not in competition with anyone else here. We practise only Canadian law. We’re much more like the US firms in Sydney in that respect,” says managing principal Brian Hansen.

The other option involves a focus on practice-oriented niche areas, the classic example being Holman Fenwick Willan’s shipping practice. “The entry into the Australian market was a natural step for Holman Fenwick Willan and consistent with the firm’s business model of being represented in major international trade centres,” partner Gavin Villely says.

Why carve a niche?International firms that reported revenues in the billions in 2008 would hardly be considered averse to

competition. And yet, interestingly, the international firms that have ventured into the Australian market have avoided trespassing on local legal territory. “We purposely want to limit our practice to that [US law] market, and work in conjunction with Australian firms,” says John Estes, a partner with Sullivan & Cromwell.

Similarly, Adrian Deitz of Skadden Arps notes that his firm “enjoys excellent relationships with the major Australian firms and doesn't want to jeopardize those relationships by competing with them”. “We have no plans to practice Australian law. We

would rather continue to play to our strengths and work collaboratively with them on major cross-border transactions,” he says.

One might then question the need to open Australian offices

in the first place, when cross-border interaction has been considerably eased by technology in the past decade. But the international firms claim that client needs have lured them to Australian shores. Deitz says

that the Skadden Arps decision to open an office was client-led. “It was simply more efficient to service them [Australian resource companies] on the ground here by opening an office. Any future expansion will be

client-led – we’ll commit the resources necessary to ensure our clients get the service they require,” he adds.

Alternatively, the location of Australia can provide another incentive, as many firms continue to seek access to the growing Asia-Pacific

markets. John Chrisman, from the newly opened Dorsey & Whitney office, claims his firm sees Australia as an excellent base for serving its clients in China and India. “That is certainly a factor in our decision to locate in Sydney,” he says.

Chrisman maintains that the decision to open the Sydney office last month, in the midst of a looming recession, was a sound one. “The key is that our clients are looking for us to be where they need us and this is part of that effort,” he says. Chrisman sees a key role to be played by Dorsey’s Sydney office in their broader Asia-Pacific operations. “We believe that the Asia-Pacific region will experience substantial growth during the foreseeable future and that the region continues to warrant a significant investment by our firm,” he says. “Australia is a strong, developed economy in a region where most countries’ economies are just emerging and, accordingly, will give balance to our regional presence.”

The common thread between the firms is a consensus on the maturity of the Australian market. As Waldo Jones, head of Sullivan & Cromwell’s Sydney office, explains: “The market is only so large in Australia… It’s not like Asia and Europe, which are viewed as offering potentially large future growth opportunities for international firms. Australia is a relatively stable economy, and is likely to grow at slower but steadier rates over time. This is a reflection on how we view our firm’s prospects for growth in the Australian market.”

One firm which has crossed the line is Jones Day, who in 2006 expanded their US-only practice to domestic M&A work. “We aren’t too concerned with the introduction of other US firms, since they focus on cross-border transactions and the like,” partner Chris Ahern says.

InternatIonal fIrms In australIa ►Firm Australian office location(s)

and year of openingPartners Lawyers

Baker & McKenzie Sydney (1964), Melbourne (1982) 91 260

Sullivan & Cromwell Melbourne (1983), Sydney (2001) 1 10

Skadden, Arps, Slate, Meagher & Flom Sydney (1989) 2 5

Stikeman Elliot Sydney (1997) 1 1

Jones Day Sydney (1998) 4 10

Holman Fenwick & Willan Melbourne (2006) 7 13

Kennedys Sydney (2006) 9 5

Sidley Austin Sydney (2007) 2 3

Austin Haworth & Lexon Sydney(2007) 1 22

Dorsey & Whitney Sydney (2009) 1 2John Chrisman,

Dorsey & Whitney

“It was simply more efficient to service them [Australian resource companies] on the ground here by opening an office. Any future expansion will be client-led, we’ll commit the resources necessary to ensure our clients get the service they require”

AdriAn deitz, SkAdden

Adrian Deitz, Skadden Arps


50



“We’re a small M&A firm with top-tier clients, and as such, are much more likely to compete with [firms such as] Freehills.”

Effect of the GFCHow will the global financial crisis affect international firms in Australia? “It hasn’t impacted our plans for Dorsey in Australia,” Chrisman says. “We opened the office in 2009 despite the recession. We believe that the Asia-Pacific region will be the world’s growth engine for foreseeable future.” There is similar attitude at Kennedys, according to

O’Reilly. “I would say the economic climate hasn’t impacted on us, primarily because we are litigation-focused. That tends to be less driven by economic issues,” he says. Indeed, the turmoil in international commodity

and freight markets has generated litigious work for Holman Fenwick

Willan. “The main impact, however, is in the projects area, where projects have been either deferred or cancelled. When the economic circumstances turn, the projects will come back on stream,” Villely says.

Others claim that the relative strength of the Australian economy has buffered the blows of the global recession. “Our completed deal list since the crisis started last September compares very favourably with other offices in the Skadden system,” Deitz says. “The Australian economy and financial system has proved to be remarkably resilient, and that has resulted in deal flow out of Australia

being significantly higher than most other regions.”

However, different firms are evidently experiencing different trends in transactional work, as Ahern explains that while M&A transactions have been put in motion by Jones Day, many have fallen short of a reaching a conclusion. “I think that in these times, clients want to make sure that they’re getting the absolute rock-bottom for every deal, and this has led to hesitation in closing.”

On the other hand, Stikeman Elliot’s Hansen notes: “While the number of securities transactions from Asia has reduced dramatically [since the

John Estes, Sullivan & Cromwell

“I think that in these times, clients want to make sure that they’re getting the absolute rock-bottom for every deal, and this has led to hesitation in closing”

ChriS Ahern, JoneS dAy


www.strikeman.com



GFC began], there has been recent significant activity in the M&A sector, both out of Australia and China. As one sector falls back with market conditions, other forms of business find market conditions beneficial.”

Estes agrees, saying that “the nature of the transactional work Sullivan & Cromwell undertakes for our Australian clients tracks economic conditions”. “Where the credit markets are frozen, the impetus for Australian corporates to raise debt in the international markets has been significantly reduced,” he says.

But Estes recognises the need for capital to prevail in such times and the need for strength in balance sheets. “Australian corporates have returned to raising more equity in the past year. Our work has shifted from the debt side of things, to more on the equity side,” he says.

A rising trend for the future?Dorsey & Whitney has modest expectations for their new Sydney office – Chrisman hopes to have three

or four lawyers in Sydney and the office will borrow from its Hong Kong counterpart when necessary.

It seems the chosen path for future investment in Australia will involve further regional and global agreements, such as the ‘best friend’ relationship of Herbert Smith with Freehills and Corrs Chambers

Westgarth. Other international firms may veto the expense of a local office in favour of membership of a global organisation, such as Lex Mundi, MSI Global Alliance or Terralex. The Australian market is often overlooked as international firms relocate partners to Asia and the Middle East, in anticipation of growing work in insolvency, restructuring and corporate advisory.

This outlook could imply that Australia is yesterday’s frontier for international firms. After all, the arrival of Baker & McKenzie and

Sullivan & Cromwell on Australian shores occurred decades before the internet and the ease of video conferencing. International firms such as Coudert Brothers and Pillsbury Winthrop have seen fit to depart Australian shores – or in the case of the former, depart altogether. But Estes claims that for Sullivan & Cromwell at least, Australian offices still have a strong role to play. “Clients in the Australian market value close interaction with their advisors. And more so than other markets, time zones factor into the equation,” he says.

“Given the presence of us and a couple of competitors in the market, it may be more difficult for new international law firms to enter Australia and attract a sufficient volume of work to justify the presence of an office here,” Estes acknowledges. “But for us, being here and being established in Australia and having the franchise we’ve developed over 25 years means that we are very much here to stay.” ALB

Waldo Jones, Sullivan & Cromwell


www.hfw.com


FEATURE | interview >>



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Karen Perret’s first few weeks as general counsel at Cadbury must have been a fiery induction. Not only did

she learn of her promotion to the role while on maternity leave, but when she returned to work one of her first key challenges was coordinating the legal aspects of Cadbury’s A$1.2bn sale of its Schweppes beverages business in Australia to Japan’s Asahi Breweries. “The legal issues associated with the sale were extremely complex and interesting – for example, the need to separate the beverages business from the confectionery business – but I loved every minute of it,” Perret says.

Panel systemIn 2007, Cadbury appointed a formal legal panel for its Australian operations for the first time and Freehills, Mallesons and Corrs have been the main recipients of work so far under this arrangement. Cadbury had previously used an informal panel of firms and the objective in establishing a formal panel was to test whether more beneficial terms could be reached with firms. It is an experiment which may well have run its course.

“While we did extract some benefits, I’m not convinced that there is any real

advantage in having a formal panel,” Perret says. “I think all of the benefits we got through the panel we could have secured in any event outside of the process. When the arrangement ends later this year, at this stage, I am unlikely to continue with it.”

Perret sees an advantage in having a range of firms with which to work, beyond the usual conflict considerations: “From my perspective, the key to maximising the benefit from external legal providers at the minimum cost is to have a number of law firms to choose from – both top-tier and mid-tier – and to actively manage each of them in terms of their service delivery and cost,” she says. “I make it clear to firms that unless they are competitive, and they keep

me happy with the level of service and the costs, I will move work to another firm. It is important to then actually follow through with that threat if you are going to keep law firms on their toes.”

Perret praises long-standing advisor Freehills for their work on the sale of the Schweppes beverages business: “Historically we have engaged Freehills for their industrial relations expertise. They have had a close working history with Cadbury and know our business and our people very well,” she says. “On the Schweppes transaction we worked mainly with the corporate team with [partner] Martin Shakinovsky and Kristin Stammer’s IP team, who were very easy to work with.”

Cadbury Australia-NZ GC Karen Perret talks to ALB about getting the best value and service from law firms

The best bar nonein-house perspective

“I’m not convinced that there is any real advantage in having a formal panel. I think all of the benefits we got through the panel we could have secured in any event outside of the process. When the arrangement ends later this year, at this stage, I am unlikely to continue with it”




The individual and the brand“If you get the partner, you’ll get the client.” That has been the recruitment policy behind some successful mid-size firms of late, and the premise is that clients relate more strongly to the individual lawyer rather than the firm brand – a philosophy Perret agrees with. “I am a big believer that the best way to keep costs down and to get the most practical, commercial advice at the lowest cost, is to choose the individual, not the firm,” she says. “That means briefing specific types of work to specific individuals who you know can deliver what you need in the way you want. Locking yourself into selected panel firms can limit your ability to do this.”

Perret points to the efficiency with which an appropriately experienced lawyer can handle a query without needing to do additional research or consulting with colleagues, effectively “managing the query in a lean manner”. She also takes the time to meet most of the individual lawyers working on Cadbury matters to ensure the matter is being handled in as cost effective a manner as possible.

Firms often pride themselves on handling the big transactions for clients,

but Perret says the smaller matters also warrant attention: “From my point of view it’s of interest to see how firms resource the smaller matters. It’s an opportunity for us to get to know firms and get comfortable with using them.” The result, she says is a “lost opportunity” for firms that concentrate only on winning the major work.

WorkflowMuch of the work flowing through Perret’s team has an IP theme. “With Cadbury being such an iconic brand, protecting and enforcing our intellectual property is also a focus area for the legal team. We are very much involved in product innovation and development, and at all stages of new product launches, whether at the concept stage and ultimately through to reviewing artwork, advertising and point of sale material,” she says.

Another key area is trade practices. “As an FMCG company, as you would expect we have a strong trade practices focus and assist with promotions, sponsorship arrangements and the like, providing extensive legal support to the sales, strategy and marketing teams for example,” Perret says.

The diversity of expertise in Perret’s team means that outsourcing occurs on a limited basis. “We tend to limit outsourcing to large scale M&A and litigation which we don’t have the resources to do in house or specialist areas such as industrial relations and taxation,” she says. “We also sometimes use external law firms as ‘arms and legs’ for matters requiring very long and complicated agreements with a lot of drafting needing to be done in a short time frame. That frees us up to make sure the agreement being reached is one that works best for the business rather than merely focusing on how it is being documented.”

The current economic climate has increased the workload for the team, although not dramatically. However, this additional work has mainly been in areas such as those relating to the creditworthiness of counterparties and trading terms, but Perret says that on the whole this has not been a key driver of legal work. “We are currently reconfiguring our chocolate and candy operations in Australia and New Zealand for example, and it is this kind of more strategic initiative that is occupying our time,” she says. ALB

“With Cadbury being such an iconic brand, protecting and enforcing our intellectual property is also a focus area for the legal team. We are very much involved in product innovation and development”





www.kensingtonswan.com

56

FEATURE | caseflow >>


A few years ago, when the term ‘litigation support’ first emerged, it was often perceived as a description of products

designed to address several areas of litigation. Back then, and even now, it could have applied to transcript analysis, discovery, scanning and optical character recognition, or a case-by-case structured database with user entered cross references and keywords.

A case management system is often regarded as a system that is deployed when a firm engages in high volume, process driven matters. Although case management systems were likely to have originally been developed to handle this type of work, in recent years they have far surpassed this, and are now finding acceptance as the third “must have” system within firms.

Case management systems now sit alongside the two other major systems within a firm, namely; the practice management system and the content (Document) management system. No longer are case management systems just limited to the sausage machine or ‘process’ work they have been historically tagged with.

Overseas firms, especially in the UK, also regard case management systems as

The term case management is often misunderstood to be a system for high volume and process driven work, but Brian Smith of Caseflow suggests that modern systems offer much more

Case management:

a must have. It is not just a question of whether they need a case management system, but also which is the best for their firm. The benefits attached to having an integrated case management system extend to most practice areas within a firm – not just the highly automated areas.

There is currently a strong view held by firms that ‘a little bit of case management for everyone’ offers the best balance. However, exactly what is a modern ‘best of breed’ case management system? It is actually where it fits within today’s law firm and how it can be utilised at many differing levels. Most firms now employ sophisticated document management and practice management systems. For a best of breed case management system to be highly effective, it must seamlessly integrate with document management and practice management systems – failing this, the case management system becomes an orphaned legacy piece of software that can plague firms.

On the flip side, a case management system can be as simple as having the ability to store, update and easily access the full database of clauses that any law firm uses on a day-to-day basis. All users can make use of a centralised, firm-

Far more than high volume process driven functions


wide clause library, regardless of what area they work in. The role of a case management system can also extend to add document assembly functions, which can automate letters to various parties or automate completion of court or other regulatory documents. These all appear to be simple tasks, but why not just handle them from a single system, and re-use the firm’s central repository of clauses instead? Often one finds that firms deploy multiple independent systems to address these “micro-tasks” within the firm, only to end up with a plethora of systems that are difficult for staff to deploy and manage.

When a lawyer produces documents using document assembly, it sends out a notice that requires a response within a certain timeframe, and adds a reminder to the calendar, email or task list that is part of the case management system. These mini-workflow tasks have always been possible through the use of macros and other custom-built software, and are now firmly in the camp of the case management system as well. They can easily be expanded to produce multiple documents, as well as track the reminders and deadlines.

Many knowledge/precedent managers would know many horror stories about

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the misuse of clauses within firms. A firm depends on many things to be successful and its knowledge base would be one of the most fundamental parts. It partly lies within the repository of clauses, which may involve hundreds – if not thousands – of individual clauses spread across the many practices.

With respect to standard clauses, also called auto-text, firms fall into one of the following categories:

firms where each person, team •or practice group maintains their own little knowledge base that will sometimes be shared and stored to enable easy access. These are usually individual mini-documents containing the clauses or a series of master documents from which the user cuts and pastesfirms whose IT departments have •developed their own in-house clause libraryfirms who have evaluated and •purchased a specialist clause library system

The first group are living on the edge, little silos of knowledge spread around

the firm. Some departments will manage it well and others say they do not have the time to do it well. Cutting and pasting is to be avoided at all costs, as there is no oversight or management of the knowledge and professional staff can waste countless hours reviewing the same content and finding the same errors. Those that say they do not have the time, will eventually see that it is not good for business and they should make time to streamline their processes, so they can do even better.

The second group are on the right track, but software development, in any form, is best left to developers. Developers often tell clients and potential clients a joke: “I won’t write contracts if they don’t develop software.” The moral of the story is that they should stick to their knitting – law firms should not try to become software developers, just as software developers should not try to become law firms.

The third group have done a good job in selecting a commercial product, but why stop at the clause library? Different users in a firm will have different needs.


www.olympusvoice.com.au

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The trick to getting IT systems right is to deliver the right components to the right people, but in doing so, one runs the risk of buying product X just for department A. When department B likes what they see happening in department A and discover that they have a need for similar functionality, the immediate response is to try to make product X fit the needs of department B. In this situation it can be a matter of luck that the chosen product might be adaptable and capable of handling the increased work load, but then again it may not. The solution? Find a product that has credentials with the right sized firms, and can demonstrate the ability to handle different types of work. It is also important to ensure that it will scale to grow with the firm, integrates with key systems, and shares its features and knowledge across the firm in a centrally managed way.

Five years ago, case management systems were only for the high volume areas. Firms had clause libraries from one supplier, a document automation/assembly

system from another supplier. Now the horizon has changed and the way forward is continuing to change. Case management systems are expanding to include many of these independent functions and absorb the features previously provided by specialist products. The practice group or department just needs a clause library that is able to use the same clauses used by the users. The document assembly system that is used to complete basic forms, simple templates and regulatory documents should be in the same document assembly system that is used across the firm, regardless of the area of law, complexity or volume.

The database used to track tasks and provide client reporting can even be a basis to establish a client extranet, in areas that require tight management and reporting. They should offer access to the same database to simply and effectively capture a few key dates, with the ultimate goal of simplifying client reporting tasks.

The case management system can

save support staff up to half a day each week or fortnight from gathering matter statistics to populate spreadsheets for clients. A firm employing even this basic level of case management will improve productivity, accuracy and efficiency, and most importantly, mitigate risk. Presuming this base level of case management system can be upgraded with higher levels of features and functions, this benefit alone is enough of a purchase incentive. In addition to this, an entry-level system is relatively inexpensive to buy and requires very little support and training to implement.

It is becoming evident that most firms, not only want, but also need some form of case management. As firms around the world are tightening their belts and their continued emphasis is placed on producing more with less, making a good case for a good case management system. ALB

Brian Smith is a director and founder of Caseflow and has been designing and developing software for law firms for more than 25 years.

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60

FEATURE | China FDI >>


The sheer power of China’s acquisitive capability means that outbound FDI from Australia to China is dwarfed

by the inbound stream the other way, says Mallesons partner Stephen Minns. And while the level of inbound FDI is on the rise, he says that the outbound work has been more modest. “Australian investment is going into a whole range of industries – manufacturing, consumer products, financial services for example,” Minns says.

Outbound investment from China into Australia has been almost exclusively in the resources sector. “Certainly the outbound work is a lot more significant than what it was even a year ago, and the importance of resources [for China] and the decline in prices has made Australian assets more attractive,” he says. And while there has been some uncertainty among purchasers as to the right time to buy and some occasionally unrealistic valuations from vendors,

there is no evidence of a stalemate between buyers and sellers. “The Chinese are definitely interested in investing now – and they’re not about to wait,” Minns says.

Waiting, however, is not always a matter of choice, with the ultimate approval usually resting with Australian treasurer Wayne Swan and the Foreign Investment Review Board (FIRB), which is currently reviewing a backlog of highly significant proposed deals. “It’s clear that the government wants to be comfortable that Australian companies continue to operate independently,” Minns says. The challenge for legal advisors is to structure deals in a way that reflects this requirement – not an easy feat and one which requires some layers of complexity.

“There is a strong desire on the part of the Chinese companies

As lawyers ponder Hunan Valin Iron & Steel Group’s A$1.2bn investment in Fortescue Metals and Chinalco’s US$19.5bn courting of Rio Tinto, there is no doubting the potency of the outbound Chinese FDI juggernaut. But it also pays to keep an eye on investment flowing in the opposite direction

China FDI: A two-way street?

Stephen Minns, Mallesons

p60-63 fdi.indd 60 19/05/2009 4:06:17 PM



to understand these regulatory requirements so that their deals can go ahead,” Minns says, describing this as one of the most important parts of his work. The issue of protecting national interest, of course, is not limited to Australia. China also vets foreign investment and recently vetoed a bid by US-based soft drink giant Coca-Cola to take control of China Huiyuan Juice, China’s biggest juice maker. It is a decision that was seen by some commentators as a reflection of renewed Chinese nationalism and a corresponding aversion to large-scale foreign investment.

However, Zhang Danian, managing partner at Baker & McKenzie’s Shanghai office, says there was more to the decision than sentiment. “What the Coke/Huiyuan rejection shows is that government authorities will increasingly vet proposed foreign investments thoroughly on both national security and antitrust grounds. In addition, it is clear that the PRC authorities will take concerns of small and medium competitors

as well as any possible threat to Chinese consumers very seriously in determining whether to grant antitrust approval,” he says.

Investment into ChinaIt is no surprise that outbound Chinese investment continues to dominate headlines in Australia. But as lawyers from other parts of the region point out, Chinese FDI is not necessarily a one-way street – and nor is investment limited to M&A. M&A is the type of FDI which generally attracts the most discussion, but there are other forms of FDI that also warrant attention, such as franchising and greenfield investment.

Stanley Jia, managing partner at Baker & McKenzie's Beijing office, says there are several drivers for greenfield investments in China, which could take the structure of wholly-owned foreign enterprises as well as joint ventures. “A greenfield investment is attractive to those foreign investors who would like to avoid inheriting legacy issues and historical liabilities of an M&A target,”

he says. “Whether a foreign investor would consider greenfield to be a more suitable investment option will depend on how steep start-up costs are as compared to acquisition costs, the importance of having an already-established sales and distribution networks, and whether there is a tight timeline for starting up the business.”

Another significant type of FDI into China is franchising or licensing agreements, according to Zhang. “This is attractive for companies that are interested in building brand recognition without the need to invest considerable manpower or capital in a foreign jurisdiction, especially if companies are able to work through concerns of possible IP infringement,” he says. “This will be an attractive means of FDI this year, especially for foreign companies hesitant to invest in a new market during volatile economic times.”

Zhang Danian, Baker & McKenzie

p60-63 fdi.indd 61 19/05/2009 4:06:19 PM

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Strategic investmentThere is no doubt which way the investment tide is flowing for Australian lawyers – but are lawyers overseas also seeing the same focus on outbound China investment?

“There is not so much a shift of work towards China outbound investment, but rather more attention given to it,” says Jingzhou Tao, a partner at Jones Day in Beijing. “While inbound investment has been going on for a long time, outbound investment activities in recent times – such as Chinalco, Minmetals and Lenovo – have received much attention due to their novelty and large values.

Indeed for some firms, outbound Chinese investment is nothing new at all. “For our firm, this is not a shift,” Jia says. “We have already been advising Chinese clients with their investments abroad for a number of years now.”

What has changed, perhaps, is the volume of work. “The volume and size

of overseas investments by Chinese companies will definitely continue to increase,” he says. “This is just in line with the Chinese government's policy of encouraging Chinese companies to ‘go global’ and invest overseas. In addition, compared to their western counterparts, many Chinese companies are in much better financial shape and equipped to take advantage of the low valuations of targets now.”

Outbound Chinese investment is beginning to take a strategic bent.

“Chinese companies have been making outbound investments for the purposes of gaining brand recognition as well as access to overseas distribution networks and technological know-how in the technology and automotive sectors,” Jia says. “In the technology sector, notable transactions include Lenovo’s acquisition of IBM’s personal computer division in 2005. More recently, Beijing West Industries announced that it

would acquire the US-based Delphi Corporation’s global suspension and brakes business, giving the Chinese automaker access to Delphi’s patents and markets.”

A shift in balanceLawyers advising on inbound investment have found themselves dealing with a new playing field, which complicates negotiations. Jingzhou Tao describes a shift in power towards local Chinese companies.

“For a start, foreign companies who used to be cash rich are now finding their financial resources drying up; two, there is often a discrepancy between Chinese and foreign parties in their value assessment of the same Chinese assets; and three, the recent awareness of China’s huge market potential has put [Chinese parties] in a position to impose conditions in a deal,” he says. “Only five years ago, the roles were the reverse and it was the foreign company that had the upper-hand. These factors cause renegotiation or sometimes the end of negotiations.” ALB

Jingzhou Tao, Jones Day

Stanley Jia, Baker & McKenzie

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www.srs.net.au

p60-63 fdi.indd 63 19/05/2009 4:06:29 PM

www.bannisters.com.au

64

Sign off >>


It appears Eversheds is into staff protection. The UK firm recently

requested that associates stay in the safety of their own homes during the G20 summit period, stating that they put “staff safety first” as anti-capitalist protesters threatened to overthrow the City of London.

Those who attended Eversheds’ Cheapside office on the edge of the City were also asked to dress down for two days of the summit.

The firm is one of three UK firms who briefed staff on safety precautions.

Clifford Chance warned staff to be prepared to work from home and to avoid its Coleman Street office, while Ashurst urged staff to take public transport rather than drive into work to avoid the risk of being spotted by protesters.

A former partner with a prominent New Orleans law firm, Adams and Reese, has landed himself behind bars after pleading guilty to stealing

millions of dollars from the firm and a casino operator. The partner, James Perdigao, 46, pleaded guilty to charges that included

fraud and money laundering. He was sentenced to just over 15 years in prison and ordered to repay about $23 million.

Perdigao was awaiting trial in the fraud case last year when a grand jury pressed new charges, stating that he hacked into his former firm’s computer system and stole confidential correspondence between prosecutors and the firm. He resigned from Adams and Reese in September 2004.

A passion for fashion

Come fly with me

Travelling for business plays a big part in

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Crime doesn’t pay for jailed US lawyer

The world’s Top 10 airporTs ►Rank Airport Why/Facilities

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5 Munich Miniature golf, a 60-seat cinema, and cosmetic and physiotherapy services

6 Kansai WiFi and internet facilities, check in ease, transport services

7 Copenhagen Transport services, auto machine check-in facilities, restaurants.

8 Zurich Shopping, airport views, ease of facilities

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Source: SkyTrax

Y• ear-on-year decline of 28.4% for fees in Asia-Pacific, Japan (excluding Central Asia) region Equity market, M&A and syndicated loans •are down. Loans hit most – 35.6% decline Debt market was only segment to experience increase in fees, posting gain of 48.8% from same quarter last year Mizuho Financial Group topped investment •banking fee charts in Asia-Pacific, Japan (excluding Central Asia), with US$136m in revenues (3.7% increase from fees earned in same period last year) Top fee destination is from the M&A market, •with 49.7% of total fees paid for in the Asia-Pacific, Japan (excluding Central Asia) region

Asia-Pacific, Japan banking fees fall

It seems even lawyers have been swept away by the spirit of

Australian Fashion Week. The offices of leading commercial

law firm Kemp Strang doubled as a catwalk and cocktail lounge recently as the firm became the venue for the Leona Edmiston Winter 2009 collection.

The glamorous night was a fundraising event for the Wayside Chapel in Kings Cross, Sydney.

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www.bplr.com.au

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www.aderant.com

Documents

Australasian Legal Business May 2009