austRalasiaN legal BusiNess
PerTH: ThE rIghT SIdE OF ThE TwO SPEEd EcOnOMy
AustrALAsIAn
LEGAL BUSINESS
www.legalbusinessonline.com issue 10.6 july 2012
july 2012
cAn AllEn & OvEry TAkE A STAnd AgAInST MAllIES?
lAw AwArdS wInnErS PErTh AllEn & OvEry
AlB lAw AwArDS 2012: fUll COverAGe Of THe wInnerS Page 38 issue 10.6 ISSUE 10.1 ALB 1006.indb 1
26/06/2012 3:57:02 PM
Another Hat-trick!
Russell McVeagh has scooped up all three major New Zealand awards at the 2012 ALB Australasian Law Awards, and three of the five awards for which the firm was nominated: New Zealand Deal Team of the Year 2012 New Zealand Deal of the Year award for the Telecom Demerger New Zealand Dealmaker of the Year awarded to Pip Greenwood This is Pip's third Dealmaker of the Year Award – she also won in 2008 and 2010 – and the hat trick is a huge achievement. Thank you to all our clients, we couldn’t have done it without you.
www.russellmcveagh.com AU C K L A N D V E RO C E N T R E 4 8 S H O R T L A N D S T R E E T P O B OX 8 AU C K L A N D N E W Z E A L A N D DX C X 1 0 0 8 5 T E L E P H O N E 6 4 9 3 67 8 0 0 0 FA X 6 4 9 3 67 8 1 63
W E L L I N G TO N VO DA FO N E O N T H E Q UAY 15 7 L A M B TO N Q UAY P O B OX 1 0 -2 1 4 W E L L I N G TO N N E W Z E A L A N D DX S X 1 1 1 8 9 P H O N E 6 4 4 4 9 9 9 555 FA X 6 4 4 4 9 9 9 55 6
CONTENTS
Australasian Legal Business ISSUE 10.6
1
“My sense is that the market has absorbed MRRT and moved on. It has been factored in and people are making decisions with it and the carbon tax included. I have not seen any evidence of major decisions not being made or being changed because of the introduction of those two legislative reforms.” Andrew Pascoe, Allens Perth
28
NEWS DEALS
COVER STORY
LEAGUE TABLES
Allen & Overy v MALLESONS A&O is claiming to have gained valuable market share from Mallesons in the banking & finance space – but the view is not mutual. 10
28
Basel III Some enlightenment on the allimportant assets to capital ratio
20
India 22 India – land of economic stagnation and lost opportunity?
ALB 1006.indb 1
ALB Law Awards Full wrap of this year’s winners
38
Technology A look at data centres and near field technology
58
Practice management software The battle between Aderant and Thomson Elite continues
66
08
Sponsored update Buddle Findlay
09
ACLA PERSPECTIVE
26
APPOINTMENTS
38
Profiles In-house perspective Brian Salter, AMP
52
FEATURES Perth 2012 Asketh the lawyers: what global downturn?
06
26/06/2012 3:57:04 PM
AUSTrAlASIAn leGAl BUSIneSS ISSuE 10.6
2
AustrALAsIAn
LEGAL BUSINESS
ALB ENJOYS ALLIANCES WITH THE FOLLOWING ORGANISATIONS
www.legalbusinessonline.com ALB is a sponsor of the International Bar Association Annual Conference DubaI 2011
Corporate Lawyers Association of New Zealand
www.ibanet.org
www.clanz.org
INTER-PACIFIC BAR ASSOCIATION
www.apsma.com.au
MANAGING DIRECTOR Andrew Goldner www.mlaanz.org
www.ipba.org
MANAGING EDITOR lesley Horsburgh AUSTRALASIA EDITOR renu Prasad
Inter-Pacific Bar Association Corporate Counsel Forum
Shanghai In-house Counsel Forum PANTONE 185C
Asia-Pacific Professional Services Marketing Association
PRODUCTION EDITOR Imogen Tear
www.cla.org.au
AUSTRALASIA JOURNALISTS Olivia Collings www.scca.org.sg
www.beijinginhouse.com
PANTONE 186U
ALB is the Asia-Pacific Legal Media Partner of the IPBA Annual Conference Japan 2011
Association Of Corporate Lawyers Sri Lanka www.aclsrilanka.com
Indonesian Corporate Counsel Association http://w3.icca-indonesia.com
ASIA JOURNALISTS kathryn Crossley ranajit Dam Seher Hussain Candice Mak kanishk verghese
DESIGNER vanessa lyons PHOTOGRAPHER Thilo Pulch ADVERTISING SALES MANAGERS Paul ferris Peter ratcliff TRAFFIC COORDINATOR emily Ings MANAGING DIRECTOR ASIA Andrew Goldner
EDITORIAL ENQUIRIES
renu Prasad T (61) 2 8587 7211 renu.prasad@thomsonreuters.com
GRAYSCALE VERSION
ADVERTISING ENQUIRIES
ThOMSOn rEuTErS TruST PrIncIPlES 01
That Thomson Reuters shall at no time pass into the hands of any one interest, group or faction;
02
That the integrity, independence and freedom from bias of Thomson Reuters shall at all times be fully preserved;
03
That Thomson Reuters shall supply unbiased and reliable news services to newspapers, news agencies, broadcasters and other media subscribers and to businesses governments, institutions, individuals and others with whom Thomson Reuters has or may have contracts;
04
05
That Thomson Reuters shall pay due regard to the many interests which it serves in addition to those of the media; and That no effort shall be spared to expand, develop and adapt the news and other services and products so as to maintain its leading position in the international news and information business.
AUSTRALIA Paul ferris
T (61) 2 8587 7114 paul.ferris@thomsonreuters.com
Peter ratcliff
T (61) 2 8587 7543 peter.ratcliff@thomsonreuters.com
HONG KONG rebecca ng
T (852) 3762 3265 rebecca.ng@thomsonreuters.com
SINGAPORE May wong
T (65) 6870 3309 may.wong@thomsonreuters.com
CHINA yvonne Cheung
T (852) 3762 3266 yvonne.cheung@thomsonreuters.com
EVENT ENQUIRIES AUSTRALIA George Sengulovski
T (61) 2 8587 7701 george.sengulovski@thomsonreuters.com
THOMSON REUTERS PROFESSIONAL AUSTRALIA (LIMITED) AUSTRALIA
Level 5, 100 Harris Street Pyrmont, NSW 2009 Australia T (61) 2 8587 7000
SUBSCRIPTIONS Australasian Legal Business is available by subscription.Please call 1300 304 195 or visit www.legalbusinessonline.com 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. ISSN 1839-0382
Please contact Andrew Goldner with any questions. andrew.goldner@thomsonreuters.com www.thomsonreuters.com
ALB 1006.indb 2
26/06/2012 3:57:11 PM
SYDNEY
SYDNEY
MELBOURNE
MELBOURNE
P E RT H
P E RT H
4
EDITORIAL AUSTRALASIAN LEGAL BUSINESS
PERTH: THE RIGHT SIDE OF THE TWO SPEED ECONOMY
JULY 2012
LEGAL BUSINESS
www.legalbusinessonline.com ISSUE 10.6 JULY 2012
CAN ALLEN & OVERY TAKE A STAND AGAINST MALLIES?
LAW AWARDS WINNERS
GOD SAVE THE QUEEN
AUSTRALASIAN
PERTH ALLEN & OVERY
A
h, the nostalgia. Fans of the Howard political era – and we suspect there are more than a few of them amongst the ranks of ALB readers – were recently treated to the sight of the man himself scurrying along, rodent-like, outside Buckingham Palace on the national news. Mr Howard was there to receive the insignia of a member of the Order of Merit from Her Majesty Queen Elizabeth II, a ALB LAW AWARDS 2012: FULL COVERAGE OF THE WINNERS rare honour which is limited to just 24 living recipients. Howard’s political gift was an innate understanding of the conservative soul of the nation. Despite the constant mocking of talkback radio and tabloid columnists by the “progressive” media, this is still a part of Australian politics which travels surprisingly under the radar. Julia Gillard and Tony Abbott have made various attempts to “dog whistle” the populace, but only with limited success. Their efforts are opportunistic rather than a revelation of true conservatism; one gets the impression that Abbott in particular would happily support the Communist Party manifesto if he believed it would improve his electoral prospects. Howard, with his white picket fences and vision for a relaxed and comfortable Australia, was a different beast. Here was a man who saw genuine value in the monarchy and Britain’s legacy in Australia; a man who instinctively understood the deep suspicion in some quarters towards the fundamental economic and geopolitical changes wrought in Australasia over the past three decades. Mind you, this conservatism did not necessarily translate into policy action – Howard’s policies had more in common with the Keating era than his personality would indicate – but somehow he still managed to create a convincing conservative aura. Therefore, as we celebrate the Queen’s Diamond Jubilee, we extend the metaphorical salute to John Howard, the conservative soul of the nation and those deep ties to England. To all of the British law firms in Australia: Norton Rose, Ashurst, Allen & Overy, Clifford Chance, Holman Fenwick: the Union Jack still maintains pride of place upon the Australian flag and it is for thee. At least until the next referendum. PAGE 38
ISSUE 10.6 ISSUE 10.1
OFC_ALB10.06.indd 1
25/06/2012 11:26:34 AM
Renu Prasad Australasia Editor, Australasian Legal Business, Thomson Reuters
AustrALAsIAn
LEGAL BUSINESS ALB 1006.indb 4
26/06/2012 3:57:13 PM
6
deals
Australasian Legal Business ISSUE 10.6
Your month at a glance Firm Allen & Overy
Deal
Value
Client
Lead lawyer
Exego Group refinancing
A$264.8 million
Financiers
Angela Flannery
Intermediate Capital Group’s majority stake in SCF Group
Undisclosed
Intermediate Capital Group
Grant Koch, Martin Larkman
Biota Holdings proposed merger with Nabi Biopharmaceuticals
A$240 million
Biota Holdings
Craig Henderson
The transaction is a reverse takeover of a NASDAQ-listed US company, and the new company will be called Biota Pharmaceuticals
Privatisation of Sydney Desalination Plant
A$2.3 billion
Consortium
Robert Clarke, Simon Lynch, Ted Hill, Anthony Arrow, Michael Graves, Bill McCredie, James Darcy, Martin Fry
Allens acted for MAp Airports on its A$1.6 billion asset swap with Ontario Teachers’ Pension Plan Board in 2011
Zijin Mining Group Co’s bid for Norton Gold Fields Limited
A$212 million
Zijin Mining Group Co
Campbell Davidson
In July last year, Allens advised Zijin on its purchase of approximately 17 percent of Norton shares for A$27.7 million
AGL Energy’s two solar power stations in NSW under the Commonwealth Government’s Solar Flagships Program
A$450 million
First Solar
Anthony Arrow, Tom Story, Grant Cathro
Employees Provident Fund (EPF) joint venture with Goodman Industrial Funds Management
A$400 million
Employees Provident Fund (Malaysia)
Michael Ryland, Vivian Chang, Cameron Thomson, Michael Ryland
Kellogg Company acquisition of Procter & Gamble’s Pringles business in Australia
$US2.7 billion (global value of Pringles business)
Kellogg’s
Ben McLaughlin
NEC Corporation’s acquisition of CSG Limited’s Technology Solutions business
A$227.5 million
NEC Corporation
Teresa Handicott, Andrew Mackenzie, Helen Clarke
Stanmore Coal and Queensland Coal Corporation (QCC)’s tenement swap
Undisclosed
Stanmore Coal
Bruce Adkins
Allens
Ashurst
Corrs Chambers Westgarth
Comment
DLA Piper advised Aviva Investors in the UK on its £400m refinancing for its Airport Property Partnership (APP) This is the first time the Australian arm has undertaken work for Aviva, which has previously used Freehills for work in the Asia pacific region. Tom Cantwell - DLA Piper
DLA Piper
ALB 1006.indb 6
Aviva Investors stake in the new Woolworths logistics centres
A$200 million
Aviva Investors
Tom Cantwell
DLA Piper advised Aviva Investors in the UK on its £400m refinancing for its Airport Property Partnership (APP)
26/06/2012 3:57:14 PM
deals
Australasian Legal Business ISSUE 10.6
7
Your month at a glance Firm
Freehills
Deal
Value
Client
Lead lawyer
AMP Capital acquisition of the South Australia Schools PPP
A$232 million
CBA and Lend Lease
Josh Sgro
Perron Investments’ acquisition of a 50 percent interest in three regional Centro shopping centres
A$690.4 million
Centro Retail Australia
Michael Back, David Sinn
Brambles’ fully underwritten entitlement offer
A$448 million
UBS and Merrill Lynch
Philippa Stone, Rob Finlay
AGL Energy’s successful application to develop two solar power stations in NSW under the Commonwealth Government’s Solar Flagships Program
A$450 million
AGL Energy
Toby Anderson, Alicia Albury
Comment
Freehills has previously acted for AGL in relation to the Hallett group of wind farms in South Australia and the Oaklands and Macarthur wind farms in Victoria
King & Wood Mallesons also advised on AGL’s $650 million high equity credit subordinated note issue earlier this year. David Eliakim, KW Mallesons
King & Wood Mallesons
Minter Ellison
Norton Rose
ALB 1006.indb 7
Perron Investments’ acquisition of a 50 percent interest in three regional Centro shopping centres
A$690.4 million
Perron Investments
Simone Menz
AGL’s retail entitlement offer (PAITREO)
A$900 million
Citigroup Global Markets Australia and Deutsche Bank AG, Sydney
David Eliakim, David Friedlander, Scott Heezen
King & Wood Mallesons also advised on AGL’s $650 million high equity credit subordinated note issue earlier this year
CFS sale of 50 percent stake in Myer Centre Brisbane to ISPT
A$366 million
ISPT
Helen Scott, Michael Byrom
Holding Redlich has advised its client ISPT for over 15 years
Intermediate Capital Group’s acquisition of Archer Capital Growth Fund’s majority stake in SCF Group
Undisclosed
Archer Capital Growth Fund
Dan Marks, Greg May
AET SPV Management acquisition of a portfolio of Australian corporate real estate loans from BOS International (Australia) and Capital Finance Australia
A$620 million
Lloyds International
Victoria Mathewson, John Elias, Daniel Scotti, Lindsay Powers, David McElhone
Minter Ellison has advised Lloyds International in relation to a number of transactions – most recently on the first sale of distressed property loans, which took place in the second half of 2011
General Electric Company (GE) acquisition of Industrea and Industrea Mining Services (IMS)
A$470 million
Industrea
Shaun Clyne
Clyne advised Industrea on its acquisition of AJ Lucas Grou’s Underground In-Seam Services Business for A$25.5 million in March 2011
AMP Capital acquisition of the South Australia Schools PPP
A$232 million
AMP Capital
Adrian Ahern
SK E&S stake in Timor Sea gas discoveries
US$520 million
SK E&S
Alex Cull
26/06/2012 3:57:15 PM
8
league tables
Australasian Legal Business ISSUE 10.6
Top M&A advisors - Australian announced deals, year to date
1
NO.
Top M&A advisors - completed deals, year to date
1
Freehills
10,945.93
Value ($Mil)
NO.
Deals: 27 Market Share: 33.4
Rank Legal Advisor
Value Mkt. Deals ($Mil) Share
King & Wood Mallesons
17,350.11
Value ($Mil)
Deals: 31 Market Share: 53.6
Rank Legal Advisor
Value Mkt. Deals ($Mil) Share
2
Gilbert + Tobin
5,399.74
16.5
13
2
Gilbert + Tobin
13,550.43
41.9
15
3
King & Wood Mallesons
4,847.55
14.8
28
3
Allens
12,577.99
38.8
13
4
Ashurst
4,033.29
12.3
17
4
Corrs Chambers Westgarth
11,709.38
36.2
12
5
Allens
3,349.90
10.2
16
5
Ashurst
11,424.25
35.3
17
6
Latham & Watkins
3,309.12
10.1
1
6
Clayton Utz
10,830.51
33.4
24
6*
Jipyong Jisung
3,309.12
10.1
1
7
Freehills
9,492.05
29.3
28
8
Allen & Overy
2,161.47
6.6
7
8
Minter Ellison
5,675.53
17.5
23
9
Clayton Utz
1,990.53
6.1
18
9
Allen & Overy
5,138.48
15.9
13
10
Norton Rose
1,081.57
3.3
9
10
McCullough Robertson
3,134.02
9.7
11
11
Clifford Chance
1,045.07
3.2
7
11
Cravath, Swaine & Moore
2,739.72
8.5
1
12
Johnson Winter & Slattery
856.23
2.6
1
11*
Baker Botts LLP
2,739.72
8.5
1
13
Allende & Brea
840.03
2.6
2
13
Stikeman Elliott
2,414.38
7.5
2
13*
Machado Meyer Sendacz & Opice
840.03
2.6
2
14
Cassels Brock & Blackwell LLP
1,351.86
4.2
3
Bruchou Fernandez Madero Lombardi & Mitradi
15
Orrick Herrington & Sutcliffe LLP
1,220.35
3.8
1
13*
840.03
2.6
2 15*
1,220.35
3.8
1
13*
Galicia Abogados
840.03
2.6
2
Lawson Lundell Lawson & McIntosh
17
Baker & McKenzie
825.28
2.5
8
15*
Davies Ward Phillips & Vineberg LLP
1,220.35
3.8
1
18
Corrs Chambers Westgarth
745.12
2.3
9
15*
Kalamba & Associes
1,220.35
3.8
1
19
Simpson Thacher & Bartlett
600.94
1.8
1
15*
Linklaters
1,220.35
3.8
1
20
Minter Ellison
578.44
1.8
17
20
Lawrence Graham
1,194.03
3.7
1
21
Middletons Lawyers
521.56
1.6
4
21
Clifford Chance
1,027.56
3.2
6
22
DLA Piper
406.84
1.2
4
22
Sullivan & Cromwell
984.05
3.0
2
23
Mayer Brown LLP
400.00
1.2
1
23
Baker & McKenzie
788.99
2.4
9
24
Herbert Smith
394.35
1.2
1
24
Andrews Kurth LLP
526.85
1.6
1
25
McCullough Robertson
292.58
0.9
10
24*
Mayer Brown LLP
526.85
1.6
1
24,963.88
76.1
177
Subtotal with Legal Advisor
7,832.64
23.9
487
Subtotal without Legal Advisor
32,796.52
100.0
664
Industry Total
Subtotal with Legal Advisor Subtotal without Legal Advisor Industry Total
(*tie) Based on Ranking Value inc. Net Debt of Target Source: Thomson Financial Date: 2012-06-12 08:30:48 EDT
ALB 1006.indb 8
27,937.06
86.3
169
4,441.31
13.7
313
32,378.37
100.0
482
(*tie) Based on Ranking Value inc. Net Debt of Target Source: Thomson Financial Date: 2012-06-12 08:18:09 EDT
26/06/2012 3:57:15 PM
Firm Profile
NZ Commentary
MADRID PROTOCOL: THE NEXT STEP ON THE ROAD TO A SINGLE ECONOMIC MARKET BETWEEN NEW ZEALAND AND AUSTRALIA? New Zealand is now in the final stages of joining the international trade mark registration system known as the Madrid Protocol. By implementing the Madrid Protocol, New Zealand will join its major trading partners who are already members, including its closest trading partner, Australia (a member since 2001) as well as the United States (a member since 2003) and the United Kingdom, the European Union and Japan.
As part of the final implementation steps, the Intellectual Property Office of New Zealand (IPONZ) issued a Discussion Document in May 2012, which outlined proposed amendments to the Trade Marks Regulations 2003. The amendments include necessary changes to give effect to New Zealand’s obligations under the Madrid Protocol and follow on from amendments already made in 2011 to the Trade Marks Act 2002 that implemented Madrid Protocol requirements. While the Ministry of Economic Development (MED) has not provided a likely start date for the implementation of the Madrid Protocol in New Zealand, an MED official stated that December 2012 was “optimistic” but a best estimate was more likely to be February 2013. Implementation follows on from the New Zealand Government’s decision in 2006 to agree to pursue accession to the Madrid Protocol (as well as the Singapore Treaty and the Nice Agreement) as administered by the World Intellectual Property Organisation. The Madrid Protocol will allow owners of New Zealand trade marks to register their trade mark rights in member countries via the filing of a single application with IPONZ based on an existing trade mark application or registration in New Zealand. The system is intended to simplify and generally lower compliance costs associated with overseas trade mark registration. The Madrid Protocol will also allow foreign trade mark owners to more easily register their trade marks in New Zealand (i.e. without having to file a separate trade mark application in New Zealand, which is the present case). Details for the implementation of the Madrid Protocol are yet to be finalised, but IPONZ has indicated in its Discussion Document that all
ALB 1006.indb 9
filings will be accepted electronically and that IPONZ will opt in for the 18 month refusal period (as opposed to the 12 month period). The decisions made by IPONZ are intended to closely align with IP Australia’s current administration of the Madrid Protocol in Australia. The close alignment also appears to further signal the ultimate goal for New Zealand to create a single economic market with Australia. The alignment is also consistent with the announcement made in mid-2011 by the governments of New Zealand and Australia for the implementation of a simplified filing and examination process for patent applications filed in both countries by June 2014. One difference, and in an apparent first for the administration of the Madrid Protocol, IPONZ has indicated that it will not charge a handling fee when accepting Madrid Protocol applications. IPONZ does not intend to charge fees due to the anticipated low cost of administration because of IPONZ’s recently upgraded online filing system. IPONZ can however review Madrid Protocol charges in 2015. Given the imminent implementation of the Madrid Protocol, it is recommended that New Zealand trade mark owners should review their trade mark portfolio and consider registering key trade marks/brands in advance of the implementation of the Madrid Protocol, including brands/trade marks in use but not yet registered. The rationale is that the Madrid Protocol is likely to see an increase in trade mark filings from overseas (as was the experience when Australia and Singapore joined). The increased foreign filings could potentially impede trade mark registration by New Zealand trade mark owners or at least make it harder for New Zealand trade mark owners to register their marks.
country-by-country basis, which is generally less cost-effective than utilising the Madrid Protocol. It is expected that once the MED has considered the feedback relating to its Discussion Document, the proposed amendments to the
Trade Marks Regulations 2003 will be adopted and IPONZ will make an announcement as to the start date for the Madrid Protocol in New Zealand. When finally implemented New Zealand will belatedly join Australia and so enjoy the benefits of the Madrid Protocol. Hamish Selby is a senior associate in the Auckland office of Buddle Findlay, one of New Zealand’s leading law firms. Hamish is a specialist intellectual property lawyer with extensive experience advising clients in New Zealand, Australia and overseas. He can be contacted by phone on +64 9 363 0703 or email hamish.selby@ buddlefindlay.com
HAMISH SELBY
Buddle Findlay
When considering trade mark protection outside of New Zealand, trade mark owners should assess the benefits of trade mark registration via the Madrid Protocol, particularly when registration is sought in multiple countries. In particular, it is recommended that trade mark owners should factor in the Madrid Protocol as an alternative to registering trade marks on a
26/06/2012 3:57:15 PM
10
bANKINg & FINANCE
AUSTrAlASIAn leGAl BUSIneSS ISSuE 10.6
A&O nABS A MAlleSOnS BABy….
BAnkIng & FInAncE hAS EMErgEd AS ThE kEy BATTlEgrOund BETwEEn InTErnATIOnAl FIrMS And ThE TrAdITIOnAl AuSTrAlIAn ALB 1006.indb 10
26/06/2012 3:57:18 PM
Australasian Legal Business ISSUE 10.6
BANKING & FINANCE
11
….but Mallies claims moral victory. top tier – and as ALB’s Renu Prasad reports, both King & Wood Mallesons and Allen & Overy are claiming victory. ALB 1006.indb 11
26/06/2012 3:57:19 PM
12
BANKING & FINANCE
Australasian Legal Business ISSUE 10.6
y”
H
ere’s a sobering fact for those who claim that international firms are not making any impact on the Australian market: Allen & Overy has scored roles on five out of the five covered bond programmes which have been brought to market by Australian issuers to date, including acting for the issuer in the case of the NAB and CBA programmes. Not a bad effort for a firm which many claimed was nothing more than a collective of disgruntled Aussies operating under a new logo. But is this really a watershed moment for Allen & Overy in Australia? Far from it, according to some observers. “It was their international capability which got them the job in most of those transactions – it had nothing to do with the fact they had a local office. It’s important to emphasise that,” one lawyer told ALB. Covered bonds are a
product with a strong European heritage and, on one analysis, A&O was simply winning work which it would have won even without an Australian presence. Clearly this is not a view that particularly flatters Grant Fuzi’s local A&O team, although when asked to respond the firm preferred to maintain a dignified silence. There may be another reason why A&O is feeling quietly confident: while the exact parameters may be in dispute, there is no doubt that A&O Australia has inflicted some significant pain on its local rivals. The NAB is well known for its relationship with King & Wood Mallesons, yet the bank opted to use A&O for its debut covered bond programme. It’s a decision which KW Mallesons partner Berkeley Cox admits caused his firm some disappointment, but he says he is very comfortable with the firm’s relationship with NAB. “We are fortunate to continue to have a great relationship with the relevant people at NAB,” he says. The real story, according to Cox, is to be found in an analysis of the issuer roles across the five transactions to date. “The role that everyone covets is the issuer’s documentation role, which we had on three of the five deals – ANZ, Westpac and Suncorp,” he notes. “Who was first to market? ANZ and Westpac. They wanted to use
Syndicated loans: top legal advisors, Asia Pacific 2011 Proceeds Amount ($USm) Borrower Advisor
Deals
Proceeds Amount ($USm)
Rank
Proceeds
Market Share %
Rank
# of Deals
Market Share %
Mallesons Stephen Jaques
1
19,079.4
2.6
1
33
1.1
Freehills
2
18,919.6
2.5
2
32
Allens Arthur Robinson
3
13,129.6
1.8
4
Baker & McKenzie
4
8,007.1
1.1
Blake Dawson
5
5,724.4
AZB & Partners
6
Rajah & Tan LLP
Deals
Rank
Proceeds
Market Share %
Rank
# of Deals
Market Share %
Allens Arthur Robinson
1
32,620.0
4.4
1
52
1.7
1.1
Freehills
2
17,620.4
2.6
5
28
0.9
21
0.7
Mallesons Stephen Jaques
3
17,593.7
2.0
4
30
1.0
3
24
0.8
Clifford Chance
4
13,269.5
1.6
3
34
1.1
0.8
6
9
0.3
Baker & McKenzie
5
9,215.9
1.6
2
43
1.4
5,502.2
0.7
20*
4
0.1
Wong Partnership LLP
6
5,315.9
0.8
7*
12
0.4
7
4,785.5
0.6
30*
2
0.1
Blake Dawson
7
5,310.3
0.6
9*
10
0.3
Allen & Gledhill
8
3,072.6
0.4
20*
4
0.1
Minter Ellison
8
4,687.8
0.6
9*
10
0.3
Clayton Utz
9
2,619.2
0.4
7*
8
0.3
Luthra & Luthra Law Offices
9
4,517.4
0.6
29*
3
0.1
Linklaters
10
2,545.5
0.3
12*
5
0.2
Zhong Lun Law Firm
10
4,434.5
0.4
44*
1
0.0
Lender Advisor
According to the Thomson Reuters “Syndicated loans legal advisory review” for the full calendar year 2011, the most prolific legal advisors in the Asia Pacific (including Japan and Australia) were Mallesons (on the borrower side) and Allens Arthur Robinson (on the lender side).
ALB 1006.indb 12
26/06/2012 3:57:19 PM
Australasian Legal Business ISSUE 10.6
us because of the local law expertise that proved critical in the implementation phase of the legislation and the execution of all these trades. We’re very comfortable with the depth of our local law expertise, which sits favourably against any other firm – including Allen & Overy.” King & Wood Mallesons was able to lay claim to at least one other moral victory in the banking & finance space too – according to the Thomson Reuters’ Syndicated Loans Legal Advisory Review for the full calendar year 2011, the most prolific legal advisors in the Asia Pacific were Mallesons (on the borrower side) and Allens Arthur Robinson (on the lender side). The raw numbers only tell so much of the story, but there’s nothing like a good league table to keep the marketing people busy.
“They wanted to use us because of the local law expertise that proved critical in the implementation phase of the legislation and the execution of all these trades.”
Berkeley Cox, King & Wood Mallesons
“it’s pretty clear that overall there has been a drop off in volume – there is a drop off in the number of deals banks are prepared to look at.”
Shaun McGushin, Corrs Chambers Westgarth
“There’s still a lot of lending activity in the infrastructure and energy and resources space – we’ve been fortunate to be involved in many of those deals.”
Jason Huinink, Allen & Overy
“We had always anticipated this wall of refinancing – so there was a lot of refinancing activity ahead of maturities.” Eric Boone, Baker McKenzie
ALB 1006.indb 13
BANKING & FINANCE
13
Aside from being one of the key battlegrounds in the war to win the Australian market, banking and finance practices are at the forefront of what is perhaps the real war of attrition in today’s ravaged global economy: the continual struggle to raise capital in an increasingly uncertain environment. Investors have been burned in the sharemarket and banks are shutting up shop – so it’s up to innovative lawyers to step into the breach. Loan volumes According to statistics from Thomson Reuters LPC, Australian loan volume for the first five months of 2012 totalled US$18 billion. The corresponding figure in 2011 was US$29 billion, so clearly there has been a significant drop off in activity.* “This is a trend that we’ve seen and when we speak with other banking and finance groups around town, it’s pretty clear that overall there has been a drop off in volume – there is a drop off in the number of deals banks are prepared to look at,” observes Corrs Chambers Westgarth partner Shaun McGushin. Some obvious explanations come to mind – the departure of European banks from local activity, confidence issues relating to Greece and the general post GFC malaise. However, the year on year drop in loan volume could perhaps also be partly explained by an unusually high level of refinancing activity last year. “In 2011 and even 2010 there was a lot of refinancing – people just wanted to get it done as soon as possible, even if they didn’t need to do it at that point,” says McGushin. “That was quite common and I think that has died off now.” Baker & McKenzie partner Eric Boone agrees: “We had always anticipated this wall of refinancing – so there was a lot of refinancing activity ahead of maturities – they were refinancing ahead of time,” he recalls. Nor is the picture necessarily uniformly negative. Allen & Overy partner Jason Huinink points out that while he agrees with the broader picture of declining volumes, the market has many redeeming features too. “There’s still a lot of lending activity in the infrastructure and energy and resources space – we’ve been fortunate to be involved in many of those deals,” he observes. “There is absolutely no doubt that this activity is still continuing.” Huinink cites debt restructuring work and loan portfolio sales as two other examples of areas where activity has held up so far this year.
26/06/2012 3:57:22 PM
14
BANKING & FINANCE
Australasian Legal Business ISSUE 10.6
Bond volumes The level of bond issues has remained steady. Thomson Reuters statistics show that Australian issuers had issued US$80 billion worth of debt in the year to date by mid May, which is a similar figure to the corresponding figure for 2011. Total number of issuances (155 this year, 170 for the corresponding period last year) were also similar. The bond market has been a source of notable activity. BHP set the pace early in the year with a $US5.25 billion plan to tap the U.S. market, banks have been testing the covered bond market and there has been a resurgence in hybrid and subordinated note offerings. The list of recent issuers of hybrid offerings includes Woolworths, Origin Energy, AGL Energy and the major banks and a KPMG analysis reported that total issuance of Australian hybrids for Q1 2012 alone was A$6 billion. Boone says the motivation here is not simply limited to a need to refinance, but also to shore up different sources of funding. “With the Australian corporates – I think people have learned the lessons from the GFC, especially if we have another financial crisis – people recognise that there needs to be a diversification of funding sources,” he says. Banks are issuing hybrids with one eye
HYBRID ISSUANCES - summary up to q1 2012 Issuer
Date
Term
Risk Margin
Amount
AGL Energy
Apr-12
27yrs
380bps
A$650m
ANZ
Mar-12
10yrs
275bps
A$1500m
Westpac
Mar-12
8yrs
320-35-bps
A$750m
Colonial First State
Mar-12
25yrs
325bps
A$1,000m
Tabcorp
Mar-12
25yrs
425bps
A$200m
Origin Energy
Dec-11
60yrs
400bps
A$900m
Woolworths
Nov-11
25yrs
325bps
A$700m
Source: www.insto.com.au
ALB 1006.indb 14
on the looming shadow of Basel III. “Hybrids that are issued by banks are generally issued to meet prudential regulatory standards – particularly the Basel III standards coming into effect in January 2013,” says Allen & Overy senior associate Anand Sundaraj. “As a result a lot of existing bank hybrid capital will need to be retired as it doesn’t comply. We expect to see quite a number of banks issuing hybrids in the near future.” Sundaraj says that it’s a stimulating line of work for legal advisors: “The interesting thing to note about hybrids is that, in contrast to a convertible bond where there’s not much variation in the terms of issue, with a hybrid everything is on the table and up for negotiation,” he says. “The terms of a hybrid will be tailored to meet the issuer’s specific situation and needs.” Subordinated notes seem to be back in vogue. NAB’s first subordinated note issue in over 10 years attracted plenty of attention, particularly following the bank’s decision to double the size of the offer from A$500 million to A$1 billion. NAB was following in the steps of ANZ in this case and ANZ’s issue also involved a dramatic increase in the offering size – a tripling from A$500 million to A$1.5 billion. “Subordinated notes seem to come in and out of favour over the years – probably more so than most other debt instruments,” observes Shaun McGushin. “Certainly they seem to go up and down with the market and the level of risk they are perceived to have.” The brisk activity by banks in not only subordinated notes but other forms of capital raising has led many to conclude that we have already seen the bulk of activity that can be expected in this area for 2012. “Certainly with the big four banks – they’ve done so much financing late last year and the first three months of this year, they probably don’t need to do much more financing at this point for the fiscal year,” says Boone. Covered bond issuances Last October Australian parliament passed legislation allowing financial institutions to sell covered bonds, which offer a higher level of investor security by securing the bond against designated bank assets. Australian banks have been quick to take the initiative on covered bonds and all of the “big four” have made multi-billion dollar issuances in the latter stages of 2011 and early 2012, while regional player Suncorp is also testing the waters. “We’re seeing the second wave of covered bonds coming into market with the Suncorp issue,” says Allen & Overy partner Karolina Popic. “This issue will feature a soft bullet so you have a maturity date which is extendable for a year if there is a default on the hard date. That kind of feature is predominant in the overseas market – basically all of the European issued covered bonds have that kind of feature - but it’s really the first time we’ve seen it in Australia.” Covered bonds are frequently associated with the European market for historical reasons. “Covered bonds are very established products in Europe and have been in place for literally three hundred years,” says Clifford Chance senior associate Laura Sheridan Mouton. “They are a very well understood instrument there. That would be less the case in the U.S. markets, though there is increasing appetite for this type of instrument in the U.S. – however, it’s not a traditional product in the U.S. whereas it is in Europe – for legislative and historical reasons it’s something that is more familiar in Europe.”
26/06/2012 3:57:22 PM
BANKING & FINANCE
Australasian Legal Business ISSUE 10.6
COVERED BOND CURRENCY ISSUANCE BY “BIG 4” BANKS
5%
4%
7% 10%
42%
32%
AUD
USD
NOK
EUR
CHF
GBP
Source: Insto, KPMG analysis as at 17 April 2012
“Hybrids that are issued by banks are generally issued to meet prudential regulatory standards – particularly the Basel III standards coming into effect in January 2013.” Anand Sundaraj, Allen & Overy “This issue will feature a soft bullet so you have a maturity date which is extendable for a year if there is a default on the hard date.” Karolina Popic, Allen & Overy
“it’s unlikely that covered bond issuance will continue at the pace it did in the latter part of 2011 and early 2012.” Laura Sheridan Mouton, Clifford Chance
ALB 1006.indb 15
15
However, covered bonds are not an exclusively European play and an April study by Insto and KPMG found that 42 percent of first quarter issuance was in Australian dollars and the Euro accounted for only 32 percent and the US dollar 10 percent. These figures demonstrate that issuers have placed weight on the diversity of funding sources in their programmes. “Pretty much all of the programmes have introduced a wide measure of flexibility so as to allow for issues into the US 144A market as well as EU Prospectus Directivecompliant issues listed on regulated markets in Europe,” says Mouton. “A couple of issuers early in the year – Commonwealth Bank and ANZ – did local issues and they were substantially sized transactions in the A$3 billion range. I think there is quite a bit of interest particularly from Asia in Australian dollar-denominated issues.” Australian rules permit banks to issue the equivalent of 8 percent of their assets in covered bonds, which means banks could potentially issue up to $140 billion of these instruments. Banks have not yet reached this level, but the feeling is that the initial surge of covered bond activity has now peaked. “The banks are not yet [at the statutory issuance cap of 8 percent of their Australian assets], but I would agree that for a variety of reasons – for diversification, investor appetite and market driven reasons in terms of pricing – it’s unlikely that covered bond issuance will continue at the pace it did in the latter part of 2011 and early 2012,” says Mouton. It is worth acknowledging the role played by New Zealand banks and lawyers in the covered bond area. The very first such issue in Australasia was from the Bank of New Zealand in mid 2010, a deal which went on to win Debt Market Deal of the Year in the 2011 ALB Law Awards. This was a rare example of a New Zealand deal beating a field of Australian nominees and must have been a pleasing result for the Kiwi lawyers involved. Interestingly, the deal preceded the introduction of a legislative framework in NZ, so lawyers had to draw on securitisation techniques. As this edition of ALB was going to print, the NZ government was still finalising a regulatory framework for covered bonds. *Loan volume figures record all syndicated and club loan types, including project finance, M&A, refinancing, working capital, asset finance etc. but exclude bond issuance.
26/06/2012 3:57:26 PM
BUSINESS OF LAW MASTERCLASS MAXIMISE IN-HOUSE POTENTIAL AND MINIMISE REGULATORY RISK INTERCONTINENTAL SYDNEY 23-24 AUGUST 2012
INTERCONTINENTAL MELBOURNE 30-31 AUGUST 2012
AUSTRALASIAN
LEGAL BUSINESS 016-017_masterclas dps.indd 1
26/06/2012 9:22:30 AM
THE EVENT
THE BUSINESS OF LAW MASTERCLASS IS A PREMIER LEARNING FORUM ADDRESSING KEY PRACTICE MANAGEMENT AND REGULATORY CHALLENGES FOR CORPORATE LAWYERS. You will receive practical and timely insight on regulatory priorities, professional privilege, legal fees and alternative billing arrangements, securities and regulatory litigation, competition law, continuous disclosure, legal process outsourcing, top 10 tips for general counsel and much more.
WHY ATTEND
Whilst aimed at in-house lawyers, this is a must-attend event for every legal practitioner regardless of their background as it aims to provide an interactive platform for collaborative discussion. It delivers a high value learning experience with relevant and up to date content, eminent speakers and panellists, and a highly participative format. PLUS, every attendee receives a complimentary Business of Law Bundle (RRP $786) including the following leading publications: • The Interpretation of Contracts in Australia • Regulation, Litigation and Enforcement • Financial Literacy for Lawyers • Australian Competition Law and Policy • Corporate Legislation 2012
To book or find out more infomation contact Savitha Iyer 02 8587 7960 The in-depth sessions cover topical industry issues from a broad spectrum of stakeholder perspectives; including in-house lawyers, regulators, private practice lawyers and legal service providers.
EXPERT SPEAKERS INCLUDE
Daniel Krutik Senior Legal Counsel, Origin Energy Rod Bordignon Group Legal Manager-Corporate & Commercial, Woolworths Brian Salter General Counsel, AMP Simon Tuxen Group General Counsel, Westfield Dan Last General Counsel & Company Secretary, Foster’s Group Sandra Steele Assistant General Counsel, Lend Lease Francesca Lee General Counsel & Company Secretary, OZ Minerals Professor Bob Baxt AO Emeritus Partner, Freehills
Michael Legg Associate Professor, UNSW and Consultant, Clayton Utz Kathleen Harris Special Counsel, Kemp Strang. Former Deputy Bureau Chief, New York Antitrust Bureau Dr George Beaton Executive Chairman, Beaton Research & Consulting David Vilensky Managing Director, Bowen Buchbinder Vilensky Anthony Alex Managing Director Legal Solutions, Pangea3 Melanie Noble Director, Switch Legal Jennifer Duxbury Experienced Legal Manager & Policy Adviser
www.thomsonreuters.com.au/events 016-017_masterclas dps.indd 2
26/06/2012 9:23:32 AM
18
ANALYSIS
Australasian Legal Business ISSUE 10.6
Dewey’s bankruptcy: Let the rumble begin By Nate Raymond and Nick Brown, Reuters
A
s U.S firm Dewey & LeBoeuf embarks on the humbling process of working through bankruptcy, creditors and former partners are bracing themselves for a nasty court battle that could drag on for years. Dewey, a storied firm with deep Wall Street connections, filed for Chapter 11 protection last month after veering toward collapse amid revelations of fat salary guarantees, risky loans and a culture of secrecy. Some former partners have hired lawyers in anticipation of clawback suits by the estate. Law firms that offered positions to former partners could also get embroiled in fights over rights to client fees. Creditors ranging from banks to temp services have started jockeying for position to maximize limited payouts. Some contentiousness was on display at a recent bankruptcy hearing in Manhattan. Lenders were especially aggressive, asking the judge to approve a lien on certain litigation proceeds in exchange for letting Dewey fund its bankruptcy with money owed to the lenders. Judge Martin Glenn denied that request as unreasonable, at least in the interim, saying he would prefer to wait to make his decision until an official committee of unsecured creditors was in place. There also appeared to be communications issues during the hearing. Albert Togut, Dewey’s bankruptcy attorney, announced that the firm was “close” to a settlement framework. But he was contradicted by Mark Zauderer, an attorney representing a group of ex-Dewey lawyers, who said settlement talks were only preliminary. WHEN ASSETS WALK AWAY In a typical Chapter 11, a corporation uses its existing assets to continue generating revenue to fund a reorganization. The theme park Six Flags, for example, continued to sell tickets while in Chapter 11
ALB 1006.indb 18
in 2009. The company also had tangible assets -- the theme-park rides themselves, real estate, merchandise -- which could have been sold off to raise money for creditors had it been necessary. Dewey has different kinds of assets: Its lawyers and their books of business, or clients. Once the lawyers walked away -- by now nearly all of its 300 partners have left the firm - the company had little means to produce revenue. “Our assets went home every night,” Togut said, “until one night, they went home and never came back.” According to bankruptcy filings, all that is left of Dewey’s oncerobust operations are accounts receivable of about $255 million, about $13 million in cash, various pieces of artwork of unknown value, and about $11 million invested in an insurance consortium. How effective Dewey will be in getting clients to pay those accounts is unclear, especially since the incentive of an ongoing client-firm relationship has disappeared. “You find reasons not to pay,” said Jonathan Landers of Jager Smith, who represented Citigroup Inc in prior law firm collapses. CREDITORS, GET IN LINE As of now, Dewey & LeBoeuf effectively exists to service its creditors, whose place in line to collect will be determined by a number of factors, including whether the debts were secured or not, and the vagaries of bankruptcy and employment law. Typically, secured creditors get first dibs under federal bankruptcy statutes. In the Dewey proceeding, those include Dewey’s lenders and bondholders. JPMorgan Chase & Co and a group of lenders had a tab of $76.5 million under a secured credit agreement, according to bankruptcy filings. A group of investors who bought privately placed bond notes that Dewey issued in April 2010, meanwhile, are owed $150 million, according to court papers. Next in line come employees who were terminated in the period prior to the bankruptcy. Under U.S. law, these people have priority status, ahead of other unsecured creditors. Then the other unsecured creditors get their shot. Among these the U.S. Pension Benefit Guaranty Corporation has asserted the largest claim. The PBGC sued Dewey earlier this month to seize three pension funds it said were underfunded by $80 million. Dewey’s New York landlord, Paramount Group, claims to be owed $3.78 million for a lease at Dewey’s Manhattan headquarters on Avenue of the Americas. Other unsecured creditors include HireCounsel, a staffing firm that put in a claim for $1.56 million, and HBR Consulting LLC, a legal consulting firm that claims about $656,700. Thomson Reuters, the parent of legal research company Westlaw as well as Reuters, entered a claim for $2.36 million, and rival Reed Elsevier’s
26/06/2012 3:57:27 PM
ANALYSIS
Australasian Legal Business ISSUE 10.6
Lexis-Nexis said it is owed $1.41 million. A spokesman for PBGC said the pension fund is continuing efforts to take over the pension plans. Representatives for Paramount group, HireCounsel, HBR Consulting and Thomson Reuters Corp did not return calls for comment. A representative for Reed Elsevier declined to comment. The last group to recover money would likely be the former partners themselves. The firm, like most of its contemporaries, required members to make a capital investment at the time of partnership. Dewey’s fund at the time of writing stood at $52.4 million. It is far from clear whether there will be money left in that fund for ex-partners. What’s more, some of them could be vulnerable to clawbacks that would offset any money they are owed. Former partners have said privately for weeks that they’ve anticipated both bringing claims and being sued. Tracy Klestadt, who represents about 20 ex-Dewey partners, said he expected the estate would consider filing claims against all of Dewey’s partners. Already one former Dewey partner, James Woods, has initiated arbitration before the New York City Bar Association for compensation he’s owed, according to bankruptcy filings. Woods, now with Mayer Brown, did not respond to requests for comment. While Dewey’s bankruptcy attorney Togut has said that Dewey was nearing a settlement with former partners, it is unclear how many would participate. “I just heard it for the first time in court,” said Klestadt. GOING AFTER THE FIRMS The firms that poached the former Dewey partners could also be vulnerable to litigation by the Dewey estate. When partners leave one firm for another they typically take their clients along. In some past law-firm bankruptcies the trustee for the bankrupt firm claimed that at least some of the fees generated by those clients belonged to the estate. Last month a U.S. district court judge in Manhattan ruled that revenues generated by former Coudert Brothers lawyers on cases they took with them after that firm dissolved in 2006 belong to Coudert’s bankruptcy estate. That ruling could pave the way for the Dewey estate to pursue its former partners’ new employers to collect on the profits of the so-called unfinished business. Among the firms that recruited the most Dewey & LeBoeuf partners are Morgan Lewis & Bockius; DLA Piper; Willkie Farr & Gallagher; Proskauer Rose; and Sutherland Asbill & Brennan. Spokespeople for Willkie, DLA, Morgan Lewis and Sutherland declined comment, while a representative for Proskauer had no immediate comment. CHAPTER CHOICE Until fairly recently, liquidations like Dewey’s usually were pursued under Chapter 7 of the bankruptcy code. Chapter 7 puts a debtor’s estate under the control of a trustee tasked with selling assets quickly and using the proceeds to pay off creditors. Dewey, though, has chosen to file under Chapter 11, which provides for a more cooperative, deliberative process. Debtors typically prefer Chapter 11 because it lets them remain in control of their estate, usually without interference from a trustee. Creditors often prefer Chapter 11 as well, because it allows them to form official committees paid for by the estate, gives them access to operating reports, and lets them exercise more control over how the debtor liquidates and how their bankruptcy claims are treated. Given the sheer volume of competing interests and unresolved issues in the Dewey case, the unwinding could be slow going.
ALB 1006.indb 19
>>
19
In-house Q&A
Wilfred Ong
1
In your opinion, why have in-house lawyers become an increasingly indispensable part of an organisation?
I wouldn’t use the term ‘indispensable’ as no organization or individual in any profit-driven organization is ‘indispensable’. But the business is beginning to recognize the value the Legal/Contracting organization brings to the table. One of the main reasons is probably the effect of globalization. The reaction to globalization in some of the key markets in Asia like China & India are local regulations to protect the local market, or to enhance what they perceive as their security & ‘social harmony’. We help in identifying and trying to mitigate these regulatory risks. In the IT industry where competition for business is very keen, again, our organization helps to identify & mitigate risks in contracting terms. As the role of in-house lawyers are becoming more broad based, our organization adds value to the operationalization of business strategies by managing labor risks; negotiating disputes and in strategic business collaboration; helping the business to articulate & review business strategies; & mergers/ acquisitions. It is only when in-house lawyers deal with these issues in a holistic manner, and appreciate the business objectives that needs to be achieved, that the business will clearly see the value that we bring to the table.
2
In recent times, the role of the General Counsel has diversified into a multi faceted role (where the General Counsel can wear the ‘hat’ of Lawyer, Legal Manager, Compliance Manager, and Company Secretary). In your opinion, do you believe this has increased your risk profile?
Not really, as these functions ‘come with the turf’. This is what makes our role unique. I personally do not view this as ‘increasing my risk profile’, but rather, I take it as a challenge to the ever growing complexity in the role of a corporate General Counsel. Any significant role in any business, especially multinational companies, has a dimension of risk. Why not ours? We should move away from the stereotyping of corporate counsels as being people who are entirely ‘risk averse’. Its unavoidable that our role embraces a certain level of risk.
3
What is the best advice you have ever received?
Someone once repeated to me the adage that ‘the grass is ALWAYS greener on the other side’. If we keep comparing, we’ll never be satisfied. Its only natural that younger in-house counsels tend to move quite quickly from one job to another – to get better experience, exposure, more money to support their young families etc. But we must not lose sight of the intangible benefits that our current jobs may sometimes bring – fair & supportive bosses who walk the talk and whom we can respect; the sense of belonging & collegiality in our organization; and the hard-earned respect & recognition our organization has earned with the company. These are equally important. Please also answer these questions which will appear as part of your profile.
JLegal is a global specialist legal recruitment consultancy focused solely on providing recruitment solutions to the legal profession.For a confidential discussion about your career, contact one of our senior consultants today. www.jlegal.com Melbourne t | +61 3 9910 6700
Sydney t | +61 2 8249 4730
26/06/2012 3:57:27 PM
bANKINg & FINANCE
20
AUSTrAlASIAn leGAl BUSIneSS ISSuE 10.6
cOBuRN’s guide to capital, assets,
and chicken chilli BASEL III
ThE cAPITAl TO ASSETS rATIO IS A kEy POInT OF dIScuSSIOn In ThE FInAncIAl PrESS – BuT whAT dOES ThE TErM AcTuAlly MEAn And hOw IS IT cAlculATEd? FrEEhIllS cOnSulTAnT tONy cOBuRN PrOvIdES SOME EnlIghTEnMEnT.
ALB 1006.indb 20
L Tony Coburn
ike its predecessors Basel II and I, the Basel Committee’s latest regulation is a framework to ensure global banks have the right proportion of funds owned to funds loaned. Banking regulation is similar to cooking. You have a number of ingredients and a chosen recipe to follow. But often you find you have more carrot than bok choy in your fridge and so you must take a more flexible approach to the meal. As long as you understand how to limit your use of the more risky ingredients, your meal will more than likely be all right. Too much fish sauce and your dinner will end up in the insolvency incinerator with the Lemon Brothers.
26/06/2012 3:57:31 PM
Australasian Legal Business ISSUE 10.6
ALB 1006.indb 21
banking & finance
21
26/06/2012 3:57:33 PM
banking & finance
22
Australasian Legal Business ISSUE 10.6
Basel III capital classes and requirements: Common Equity Tier 1 must be at least
Tier 1 capital (including Common Capital Tier 1) must be at least
Total capital (Tier 1 Capital plus Tier 2 Capital) must be at least
at all times
of risk-weighted assets at all times
of risk-weighted assets at all times
4.5% of risk-weighted assets
6%
In the banking world, there are two main ingredients for making money: capital and assets. The recipe for avoiding a similar demise is ensuring an appropriate proportion of capital to assets, and more importantly, limiting the percentage of high-risk assets. This is what’s called the ‘capital to assets ratio.’ It’s the relationship between funds invested in the bank (for example, by shareholders) compared to the value of the bank’s assets. In banking, for the most part assets refer to financial property. This means the assets are comprised of the rights to repayment of any loans granted by a bank and the rights to payment of any money owed to the bank by third parties. This includes customers, governments and other banks.
So the capital to assets ratio is a test of the capacity of the bank to absorb losses. The more capital a bank has, the greater the number of losses it can write-off without risking insolvency. Generating assets, such as credit cards, loans, or other derivative products, is how a bank makes its money. In order to create these assets, obviously the bank needs money to lend. The bank raises funds through steps that include issuing shares, taking deposits from
ALB 1006.indb 22
8%
customers, and issuing bonds or notes in debt capital markets. A bank has to repay depositors, bond holders and note holders. Failure to do so could result in the bank being sued and ultimately becoming insolvent. Shares, on the other hand, are not repayable because a shareholder invests in the hope of receiving dividends from profits made. And the share price will reflect both retained earnings by the bank and the market perception of likely future earnings. Investing in shares comes at the risk of the bank making a loss. In that case, no dividends would be paid, and write offs of unrecoverable loans and obligations owed to the bank would reduce shareholders’ funds and therefore the market value of the shares. So the capital to assets ratio is a test of the capacity of the bank to absorb losses. The more capital a bank has, the greater the number of losses it can write-off without risking insolvency. Because of our comparatively conservative regulation, Australian banks have always had a significant amount of capital in proportion to their assets. Quite straight forward? Here’s were it gets a little more complicated. Like our ingredients, some assets are more risky than others and so assets are “risk weighted”. This means different assets require varying amounts of capital to be held against them. For example, unsurprisingly the risk of non-repayment by a government is considered to be less than that of a credit card holder. Some credit cards and other unsecured loans and personal loans and may need to be risk-weighted at 100 percent. This means the full value of the loan must be taken into account in determining the amount of capital that the bank requires. But loans made to highly rated banks are likely to have a lower risk-weighting, perhaps closer to 20 percent of the loan value. Residential mortgages might be lower than unsecured loans or business loans, and might be weighted at, say, 35 percent of the loan value. Under Basel III, banks will take a new approach to how they calculate the amount of capital that must be held available for its risk-weighted assets. Capital will now be divided into three different classes known as Common Equity Tier 1, Additional Tier 1 Capital, and Tier 2 Capital. And there will be minimum
26/06/2012 3:57:33 PM
banking & finance
Australasian Legal Business ISSUE 10.6
While we know that Common Equity Tier 1 will include all capital related to shareholders equity, for example shares, retained earnings or other disclosed reserves, it is not as clear what may be characterised as “Additional Tier 1 Capital” or “Tier 2 Capital”. requirements as to the proportion of capital that must be Common Equity Tier 1 and Additional Tier 1 Capital. In total, capital of the bank must be in an amount that is at least 8percent of the risk weighted value of the bank’s assets. While we know that Common Equity Tier 1 will include all capital related to shareholders equity, for example shares, retained earnings or other disclosed reserves, it is not as clear what may be characterised as “Additional Tier 1 Capital” or “Tier 2 Capital”. There are various forms of instrument which have some features similar to debt, but which may be treated as capital of the bank for these purposes. An example being some forms of convertible notes. The extent to which the rights of the note-holders are subordinated to other creditors will also affect the characterisation of these instruments. It is here that some of the most interesting and difficult issues will arise for banks complying with this new
23
regulation. Basel III will bring a change within the Common Equity Tier 1 for Australian banks because APRA proposes to adopt its treatment of dividends. That is, dividends will be deducted from retained earnings only after the dividends have been declared. Balancing this, there will be new guidelines on building retained earnings during good times to increase Common Equity Tier 1, and to create more of a buffer to absorb future losses. Finally, on the asset risk weighting side, Basel III will recalibrate the level of risk attributed to some assets and in particular trading book assets such as holdings of structured products, collateralised repos and derivative products which produced material losses for some banks in the global financial crisis. Given that Australia already had well developed prudential guidelines in place for capital requirements, and for risk weighting assets, the introduction of Basel III will have less impact here than in many other countries.
Become Australia’s most valuable export. With seven international offices, we are your global career strategists. Through our international network, we recruit lawyers at all levels with the leading Australian, Middle Eastern, UK, US and Asian law firms, together with a comprehensive list of local and global companies, financial institutions, sovereign wealth funds, and government bodies. We are committed to providing you with our unique blend of specialist knowledge and distinctive personalised service, which continues to differentiate us in the market. For a confidential discussion about your career, contact one of our senior consultants today. melbourne level 2, 757 bourke street, docklands t | +61 3 9910 6700 e | melbourne@jlegal.com sydney level 3, 3 spring street, sydney t | +61 2 8249 4730 e | sydney@jlegal.com
ALB 1006.indb 23
Lawyers Weekly Australia 155x220 FINAL.indd 1
www.jlegal.com join jlegal on linkedin, follow us on twitter melbourne sydney singapore hong kong uae london new zealand
26/06/2012 3:57:33 PM 31/05/2012 20:14
24
feature
Australasian Legal Business ISSUE 10.6
India destination unknown
In theory, India has the potential to rival China as a regional economic powerhouse – but will the hype ever match reality? By Nishant Kumar, Reuters, with Additional reporting by Renu Prasad, ALB
ALB 1006.indb 24
26/06/2012 3:57:35 PM
Australasian Legal Business ISSUE 10.6
S
outheast Asian nations are swallowing an outflow of money from India, as foreign investors lose patience with its policy paralysis and slowing growth and aim instead for more promising emerging markets such as Indonesia. Corruption scandals and high inflation have added to India’s woes, which have seen growth slow to a three-year low while the fiscal deficit widened to 5.9 percent of GDP in the last financial year. “India was sold on the promise of high growth which simply hasn’t panned out over the past four years,” said Gautam Prakash, founder of U.S. based hedge fund Monsoon Capital. Foreign investors pulled a net $540 million out from India in March and April, compared with $13 billion in inflows in JanuaryFebruary. Foreign portfolio flows into Indian stocks have dropped 99 percent to just 5.17 billion rupees ($96.5 million) since a March budget that largely disappointed investors, compared with 427.36 billion rupees in 2012 before the budget. Among the most significant developments from the shift has been the direction in which money is headed – with a big chunk flowing to Jakarta and other Southeast Asian capitals. Two provisions put forward in the budget to tax indirect investments and combat tax evasion were the last straw for some global mutual funds, prompting an acceleration of money leaving India. While the provisions were later put on ice, the prospect that such a tax could be proposed in India was enough for some investors to send their Asia-allocated money further east. “You’re seeing a situation where the ‘I’ in BRIC is being replaced by Indonesia,” said Tim Condon, head of research and strategy for Asia at ING. INDIA – AUSTRALIA INVESTMENT: OVERRATED? Indian investors have made various forays into Australia over recent years, but Gilbert + Tobin partner Neil Pathak admits that the potential is somewhat overrated. “When you look at the last three to four years of investment, it’s been mainly resources focussed with a bit of IT – you could probably count it all on one hand,” he says. “You’ve got Adani, Lanco, GVK, Tata but not too much else. And so really I don’t see any great explosion in Indian businesses looking to set up in Australia.” With the exception of resource-heavy industries such as power and steel, Pathak believes that, despite the geographical proximity to Australia, Indians will be looking further afield. “I think for Indians places like the U.S. and UK and, closer to home, Singapore will be more front of mind than Australia,” he says. “For example with the U.S., there are many Indian expatriates in places like Silicon Valley and the sheer size and scale of the U.S. economy means there is a certain affinity and opportunities which Australia could never compete with. So while we’re seen as a nice country with the shared interest in cricket, ultimately Indian investment in Australia will be about resources. For the other high tech industries or the industrial type companies looking to expand, they are more likely to look to places like Europe, America and other parts of Asia before they think about Australia.” Pathak warns that Indian investment in Australian resources is highly price sensitive and cannot be taken for granted. “Power prices [in India] for example are quite regulated, so while there is interest in resources here they’ve got to get it at the right price in order to fit in with power regulation over there,” he says. Australian miners have been threatening to take their investment off-shore in response to what they see as unfavourable government policy settings. According to Pathak it’s all part of the bigger picture where the future direction of Indian and Chinese investment
ALB 1006.indb 25
feature
25
is hanging in the balance. He cites Africa as an example. “China and India also see huge opportunities in Africa – they can see themselves getting in more quickly and perhaps more cost effectively,” he says. “In some cases, the local governments may seem to be more welcoming of the foreign investment than maybe the case for an Australian investment. Indians will look at all of these destinations. China is in the same boat – they’ve definitely moved on a little bit from Australia and in many cases see more prospective opportunities and better pricing in Africa.” LEFT OUT While Pathak concedes that India’s economic progress has been “sluggish” of late, he says a broader context is necessary. “I think India has done very well and while economic growth might be a bit more sluggish today than it has been its still above six percent and I am sure India’s growth will continue to progress quickly in the future,” he says. Others have been less kind. An emerging market brochure distributed by Franklin Templeton last month had data on India missing from a world map. From a global leader in emerging market investing, led by omnipresent guru Mark Mobius, that omission was telling. India exposure in Asia’s biggest equity fund, the $18 billion Templeton Asian Growth fund, dropped to 16 percent of its assets at the end of March from nearly 20 percent a year ago, while exposure to Association of Southeast Asian Nations countries rose to 35 percent from 31 percent during the period. An ASEAN-focused equity fund launched by Daiwa Asset Management started with about $366 million in February and has since grown to manage about $430 million, while Fidelity Funds-ASEAN has seen a net inflow of nearly $250 million in the last year. The bigger ASEAN markets do not necessarily offer a compelling case on valuation grounds. “Generally we are more negative on India than we are positive on the alternatives, such as Indonesia and the Philippines where we feel the markets have perhaps run ahead of themselves,” said David Baran, co-founder of Tokyo-based hedge fund Symphony Financial Partners. “However, the ASEAN alternatives do have more positives and less negatives than India and we think that foreign investment outflows from India into the ASEAN alternatives are highly likely to increase
26/06/2012 3:57:35 PM
26
feature if anything.” Indian shares trade at price to book value of 1.9 times, higher than 1.4 times for Asia Pacific shares as a whole but less than 3.1 times for Indonesia, 2.2 times for Thailand and 2.5 times for Philippines, according to data from Thomson Reuters StarMine. The trend, nonetheless, is clear as money managers shift away from India, at least for the short-term, towards markets that offer the same favorable demographics and growth potential that had previously drawn investors to Delhi and Mumbai. BETTING ON ASEAN Funds from firms such as Aberdeen, Matthews and T. Rowe with mandates to bet in Asia invested a smaller percentage of their assets in India at the end of March compared with the year-ago period and more in Indonesia and other Southeast Asian countries than they did a year ago. Part of the drop is due to a fall in the value of holdings, but fund flow data tracked by Lipper shows mutual fund clients are responding as well, giving more ammunition to funds betting on Southeast Asia and less to those investing in India. Investors pulled out nearly $480 million from offshore India dedicated funds in April, increasing the 12-month cumulative net outflows to about $4.1 billion, according to data from Lipper. By comparison, funds investing in Southeast Asia have seen net inflows of about $900 million in the year ending April. The gap between the total assets under offshore India funds and that of Southeast Asia fell to a three-year low of about $13.5 billion in April, indicating investors were buying into a region that is home to nearly 600 million people. Indonesia focused bond funds are in favor too, with eight such funds collecting a cumulative $355 million in the year ending April. HSBC Indonesia Bond Open received $200 million alone. “We are definitely seeing more interest in ASEAN,” said Matt Pecot, head of Credit Suisse’s prime broking unit in the Asia Pacific. Net exposure to India in Asia-focused hedge fund portfolios fell to 18.7 percent in April from 32.5 percent in January 2011, according to data compiled by Credit Suisse based on their client portfolios. The same measure for Indonesia surged to 51.8 percent in April from 24.7 percent in January 2011. Net exposure refers to the difference between a hedge fund’s long positions and short positions. A higher net exposure means funds are expecting the stock market to rise.
ALB 1006.indb 26
Australasian Legal Business ISSUE 10.6
BRIC HITS WALL Ten years ago, Chairman of Goldman Sachs Asset Management Jim O’Neill, then the bank’s chief economist, combined the emerging market growth stories of Brazil, Russia, India and China to coin the famous “BRIC” moniker. O’Neill recently called India the “biggest disappointment” of the BRIC nations. “India was a 9 to 10 percent growth economy when the BRICs were put together and now it’s slowing. Indonesia was a 4 to 5 percent growth economy and it’s moving in the other direction,” ING’s Condon said. The top-three BRIC mutual funds by assets invested a smaller percentage of their assets into India at the end of March than they did a year back, according to data from Lipper. They are also underweight compared with their benchmark, meaning they do not expect India to contribute to portfolio outperformance. Templeton BRIC fund had 11.7 percent of its assets in India, its lowest since June 2009. “India is getting trapped in that high fiscal deficit, high current account deficit situation and there is no easy way out of that unless it takes the tough steps,” said Binay Chandgothia, portfolio manager at Principal Global Investors. Indonesia and the Philippines, meanwhile, have neither current account nor significant budget deficits to worry about, although they do share some of India’s problems such as their own fuel and food subsidies, Symphony Financial Partners’ Baran said. With combined GDP of $2 trillion, 10-member ASEAN is angling for foreign investment. Ranging from resource-rich Indonesia to impoverished Laos and financial centre Singapore, ASEAN is planning a union by 2015 to allow for free flow of goods, capital, services and labor. “As far as stock prices go, foreigners own approximately 40 percent of the free float of the Indian market,” Baran said. “It will not take much of an exodus for this to have a significant impact on the market and there are clearly plenty of alternatives in ASEAN.” ($1 = 53.5550 Indian rupees) LEGAL SERVICES LIBERALISATION Liberalisation of the Indian legal services market has become something of a bad joke among the international law firms who have been eyeing a possible market entry for many years now. Still, the delay allows for some time for reflection as to whether this would be the right path for Australian law firms, even if liberalisation did occur. “I don’t see this as something that is a particularly fertile environment for Australian law firms – but I can imagine that for UK firms or global firms there is some logic in it,” says Pathak. “I’m not holding my breath that liberalisation will happen anytime soon – it will happen some day but in my view the upside won’t be as great as some people think it will be.” Pathak can see the possible benefit of international firms opening Indian offices to advise Indian multinationals on their expansion westwards, but says Australians could be better placed to use a “fly in, fly out” model. “The investment from India to here will be about resources and Australian based firms working in Australia will be well placed to capture that work provided they have relationships with such Indian companies,” he says. “I don’t see a need to set up an office in India to have those relationships.” Additional reporting by Abhishek Vishnoi in MUMBAI; Editing by Michael Flaherty and Alex Richardson
26/06/2012 3:57:35 PM
Equitrac Professional: the leading cost recovery solution for Law Firms Improve Security
Reduce Waste
Follow-You PrintingÂŽ means documents are held in the print queue in the secure Equitrac server until released by the user at the copier via a simple card swipe or PIN. Attorney work and client confidentiality is protected by preventing documents from sitting exposed in the output trays at unattended printers.
Unreleased jobs can be deleted after any speciďŹ ed amount of time eliminating unclaimed printing.
Reduce costs Enforce print rules to prevent misuse of high cost-perpage devices, such as colour printers. No need for costly personal printers previously kept for privacy & confidentiality.
Improve overall productivity and mobility Users are not limited to a single printer, so can output documents when and where they are needed and avoid printers that are busy or out of service.
Capture, track and allocate every clientrelated expense Copies, prints, scans, disbursements, phone, VoIP calls, online research & postage.
With over 30 years of experience developing & deploying solutions for law firms worldwide contact us today to discuss how Equitrac products can meet your unique needs.
Contact us on +61 2 9434 2382 or getequitrac@nuance.com For further information and case studies please visit www.getequitrac.com.au
28
AUSTRALASIAN LEGAL BUSINESS
Australasian Legal Business ISSUE 10.6
In-house Observations By Tony de Govrik, Legal Affairs & Communications Director, Australian Corporate Lawyers Association, the professional body for in-house lawyers.
W Tony de Govrik
ALB 1006.indb 28
elcome to this first column of In-house Observations. Each month we hope to bring some insightful commentary on recent developments or matters of interest to the in-house legal profession. For the inaugural column we take a look at the implications of the High Court decision handed down in May this year in the James Hardie case. Much has been written about the High Court decision – albeit a decision that can hardly be described as “ground-breaking”. Far from being a landmark decision, it has probably not taken the law relating to Directors duties any further. In fact, it probably does little more than reinforce what the Federal Court decided in the Centro case last year. The James Hardie case was one that simply revolved around a finding that the seven non-executive directors and three senior executives (the CEO, CFO and General Counsel) had breached their statutory obligation under section 180(1) of the Corporations Act to act with care and diligence in performing their duties. In a somewhat parallel decision to Centro, three significant points evolved for non-executive directors, namely: • there are significant limitations on reliance on other directors, management and independent advisors • a high level of scrutiny must be given to major transactions • directors have an important role to play when internal policy is not complied with. If nothing else, the penalties originally handed down by Gazell J in the NSW Supreme Court are certainly sobering. All 10 defendants in the civil proceedings brought by ASIC were banned from being a company director or from otherwise being involved in the management of a company
for periods ranging from five years to 15 years. The monetary penalties ranged from $30,000 to $350,000. For in-house counsel, it is worth noting that the former general counsel and company secretary of James Hardie, Peter Shafron, received the second highest penalty (after former CEO, Peter Macdonald). Shafron copped a whopping seven year disqualification and a $75,000 penalty. Although largely acting in his capacity as general counsel, Shafron was deemed to be an “officer” of the company under the broad definition of “officer” in section 9 of the Corporations Act. In a separate judgment in the High Court, Heydon J noted that “It is not possible to sever Mr Shafron’s responsibilities into watertight compartments, one marked ‘Company Secretary’ and the other marked ‘General Counsel’. The expression ‘company secretary’ is not a term of art.” So what are the implications arising out of the case for in-house counsel? These may be summarised as follows: • the main message for in-house counsel is that the decision makes it clear that senior executives (including general counsel) and other ‘officers’ of a company must ensure that they properly inform and advise the Board (or CEO) of material matters – particularly those that may be adverse to the interests of the company. Full and frank disclosure seem to be the operative words • the decision highlights to corporate counsel who also act as company secretary the need for them to accurately record the minutes of a meeting and to issue them in a timely fashion and for directors and the chairman to pay particular attention to the accuracy of the minutes when being adopted and signed at the following Board meeting • other than the above, in practical terms, the decision will probably have little impact on the role of senior in-house counsel in a company. This is because most corporate counsel who regularly attend and advise at Board meetings (whether acting in the dual role of company secretary or not) most likely consider themselves to be ‘officers’ of their company under the section 9 definition and conduct themselves accordingly. While upholding the findings of the trial judge, the High Court has remitted back to the NSW Court of Appeal for consideration claims by the defendants to be excused from liability, penalty and disqualification. Under the Corporations Act a court may relieve a person from a liability where it appears to the court that the person has acted honestly and, having regard to all the circumstances of the case, the person ought fairly be excused for the contravention. So the James Hardie case has yet to be fully played out!
26/06/2012 3:57:36 PM
ALb SpECIAL REpORT: pERTh 2012
30
AUSTrAlASIAn leGAl BUSIneSS ISSuE 10.6
A LEAGUE OF THEIR OWN PErTh PrAcTIcES ArE STIll BOOMIng – BuT FOr hOw Much lOngEr? Olivia cOlliNgs rEPOrTS
ALB 1006.indb 30
26/06/2012 3:57:37 PM
Australasian Legal Business ISSUE 10.6
ALB Special Report: Perth 2012
31
W
estern Australia: It’s the country’s largest state by size and increasingly by revenue and home to some of the biggest mining operations in Australia. More than A$200 billion is to be spent on a variety of mining and LNG projects in the region in the coming years, on the back of a period of already significant investment. According to the latest update by the Bureau of Resources and Energy Economics Australia, if all the projects come to fruition as tabled, total resources sector investment in Australia will exceed half a trillion dollars, and more than half of that will be in Western Australia. Unsurprisingly, on the back of all this investment, the economy of Western Australia is expected to grow by 4.5 percent this financial year and by four percent annually for the next three years, according to West Australian state treasury forecasts. Legal services within the state have also been experiencing a boom, with several new international legal brands setting up in the past 18 months including Norton Rose, Allen & Overy, Clifford Chance, Holman Fenwick Willan and Squire Sanders.
Thriving market Despite the increasingly competitive nature of the market, all firms ALB interviewed had revenue increases in the past year and expected further revenue and staff increases in the coming 12 months. Jackson McDonald for instance has had revenue increases of about seven percent this financial year and expects a nine percent increase next financial year. “This is due to the volume of work, rather than price increases,” says CEO John McLean. The firm is also looking to increase fee earner numbers by approximately five percent. Allion Legal expects to grow revenue by 25 percent in the next year, because of existing clients’ needs but also because of the addition of a new litigation practice to be headed up by principal Dirk Fairweather, previously of Maxim Litigation. “We have a fairly aggressive plan for that practice and all up we would like four to five lawyers in that group within the next six to 12 months,” states managing principal Phil Lucas. The firm also has active briefs at the moment for additional staff across other practice areas including workplace relations. Most of Fairweather’s former colleagues at Maxim Litigation have joined Lavan Legal. The firm has also recruited a new front end construction partner, Donald Turley. “We are expecting growth both because of Maxim and in addition to it,” says managing partner Greg Gaunt. He also expects to add 10 or more senior fee earners in the next 12 months. Michael Blakiston, whose previous firm Blakiston & Crabb joined Gilbert + Tobin in late 2010, has also had a successful year following the merger. “The transactions we are working on now are bigger than what we had worked on previously, and that is obviously a reflection of the G+T brand,” says Blakiston, who is the managing partner of the office. “It’s fair to say we expect a buoyant year and we are working to ensure we are geared up for the market’s needs.
ALB 1006.indb 31
26/06/2012 3:57:38 PM
32
ALB Special Report: Perth 2012
Australasian Legal Business ISSUE 10.6
Perth firms by lawyer headcount Partners
Fee Earners (Lawyers)
Total
Allen & Overy
4
(not disclosed)
(not disclosed)
Allens
13
63
76
Allion Legal
11
29
40
Ashurst
22
95
116
Corrs Chambers Westgarth
15
45
60
Freehills
27
123
150
Gilbert + Tobin
8
32
40
Jackson McDonald
32
110
142
King & Wood Mallesons
17
91
108
Lavan Legal
21
90
111
Middletons
7
29
36
Norton Rose
21
52
73
Squire Sanders
14
43
57
Firm
John McLean, Jackson McDonald
Dirk Fairweather, Allion Legal
*List does not purport to cover all Perth firms. Figures supplied by firms.
Right across the firm we have added five or six people and in the resource space we expect to add staff again in the next six months.”
Phil Lucas, Allion Legal
Jenni Hill, Norton Rose
ALB 1006.indb 32
Uncertainty However, despite the solid fundamentals, some in the market can see the cracks beginning to form as a result of the region’s reliance on the resources and energy industries. “All the projections around the West Australian state economy are on the back of the resources sector remaining strong,” says Norton Rose Australia Perth head partner Jenni Hill. With ongoing uncertainty across the globe from Europe to China, even some in Western Australia are approaching decisions cautiously according to Phil Lucas from Allion Legal. “The success of Western Australia is at all times dependent on the broader international position and demand for commodities which we produce,” he says. The delicate state of the global financial market is having an impact on the ability of projects and companies in the state to gain funding or raise capital according to Allens Perth head partner Andrew Pascoe. “It remains very challenging for a number of projects to get appropriate debt finance, there have been some successes recently, but overall it remains challenging. The general lack of confidence globally could have an impact on the willingness of companies to execute major transactions or investment decisions in the short term,” he says. A significant reduction in the GDP growth in China would also have a significant impact on the West Australian economy. At a more local level, ongoing issues such as infrastructure, labour and legislative changes are also beginning to impact sentiment within the state. “Within our market sector there is a lot of caution, and a lot of the work and success will be dependent on whether
“All the projections around the West Australian state economy are on the back of the resources sector remaining strong.” Jenni Hill, Norton Rose some of the domestic issues get resolved,” states Lucas. “There is a frustration that because of what is happening domestically we are not taking advantage of all the opportunities that are there, because people are more circumspect in their outlook.” Geoff Simpson, Allen & Overy Perth managing partner, says that the introduction of the Mining Resources Rent Tax (MRRT) has already had a negative impact on the state because the junior miners will pay a disproportionate share of the tax. “It is our impression that the tax has already had a significant impact on foreign investment because of the uncertainty which it has generated over the last 18 months or so,” he states. “This, along with the impact of other factors has prompted many foreign investors, especially in coal, to have a closer look at opportunities elsewhere.” However, this view is not shared by Pascoe: “My sense is that the market has absorbed MRRT and moved on. It has been factored in and people are making decisions with it and the carbon tax included. I have not seen any evidence of major decisions not being made or being changed because of the introduction of those two legislative reforms.” Booming state, booming costs While Perth firms are undoubtedly reaping the benefits of working in a resources and infrastructure vibrant state, behind the mounds of work lies more serious issues. The side impact of all the wealth from the mining and resources sector is that “the costs of operating any business in Western Australia has increased in the last five years,” says partner in charge of the Perth King & Wood Mallesons, Michael Lundberg. Perth has climbed the ranks in terms of most expensive cities to live in across the world, coming in at 13 last year, well ahead of global cities such as London, Rome, Berlin, Hong Kong and Beijing. According to commercial real estate services firm
26/06/2012 3:57:39 PM
34
ALb SpECIAL REpORT: pERTh 2012
AUSTrAlASIAn leGAl BUSIneSS ISSuE 10.6
CBRE, rents in Perth jumped 6.3 percent in the second half of 2011 as vacancies plunged to 3.3 percent. “We have the lowest tenancy vacancy in Australia and possibly in the world,” says Norton Rose’s Hill. “You have to be creative about how to maximise office space, as people have very clear ideas about how a law firm should look and operate.” Allion Legal is currently evaluating its options as it looks to add a new practice and up to five new lawyers in the coming 12 months. “The sheer expansion of the firm has put pressure on this office in terms of its size,” says Lucas. “One of the issues we are getting our heads around at the moment is how do we satisfy our office requirements in the short-to-medium term, in a highly competitive market, where it is almost full tenancy? Not to mention fitting out the premises if you do move.” Rates PRessuRe The increasing cost of doing business has caused many firms to reevaluate their rates and what they charge their clients in order to remain profitable. “The cost of doing business leads to pressures on hourly rates,
“ThE cOSTS OF OPErATIng Any BuSInESS In wESTErn AuSTrAlIA hAS IncrEASEd In ThE lAST FIvE yEArS.” michael Lundberg, Perth King & Wood Mallesons
PeRtH PaRtNeR RemuNeRatiON iN PeRtH OveRHeads Firm size
mode
Top Tier/Major
$1,325,000
Mid tier
$745,000
Small commercial
$385,000
Office sPace cOmPaRisON (PRemium) Current vacancy Q1 2012
Projected vacancy ( next 6 months)
Price per square metre
melbourne
5.3%
6%
$565
sydney
9.6%
9.2%
$1,000
Perth
3.3%
4.5%
$840
Location
Based on Mahlab Recruitment data 2011
and then people start saying lawyers are expensive,” says Blakiston. “You have to make sure that your proposition represents good value.” Lucas has also seen increasing pressure on hourly rates because essential services are becoming more expensive. However, he does not see the need to disproportionately push up rates in the near future. “We don’t feel the need to go above and beyond the increase in costs, which are going up about 10 percent a year,” he says. While many in the market are aware that they need to increase rates in order to remain profitable, according to a number of firms one international firm is discounting rates in order to secure work, particularly in the transactional space. Several firms, who asked not to be named, claimed Allen & Overy in particular had been “below market average” or “overly competitive”. However, Simpson from Allen & Overy Perth, claimed otherwise: “I have not felt the need for A&O to be overly competitive in regards to rates in the past 12 months,” he says. He did however add that it was a highly “competitive market” and in pitches against other firms for work “one element of the pitch is price,” he observed.
Data from Colliers International
PRivate PRactice Wages fOR PeRtH majOR/ tOP tieR fiRms Year level
iN-HOuse salaRies iN PeRtH
Low
high
middle
Year level
Low
high
middle
1 PQE
$67,000
$79,000
$78,000
1 PQE
$65,000
$80,000
$77,000
2 PQE
$77,500
$96,500
$87,000
2 PQE
$70,000
$94,000
$89,000
3 PQE
$86,500
$117,500
$102,000
3 PQE
$85,000
$118,000
$110,000
4 PQE
$98,500
$132,500
$115,500
4 PQE
$100,000
$143,000
$131,000
5 PQE
$112,500
$147,500
$130,000
5 PQE
$120,000
$160,000
$149,000
Based on the combined information of Hays and Mahlab Recruitment data 2011
ALB 1006.indb 34
Based on Mahlab Recruitment data 2011
26/06/2012 3:57:40 PM
Australasian Legal Business ISSUE 10.6
ALB Special Report: Perth 2012
35
Inside WA’s resources boom Olivia Collings speaks with Perth lawyers on the latest developments in the LNG and hard rock space.
H
aving already established itself as a valuable source of hard rock minerals and precious stones, in recent years the Western Australian economy has also become a growth area for oil and gas, predominantly Liquefied Natural Gas (LNG). Of the five LNG projects involving Australian operators which received a final investment decision last year, three were in Western Australia, including Wheatstone (A$29 billion),
Prelude Fields (A$10.3 billion) and Ichthys (A$34 billion). The Ichthys project off north Western Australia will include a 900-kilometre underwater pipeline, the longest in the world, to Darwin where the gas will be processed. The project is owned by Tokyo-listed Inpex Corporation and the French oil and gas multinational Total. The project has the potential to meet 10 percent of Japan’s LNG needs, which are likely to grow as Japan turns away from nuclear power following last year’s earthquake and the nuclear leak at Fukushima Daiichi nuclear plant. Allen & Overy have been advising the sponsors of the project and expect to be doing more work as the project develops. “We are the overarching
One of Western Australia’s most respected corporate and resources law firms
ALB 1006.indb 35
26/06/2012 3:57:46 PM
36
ALB Special Report: Perth 2012
legal advisor on that project and have had partners working on it out of Tokyo, Sydney and Perth,” says A&O Perth managing partner Geoff Simpson. According to Allens’ oil & gas partner Anthony Patten, Australian gas is seen globally as a ‘premium product’ because of its reliability and also because of its economic cost. However, one of the biggest potential risks to Australia’s LNG success is the United States, where gas is priced substantially lower. “The price of gas in the United States is about US$2.50 per unit,” states Patten. “The price going into Asia is between A$15 and A$18 per unit. Depending on what happens to those prices, and if someone can work out a way of getting that gas from America into Asia at those prices, then that could have an impact on Australian operations.”
“Our work is mainly focused on the new developments where there is work around project development – that is where the big ticket legal work lies.” Geoff Simpson, Allen & Overy Patten does not expect this to be a serious threat as the United States manufacturing industry is heavily reliant on the low cost of domestic gas, and if it were to start sending gas overseas, it would have to increase the price which would be “politically unpopular”. However he believes that Australia’s gas is unlikely to drop in price any time soon as there are a limited number of contractors and workers to complete the projects tabled, therefore pushing the cost of projects up. Another aspect of LNG set to keep legal advisors in the market busy is the M&A work associated with these billion dollar projects. Woodside Petroleum recently announced it was selling 14.7 percent of the A$30 billion Browse project off Western Australia for A$1.9 billion to Japan’s Mitsubishi Corporation and Mitsui & Co. The sale saw Woodside’s share of the project fall from 46 percent to 31.3 percent. The Japanese Government together with a
ALB 1006.indb 36
Australasian Legal Business ISSUE 10.6
consortium of Japanese companies are also set to buy a 10 percent stake in Chevron’s Wheatstone LNG project for A$4.35 billion. The project is valued at A$29 billion and has been forecast to produce as much as 8.9 million tonnes of natural gas annually, beginning 2016. “I think we will see a bit more divestment activity, as more companies spread their project risks and financing commitment,” explains Patten. “More owners bringing in partners to help get projects to their next stage – there are lots of willing partners around.” Simpson agrees: “Firstly because the Japanese are being more aggressive in their acquisition of energy assets and also because there are a number of players in the market who will have to sell interest in their projects in order to meet their funding requirements while the capital and debt markets remain tight,” he says. Hard rock While there is a lot of excitement in the market about the potential of LNG, hard rock mining and infrastructure are not about to fall off the wayside any time soon. For example, Hancock Prospecting’s Roy Hill iron ore project is valued at A$9.5 billion and is set to create more than 3,000 jobs during its construction in the Pilbara region. BHP and Rio Tinto are also highly active in the market, although both have cast doubts in recent times about future Australian expansions, such as BHP’s mooted A$20 billion expansion of its Olympic Dam copper-uranium mine in South Australia or Rio Tinto’s outer harbour Port Hedland iron ore ship-loading facility. However, the impact for law firms may not be as great as initially expected even if these projects do not proceed. According to Simpson, because their projects are self funded and they have large in-house capabilities, the BHP/Rio mega projects do not involve the same volume of legal work for law firms as with other projects, such as the Roy Hill and LNG projects. “Our work is mainly focused on the new developments where there is work around project development – that is where the big ticket legal work lies,” he explains. What is, however, generating a volume of legal work is the development of ports and rail capabilities in the state to service the growing mining industry. The Oakajee integrated port and rail project, a A$3.5 billion undertaking, continues to be one of Western Australia’s most significant projects due to its role in opening up the mid-west iron ore region, allowing a number of projects to come online and supply ore to international markets as economically as possible. Developments currently proposed around Western Australia’s existing and newly planned ports total A$80 billion, and this investment level is expected to continue into the future as ports reach their tonnage limits. Along with mining related infrastructure the legal fraternity is also busy working on social infrastructure in the state such as the Perth Waterfront project, a A$440 million dollar state government redevelopment along the Swan River, and a number of public infrastructure projects such as the New Children’s Hospital and the WA Gateway road project. “There are a number of public projects that will have a major impact on Western Australia,” says Freehills Perth office head Jason Ricketts. “We have roles on a number of those projects.” Projects breed disputes A number of projects in the Mid West have already been highlighted in the media as potential litigation cases as a result of budget and schedule overruns and even cancellations. “Some of the
26/06/2012 3:57:46 PM
ALB Special Report: Perth 2012
Australasian Legal Business ISSUE 10.6
projects being undertaken in Western Australia are immensely complicated, therefore the scope for litigation and dispute is there,” says Lavan Legal managing partner Gaunt. An increasing volume of litigation and dispute resolution work in the market has prompted Allion Legal to appoint a litigation partner after years of referring this work to other firms. “The big area of growth we see for us in the coming 12 months is the move into litigation,” says managing principal Phil Lucas. One of the key factors likely to feed disputes is that companies are agreeing to undertake work without first having the necessary skilled labour to complete the work, according to Gaunt. “If all the projects are to go ahead we need the people to do it,” he says. Lucas agrees that the sheer volume and size of projects being undertaken at the same time is putting a strain on the labour market, and therefore the cost of completing a project is changing. “The cost of getting business done and the ability to find people to get the business done is a major issue for our clients,” he says. International play During the past decade a lot of the international work undertaken by firms in the market was inbound investment, but now a growing number of Australian-based companies are heading offshore in search of resources in jurisdictions in Africa and South America. “We work for quite a few clients who are busy looking overseas for projects,” says Lucas. “The industry in Western Australia is relatively mature, so a number of clients have gone overseas in order to
2012
WINNER
“The cost of getting business done and the ability to find people to get the business done is a major issue for our clients.” Jason Ricketts, Freehills
purchase or establish new projects there… we anticipate that the level of activity will continue. “There will still be inbound work, but I think less so as Australia is increasingly hard to do business in from an outsider’s perspective.” By contrast, Jackson McDonald is actively targeting inbound work: “We have some opportunities to service our clients overseas on project/ contract needs, in Asia, South America and Africa; but our strength is our offering in Western Australia,” says CEO John McLean. “We expect an increasing flow of this work during the next 12 months.”
Delivering first class legal service to WA for 90 years.
Jackson McDonald is delighted to be 5th time recipient of the ALB Perth Law Firm of the Year award. In our 90th year, we remain committed to supporting WA’s key industries by providing specialist commercial legal advice. www.jacmac.com.au
ALB 1006.indb 37
37
Level 25, 140 St Georges Terrace. Perth, WA
Jackson McDonald First Class Legal Service
Ph: +61 8 9426 6611
26/06/2012 3:57:48 PM
profile Appointments
38
Brought to you by
Australasian Legal Business ISSUE 10.5
recruitment made easy partner appointments Name
Practice area
Going from
Going to
Matthew Beazley
Commercial lawyer
Norton Rose
Russell Kennedy
Richard Chew
Intellectual property & technology
King & Wood Mallesons
Piper Alderman
Joanne Daniels
Resources, infrastructure & competition
Middletons
Allens
Neal Dallas
Superannuation & revenue practice
McCullough Robertson
McInnes Wilson Lawyers
Jan Dransfield
Employment law
Ashurst
Johnson Winter & Slattery
Mick Garner
Financial services
Allens
Maddocks
Robert Johnston
Litigation
HWL Ebsworth
Johnson Winter & Slattery
Ben Macdonald
M&A
Deutsche Bank
Gilbert + Tobin
John Matthews
Building & construction
Carter Newell
Mills Oakley
Stephen Moulton
Corporate/M&A
PricewaterhouseCoopers
Clayton Utz
Keith Nathan
Financial services
DLA Piper
Maddocks
Robert Ritchie
Financial services
Corrs Chambers Westgarth
Ashurst
Alistair Salmon
Industrial relations
Office of the Australian Building & Construction Commissioner
Holding Redlich
Quentin Solomon
Banking & finance
Clayton Utz
HopgoodGanim
Ruth Stringer
Financial services & superannuation
Ashurst
Lander & Rogers
Donald Turley
Construction & infrastructure
Clyde & Co
Lavan Legal
Chris Wille
Property & projects
Minter Ellison
Holding Redlich
Shawn Wytenbur
Financial services
Corrs Chambers Westgarth
Ashurst
King & Wood Mallesons
Piper Alderman
Piper Alderman adds IT partner in Sydney Piper Alderman has appointed a new partner in its intellectual property and technology team. Richard Chew joins the firm from King & Wood Mallesons Sydney where he was a senior associate. He was a member of the IT industry for more than 10 years prior to law. Clyde & Co
Lavan Legal
Lavan secures former ME construction expert Perth-based Lavan Legal has added international construction counsel, Donald (Don) Turley. Turley is a senior construction and infrastructure specialist with more than 30 years of experience in major energy, infrastructure and construction projects across Dubai, Australia and New Zealand. Prior to his move to Perth he was at Clyde & Co as a consultant in the Riyadh office of an associate firm in Saudi Arabia, Abdulaziz. McCullough Robertson
McInnes Wilson Lawyers
McInnes Wilson nabs McCullough Robertson talent Brisbane-based McInnes Wilson Lawyers has added another principal to its team. Neal Dallas has joined the firm’s superannuation and revenue practice from McCullough Robertson where he was a special counsel. Norton Rose
Russell Kennedy
Russell Kennedy appoints Norton Rose partner Allens
Middletons
Allens recruits Middletons’ partner Allens has recruited resources, infrastructure and competition lawyer Joanne Daniels as a partner in Brisbane. Most recently a partner at the Melbourne office of Middletons, Daniels began her career with the Queensland Government and has also been a partner at Clayton Utz. Australian Building & Construction Commissioner Minter Ellison
ALB 1006.indb 38
Holding Redlich
Holding Redlich
Holding Redlich adds two new partners Holding Redlich has appointed two new partners, one in Sydney and one in Brisbane. Industrial relations expert Alistair Salmon has joined the Sydney workplace relations and safety group from the Australian Government, where he was most recently executive director – legal (Eastern) with the office of the Australian Building and Construction Commissioner. Prior to this role he was a partner at FCB Workplace Lawyers. Former Minter Ellison special counsel Chris Wille has joined the firm’s Brisbane office as a partner in the property and projects group.
Former Norton Rose partner Matthew Beazley has been appointed a principal (partner equivalent) at Melbourne-based law firm Russell Kennedy. Beazley is a commercial lawyer who has focussed on government, planning, and environment law for more than 12 years. At Norton Rose, Beazley worked within the planning and environment group, specialising in statutory and strategic planning, environmental law, property law (including compulsory acquisition), governance, and water law. Clayton Utz
HopgoodGani
HopgoodGanim recruits senior Clutz partner HopgoodGanim has recruited former Clayton Utz partner of 15 years Quentin Solomon as
26/06/2012 3:57:49 PM
Finding the right lawyer should be this easy. project banking and finance director. Solomon is a senior banking and finance lawyer with more than 25 years’ experience in the financing of major projects in the energy, mining and transport sectors, and in corporate restructuring and brings a wealth of international experience to the role. He has previously worked with Minter Ellison and Norton Rose, and lectured in the Masters of Laws programs at both Melbourne and Monash Universities. DLA Piper
Maddocks
Allens
Maddocks
Maddocks grows financial practice with Allens and DLA talent Maddocks has made two senior appointments to the financial services team: special counsel Mick Garner and consultant Keith Nathan. Garner was most recently a special counsel at Allens while Nathan was a partner and consultant at DLA Piper. Both lawyers have significant experience in superannuation, investment and funds management having held senior positions with leading law firms. Corrs Chambers Westgarth
Ashurst
Corrs Chambers Westgarth
Ashurst
Stringer, to spearhead the development of the firm’s financial services offering in the Sydney market. Stringer has practised financial services law for more than 20 years and joins from Ashurst (previously Blake Dawson) where she was a partner. Prior to Ashurst she spent 11 years at Minter Ellison, where she established its superannuation practice and was a founding member of the firm’s funds management practice. She has also had in-house general counsel experience. Deutsche Bank
Gilbert + Tobin
G+T recruit Deutsche Bank M&A guru Gilbert + Tobin has recruited a new M&A partner, Ben Macdonald, from Deutsche Bank where he was a senior vice president in the natural resources group based in Melbourne. Macdonald brings to G+T a wealth of experience in M&A and mining and resources. Prior to being an investment banker he was a senior corporate/M&A lawyer at Freehills in Melbourne and spent time working at Allen & Overy in London. Ashurst
Johnson Winter & Slattery
HWL Ebsworth
Johnson Winter & Slattery
Ashurst recruits Corrs’ financial gurus
Ashurst and HWL partners join JWS
Ashurst Australia has recruited two new partners for its Sydney financial services practice. Robert Ritchie and Shawn Wytenburg join Ashurst from Corrs Chambers Westgarth where they were both partners. Ritchie is an experienced Australian and cross-border projects and corporate finance practitioner. Wytenburg is a leading advisor in leveraged and acquisition financing.
Johnson Winter & Slattery has expanded its partnership with the appointment of two new partners based in its Sydney office. Jan Dransfield, formerly a partner with Ashurst (Blake Dawson) in Sydney, has joined the firm along with Robert Johnston, formerly a partner at HWL Ebsworth in Sydney. Dransfield has practised extensively in employment law for more than 20 years, acting for major corporations across the financial services, transport, retail, professional services and IT sectors. Johnston is a senior commercial litigation lawyer with experience in managing large scale, multi-party, complex cases.
Carter Newell
Mills Oakley
Mills Oakley builds Brisbane partnership again Mills Oakley has added a new partner in its Brisbane building and construction practice. John Matthews has joined the firm from Carter Newell, where he was a senior associate in construction and engineering, with extensive experience in front end construction work. Ashurst
Lander & Rogers
Lander & Rogers adds Ashurst partner Lander & Rogers has appointed financial services and superannuation partner, Ruth
ALB 1006.indb 39
Sole practice
Allion Legal
Allion Legal adds litigation practice Perth-based Allion Legal is launching into litigation following the appointment of experienced litigator, Dirk Fairweather. Allion has previously referred client litigious work to other firms, including Maxim Litigation where Fairweather worked prior to the majority of partners at the firm moving to Lavan Legal earlier this year.
Candidate 1
Candidate 2
Candidate 3 For a legal recruitment company that likes to keep things simple contact Brisbane Sydney Melbourne Perth
07 3231 1200 02 9375 2222 03 9098 8750 08 9288 1855
or visit www.empirecareers.com.au
recruitment made easy 26/06/2012 3:57:49 PM
40
alb awards
Australasian Legal Business ISSUE 10.6
2012 ALB LAW AWARDS:
WINNERS REVEALED
On Thursday 24th of May, the 9th annual ALB Law Awards were held at the Sydney Town Hall in a night to celebrate the achievements of the previous year.
I
t was the last hurrah for the firm previously known as Mallesons Stephen Jaques. The 2012 ALB Awards recognises firms for work completed in the previous calendar year, so the Australian legal community were treated to the sight, for one final time, of the old Mallesons Stephen Jaques branding up in lights as the firm’s lawyers took to the stage to collect more than their fair share of awards. Mallesons may have topped the award count, but that
ALB 1006.indb 40
was an honour which they had to share with Corrs Chambers Westgarth, surely one of the most improved performers at this year’s Awards. Corrs must have been particularly pleased with managing partner John Denton finally securing the coveted Managing Partner of the Year trophy, after several years as a nominee. Both Mallesons and Corrs scored six awards each. Freehills secured five trophies, but one can’t help but wonder if Gavin Bell’s team are quietly
feeling that they have secured a moral victory of sorts: it is notable that two of the more prestigious deal awards of the night – Australian Deal Team of the Year and Australian Dealmaker of the Year (Philippa Stone) went to this firm. At least one trophy resurfaced at local nightspot Ivy a few hours later, where it was duly confiscated by security on precautionary grounds. We hope the Freehills team remembered to redeem it. Another firm quietly counting
26/06/2012 3:57:52 PM
alb awards
Australasian Legal Business ISSUE 10.6
its honours was New Zealand’s Russell McVeagh, which picked up New Zealand Deal Team of the Year (corporate team), while Pip Greenwood won New Zealand Dealmaker of the Year. The Kiwis were also behind the shock result of the night: Bell Gully zoomed past a field full of Australian rivals to win the award for Corporate Citizen Firm of the Year. This is a result which demonstrates that the ALB Awards are a true meritocracy and that all firms,
ALB 1006.indb 41
regardless of size or jurisdictional origin, are competing on an even playing field. On the in-house front, it was a spectacular night for Origin Energy, with the award for In-House Lawyer of the Year going to Origin’s Daniel Krutik while the Origin team was also collectively on hand to receive the In-House Team of the Year. UBS continued its domination of the Investment Bank In-House Team of the Year category, yet another affirmation that this team is one of
41
the true class acts of the industry. SABMiller plc’s acquisition of Foster’s Group Limited won the title for M&A deal of the year while there was a notable thematic consistency with the winner of the trans-Tasman Deal of the Year categories: the winner of the New Zealand deal of the year was the Telecom demerger while the winner of the Australian Deal of the Year were the definitive agreements for the National Broadband Network.
26/06/2012 3:58:02 PM
alb awards
42
Australasian Legal Business ISSUE 10.6
2012 ALB AWARD WINNERS Debt Market Deal of the Year
WINNER Australia And New Zealand Banking Group Limited Global Covered Bond Programme
Energy & Resources Deal
of the Year
WINNER Peabody’s US$5.2 billion hostile takeover of Macarthur Coal
Equity Market Deal of the Year
WINNER Origin Energy’s A$2.3 billion capital Raising
ALB 1006.indb 42
26/06/2012 3:58:05 PM
44
alb awards
Australasian Legal Business ISSUE 10.6
M&A Deal of the Year
WINNER SABMiller plc’s acquisition of Fosters Group Limited
Project Finance Deal
of the Year
WINNER Wiggins Island Coal Export Terminal
IPA Insolvency & Restructuring Deal
of the Year
WINNER Centro restructure
Baker & McKenzie Banking & Financial Services In-House Team of the Year
WINNER Challenger Limited
ALB 1006.indb 44
26/06/2012 3:58:09 PM
2012
WINNER
Herbert Geer Full Page Ad_210mmX268mm Award FA OL.indd 1
14/06/12 10:59 AM
46
alb awards
FindLaw Innovative use of Technology Firm of the Year WINNER Gilbert + Tobin
Australasian Legal Business ISSUE 10.6
LitSupport Corporate Citizen firm of the Year WINNER Bell Gully
LitSupport CSR firm of the Year
WINNER Mallesons Stephen Jaques
Baker & McKenzie Energy & Resources InHouse Team of the Year
WINNER Origin Energy Limited
Gilbert + Tobin Investment Bank In-House Team of the Year WINNER UBS AG
ALB 1006.indb 46
26/06/2012 3:58:12 PM
2012
WINNER
48
alb awards
Sparke Helmore Insurance Inhouse Team
Australasian Legal Business ISSUE 10.6
Dolman Employment Specialist Firm
of the Year
of the Year
WINNER Allianz Australia (Corporate)
WINNER Middletons
Insurance Specialist Firm of the Year
WINNER Lander & Rogers
Law Staff IP Specialist Firm GR Law International Firm of the Year
of the Year
WINNER Griffith Hack
WINNER Sullivan & Cromwell
ALB 1006.indb 48
26/06/2012 3:58:16 PM
Carter Newell Lawyers‌ AWARD WINNING LAW FIRM
WINNER 2012 Brisbane Law Firm of the Year WINNER 2008 FINALIST 2007, 2009, 2010 & 2011
WINNER 2012 Disability Employment Award AHRI Diversity Awards
Insurance Construction & Engineering Resources Corporate Commercial Property Litigation & Dispute Resolution Aviation
CN187-ALB_fp_AD.indd 1
CN
L A W Y E R S CN/187-ALB
15/6/12 1:26:37 PM
50
alb awards
Australasian Legal Business ISSUE 10.6
Murdoch University Perth Firm
Huon IT Melbourne Law Firm
WINNER Jackson McDonald
WINNER Herbert Geer
of the Year
of the Year
LitSupport Brisbane Firm
of the Year
WINNER Carter Newell Lawyers
Burgess Paluch Adelaide Firm
Empire Careers Sydney Firm
WINNER Finlaysons
WINNER Henry Davis York
of the Year
ALB 1006.indb 50
of the Year
26/06/2012 3:58:21 PM
2010
WINNER
Untitled-1 1
2011
WINNER
2012
WINNER
26/06/2012 4:29:05 PM
52
alb awards
Australasian Legal Business ISSUE 10.6
Russell McVeagh New Zealand In-House Team of the Year
WINNER Fletcher Building Limited
Clayton Utz Australian In-House Team of the Year
WINNER Origin Energy Limited
In-House Lawyer of the Year
WINNER Daniel Krutik, Origin Energy
ALB 1006.indb 52
New Zealand Dealmaker
Australian Dealmaker
of the Year
of the Year
WINNER Pip Greenwood, Russell McVeagh
WINNER Philippa Stone, Freehills
26/06/2012 3:58:25 PM
alb awards
Australasian Legal Business ISSUE 10.6
New Zealand Deal Team of the Year
WINNER Russell McVeagh Corporate Team
53
Australian Deal Team
of the Year
WINNER Freehills Corporate/ M & A Team
New Zealand Deal
of the Year
WINNER Telecom demerger
Cicero Managing Partner of the Year
WINNER John Denton, Corrs Chambers Westgarth
ALB 1006.indb 53
Australian Deal of the Year
WINNER National Broadband Network – definitive agreements
26/06/2012 3:58:29 PM
54
alb awards
Australasian Legal Business ISSUE 10.6
award sponsors Baker & McKenzie Baker & McKenzie is unrivalled in delivering the knowledge, experience and capabilities of a truly global law firm to our clients in Australia and across the globe. In Australia since 1964 and with 68 offices in 40 countries, we provide the innovative legal solutions clients expect, together with practical advice and seamless execution. Contact Chris Freeland, National Managing Partner T: 02 9225 0200 E: chris.freeland@bakermckenzie.com W: www.bakermckenzie.com
Burgess Paluch Legal Recruitment Burgess Paluch is a leading legal recruitment group with significant experience in local and international markets. Utilising a strategic approach and providing accessible, proactive advice, Burgess Paluch is one of the leading legal recruiters in Australia. Burgess Paluch focuses on creating successful outcomes for both lawyers and law firms. Contact Paul Burgess, Director
T: 03 8676 0372 E: paul@bplr.com.au W: www.bplr.com.au Cicero Cicero is an Australianowned specialist legal executive search, selection and training firm with a reputation for honesty and responsiveness. Cicero’s focus is working closely and strategically with clients to build their businesses and also assisting lawyers to progress their careers. Cicero has national reach within Australia, and with associated international offices in Asia and throughout the UK. Contact Jonathan Gill, Managing Director T: 02 9008 1122 E: jgill@cicero.com.au W: www.cicero.com.au
Clayton Utz A top-tier law firm with a difference: Clayton Utz take a fresh, pragmatic, commercial approach to legal practice that focuses on achieving the best results for their clients. Their ability to bring together
teams of our country’s finest lawyers with unique and diverse skills is why they advise on Australia’s largest and most complex deals and litigation. Contact Lauren Scott, National Corporate Affairs Manager T: 03 9286 6972 E: lscott@claytonutz.com W: www.claytonutz.com
Dolman is a leading legal recruitment/ search consultancy based in Australia. Established in 1994, Dolman provides services to law firms and corporates in Australia and internationally. We place junior lawyers through to General Counsel/ Partners and our clients include top and mid tier Australian, UK and US firms and ASX listed and international companies. Contact Daniel Stirling, General Manager T: 61 2 9231 3022 E: daniel.stirling@dolman.com.au W: www.gtlaw.com.au
Empire Careers Empire Careers is a specialist legal recruiter providing both professional and support staff to leading law firms and in-house legal teams of blue chip organisations. Our consultants are very well known in the market and have all worked in legal recruitment for a minimum of five years, they bring long standing relationships with both clients and candidates. Empire Careers has a national presence with offices in Sydney, Melbourne, Brisbane and Perth. Contact Lucy Brady P: 02 9375 2222 E: lucy@empirecareers.com.au W: www.empirecareers.com.au
alb awards
Australasian Legal Business ISSUE 10.6
Gilbert+Tobin Gilbert+Tobin is a leading corporate law firm and a key player in the Australian legal market. They work on transactions and cases that define and direct the market. The firm’s reputation for expert advice extends across M&As, private equity, capital markets, banking & finance, real estate and projects, tax, competition and regulation, communications and technology, intellectual property and litigation. Contact Danny Gilbert, Managing Partner T: 02 9263 4000 E: email@gtlaw.com.au W: www.gtlaw.com.au
GR Law GR Law is a global specialist legal recruitment consultancy assisting clients and candidates from the newly qualified level through to partnership. Our highly experienced team of consultants work for the majority of international firms multinational corporations in London, Australia, Asia, Europe and the UAE offering a truly international service. Contact Nicole Garrett, Senior Consultant – Australia & Asia P: 02 9220 4400 E: Nicole.Garrett@grlaw.com.au W: www.grlaw.com.au
Huon IT Huon IT are industry renowned Legal Technology Specialists, with a focus on providing strategy, IT management, systems integration and 24x7 support to a range of professional service organisations. Established in 1989, Huon IT has established long term partnerships with firms across Australia, with offices in both Sydney & Melbourne. Working alongside both management and technical departments within their client’s organisation, Huon IT helps to align technology systems with executive vision to maximise business performance.
55
Contact Damian Huon, Chief Executive Officer P: 02 8401 8000 E: dhuon@huonit.com.au W: www.huonit.com.au
Contact Val Pitt, Communications Director T: 03 9621 1333 E: val_pitt@litsupport.com.au W: www.litsupport.com.au
IPA The IPA’s vision is building professional excellence, achieved by our members’ commitment to the highest standards of professional and ethical conduct and through their adherence to our continuing education requirements and professional code of practice. We work cooperatively with regulators and consult with our members frequently to ensure that Australia has one of the most effective and efficient insolvency systems in the world. Contact Leanne Carter, Publications and Marketing Manager T: +61 2 9290 5770 E: lcarter@ipaa.com.au W: www.ipaa.com.au
Murdoch University Murdoch Law School provides a rigorous and intellectually challenging legal education. It seeks to develop the research, writing and advocacy skills of its students and combines a tradition of excellence in legal education with new innovative programs which prepare students for the practice of law in a rapidly changing world. Contact Professor Gabriël Moens, Pro Vice Chancellor (law, business and information technology) T: 08 9360 6064 E: G.Moens@murdoch.edu.au W: www.murdoch.edu.au
Law Staff Law Staff is an award winning legal recruitment specialist, experienced in assisting lawyers, paralegals, legal secretaries, executive and personal assistants and shared services staff on a permanent, temporary and contract basis. Our clients include top tier, mid tier and boutique law firms, as well as in-house departments of major corporations throughout Australia. Contact Melanie Hawcroft, General Manager T: 02 9235 3399 E: melanie@lawstaff.com.au
LitSupport LitSupport is Australia’s leading provider of secure and confidential document copying, printing and scanning services. Our clients include law firms, government departments, financial services institutions and all corporate and commercial organisations who require critical and sensitive document reproduction. We operate a 24/7 service from a national network of offices in Sydney, Melbourne, Brisbane and Perth.
Russell McVeagh We are regarded as New Zealand’s premier law firm. Russell McVeagh has an extensive and celebrated history of representing New Zealand’s leading corporations and financial institutions. Contact Gary McDiarmid, CEO T: 64 9 367 8091 E: gary.mcdiarmid@russellmcveagh.com W: www.russellmcveagh.com
Sparke Helmore Lawyers Sparke Helmore Lawyers is the 2011 Australasian Law Awards Insurance Law Firm of the Year. We are a firm of 600 people working from eight offices across Australia, serving the needs of the insurance, government, corporate and financial services sectors. Our expertise spans commercial to construction, workplace to insurance, mining to manufacturing, and property to procurement. Contact Rhett Slocombe, National Practice Group Leader - Insurance P: 02 9373 3555 W: www.sparke.com.au
56
profile
Australasian Legal Business ISSUE 10.6
In-house perspective
Emphasis on value Brian Salter may have developed as a private practice lawyer in a top tier firm, but his allegiance is now most definitely to his business and the bottom line, writes Olivia Collings
B
rian Salter never dreamed of being a lawyer when he was a young man. Instead he dreamed of being a pilot, an engineer or an archaeologist; luckily for his current employer AMP and his previous law firm Clayton Utz, those didn’t work out. “I ended up as a lawyer by default,” says Salter, who is group general counsel and company secretary at AMP Limited. “At the Australian National University in those days, if you applied for law you automatically got into everything else… I turned up on the first day of semester and found myself enrolled in law; I was not very keen on it, I found it very difficult and dry.” During his legal studies he took a year off to work in the public services as well as undertaking a double degree in archaeology; but being determined not to leave any stone unturned, Salter went back to law and completed his degree. He then
ALB 1006.indb 56
packed up his car drove up the Hume Highway to Sydney where he commenced as a legal practitioner at Clayton Utz, a firm he remained at for the next 27 years. “When I started there I worked with the 12th partner on the letter head; when I left there were more than 200 partners,” says Salter of his time at Clayton Utz. “Banking was taking off in Australia and the firm was going through a rapid growth phase – for me it was very exciting.” Having never intended to be a lawyer Salter found himself to be rather apt at banking and finance law and built a large team around his specialisation of structured finance and securitisation. But, as with many legal practitioners, having become a partner, built a practice, taken on senior management positions it was time for a change, and so in 2008 he joined AMP as general counsel, months ahead of what is now called the global financial crisis. “It was a very demanding period, but also very interesting,” says Salter of his timing. “Some people would say that I dodged a silver bullet, because securitisation collapsed, and I had just stepped out of that market.” Yesterday, today and tomorrow The company Salter joined those four years ago is strikingly different to the one he works for today. Having navigated the
26/06/2012 3:58:35 PM
profile
57
Photography by Thilo Pulch
Australasian Legal Business ISSUE 10.6
ALB 1006.indb 57
26/06/2012 3:58:43 PM
58
profile
financial crisis and strengthened its capital position in early 2011 AMP merged with AXA Asia Pacific Holdings’ Australia and New Zealand, to form AMP Limited. The deal, which was worth A$14.6 billion, saw a largely Sydney centric organisation, AMP, incorporate a very substantial Melbourne presence as well as a greater presence in New Zealand through AXA. Salter’s team in particular has grown and changed as a result of the merger. He now has approximately 100 staff across the legal and secretariat group, located in Melbourne, Sydney and New Zealand. The team was last year named Banking & Financial Services In-house Team of the Year at the ALB Law Awards. Earlier this year AMP changed again, this time through an alliance with Japanesebased Mitsubishi UFJ Trust and Banking Corporation (MUTB). As a result of the transaction MUTB acquired a 15 percent minority shareholding in AMP Capital Holdings, the parent company of the AMP Capital group of companies, and in return AMP group’s regulatory capital resources increased by approximately A$380 million. “There will always be M&A and treasury transactions,” says Salter. “But, going forward I think there will be much more focus on business critical transactions… instead of doing one major transaction a year, the team will be handling half a dozen transactions.” In addition to these large and ongoing transactions, AMP has also been facing an ever changing regulatory environment. “The volume and pace of regulatory change is extraordinary, the challenges are enormous, but we will meet them,” says Salter. One of the main changes to impact the financial services sector is the introduction of the Future of Financial Advice (FOFA) legislation. While originally intended to start on 1 July 2012 the regulation has since become optional until 1 July 2013. “My team led the market in relation to FOFA,” says Salter. “Understanding the legislation, briefing the business and industry groups in relation to it… I’m very proud of them.” The proposed changes to superannuation through the Simplified Superannuation Reforms and other taxation changes tabled by the government are also likely to keep Salter and his team busy. The legal team is also undertaking a number of internal projects, such as improving the experience
ALB 1006.indb 58
Australasian Legal Business ISSUE 10.6
“in the last panel tender some law firms wanted to increase rates by 30 percent – in a market which is incredibly tough it seems to be completely out of sync with the market and their clients.” for its customers through the design of products, disclosures and the support they provide to the customer facing divisions of the business. “Over the years I have challenged our team as to how we can improve our customer experience,” says Salter. “It’s important to demonstrate how a function, which is not customer facing, can have a positive impact on the customer experience.” In search of value and service As a result of the AXA merger and organic growth the AMP legal team has grown in the past year, but private practice firms still play an important part in AMP’s legal undertakings. In an effort to better manage the costs of those external legal providers Salter has created a new legal panel to complement its existing one. The existing legal panel that AMP had has been rebadged as a commercial legal panel while the new legal panel has been badged as a general legal panel. “Traditionally, AXA had tended to focus on low cost legal providers, while AMP was slanted towards the top tiers,” explains Salter. “What we have done with the two panels is bring the best of the two together. The feedback I am receiving is that it has been very successful: We have received very attractive rates, but also because we are using specialist law firms in those areas, we are receiving superior service.” The general panel focuses on commoditised legal work such as claims, property leasing, securities enforcement and other work along those lines. Many of the firms on the new panel provide their services on a fixed-fee basis, says Salter. “25 to 30 percent of our general panel is fixed fee. The other work on the commercial panel tends to be more bespoke; it’s harder for firms to quote a fixed price in relation to that.” In addition to fixed fees Salter would like to see law firms assisting him manage AMP’s legal costs by paying closer attention to their own. “I would like to see the law firms delivering more value to their clients by managing their own middle lines…by adopting more cost efficient ways of doing business,” he states. “I would like to see law firms being more conscious of the needs of their customers when it comes to their charge-out rates; in the last panel tender some law firms wanted to increase rates by 30 percent – in a market which is incredibly tough it seems to be completely out of sync with the market and their clients.” A focus on costs has become of particular importance to Salter, since moving in-house. “Our middle line is just as important as our revenue line,” he says. Although he has only been at AMP for four years, the internal legal team has been tracking external legal expenses for the past 10 years, and now has very reliable data on the cost of outsourcing matters compared to the cost of an in-house legal team. “Economically it’s much better to do work in-house rather than externally,” he adds.
26/06/2012 3:58:43 PM
Meet Westlaw AU Your new partner in legal online research.
w AU Westla
Westlaw AU is the latest evolution in legal online research, delivering better search options, easier navigation and faster results, as well as everything else you’ve come to rely on from Thomson Reuters’ legal online service: • expert analysis and opinion from trusted authors • current and accurate content updated daily • superior customer support and training. A partner you can trust.
Find out more today! Call 1300 133 041 Visit thomsonreuters.com.au/westlawAU
Westlaw AU It all just clicks
OzLB_10.4.indd 13
30/04/2012 1:41:05 PM
60
TEChNOLOgY
AUSTrAlASIAn leGAl BUSIneSS ISSuE 10.6
THe CHAnGInG wOrlD Of DATA CenTreS dATA cEnTrE dEvElOPErS ArE BEIng FOrcEd TO InnOvATE And AdAPT TrAdITIOnAl BuSInESS MOdElS TO MEET ThE dEMAndS OF ExPOnEnTIAl dIgITAl grOwTh And IncrEASEd STOrAgE dEMAndS, AS wEll AS dEvElOPMEnTS In clOud cOMPuTIng And rISIng EnErgy cOSTS, wrITES gIlBErT + TOBIn PArTnEr BeRNadette jeW
I
n today’s global cloud environment, one might assume that a single data centre would suffice for an organisation’s worldwide operations. While this is technically possible, local regulations are inevitably forcing global organisations to establish a presence in multiple locations; local data storage is required to manage the risks arising in relation to the US Patriot Act, privacy and other regulatory obligations in local jurisdictions. Customers need to know exactly where their data is, right down to the server level. In essence, regulatory requirements mean that it is necessary to build managed services in the cloud “in country”. These issues are driving data centre investment in multiple jurisdictions. In the Asia Pacific, data centre demand is heavily outweighing supply. Lead times for data centre construction are estimated to be approximately three years, while digital customers are working with very short decision-making timeframes and demanding minimal lead times (as little as 12 weeks) for the delivery of new or increased capacity.
ALB 1006.indb 60
This increased demand has created opportunities for premium revenues, particularly in comparison to more commoditised revenues derived from the associated network and real estate industries. However, stability remains a key factor in the selection of a particular data centre location – whether in relation to the regulatory, infrastructure, financial or geographical features of the location. Also, risk-adjusted returns are generally considered to be more variable across the Asia Pacific region, with there being a higher risk of “getting it wrong” in comparison with data centre investment in the United States and Europe. cHalleNges iN eNeRgy maNagemeNt Ten years ago, the focus of data centre operators was maximising security. Today, it’s more about energy management, as rising energy prices drive up the cost of capital and data centre “density” becomes an important driver of profitability. These challenges are requiring data centre operators to become specialists in energy management. Operators are driving innovation in energy conservation through the use of renewable fuels, cooling systems, distributed energy generation and Datacentre Automation Software and Hardware (DASH) to reduce electricity consumption and CO2 emissions. tHe imPact Of clOud cOmPutiNg The vast majority of data centres across the Asia Pacific region remain in-house. However, data centres are fast becoming an enabler for cloud computing developments – creating the potential
26/06/2012 3:58:46 PM
Australasian Legal Business ISSUE 10.6
to dis-intermediate traditional IT solutions and provide a platform for multi-tenant infrastructure. These cloud developments are, in turn, forcing data centre operators to change their own service offerings – and to provide more elastic “pay as you grow” packages that are more closely aligned to the scalable cloud service offerings delivered via shared resources on a pay per use basis. There is little doubt that cloud developments will drive greater contestability in data centre services – since cloud customers will no longer be entrenched in a particular data centre for 10 or 20 years. If a data centre is not competitive and efficient, it will be relatively easy to move the cloud to an alternative data centre. Specialised players We are seeing an exponential increase in the scope and scale of data centres. The trend is moving from 1-3 MW facilities to 50-100 MW facilities. This means that in many cases it is no longer viable for a single entity to provide all of the data centre elements – or to assume all of the risks – on an end-to-end basis. As a result, specialised players have emerged, dedicated to either real estate or data centre operations. While there are still some “one stop shops” which provide all aspects of a data centre offering, this is not the predominant trend. We are also seeing the emergence of property funds which aggregate specialised real estate holdings for data centres – offering “white cold space” on a long-term basis. These funds do nothing more than lease the property to data centre operators for
ALB 1006.indb 61
technology
61
10 to 20 years, without offering operational services. Alliances are commonly being developed with telecommunications providers and other data centre operators for the separate delivery of operational services, via a separate contract with the data centre customer. Conclusion The future of data centres is inextricably linked with cloud computing developments and the seemingly insatiable demand for digital storage. This is pointing to continuing exponential growth across the Asia Pacific region over the next two to three years, focusing in particular on favoured locations such as Sydney, Melbourne, Hong Kong, Singapore and Tokyo. As the data centres become larger, specialised players are emerging in real estate and operational services, and data centre operators are being forced to consider greener energy options. Similarly, traditional long-term, rigid packages are losing favour to service offerings that more closely reflect the scalability and flexibility of service offerings in the cloud.
26/06/2012 3:58:47 PM
62
ALB 1006.indb 62
technology
Australasian Legal Business ISSUE 10.6
26/06/2012 3:58:48 PM
Australasian Legal Business ISSUE 10.6
technology
63
A TOUCH OF CONVENIENCE
While next generation technologies, such as contactless payment systems are making our modern lives easier and more efficient, they also pose significant legal implications, writes Gilbert + Tobin partner Ken Saurajen.
ALB 1006.indb 63
26/06/2012 3:58:49 PM
64
technology
W Ken Saurajen
ALB 1006.indb 64
ith digital goods payments tipped to account for nearly 40 percent of the market by 20151, near field communications technology has received a good deal of attention for its potential to re-invent the physical point of sale experience and appeal to the modern consumer’s desire for convenience, device consolidation and better security. This brings with it a challenge of a different kind and one on which the successful commercialisation of solutions may depend: the development of consistent global standards for near-field technology. From a legal perspective, the standardisation of clear functional and technological requirements for NFC solutions will play a huge role in assisting reliable and efficient contracting in a future mobile payments landscape. A wider take-up of NFC will attract a range of new business arrangements that need to intelligently balance the interests of a range of stakeholders. Those stakeholders will include hardware (handset and chip) manufacturers, applications developers, technology integrators, telecommunications companies, banks, payment schemes, individual consumers and merchants. While everybody may have a simple, intuitive sense of what near-field technology is and what it should achieve, recording the finer detail of those solutions in legal terms is much more complex. This is because near-field solutions encompass a wide range of unique technology aspects and specific demands: for instance, integration of the NFC chip with a potentially vast array of manufactured proprietary handsets with different firmware and operating
Australasian Legal Business ISSUE 10.6
systems; interoperation between the chip with handset; further interoperation between both chip and handset with various point of sale devices; expansion of SIM card and device capability to support different applications and store information for multiple banking accounts; and, of course, robust information security and authentication features to protect the sensitive personal data that will be contained on the mobile device. These functions comprise a broader technology supply chain extending across design, build, implementation and support. However, because each of these functions in the transaction chain can potentially be provided and supported by different stakeholders, legal accountability can become blurred. To avoid this, the interaction and handover between (and legal responsibility for) each element needs to be very clearly expressed.
While everybody may have a simple, intuitive sense of what near-field technology is and what it should achieve, recording the finer detail of those solutions in legal terms is much more complex. All parts of this supply chain are important for a robustly contracted solution, from both a supplier and customer perspective. Obviously, there is also the need to appropriately manage legal risk and liability against the performance of each of those supply chain elements as well as the end-to-end solution. However, while lawyers have a tendency to focus on traditional contract risks, high-end contracting for new and emerging technology solutions, such as NFC, requires a more sophisticated approach. This is because many contract risks arise from non-legal matters such as proper descriptions of scope, performance parameters and desired product outcomes. A clear standard or statement of technology requirements will go a long way to minimising the risk and the possibility of disputes.Contracting for NFC solutions is not all about managing risk. There is also the opportunity to creatively structure
26/06/2012 3:58:51 PM
Australasian Legal Business ISSUE 10.6
Smarter lawyers will seek to contract for agreement outcomes in functional as well as pure technology terms.
ALB 1006.indb 65
technology
65
relationships in a way that positively aligns the interests of various NFC stakeholders and offers strong incentives for good behaviour, thereby increasing the chances of a near-field project’s success. Future regulatory impacts will also be important. While NFC technology is not subject to specific regulation at present, it makes sense to design solutions in ways that are conscious of existing and likely future regulatory requirements. To the extent that the industry is proactive and capable of reaching consensus, there arrangements could be self-regulatory, or operate with a minimum degree of external regulatory oversight.On one view, a universally positive technology result is in all stakeholders’ interests, because consumers may not immediately discriminate between different proprietary NFC solutions. In the early stages of technology adoption, it is possible that consumers’ initial experiences may influence their opinions about the technology more broadly. This is particularly the case with near-field technology, the performance quality and useability of which are directly exposed to the consumer and reflected in quick enduser perceptions. Documenting the requirements for NFC solutions will require some care and precision. Smarter lawyers will seek to contract for agreement outcomes in functional as well as pure technology terms, because (in addition to what the detail of particular technology specifications might say) ultimately the fundamental test is that the technology delivers a specific transactional experience for the user in a functionally equivalent way. 1. Juniper Research Report, July 2011
26/06/2012 3:58:54 PM
66
technology
Australasian Legal Business ISSUE 10.6
Practice management solution software: the underappreciated underbelly of legal practice Practice management software solutions are a complicated affair for anyone engaged in legal business. Stanley Hong outlines the key players and canvasses market opinion on the subject.
I
n Australia, there are approximately 15 major players offering practice management solution (PMS) software all of whom are vying for the hearts and minds of law firms across the country. Of the major players, four stand out: LexisNexis and Leap Legal Software are both competing with one another for supremacy in the smaller to midsized practices, while Thomson Reuters (owner of this magazine) and Aderant, are both fighting tooth and nail in trying to capture the attention of the top-tier firms. Furthermore, thrown into the mix are a number of independent players and overseas vendors which have begun to enter into the country. The result is an extremely crowded marketplace all jostling to become the preeminent software provider in a multimillion dollar industry.
Practice management solution software: More than just an accounting tool Practice management solution software, much like the operating system on a personal computer, can often be underutilised and many people working within law firms may not have a full appreciation of what the technology can offer – with the problem being especially acute in small to mid-sized firms, and with sole practitioners. One potential problem may lie in the fact that, like other forms of technology, PMS software has to constantly evolve in order to meet the needs of the
ALB 1006.indb 66
client. Looking at Aderant’s technology for example, we can see that the software has moved away from the core functionality of the traditional time and billing services, and is now more of enterprise solution, with the software able to offer a larger array of tools. These tools include: matter planning and scheduling, business intelligence workflow and customer relationship management (CRM) as Bruce Heaney, Sales Director of the Asia-Pacific Region for Aderant noted via email. However, with the addition of more features, the software can also potentially seem more daunting for the uninitiated. A 2011 study, conducted by Kate Hart of KD Consulting in conjunction with the State Law Society, reviewed the area in relation to Queensland legal practitioners and found that a significant number of lawyers did not fully grasp the whole scope of the technology. According to Hart the lawyers were essentially using the software as an, “accounting program, without appreciating that the solution had a number of other tools that were already part of the software, [and] not realising that they did not need to make any additional purchases to manage their practice”. The study found that the biggest mistake made by many legal practitioners was not being able to recognise the true power of the software in assisting with workflow, CRM and the document automation process. As a result important matters such as ensuring that compliance issues were being adhered to, or the ability to seamlessly bring up any essential information when dealing with a client which forms part of CRM, as well as granting more senior lawyers the capability to easily monitor the work of their more junior counterparts, meant that many practices were not as efficient and productive as the PMS software would allow them to be. This could potentially impact their bottom line, says Hart. The key practice management solution providers When discussion revolves around the PMS software offerings in relation to the top-tier law firms, there are only essentially two entities that control the top end of the legal market: Aderant, with their ‘Aderant Expert’ offering and Thomson Reuters, with its suite
26/06/2012 3:58:54 PM
Take advantage of our ‘ALB’ when you place your order
DX Express is a new, quick and reliable service for DX Members any street address
flexible product options
Urgent documents are delivered to any street address next business day to most locations in Australia.
There are a range of options to choose from, starting at DLX envelopes to 5kg satchels.
Real-time delivery confirmation is easy to access on our website.
simple to lodge
price competitive
customer service support
Simply lodge your DX Express at any DX Exchange or organise a regular pickup to make it easier for you.
DX Express is price competitive compared to other document delivery services.
Enjoy the assistance of your account manager and our professional customer service team.
Call 13 88 44
dxmail.com.au
68
technology of integrated legal business management solutions from their ‘Elite’ legal software division. Looking beyond the top-tier, the competition in regards to practice management solution software is especially fierce in the mid-tier law firm market with numerous vendors battling hard to gain the upper hand. In recognition that there is a market ripe for the picking, Thomson Reuters has made a number of acquisitions in the past year, acquiring Mattersphere, which is a full matter and document management solution that now sits alongside the Elite 3E solution and UK midmarket leader, Pilgrim Systems and their LawSoft solution. According to Lucas Garlepp, Director of Sales Asia Pacific for Elite these acquisitions further broaden Elite’s suite of products and the Lawsoft acquisition in particular targets a segment of the market that has been underserved in recent years. Thomson Reuters’ recent aggressive acquisition of a number of business platforms has increased the range of products that is now available to clients and allows Elite to offer their solutions to a broader spectrum of law firms and other professional services organisations. On the back of their recent success in the region, Elite can now count 15 of the top 30 ALB law firms amongst its clientele, whilst in the past 18 months alone, four of Aderant’s top clients have moved to Elite (among them Ashurst Australia and King Wood Mallesons) which is a far cry from where Elite was sitting eight years ago when they had zero clients. Meanwhile, we’d be remiss to ignore the other major PMS software provider, Aderant, whose Aderant Expert range of software is used by Clayton Utz, Allens Arthurs Robinson, Freehills and Piper Alderman, Norton Rose in Australia, while in New Zealand, Chapman Tripp, Russell McVeagh, Simpson Grierson and Duncan Cotterill are some of the other prominent firms who utilise Aderant Expert, signifying how fierce and lucrative the competition is amongst Aderant and Thomson Reuters. Aderant vs Elite: A two horse race In many ways, the battle for supremacy between Aderant and Elite for the hearts and minds of the top-tier law firms is akin to a two horse race in the Melbourne Cup because both software solutions are architecturally similar, a fact Ben Swindale, Chief Information Officer for King & Wood
ALB 1006.indb 68
Australasian Legal Business ISSUE 10.6
Mallesons, noted when the firm decided to embark on a recent review of which software solution the firm should implement. So with Aderant and Thomson Reuters essentially controlling the top end of the PMS software market, the question that should be asked is: how are the two vendors separated from each other? In one corner, we have one of the leading sources of intelligent information in Thomson Reuters, while in the other, sits the largest independent software company in the world that is servicing the legal vertical in Aderant. Starting with Ashurst Australia and King Wood Mallesons, the primary considerations when both firms recently chose Elite 3E as their software of choice boiled down to the ability for both firms to customise the software and the ease of use. Helen McKenzie, Deputy Managing Partner of Ashurst Australia (formerly Blake Dawson) acknowledged that although the Aderant Expert solution was excellent in its own right; “[T] he main requirement was the system had to be user friendly and had to have the capacity to be customised to what the firm wanted, rather than an off the shelf solution. We wanted a high level ability to modify the system and to tailor the software to the needs of the practice.” The adaptability of the software was a recurring theme and Tony Brennan, Chief Operating Officer and Chief Financial Officer for Minter Ellison Australia, whose firm also recently decided to adopt Elite 3E, said that after an extensive review process the ability of Elite to “manage multi-jurisdictional requirements, and the ability to leverage new technology in the future” was a deciding factor. Brennan’s sentiment was echoed by Swindale, who added that the roadmap, as well as the “multi-currency and multi-language support” were all important aspects when the firm decided to go with Elite 3E as opposed to Aderant. The client is king (or queen) when it comes to practice management solutions As the top law firms increasingly look to expand overseas taking in a large amount of new clients in the process, the emphasis will be increasingly focused on CRM and workflow, and the technology has to not only be adept in dealing with mission critical occurrences, but also needs to be “accurate, reliable and robust” as Neil Shoebridge of Clayton Utz pointed out. Shoebridge further noted that the Aderant Expert software allowed the firm to customise their reports to key clients that fit in with their reporting needs; “[B]eing the firm the size we are, we’re involved with a number of legal panels and a number of our customers demand information either in reports or in their bills that must adhere with the type of format or data that fits in with our client’s needs.” Shoebridge also added, “because of the openness of the Aderant Expert system, we’ve been able to customise it in such a way where we can include add-on features for our clients on the various data elements that they may request.” McKenzie similarly emphasised the importance of any PMS software to meet the needs and expectations of Ashurst’s clients, stating that: “Practice management software is about delivering a quality service to your clients. The interaction that you have with your clients, such as bills, is an important part of the overall service, and it’s important that a practice management system is able to deliver the information to clients of the value of what the firm has done, the cost, and where the real value is, along with the quality of service that has been delivered. Ultimately, we are in a service industry and in particular for the top-tier firms, it’s increasingly about value for the client.”
26/06/2012 3:58:54 PM
Cape Town
London
New York
Perth
Sydney
Toronto
ssoci
8 PM
exigent.indd 1
1/06/2012 4:26:09 PM
o t s s e c c a d e t Gran . s t n e m u c o d subpoenaed . e n li d a e d t h ig T e h t o t t e g t ’ n Ca ? e im t in s t r Cou r e d r O n I w La ! n o i t u l o s is your oenaed to copying subp When it comes si is ons Courts, Comm documents at w In Order have or Tribunals, La perience and considerable ex s of individual need understand the ions. specific jurisdict various nship with the Our close relatio als un ib Tr d issions an Courts, Comm te ra cu res fast, ac nationally ensu pying l your court co al processing of uct od pr al er the fin needs. We deliv d an d racy, spee to you with accu and e tiv uc most prod reliability in the ay. cost-effective w ks urt copying cler Law In Order co sions is Courts, Comm attend all CBD naed oe access the subp and Tribunals, co ith urt accordance w documents in ity product d return a qual procedures an e. ested timefram within your requ e or ur valuable tim Why waste yo t Law In Le ? rt ou nding C te at s ce ur so re ur life easier. ience make yo er p ex ’s er rd O better than s court copying ow kn e on o N Law In Order!
port Manager , Litigation Sup an m oz R t er ob R
Sydney
Brisbane
Melbourne
(02) 9223 9200
(07) 3220 1655
(03) 9691 7555
www.lawinorder.com.au
Perth (08) 9466 0155
sales@lawinorder.com.au