ISSUE 7.9
IPOs Has the drought finally broken?
Insurance law The claim game continues
Cornerstone investments Will the trend persist? Rebecca Holbrook, Fisher & Paykel Appliances (FPA)
Australasia’s 20 most inspirational in-house lawyers
n DEALS ROUNDUP n LATERAL MOVES n UK, US REPORTS n news analysis n DEALS DATA
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EDITORIAL >>
ISSUE 7.9
IPOs Has the drought finally broken?
Insurance law The claim game continues
Cornerstone investments Will the trend persist? Rebecca Holbrook, Fisher & Paykel Appliances (FPA)
At the end of the day, another cliché
T
he prognosis is still unclear, but there seems to be a consensus that the present economic downturn will not turn out now as severely as pundits had initially predicted. While there are suggestions that the legal sector may lag behind any recovery that takes place, it must feel like a relief for the beleaguered profession to have some cause for cheer – no matter how slight it may seem. With this renewed optimism in mind, let us record for posterity the things which have made the global financial crisis special for all of us. On this note we speak not of declining firm revenues, lawyer redundancies or career dislocation. No, if this economic downturn has its trademark, it is a lexical one. We are speaking of the rising tide of inevitable and inexecrable GFC-related clichés. Where would the legal industry be if we did not have commentators to opine wisely on “economic gloom and doom”? And the world would surely be a poorer place without consultants to tell us how “crisis brings opportunity”. Will life be the same without the brisk executives telling us how they have “defied the GFC”? Alternatively, will our journalists still keep us abreast of the fabled “boom in the bust”? In any event, let us rejoice – for having weathered the storm, there now seems to be a light at the end of the tunnel. Farewell, GFC clichés, until next time. The umbrella can be put away and plans can be made for the sunny days ahead. And never forget – at the end of the day, every cloud brings with it a silver lining, green shoots, ...
Australasia’s 20 most inspirational in-house lawyers
DEALS ROUNDUP LATERAL MOVES UK, US REPORTS NEWS ANALYSIS DEALS DATA
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IN THE FIRST PERSON “Communication is the key – and that’s a two way street. If our instructions aren’t clear, we are happy to be told that” Peter Horton, general counsel and company secretary, Woolworths (pg65)
“It may sound hackneyed, but firms do need to have a deep understanding of the client’s business” In-house general counsel Carl Rowling, Auckland City Council (pg33)
“In mature insurance practices like ours and especially in professional indemnity, claims have a long tail so the work is not affected so much by cycles” John Moore, Thynne & MaCartney (pg48)
If this economic downturn has a trademark, it is a lexical one – the rising tide of inevitable and inexecrable GFC-related clichés
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Australasian Legal Business ISSUE 7.9
contents >>
contents
ALB issue 7.9
12 28
COVER STORY 28 ALB In-house 20 Who made the list for ALB’s showcase of twenty inspirational in-house lawyers in Australia and New Zealand?
ANALYSIS 12 Cornerstone investments Where companies invest for a majority stake without taking majority rule, is this a passing fad for investors or here to stay? 3
Capital raisings Lawyers are bracing for more activity as business conditions improve
15 IPOs The recent Carsales.com float has lawyers looking out for the big next wave of public offerings once the market recovers
FEATURES 42 ALB Guide: Building and Construction law The best lawyers and firms in this practice area Australia-wide and in New Zealand are revealed 48 Insurance law We profile the enigmatic art of predicting claims and work volumes for specialist firms
54 Document management How firms should save time and money on their document management processes once they understand the benefits and requirements 60 CPD Online professional development is the way of the future, notwithstanding traditional preferences for face-to-face learning models 64 ALB-LexisNexis Managing Partner series: Michael Bradley, Marque Lawyers Here is a law firm and its managing partner offering a sense of value – along with a wry sense of humour too
REGULARS 6
64
54
DEALS
12 NEWS • Mallesons initiates volunteer redundancies • Mid-tier taking work from top-tier firms • Gloves off in Western Australia hiring frenzy
• Resources appetite profitable for Aussie lawyers • Senate committee improves RMA Bill • Goodman deal highlights foreign interest in Australian property • Amcor raising signals change • Law firms win big in a A$3.5bn desalination project 24 APPOINTMENTS
COLUMNS 19 UK Report 21 US Report 70 Capital Markets Deals Update 71 M&A Deals Data
COMMENTARY 17 Buddle Findlay
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australasian legal business ISSUE 7.9
NEWS | deals >>
deals in brief | M&A | ►► Yanzhou Coal Mining-Felix Resources merger A$3.4bn Firm: Allens Arthur Robinson Lead lawyer: Andrew Knox Client: Felix Resources Firm: Baker & McKenzie Client: Yanzhou Coal Mining
Andrew Knox Allens Arthur Robinson
Firm: Corrs Chambers Westgarth Lead lawyer: Andrew Lumsden Client: Yanzhou Coal Mining Firm: King & Wood Client: Yanzhou Coal Mining • Largest-ever Chinese deal seen in the Australian coal sector • China’s Yanzhou Coal Mining to merge/take over Felix Resources, via scheme of arrangement • Yanzhou Coal to finance acquisition with A$1.8bn of balance sheet cash and bank debt • Deal will give Yanzhou Coal strong foothold in Australia
| M&A | ►► Goodman capital raising A$1.8bn Firm: Allens Arthur Robinson Lead lawyer: Stuart McCulloch Client: Goodman Group Role: Adviser to Issuer Firm: Clayton Utz Lead lawyer: Fiona Smedley Brendan Groves Freehills Client: Macquarie Capital Advisers and RBS Role: Adviser to Underwriter Firm: Freehills Lead lawyer: Fiona Smedley Client: China Investment Corporation Role: Adviser to investor
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• Funds to pay for purchase of Rio Tinto’s Alcan packaging unit • China Investment Corporation took up A$500m in exchangeable preference securities
Stuart McCulloch Allens Arthur Robinson
• CIC invested A$210m in Goodman in June Brendan Groves Clayton Utz
“CIC’s cornerstone investment in the Goodman Group is an extremely valuable component of the group’s wider capital raising” Fiona Smedley, Freehills
| Banking | ►► Rural Bank securitisation A$520m Firm: Blake Dawson Lead lawyer: Bruce Whittaker Client: Rural Bank Firm: Minter Ellison Lead lawyer: John Elias Client: Perpetual • Deal consisted of A$520m securitisation for agribusiness loans pool
John Elias Minter Ellison
• First new asset class to be securitised in a public transaction in Australia since the start of the global financial crisis • Thought to be the first publicly-rated term transaction of its type in the world
• Included a fullydocumented, fully-priced committed standby servicing structure, which was customdesigned to Bruce Whittaker accommodate Blake Dawson the unusual characteristics of the underlying asset pool
“Perhaps the most unique aspects of the transaction were the credit and liquidity mechanisms that needed to be developed to accommodate the dynamic come-and-go nature of the asset pool, so that the transaction cashflows were robust and predictable enough to sustain the AAA rating” Bruce Whittaker, Blake Dawson
| M&A | ►► Randgold ResourcesMoto Goldmines buyout A$654m
Firm: Ashurst Lead lawyers: Michael Robbins, Nick Williamson Client: Randgold Resources Firm: Shearman & Sterling Lead lawyers: Laurence Levy, Richard Price Client: AngloGold Ashanti • Randgold Resources to takeup outstanding shares of Moto Goldmines • AngloGold Ashanti and Randgold Resources in joint bid competing with Red Back Mining to acquire Moto’s interests in Democratic Republic of Congo gold deposits
| Banking | ►► NAB capital raising A$2.2bn Firm: Allens Arthur Robinson Lead lawyer: Rob Pick Client: Deutsche Bank Firm: Mallesons Stephen Jaques Lead lawyers: Craig Semple, Diana Nicholson Client: National Australia Bank
Craig Semple Allens Arthur Robinson
• NAB charges for bad and doubtful debts rose to A$1.06bn for the quarter ended June 30 • Shares priced at A$21.50 – an 8.8% discount Australasian Legal Business ISSUE 7.9
NEWS | deals >>
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NEWS | deals >>
►► Your month at a glance Firm
Jurisdiction
Deal name
Allens Arthur Robinson
Australia
ALE Property Group capital raising
Australia
Amcor capital raising
Australia
Bendigo and Adelaide Bank capital raising
Australia, China
Goodman Group capital raising
Australia
Healthscope capital raising
Australia
NAB capital raising
2,200 equity
Australia
Victorian desalination plant
3,500 construction
Australia
Virgin capital raising
Australia, China
Yanzhou Coal Mining-Felix Resources merger
3,400 resources, M&A
Baker & McKenzie
Australia, China
Yanzhou Coal Mining-Felix Resources merger
3,400 resources, M&A
Blake Dawson
Australia, Hong Kong, Indonesia, the Philippines, Singapore, Taiwan and Vietnam
ANZ acquisition of RBS assets
687 banking
Australia
Boart Longyear capital raising
756 equity
Australia
Rural Bank securitisation
Australia
Goodman Group capital raising
Australia
Grange Resources capital raising
Australia
M1 refinancing
515 construction
Australia
M2 refinancing
465 construction
Clayton Utz
A$m
Practice
• Brokers were bidding A$22.50 but the price was lowered to increase demand
105 equity 1,600 equity 300 equity 1,800 equity 140 equity
261 equity
520 banking 1,800 equity 167 equity
Australia
Victorian desalination plant
3,500 construction
Corrs Chambers Westgarth
Australia
Victorian desalination plant
3,500 construction
Australia, China
Yanzhou Coal Mining-Felix Resources merger
3,400 resources, M&A
Freehills
Australia
Amcor capital raising
1,600 equity
Australia
Australand capital raising
536 equity
Australia
Challenger capital raising
130 equity
Australia
Goodman Group capital raising
Australia
NAB acquisition of Challenger mortgage business
Australia
M1 refinancing
515 construction
Australia
M2 refinancing
465 construction
Australia
Ten Network capital raising
155 equity
Australia
Virgin capital raising
261 equity
Gilbert + Tobin
Australia
Photon Group capital raising
115 equity
Mallesons Stephen Jaques
Australia
Australand capital raising
536 equity
Australia
Bendigo and Adelaide Bank capital raising
300 equity
Australia
Challenger capital raising
130 equity
Australia
Microsoft and Yahoo alliance
N/A media
Australia
NAB acquisition of Challenger mortgage business
385 banking
Australia
NAB alliance with Goldman Sachs JBWere
N/A banking, finance
Australia
NAB capital raising
Australia
Photon Group capital raising
| Resources | ►► Amcor Capital Raising A$1.6bn Firm: Allens Arthur Robinson Lead lawyers: Robert Pick, Cameron Price, Phillip Cornwell Client Amcor Firm: Freehills Phillip Cornwell Lead lawyer: Tony Allens Arthur Robinson Sparks Client: Commonwealth Securities, Deutsche Bank, JP Morgan, Merrill Lynch and UBS • Capital raising to help fund the A$3.1bn purchase of Rio Tinto’s Alcan unit • Raising took place by way of a nonrenounceable, pro-rata entitlement offer to existing institutional and retail security holders at A$4.30 per security,
1,800 equity 385 banking
2,200 equity 115 equity
Does your firm’s deal information appear in this table? Please contact
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alb@keymedia.com.au
61 2 8437 4700
Australasian Legal Business ISSUE 7.9
NEWS | deals >>
| Banking/M&A | ►► ANZ acquisition of RBS assets A$687m Firm: Blake Dawson Lead lawyers: Tiffany Barton, David Williamson, John Sartori, Peter Stirling Client: ANZ Firm: Linklaters Client: RBS
Lead lawyer: Brian Murphy Client: Australand Property Group • Pre-existing support of cornerstone investors allowed this low-doc, accelerated offer to be executed in just one week • Capital raising to shore up balance sheet after announcing a A$268.8m loss • Major shareholder CapitaLand agreed to take-up full entitlement as part of the offer
Tiffany Barton Blake Dawson
• Deal involves the sale of selected RBS Group businesses in Hong Kong, Indonesia, the Philippines, Singapore, Taiwan and Vietnam to ANZ Bank • Culmination of more than six months of work over a number of different transaction phases • Completion is expected to occur progressively from late 2009, subject to regulatory approvals in each market
“We have started to see a change in the rationale for capital raisings in the recent issues that we have been involved in, and we had expected the emergence of raisings to fund M&A activity specifically” Tony Sparks,
| equity | ►► Virgin Blue capital raising A$261m Firm: Allens Arthur Robinson Lead lawyers: Stuart McCulloch, Vijay Cugati Client: Virgin Blue
Vijay Cugati Allens Arthur Robinson
Firm: Freehills Lead lawyer: Tony Sparks Client:JP Morgan and Credit Suisse • Largest shareholder, Virgin Group, took up full entitlement and 35% of the institutional placement, as well as sub-underwriting 20% of the retail component • Raising to be used to provide flexibility for future growth opportunities • Both institutional components were over-subscribed
freehills
| equity | | equity | ►► Australand Capital Raising A$536m Firm: Freehills Lead lawyer: Tony Sparks Client: JP Morgan and UBS Firm: Mallesons Stephen Jacques
►► Channel Ten capital raising A$155m Firm: Freehills Lead lawyer: Fiona Gardiner-Hill Client: Ten Network Group Holdings
Brian Murphy Mallesons Stephen Jacques
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John Hamer Mallesons Stephen Jaques
Firm: Mallesons Stephen Jaques Lead lawyer:John Hamer Client: Macquarie Capital Group
• Channel Ten will use all the funds to pay down its A$600m of debt
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NEWS | deals >>
• Shares issued at A$1.15 each – more than a 50% markup on the company’s unsuccessful capital raising attempt in Februa
| BANKING | ►► Bendigo and Adelaide Bank Capital Raising A$300m Firm: Allens Arthur Robinson Lead lawyers: Robert Pick, Jon Webster Client: Bendigo and Adelaide Bank
• Provides funds to fuel organic growth until the bank can generate capital internally next year
| Banking/M&A | ►► NAB acquisition of Challenger mortgage business A$385m Firm: Mallesons Stephen Jaques Lead lawyers: Tim Bednall Client: Challenger
Jon Webster Allens Arthur Robinson
Firm: Mallesons Stephen Jaques Lead lawyer: Jonathan Hamer Clients: JP Morgan Australia and Macquarie Capital Advisers
• Offer was made under a prospectus, going against the current market trend of conducting fundraising without one
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• Despite the decision to use a prospectus, the deal was done in a very compressed timetable
Firm: Freehills Lead lawyers: Mark Crean Client: NAB
• The deal also includes a portfolio of residential mortgages and a 17.5% stake in Homeloans Ltd Tim Bednall • NAB has the Mallesons potential to Stephen Jaques increase this stake to 41% subject to Homeloans shareholder approval
| Finance | ►► Photon Group capital raising A$115m Mark Crean Freehills
• NAB is acquiring the mortgage management business of Challenger, including its PLAN, Choice and FAST mortgage aggregator businesses
Firm: Gilbert + Tobin Lead lawyers: Philip Breden, Janine Ryan Client: Photon Group Firm: Mallesons Stephen Jaques Lead lawyer: David Eliakim Client: Morgan Stanley
• Capital raising will be used to reduce debt and ensure the marketing company can fund future earnouts from its existing facilities
David Eliakim Mallesons Stephen Jaques
• Gilbert + Tobin have advised Photon Group since its inception in 2000
“One of the key elements of the capital raising was securing commitments from the major institutional investors upfront...” David Eliakim, Mallesons Stephen Jaques
Australasian Legal Business ISSUE 7.9
NEWS | deals >>
| Banking/M&A |
| Construction |
►► NAB alliance with Goldman Sachs JBWere
►► M1 refinancing A$561m
Firm: Mallesons Stephen Jaques Lead lawyers: Craig Semple, Diana Nicholson and Jonathan Hamer Client: NAB
Firm: Allens Arthur Robinson Lead lawyer: Simon Lynch Client: Lenders
Firm: Minter Ellison Lead lawyers: Jeremy Blackshaw, Bart Oude-Vrielink, Ben Liu, Oliver Barrett, Cathy Quinn, Lloyd Kavanagh Client: Goldman Sachs JBWere • The strategic alliance will see NAB acquire 80% of GSJBW’s private wealth management business in Australia and New Zealand • New business will be branded JBWere
Firm: Freehills Lead lawyer: Brendan Quinn Client: Transurban
• Allens Arthur Robinson’s Melbourne team acted for the new lenders, while its Sydney team advised the existing lenders
| Construction | ►► M2 Refinancing A$508m
Brendan Quinn
• ANZ, Freehills Commonwealth Bank of Australia, Westpac, Calyon, Mizuho and The Bank of Tokyo Mitsubishi are the new lenders
Firm: Freehills Lead lawyer: Brendan Quinn Client: Transurban • Commonwealth Bank of Australia, Westpac, NAB, Calyon and The Royal Bank of Scotland were lenders for the deal • Allens Arthur Robinson’s Melbourne team acted for the new lenders while the firm’s Sydney team acted for the old lenders
Firm: Allens Arthur Robinson Lead lawyer: Adrian Chek, Martin Fry, Simon Lynch Client: Lenders Firm: Clayton Utz Lead lawyer: Stuart Cosgriff Client: RTA
Correction – ALB guide Employment Law 2009 In last month’s ALB Practice Area Guide, Buddle Findlay was mistakenly omitted from the list of leading firms. ALB acknowledges that, based on the client research, Buddle Findlay should have been a leading firm and national chairman Peter Chemis should have been included as a leading lawyer in this field.
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NEWS | analysis >>
Analysis >>
C
Philippa Stone, Freehills
Cornerstone investments:
will the trend continue?
Acquiring a significant – but not majority – stake in a company, known as cornerstone investment, is providing a solid foundation for those organisations who are looking to raise capital ►► recent examples of cornerstone investments and underwritings – 2008/09 Month
Companies
June/August 09
China Investment Corporation (CIC) – Goodman Group
Total value raised* (A$) $485m, $1,800m
July 09
Warburg Pincus – Transpacific Industries Group
$800m
Clayton Utz, Freehills, Mallesons
July 09
Virgin Group – Virgin Blue
$230m
Allens, Freehills, Mallesons
June 09
Mulpha – FKP Property
$324m
Freehills, Clayton Utz
May 09
Haier Group – Fisher & Paykel
$149m
Bell Gully, Clayton Utz, Freehills, Russell McVeagh, SimpsonGrierson
March 09
Seven – Prime Media
$100m
Blake Dawson, Freehills, Mallesons
February 09
Kirch Group – Abacus Property
$187m
Freehills, Blake Dawson
December 08
GSJBW Private Equity – AJ Lucas
October 08
GIC – GPT
* total amount raised by each company in their respective capital raising
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$45m $1,600m
Firms Allens, Clayton Utz, Freehills
Freehills, Mallesons Freehills, Allens
hina Investment Corporation’s investment in the Goodman Group and Warburg Pincus’ investment in Transpacific Industries Group are both recent examples of a type of financial transaction which we could be seeing more often. Cornerstone investments, or the acquisition of a significant but nonmajority stake of a listed company as part of the company’s broader capital raising, have been increasing in prevalence. This trend is likely to continue for the foreseeable future, according to Freehills Sydney partner, Philippa Stone. “Cornerstone investments add initial momentum to a capital raising,” she said. “A cornerstoned capital raising may be attractive to a listed company, where alternative balance sheet repair might require asset sales. It allows the retention of assets and businesses that may be undervalued in difficult economic conditions, and can introduce a significant supportive shareholder.” A cornerstone investment can also enable underwriting of an offer which might not otherwise be able to be fully underwritten. James Philips, senior corporate partner with Minter Ellison, said that cornerstones are sometimes used by Chinese investors in Australian mid-cap resources companies. “These transactions are simpler to execute and also to exit than a straight acquisition,” he said. The absence of the requirement for shareholder approval, or to lodge a formal takeover bid in certain circumstances (for example, a stake of less than 20%), is likely to be a key incentive. However, it is not clear whether there will be a rush towards this type of investment. “We have more [cornerstones] in the pipeline,” said Philips, “however, it is too early to say whether they will increase as an overall proportion of transactions.” The cornerstone investment structure has also been used in New Zealand, where the iconic – but troubled – Fisher & Paykel managed to manoeuvre its way out of difficulty earlier this year, with the placement of 20% of the group’s share capital to the Chinabased Haier Group Corporation. Australasian Legal Business ISSUE 7.9
NEWS | analysis >>
This was followed by a fully underwritten capital raising. For the investing party, the clear advantage is the ability to invest at a discount and to avoid paying the premiums that an on-market bid might require. The lack of a controlling stake may be a deterrent for some investors. “Not everyone is attracted to non-controlling stakes and some private equity funds may require a controlling stake to proceed,” said Sydney Freehills partner Mark Crean, who acted for Warburg Pincus on its investment in Transpacific Industries. “However, there are other investors who are looking to have some involvement with the [target] company and are not looking for control.” Cornerstone investments are the result of a need for companies to deleverage. With a number of prominent companies having already shored up their balance sheets, will the interest in cornerstone investments continue? Stone said that she has not observed any drop in interest. Freehills has at least two more cornerstone investments in the pipeline. “There are still companies that need to recapitalise and in an environment where it is difficult to get traditional underwriting for a transaction, some companies will need to find an investor with a business focus rather than a securities focus,” she said. ALB
“In an environment where it is difficult to get traditional underwriting for a transaction, some companies will need to find an investor with a business focus rather than a securities focus” philippa stone, freehills
Analysis >>
Busy year ahead for capital raisings Lawyers that helped arrange the raising of a record A$60bn of equity on Australia’s capital markets in the 2009 financial year should not expect a rest any time soon. This year promises more of the same
A
ustralian companies found it relatively easy to raise capital in the past year as they looked to shore up their balance sheets and pay down heavy debt burdens built up during the heady years of the pre-GFC boom. While analysts are not expecting this financial year to break last year’s record, a total capital raisings figure around A$50bn would not be surprising. “In terms of equity raisings for the upcoming year, my opinion is that it will still be relatively elevated,” said Morningstar Australasia’s head of equity research, Peter Warnes. “You’re going to probably see some more IPO activity as people become a bit braver and come out of the hole. I think A$50bn is not an unrealistic number.” Nonetheless, it will not be hard for more IPO activity to take place this financial year than last, with KPMG research showing that just A$300m was raised via 27 new listings in the year to June – far below the 201 companies that went public in FY08. Despite the impression that there will be a spate of IPOs in the
Elspeth Arnold, Blake Dawson
wake of the Carsales.com.au IPO, many companies are still looking to bolster their balance sheets and raise funds for general business expenses. This is expected to be the bulk of the money raised on the capital markets. “I think that many of the large companies have recapitalised to their satisfaction but there are a number of entities out there who still need to look at their balance sheets,” said Clayton Utz Sydney partner in the capital
►► THE YEAR BEHIND AND THE YEAR AHEAD • Australian capital markets raised record levels of new equity last financial year • The death of private equity has been greatly exaggerated, with committed private equity funding available for investment in Australia estimated at more than A$10bn • Rights issues and private placements underpinned last year’s record level of new equity • Less than 30 IPOs occurred during the year with under A$300 million raised • M&A deal flow in 2009/10 is expected to be driven by the financial services, resources and energy sectors, particularly if commodity prices continue to respond to a recovery in Chinese demand • Companies from China and Japan are expected to lead inbound M&A activity in FY10 • Sectors of particular interest are expected to include resources, consumer markets, and financial services Source: KPMG
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NEWS | analysis >>
Analysis >> management team, Stuart Byrne. He added that the firm is fielding enquiries from companies looking to do just that, as well as an increase in the number of enquiries for capital raisings that are looking to do more than repay debt. However, Byrne said it is too early to call the end of balance sheet repair as a reason for undertaking capital raisings.
“Certainly I think we’re starting to see M&A activity re-emerge” Elspeth arnold, blake dawson Blake Dawson’s Melbourne corporate partner, Elspeth Arnold, said there are still tens of billions of dollars worth of debt that will mature in the second half of the year. She expects companies
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to look at how they are faring before deciding whether to tap into the capital markets to address the debt maturities. “Certainly I think we’re starting to see M&A activity re-emerge but as for non-bank companies looking to raise further equity, I think we’re in a bit of a holding pattern at the moment,” she said, adding that companies will likely be looking to offload non-core assets, which could fuel M&A activity. Tony Sparks, a Sydney partner for Freehills who usually focuses on M&A work, said he had not concentrated on pure M&A deals in the past year – but this could change in the current financial year. Sparks recognised three distinct phases of reasons behind capital raising: distressed raisings, prudent raisings and raisings for M&A activity. The first phase was characterised by companies needing to repair balance sheets at any cost to avoid defaulting on their loan agreements. While this made up the majority of raisings over
the past year, Sparks is confident that companies are now moving on to the second phase where they raise money for security against future events. “The capital raisings we were seeing nine months ago were desperate capital raisings. I think now we’re seeing a move to prudence, where Tony Sparks, Freehills a company doesn’t necessarily have any stress under its current banking ratios and it doesn’t have an immediate payment obligation around the corner,” he said. “They want to raise capital in case market conditions worsen again, or so that they have the cash available to invest in the business if market conditions improve.”
Australasian Legal Business ISSUE 7.9
NEWS | analysis >>
Analysis >> Sparks also cited Virgin Blue’s A$231m raising, where Freehills acted for the underwriters JP Morgan and Credit Suisse, as a company raising money to strengthen its capital position, without a specific purpose in mind. He expects companies to start raising funds with acquisitions more in mind, as they move out of the prudent phase and into the M&A phase. “I think we might start to see (in the next 12 months) people that are raising money for specific acquisitions,” Sparks added. “I think we’ve already seen the move from desperate to prudent and we might see a further development from prudent to acquisition funding.” Analysts said there are acquisition opportunities across all sectors, with the decimation of share prices over the past year providing good buying opportunities for companies looking to expand their presence. Sources expect financial services, resources and energy companies to make the most noise in M&A. ALB
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IPOs back in vogue The A$248m Carsales.com float ended a long drought for initial public offerings in Australia, prompting others to go public
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arsales.com, boasting a 58% market share, received the top end of its pricing when it sold up to A$248m worth of shares to institutional investors at A$3.50 a share. The strong demand for stock has prompted market spectators to expect a number of other companies to follow suit before Christmas, as private companies have been frustrated with the lack of a market for two years. It seems that they are ready to take advantage of the exit option now that pricing and confidence have returned to the capital markets. “Carsales have been looking for the right time to float,” said Clayton Utz partner Brendan Groves, who acted for underwriter Macquarie on the deal. “They made a public promise to have a liquidity event for shareholders ... my understanding is that the time is right now given the general return of confidence.” As Macquarie was prepared to fully underwrite the first significant IPO for two years, Grove said this was a testament to both the quality of the company, and the view that Macquarie must have had about the current market sentiment. “There’s obviously a lot of interest and attention to the fact that this is the first significant IPO in what is expected to be a wave of IPOs. We may not see the wave at its peak this year but certainly going into the first half next year there are a number that are going into the market.”
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NEWS | analysis >>
Exit strategy
Private Equity firm CVC controls less than half of Carsales.com, but will not be selling down any of its shares due to the company’s strong growth prospects. Other private equity firms are likely to view public listings as an attractive exit strategy, according to Groves. “In the current market with M&A probably proving slower for confidence to return, an IPO looks to be the most attractive exit for private equity.” Gilbert + Tobin corporate transactions partner, Adam Laura, said he expects to see a number of other companies try to list in the next few months, with one in particular standing out for market watchers. “I think there are a couple of large IPOs slated – in particular the Myer IPO. That [is] rumoured to be at a market cap approaching A$2bn, so that will be the darling for the year.”
Price is right Brendan Groves, Clayton Utz
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Laura said with Carsales.com’s market capitalisation of around A$800m, people are starting to recognise that the market is responding well as far
as pricing goes. With the ASX a long way off its March lows, pricing is an attractive option for private equity firms. “When you’re talking about multiples on an EBITDA basis of this one, of about 14.5 times, they’re very attractive for private equity houses,” Laura said. “If the pricing is right, the IPO exit is a good avenue for liquidity.” He believed the Carsales.com IPO will act as a test case for many companies waiting in the wings to go public. The challenge lies in maintaining a stable price for the company after going public. Laura says market participants will want to see new listed companies are able to maintain their share prices into the new year. ALB
“There are a couple of large IPOs slated, particularly Myer” adam laura, gilbert
+ tobin
Australasian Legal Business ISSUE 7.9
Firm Profile NEWS | news >>
Buddle Findlay
NZ COMMENTARY
Taxpayers and the tax man – at polar opposites?
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he relationship between New Zealand’s Commissioner of Inland Revenue and corporate taxpayers is undergoing profound change. The Commissioner is faced with tight financial conditions under which he must discharge his revenue-collecting functions. Likewise, taxpayers are under significant pressure as they struggle with the global financial crisis, and may be looking for innovative solutions to cash flow issues and ways to reduce their tax burden – both the compliance costs and the payment of tax itself. Recent developments in case law and tax administration could undermine the relationship between taxpayers and the Inland Revenue Department (IRD).
Binding rulings The binding ruling regime should enable taxpayers to achieve certainty in their tax affairs, but is increasingly viewed as falling short of this goal. The process is developing a reputation for being lengthy and expensive. In addition the Commissioner has recently declined to rule on the application of New Zealand’s general anti-avoidance provision (GAAP) to transactions. The Commissioner considers that he cannot rule on whether the GAAP applies to a particular transaction if other (unrelated but similar) cases concerning the GAAP is simultaneously being litigated before the courts. As taxpayers frequently request a ruling in relation to the GAAP, consequent delays in finalising rulings can be frustrating and difficult for taxpayers to manage.
Disputes resolution In August 2009 IRD responded to a joint submission from the New Zealand Institute of Chartered Accountants and the New Zealand Law Society recommending reforms to the disputes resolution and challenge procedures. The submission urged IRD to improve these processes to prevent taxpayers being “burnt off” by the department, to reduce costs, and to enable an “opt out” of the disputes procedures after a mandatory conference stage. www.legalbusinessonline.com
The submission also recommended that IRD progress disputes faster and suspend mandatory interest if the department causes delays. No substantive change to the disputes procedure has yet resulted.
Protocols between the Solicitor General and the Commissioner In July 2009 the Solicitor General and the Commissioner agreed on a set of protocols confirming their respective roles and guiding principles for their actions. The Solicitor General (supported by the Crown Law Office) is the Crown’s principal professional legal adviser, and is ultimately responsible for the conduct of all litigation in the Commissioner’s name. In practical terms, it appears that the Commissioner will fulfil his statutory obligations by reference to the Solicitor General. However, this arrangement seems to turn the normal solicitor/client relationship on its head. The deference that the Commissioner must show to the Solicitor General’s view may contribute to difficulties that taxpayers encounter in achieving timely settlement of their disputes with IRD. The protocols also provide that where a specific legal issue is central to significant litigation in progress at the time, there may be limits to the extent to which the Commissioner can issue a statement, ruling or report on that issue. The Commissioner must consult with the Crown Law Office on the issue, and if necessary obtain their formal advice.
Litigation relating to anti-avoidance The Commissioner recently had some success in disputes with taxpayers concerning the application of the GAAP. As a result it appears IRD is emboldened in its application of the GAAP. The Supreme Court found for the Commissioner in the “Trinity” forestry case – Ben Nevis Forestry Ventures Ltd v CIR [2009] 2 NZLR 289, and in the GST case – Glenharrow Holdings Ltd v CIR [2008] NZSC 116. Subsequently, the High Court found in favour of the Commissioner in structured finance litigation involving the Bank of New Zealand – BNZ Investments Ltd v CIR
(HC WN CIV2004-485-1059) [2008] NZHC 1644. Although the High Court recently found in favour of two taxpayers in cases concerning the application of the GAAP in Penny v CIR [2009] NZHC 346, and Hooper v CIR (2009) 24 NZTC 23,406 (surgeons who restructured their medical practices into companies owned by family trusts), IRD is appealing this case. The decision is unlikely to limit the situations in which IRD will seek to apply the GAAP.
Tax risk management In an environment in which the Commissioner and corporate taxpayers appear to be at (or nearing) polar opposites in their approach to resolving disputes, we recommend taxpayers evaluate their tax risk profile and tax risk management strategy. The standard of acceptable tax behaviour has changed in recent years, and strategies adopted even a year ago may need revising. Taxpayers who identify tax risk in all aspects of their organisation and establish policies, procedures and practices to implement risk management will be well placed to manage any tax issues that arise.
Conclusion The current relationship between IRD and corporate taxpayers is at an important developing point, and it must improve if taxpayers are to be sure that they are complying with their tax obligations and conducting their disputes effectively. As a result, the identification and management of tax risk by taxpayers has never been more important.
This article was written by Neil Russ, a partner in the Auckland office of Buddle Findlay, one of New Zealand’s leading law firms. He is the leader of Buddle Findlay’s tax practice and specialises in corporate and international tax issues as well as structured transactions. Neil has a multijurisdictional background in banking and capital market transactions. He can be contacted by phone: +64 9 358 7002 or email: neil.russ@ buddlefindlay.com
Neil Russ, Buddle Findlay
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NEWS | news >>
news in brief >> agreement on trans-Tasman disputes Alternative dispute resolution (ADR) bodies in Australia and New Zealand have signed an agreement to promote mediation in the region as a means to lessen the costs of resolving legal disputes. Speaking at a recent conference of the Institute of Arbitrators & Mediators Australia (IAMA), Australian Attorney General Robert McCelland said the current economic conditions would increase disputes, necessitating the creation of alternative resolution solutions. “We can expect to see increased numbers of commercial and financial disputes, all of which will require cost-effective, fast and innovative resolutions,” McCelland said. “We have already seen an increase in shareholder class actions. Investors may also find themselves in disputes with national and international corporations, many which have complex corporate structures. This is why court reform and increasing the use of ADR are so important.” McClelland and his New Zealand counterpart, Justice Minister Simon Power, announced earlier this year that both countries will introduce priority legislation to make resolving legal disputes across the Tasman cheaper, more efficient and less complicated.
Aussie firms making a splash in Asia The Sydney office of Baker & McKenzie heads a list of four Australian law firms feted for their expertise in ADR, according to a survey of in-house lawyers conducted by ALB. Anthony Whelan, head of Baker’s Australian and Singapore construction practices, has led numerous multi-jurisdictional disputes across Asia. “Our strategy has been to provide our regional and global clients who have involvement in [these] disputes with the services of our specialist regional litigators, supported by local lawyers in our Anthony Whelan, offices in individual jurisdictions.” Baker & McKenzie In-house lawyers in China, Hong Kong, Vietnam, Taiwan, Thailand and Singapore all cited Bakers as a leading international law firm for ADR work. Mallesons was noted for excellence in Hong Kong, Allens Arthur Robinson received kudos for Vietnam, and DLA Piper was praised for Singapore
Minter Ellison eyes Beijing presence Minter Ellison is investigating the possibility of opening a Beijing office, chief executive partner John Weber has revealed. “Beijing is a priority for us, and we’re currently looking at opening a small office there that will help us grow workflows from that market.” Beyond Beijing, Weber said that the firm was “cautious” about opening further offices offshore and that the preferred method was to service new markets by flying in teams or by utilising longstanding relationships with intermediaries and other law firms.
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resources>>
Resources appetite profitable for A
ustralian firms are again cashing in on major transactions, triggered by China’s appetite for natural resources. Allens Arthur Robinson and Corrs Chambers Westgarth jumped into action when mining company Yanzhou Coal proposed an A$3.3bn acquisition of the Brisbaneheadquartered Felix Resources. If completed, this will be the largest-ever Chinese deal done in the Australian coal sector. Allens’ corporate partner Andrew Knox is advising Felix Resources on the transaction. Corrs, who acted for Yanzhou on its acquisition of Austar Coal Mine in 2004, is advising the mining company on the deal, with partner with partner Andrew Lumsden leading the Corrs team. Yanzhou, listed in Shanghai, Hong Kong and New York, has also sought out King & Wood and Baker & McKenzie for advice on PRC and Hong Kong-related law respectively. As the world’s biggest coal and metal user, China has been scouring the globe for energy and commodities to feed its thrumming economy.
Spurred on by the Chinese government’s US$585bn economic stimulus plan, local companies have invested approximately US$2.2bn in Australian energy and resources companies so far this year. “China is a substantial consumer of many Australian resources,” said Knox. “There is no reason why the rising interest will not follow the same pattern as past investment influxes. The outcome will be closely scrutinised as there appears to be a significant appetite for more deals, dependent on there being substantial prospects [here] for a successful deal.” Employing over 47,000 people, Yanzhou Coal is located in Shandong, and is principally engaged in underground cola mining, preparation and processing, sales and railway transportation. Felix Resources is an independent ASX-listed coal producer with four operating mines in New South Wales and Queensland The company produces pulverised coal injection (PCI), semi-soft coking and thermal coals, selling 4.8 mn metric tonnes in the past year. ALB.
industry>>
Gloves off in West Australian T
he latest victim of the global financial crisis is the gentleman’s agreement between the major law firms to adhere to the guidelines for recruitment in the west, as set out by the Law Society of Western Australia. The cracks first started to show in the system during the boom years, with almost all of the mid-tier firms and several larger firms abandoning the self-imposed restrictions on legal recruitment. However, the death knell for the current version of the guidelines came this year, when the last of the top-tier
firms dropped the guidelines, according to an inside source. Minter Ellison dropped the scheme three years ago, while Deacons, DLA Piper and Jackson McDonald were the first to abandon the guidelines this year. Clayton Utz starting offering positions soon after, followed by major firms Freehills and Blake Dawson. If the guidelines had not been dropped at the last minute, applicants would have started interviewing next week for positions, with offers being made on 9 September. However, some top graduates have reportedly already Australasian Legal Business ISSUE 7.9
NEWS | news >>
Aussie lawyers
uk report Addleshaws consultancy branches out Addleshaw Goddard recently launched a management consultancy in a move to offer strategic advice in a consolidating market. The consultancy will operate as a new practice group within the firm, instead of a stand-alone business. Members of the firm’s professional practices and LLP will join the consultancy, led by the chairman, Mark Jones. The practice will aim to cater to professional businesses (including law firms) that are considering mergers, equity restructurings or new strategic directions.
►► Investment in Australian resource companies – 2008/09 China
Australia
Value US$
China Minmetals
OZ Minerals
$2,100m
Hunan Valin Iron and Steel
Fortescue Metals
$357.7m
Sinosteel
Midwest
$1,400m
China Nonferrous Metal Mining Group
Lynas Corporation
$185.7m
Jinchuan Group
Fox Resources
Sinopec Group
AED Oil
$561m
Zhongjin Lingnan
Perilya
$55m
N/A
hiring frenzy received their offers from firms, and told they need to decide within a week. Once other major law firms found out that the top talent was being targeted prior to the agreed-upon time frame for recruitment, they had no choice but to drop out and also offer spaces on a “priority offer system.” The source told ALB that the Law Society of Western Australia and other leading firms would discuss the possibility of instituting a new version of the guidelines to govern recruitment in the state. ALB
www.legalbusinessonline.com
Clifford Chance restructures As part of the firm’s global reorganisation, Clifford Chance is following in the footsteps of the banking industry, having recently initiated a strategy to market its business to clients on a sector basis. The bank industry model to be used includes 13 industry-focused groups that sit across practice areas, allowing partners to select sectors to specialise in while remaining in their current practice groups. Sectors include financial services, retail, aviation, automotive and oil & gas., and sector partners will meet regularly to help develop business in that area. Taylor Wessing welcomes change A five-partner committee from Taylor Wessing will
examine the option of external investment, made possible by regulatory changes to the Alternative Business Structures rules in the United Kingdom’s Legal Services Act, which is due to come into operation in 2011. As one of the few large firms openly receptive to outside investment, the group will look at other opportunities that could arise from evolving legal markets, including alternative fee structures, procurement and efficiency measures. The ‘change group’, set up by new managing partner Tim Eyles, also includes financial institutions head Tim Stocks, finance partner Peter Shepherd, IP and contentious partner Niri Shanmuganathan, and real estate partner Adam Marks. Freshfields names global corporate head London corporate partner Ed Braham recently took over from incumbent Andreas Fabritius, as global practice group leader for the corporate group at Freshfields Bruckhaus Deringer. Braham is a private equity specialist who also co-heads the firm’s global infrastructure and transport sector group. He has been appointed for a three-year term. Braham was chosen over Germany, Central and Eastern Europe corporate chief Marius Berenbrok, and London corporate head Mark Rawlinson, for the role.
ROUNDUP
• Clifford Chance announced 17 partner promotions worldwide, 50% less than 2008’s 35 appointments. The majority of promotions occurred in the firm’s overseas offices, with just three London associates elevated • Taylor Wessing appointed 17 to partnership, with the bulk of promotions taking place in the France and Germany offices – three each in Paris, Munich and the UK, and four in Hamburg • The London barristers’ chambers One Essex Court will have the highest-paid pupils at the bar, following a boost for the October 2010 intake to £60,000. This is up 33% on the £45,000 this year’s intake will receive • Lovells is reportedly ready to set up in Saudi Arabia in a bid to expand its Middle East presence past Dubai, with Dubai-based counsel Imran Mufti and associate Mustafa Kamal working on the launch • Squire Sanders & Dempsey recently boosted its German practice by securing a three-lawyer team from Faegre & Benson in Frankfurt, including corporate partner Karl Walter, banking partner Manfred Baumbach, and special counsel Louis Wakatsuki • Withers has followed in the footsteps of top firms Freshfields Bruckhaus Deringer, Slaughter and May and Herbert Smith, announcing a tie-up with BPP Law School. The city firm will send its trainees to the school to study the Graduate Diploma in Law and the Legal Practice Course (LPC) • Spanish firm Garrigues recently voted in new co-managing partners Fernando Vives and Ricardo Gomez, who will take charge from 1 September 2009. They replace co-managing partners Miguel Gordillo and Jose Maria Alonso, who have held the position since 2000
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NEWS | news >>
news in brief >> Rural Bank securitisation on track Rural Bank, formerly Elders Rural Bank, has launched a securitisation of agribusiness loans – the first new asset class to be securitised in a public transaction in Australia since the start of the GFC. Blake Dawson acted for the bank in establishing a new master securitisation program, and in structuring and documenting the program’s first issue, an A$520m securitisation of a pool of agribusiness loans through a trust called Agri Trust 2009-1. The team was led by Bruce Whittaker, who said “perhaps the most unique aspects of the transaction were the credit and liquidity mechanisms that needed to be developed to accommodate the dynamic come-and-go nature of the asset pool, so that the transaction cashflows were robust and predictable enough to sustain the AAA rating.”
law firms win in $3.5bn desal project A consortium advised by Allens Arthur Robinson and Clayton Utz has been awarded the largest public private partnership since the global financial crisis first took hold – the A$3.5bn Victorian desalination plant. Corrs Chambers Westgarth acted for the Victorian Government on the deal, while Allens acted for construction company Thiess and Degremont, a desalination technology specialist. Claytons acted for the entire AquaSure consortium, which also included Suez Environment and Macquarie Capital Group. The AquaSure consortium will finance, design, construct, operate and maintain the desalination plant via a PPP with the Victorian Government. The project includes building an 84km transfer pipeline to connect to Melbourne’s existing network, plus various other related renewable energy projects.
eight ripe targets for M&A named M&A lawyers may have a busy year ahead of them, after investment bank UBS created a formula that identified eight listed companies in Australia and New Zealand as attractive takeover targets. Several financial companies topped the list. The UBS report examined M&A activity between 1990 and 2008 to identify patterns in deal, target and acquirer characteristics, and used these to develop a quantitative screen for likely M&A candidates. ASX, Suncorp and Bank of Queensland are all identified as likely acquisition targets as the fallout of the GFC makes continued consolidation in the financial sector timely. Australian energy and power provider AWE was also selected due to its strategic relationship with Mitsui, which could act as a white knight if a hostile bid was launched. In New Zealand, UBS picked out Sky City’s casino monopoly as a potential takeover target as was Fletcher Building, which has “potentially large synergies with Boral via plants.”
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INDUSTRY >>
Mid-tier firms taking work A
push for cost efficiency has seen companies offload at least some of their workload to mid-tier law firms, helping boost the bottom line and fuel expansion plans. M+K Lawyers managing director, Damian Paul, said his firm, which focuses on serving clients with turnover of between A$5m and A$500m, had enjoyed record months in June and July, as clients looked to reduce their legal costs. “We’re certainly seeing the signs of us picking up work from businesses that might otherwise give all their work to higher-cost law firms,” Paul said, adding that their fees tend to be about two thirds of what top-tier firms charge. “What more and more businesses are finding is that they have a preparedness to consider mid-tier firms for certain types of their work,”
he said. “They want to keep a top-tier firm for some of their [business] but they’re more keen to spread the work around and try and find a better cost solution and improve service delivery.” After initially losing some major commercial deals due to the funding crisis, Paul has seen an increase in business to other practice areas. “We found this time last year we were working on a couple of big commercial deals that fell over because funding fell over but we’ve found during the course of the year a significant increase in other areas of work such as employment law and commercial litigation,” Paul said. “Now we’re starting to see signs of more deals coming through as businesses are being restructured, or as some of our bigger clients are looking to acquire distressed
industry >>
Mallesons initiates voluntary redundancy program M
allesons chief executive partner Robert Milliner hopes to reduce staff count by 5%, or around 100 people, by introducing a voluntary redundancy program in August. In a recent letter to staff, Milliner predicted there would be continued subdued conditions – which were cited as the main reason for the redundancy program. The move was made following a board meeting held earlier in July, to review the firm’s forecast for the next two years. The decision was made to offer the voluntary redundancies after this meeting took place. Malleson’s pessimistic outlook stands in stark contrast to prevailing opinion that the economy is starting to recover. “The work today is not evenly spread over all practice areas and centres and the economic outlook, despite
contradictory reports, is set to remain subdued with flatter conditions in the legal market,” Milliner wrote in the letter. “In these circumstances, even the strongest firms in the marketplace must adapt themselves.” Mallesons called on employees to submit expressions of interest for taking up the voluntary redundancy, while retaining discretion as to which positions are ultimately accepted for the program. A spokesperson admitted that some practice areas had been hit harder than others but maintained that the firm was keeping an open mind as to which positions would be accepted for voluntary redundancies. The offer is only open to full-time employees and settlements will be – in part – based on years of service, as well as other relevant factors. Australasian Legal Business ISSUE 7.9
NEWS | news >>
from top-tier businesses in their industry.” The business boost will help M+K continue its plans to become Australia’s only national firm that focuses solely on mid-sized clients. So far the firm has signed up three other legal practices to extend its presence from Victoria to Sydney. It hopes to have a sizeable presence in every capital city within the next five years. Last year Paul met with 40 firms to discuss possible acquisitions and is still in advanced negotiations with a number of them, looking to expand M+K’s footprint across the country. Paul said he and the practice’s chairman, Phil Clark, are identifying like-minded firms that are servicing mid-sized companies. They will use M+K’s corporate structure to issue cash and shares to acquire those firms. ALB
us report
Freshfields names new managing partner Freshfields Bruckhaus Deringer recently named New York-based corporate partner Julian Pritchard as the firm’s next regional managing partner. He will replace structured finance partner Brian Rance, who has been in the role for three years. Feder to take the lead at Paul Hastings Global real estate head partner, Phil Feder, recently replaced Mark Eagan as head of the London office at Paul Hastings Janofsky & Walker. The London and European network is a core focus for the US firm. Feder recently moved to London from the Los Angeles office to bolster senior management in the city.
Bingham acquires McKee Nelson Bingham McCutchen recently completed its acquisition of McKee Nelson, adding approximately 120 lawyers to Bingham’s Washington D.C, and New York offices. This takes the number of lawyers worldwide at the combined firm to over 1,100. The merger with McKee Nelson allows Bingham McCutchen access to McKee’s three core practice areas: tax matters, corporate/finance and business litigation. The acquisition of the smaller practice is the latest in a series of takeovers by the US firm following the appointment of Jay Zimmerman as chairman in 1994. Bingham’s last big acquisition was Swidler Berlin in 2006, which was a merger adding 170 lawyers to the firm’s Washington office.
ROUNDUP
Robert Milliner, Mallesons
Milliner said in his letter to staff that initiatives the firm took to manage their lower work levels with the same number of lawyers have yielded a positive response. This included encouraging more staff to take up a ‘swap-pay-for-leave’ offer, but Milliner said more now needed to be done, given the firm’s position that the downturn was expected to continue “well into 2010-11”. ALB www.legalbusinessonline.com
• Canadian firm Blake, Cassels & Graydon is expanding its Middle East reach. The firm recently agreed to a formal alliance with local Saudi Arabian legal practice Saudi Al-Amari in Al-Khobar, and will also launch an office in Bahrain. Led by Dan Fournier, a partner in the firm’s energy and finance practice, the practice will focus on energy, infrastructure, corporate, banking and technology law. Both offices will open their doors in autumn of this year • US firm Arnold & Porter recently poached Shearman & Sterling’s Brussels managing partner, Annette Schild and fellow partner Silvio Cappellari, leaving Shearman without a single full-time partner in the Belgian capital • Norton Rose is on the hunt for a US merger partner, following its June tie-up with Australian firm Deacons. The firm has long sought a presence in the United States. It has now widened its search beyond the confines of New York and is reportedly compiling a list of approximately 20 firms for potential merger targets • Dechert recently bolstered its New York office numbers with the hire of two new partners from Clifford Chance’s (CC’s) office in the city. Finance partners Stuart Strauss and Richard Horowitz will join Dechert’s financial services group • Cleary Gottlieb Steen & Hamilton has landed a lead role on the billion-dollar takeover of Guaranty Financial Group, a Texas-based bank currently verging on the edge of bankruptcy. Cleary will advise financial services company BBVA Compass on the acquisition • Geoffrey White, senior partner of the global asset finance practice at Clifford Chance, will shortly relocate from the firm’s London office to New York. This will further strengthen the firm’s booming asset finance practice in the States.
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NEWS | news >>
RESOURCES >>
Senate committee improves RMA Bill
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ew Zealand’s Senate Bill simplifying and streamlining resource management has been improved through its amendments in the select committee, according to Chapman Tripp partner John Hassan. “The Bill, while not perfect, is a big step forward and most of the changes the committee is recommending will improve it,” he said. Specifically, two proposals to the Resource Management (Simplifying and Streamlining) Amendment Bill 2009 were reversed. However, Hassan said some concerns remain. “The radical sanctions against businesses using the RMA to frustrate their competitors by holding up commercial developments may give rise to increased litigation. The right to refer consent applications directly to the Environment Court may be abused by some councils as a way to transfer costs from their own budgets to the Environment Court’s budget – or from ratepayers to taxpayers.” Hassan said it is helpful that the direct referral track has been clarified as only being available for notified applications. However, he said the changes the Bill makes to planning processes are not sufficient to fix the significant costs and delays which are the daily experience for resource mnaagement practitioners.
“Fortunately there will be a second opportunity in the Phase Two reforms to address some of these problems,” he added. Hassan said that although attention had naturally focussed on the big innovations in the Bill (creation of the Environmental Protection Authority and the 90-day priority consenting track) it may be some of the smaller changes which deliver the biggest dividends. He was referring to the refinements to the notification regime. Applications can either be notified to the general public, notified only to those who will be affected or not notified at all depending on their significance. Public notification is required where the effect of a development will be pronounced – even if that effect will be confined to a defined catchment of people. For example, where a new office complex would cast shade onto a neighbouring apartment. “The Bill makes clear that a limited notification – rather than full public notification, can be used in these circumstances,” he said. “This small change should speed up the approvals process while still giving incentive for applicants to negotiate resolution with affected parties,” he added. “The new ability to have a notice of requirement for designation dealt
Major amendments to the Bill 1. The proposal to narrow plan appeals to points of law has been rejected. Having wide rights of appeal provide an important protection, given the often poor quality of council planning processes. 2. The decision to transfer authority to make designations from utility operators to councils has been held over. There will be more in-depth consideration of infrastructure issues, as part of the planned Phase 2 RMA and Public Works Act reforms.
with on a limited or non-notified basis will also be helpful in streamlining the consents for minor upgrades to corridor infrastructure, such as for telecommunication and electricity networks, and for minor road upgrading.” ALB
PROPERTY/FINANCE >>
Goodman deal highlights foreign interest in Aussie property
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hina Investment Corporation’s (CIC) contribution of A$500m towards Goodman Group’s A$1.8bn capital raising highlighted an increasing trend – foreign money looking for exposure to the Australian property market. Blake Dawson property partner, Les Koltai, said that, up until recently, our market had been dominated by domestic players, but that the drying-up of capital had presented an opportunity for foreign investors to get involved. “For the past 10 years, due to the highly competitive nature of the market here and the availability of domestic capital, a lot of foreigners had never been able to get close to this market,” Koltai said. “So certainly there is now an apparent window of opportunity for foreign investors.” This is the second investment CIC has made in Goodman Group, according to Freehills partner Fiona Smedley. 22
Smedley advised CIC on both deals. The Goodman capital raising also included a A$1.3bn institutional placement and entitlement offer, with the funds going towards restructuring its debt obligations. The oversubscribing of Goodman Group’s institutional placement shows that investor appetite had returned to a market sector that Les Koltai, Blake Dawson had been suffering through the downturn, with other companies taking the opportunity to bolster their balance sheets. Challenger Diversified Property Group successfully closed its A$130m capital raising recently, while in early September ALE Property Group announced a A$105m retail and institutional entitlement offer. ALB Australasian Legal Business ISSUE 7.9
interview | Mallesons LitSupport >>
Good responses The 2009 ALB Law Awards held in Sydney last May recognised one of Australia’s best top-tier firms for its dedication to sustainable business practices – even through the downturn
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his year’s awards saw Mallesons Stephen Jaques recognised for their outstanding contribution to corporate social responsibility. The award sponsors, Val Pitt and Brad Gabriel from specialist legal support services company LitSupport, sat down with some key members of the MSJ team: Louis Chiam, partner and head of sustainable enterprises group, Jane Farnsworth, special counsel, pro bono and community, and Gerard Neiditsch, executive director (business integration and technology). Q. Congratulations on being selected as ALB’s CSR Firm of the Year. What do you think is different about Mallesons’ approach to social responsibility that saw you win? Louis Chiam: I think the degree of engagement on corporate social responsibility issues across the firm is something that sets us apart. In all of these areas we are discussing today (environmental sustainability, community partnerships and technology) we have seen a tremendous energy in the firm, particularly from young lawyers. There is also a lot of mixed practice in terms of how much CSR is corporate spin and how much is actually happening on the ground. We consciously recognise that, and as a result we are almost under-selling what we do as a firm. Q. What specific initiatives has Mallesons put in place, in terms of environmental sustainability, for its clients? Louis Chiam: I lead a sustainability team in Melbourne that has developed a carbon practice in the past two years. This has been our biggest client-facing program, with a lot of investment. We have a successful practice in Hong Kong which undertakes Kyoto CDM www.legalbusinessonline.com
[clean development mechanism] projects, with a particular focus on China. Domestically we have been engaged with clients who will be affected by the emissions trading scheme [ETS]. Many clients are poised to undertake carbon abatement projects, but they have been forced to hold off due to regulatory uncertainty. One issue we are working on is what they can do now without jeopardising their position. Although the carbon market is still nascent, we are engaged in carbon trading issues as well. A derivatives partner in Sydney, Scott Farrell, is the lead drafter developing standard carbon documentation, on the committee led by the Australian National Markets Association. Q. Have your senior staff been as engaged as junior members, leading the firm to a strong CSR stance? Jane Farnsworth: The active engagement of the chairman and chief executive partner in the ‘Mallesons in the Community’ program is why we have been able to meet our objectives. A key strategy which distinguishes us is the close working relationships we have with key not-for-profit community partners. Our former chief executive partner was instrumental in setting up Australian Charities Fund, the leading workplace-giving fund. Our current CEP Robert Milliner is still a director. Although pro bono has always been an important part of Mallesons’ work, the community projects also provide a way for non-legal staff to become involved. The technology arm has been instrumental in allowing every staff member to go online to make a pledge to one or more of the 40 partners we have across Australia. Our lawyers provide pro bono legal assistance to these organisations, but many of our secretarial and other nonlegal staff also get involved in projects,
such as making daily phone calls with the Australian Red Cross to check in on aged persons who live alone, or the Fair Trade project which is being piloted with Oxfam. Gerard Neiditsch
Q. It could be said that CSR has been sidelined in the wake of the GFC. Is it tempting to reduce these initiatives until profit is back to prerecession levels? Gerard Neiditsch: There is a real Louis Chiam cost-sacrifice to do things differently in manufacturing or retail, but for us, efficiency measures have a positive cost. There is a cost penalty in recycled paper, for example, but we would rather spend that and drive behaviour harder than go backwards. Going backwards, we would lose our staff interest, our integrity and everything we are trying to do. In professional services, the choices are not as stark as in other industries, so we didn’t have to make some of those tough choices this year. Jane Farnsworth: In ‘Mallesons in the Community’, the program is always seen as a win-win for us and the communities we work with. We are marshalling resources to work with those communities in a meaningful way, but also for the firm, because MSJ is a multi-office firm. Having projects of this kind can only, in our view, promote the sense of identity and shared purpose across all of these offices. The United States have started calling it the ‘pro bono glue’. I’ve certainly seen that operate in relation to our community, environment and technology projects. ALB 23
NEWS | appointments >>
Holding Redlich
appointments ►► Lateral hires Name
Practice areas
Organisation coming from
Organisation going to
Peter Briggs
Environment and planning
Clayton Utz
Freehills
Stephen Dickens
Litigation
de Veres
Mills Oakley
Rob Drake
Major projects
Macquarie Bank
Corrs Chambers Westgarth
Patrick Dwyer
Finance
GE Money
Langes
Chris Frawley
Litigation and insolvency
Crisp Legal
M+K Lawyers
Sonya Harris
Property
Brookfield Multiplex
Mirvac
Michael Martin
Professional indemnity
Sparke Helmore
Moray & Agnew
Cameron Roberts
Workplace services
Frenkel Partners
Herbert Geer
Andrew Venables
Major projects
Rigby Cooke
Herbert Geer
►► Promotions Name
Practice areas
Organisation
Kim Dewhurst
Dispute resolution
Piper Alderman
Chris Edquist
Construction and infrastructure
Holding Redlich
Brett Heading
Property
Trinity
Jee-Seon Lee
Corporate, energy & resources
Johnson Winter & Slattery
Andrew Maher
Litigation, IP
Allens Arthur Robinson
Richard McMullan
Corporate, M&A
Johnson Winter & Slattery
Kerry Morrow
Corporate, M&A
Johnson Winter & Slattery
Paul Svilans
Dispute resolution, media
Johnson Winter & Slattery
Kerri Thomas
Insurance
Sparke Helmore
Madeleine Perrignon
Business and property
TurksLegal
Macquarie Bank
Corrs Chambers Westgarth
Corrs poaches Macquarie Bank financier Macquarie Bank financier, Rob Drake, has been appointed to Corrs Chambers Westgarth’s major projects practice. Drake was chosen for the partner role due to his financial and legal background, according to Corrs chief executive officer, John Denton. Rob Drake “Rob’s background in riskidentification and management, particularly project financial viability, is valuable in the current market. His infrastructure projects experience has also given him a deep understanding of client needs,” Denton said. Formerly a project finance partner at Baker & McKenzie and finance lawyer at Clifford Chance, Drake also brings vast experience in M&A. At Macquarie he acted on Veolia and Degrémont’s bid for water desalination projects, and Macquarie’s acquisitions of BT Australia and ING Equities Asia.
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Sparke Helmore
Sparke Helmore expands insurance arm Sparke Helmore intends to pick up insurance business left from other national firms “gradually exiting the insurance space” the firm said, after appointing Kerri Thomas as partner charged with heading up the firms insurance practice in Victoria. “Kerri’s appointment in Kerri Thomas Melbourne is a great development for national insurance industry clients, looking for legal advisors that can emulate their own national footprint and who are demanding a consistency in service across the country that only national firms can deliver,” said national managing partner, Jesse Webb. Thomas joined Sparke Helmore in 2002 and has over 16 years of experience in insurance litigation, focusing on professional indemnity, general liability and aviation law. The firm currently has 172 lawyers including 30 partners focused on insurance work.
Holding Redlich’s stronger construction team Holding Redlich has appointed Chris Edquist as a senior partner in the firm’s construction and infrastructure practice group in Melbourne. He will head up a team providing legal services to government, developers, construction companies, Chris Edquist architects, engineers and project managers. Edquist will also assist in the development of a national construction and infrastructure practice. Chris Lovell, Holding Redlich’s national managing partner, cited Edquist’s work for the Victorian government on projects such as Federation Square and the new Melbourne Rectangular Stadium. Prior to joining Holding Redlich, Edquist was the practice group leader – property, infrastructure and development at DLA Phillips Fox. He was with the firm for 30 years and first became a partner there in October 1983, before resigning earlier this year.
Frenkel Partners and Rigby Cooke
Herbert Geer
Herbert Geer continues strong growth: appoints new partners Herbert Geer managing partner, Bill Fazio, said the firm expects to continue on the trajectory that has seen it expand by 50% in the last financial year, after announcing it has appointed Cameron Roberts and Andrew Venables as new partners. Roberts joins Herbert Cameron Roberts Geer’s workplace services team and Venables joins the major projects team, as Herbert Geer pursues its strategy to be a viable challenger to the top-tier firms. This includes building up practice areas that the firm was lacking, maintaining a competitive edge and continuing to grow its Andrew Venables Melbourne, Sydney and Brisbane offices. “Our strategy’s not complete and we expect to be continuing to grow throughout this financial year on a significant basis,” Fazio told ALB. “Coincidentally, the GFC has meant that there’s a lot more re-examination of strategy, size and people in all organisations, which has meant that there are more people actively considering where they should be. In all sorts of ways I think the GFC is making the implementation of our strategy a little bit easier.” Fazio said Venables’ appointment was made to address an imbalance in the firm’s offering and ensure it maintained a stable workflow throughout the economic cycle.
Australasian Legal Business ISSUE 7.9
NEWS | appointments >>
“I think in terms of our business – compared with some other businesses – we were underexposed to construction, infrastructure, [and] major projects,” Fazio said, adding the firm had bolstered its construction practice in the Sydney office and was looking to do the same in Melbourne. Roberts’ appointment was made to strengthen Herbert Geer’s workplace services team, led by partner Michael Gatehouse. This is one area that is expanding rapidly, due to the firm’s appointment to the Victorian government’s Legal Services Panel for personal injury. Roberts joined from Frenkel Partners while Venables joined from mid-tier firm Rigby Cooke.
Trinity
Lawyers take top spots at Trinity ASX-listed property group Trinity has responded to institutional investor unrest by appointing Brisbane lawyer Chris Morton as managing director, and former McCullough Robertson partner Brett Heading as chairman. As part of the reshuffle Sydney lawyer Tony Hartnell will step down as
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Brett Heading
non-executive director. Last week, Morton invested A$1.3m for a 7% stake in the company which is trying to retain control of its A$800m funds management loan. Heading and Morton will be meeting with major shareholders and the Investors Advisory Board (IAB) this week to persuade them to abandon plans to put the funds to public tender. Late last month, the IAB voted to remove Trinity as fund manager but a further vote is necessary before the public tender becomes inevitable. Trinity’s new management team will want to avoid that at all costs, since it is unlikely the group would win a public tender. “What I would like to stress is that the board is taking decisive action to address governance concerns in Trinity and the funds management operations and in particular to address concerns of major investors in those operations,” Morton said. He has a strong funds management background, having founded Property Funds Australia, which controlled the A$700m PFA Diversified Property Trust. PFA was acquired by Mirvac in October 2007. Morton will not receive a sign-on fee or termination payment and will be paid for the first three months at the equivalent rate of a nonexecutive director, A$65,000 per year, after which salary negotiations will take place. He will receive a grant of options to acquire 4.75m stapled securities at an exercise price of 18 cents. These options will be
escrowed until 12 months after he starts his contract and will expire at the end of the 2014 financial year.
Brookfield Multiplex
Mirvac
Harris takes reins as Mirvac general counsel Property giant Mirvac has appointed Sonya Harris as GC and company secretary, in light of the departure of former group company secretary Michael Smith. Harris joins Mirvac from Brookfield Multiplex, where she was the deputy general counsel since 2005. Prior to that she was a partner at Minter Ellison. Smith’s resignation is effective immediately, according to a notice lodged with the ASX, and comes as the company posted a A$1bn loss for the last financial year. The company saw property revaluations of A$487m in its investment divisions through the reporting period, and impairments on goodwill, management rights and other intangibles totalling A$273m. Mirvac conducted two capital raisings over the course of the year, raising a total of A$1.6bn and reducing its gearing from 34.2% to 18.7%. Managing director Nick Collishaw said that the company will maintain its cautious capital management approach in the current environment.
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NEWS | appointments >>
“We will finalise our business reorganisation across the group in 2009/10 to realise further cost reductions,” he said. “Our focus is on strengthening our capital and liquidity positions to ensure we have the financial flexibility to take advantage of opportunities that will inevitably arise.”
Sparke Helmore
Piper Alderman
No argument as Piper promotes dispute partner Piper Alderman has promoted Kim Dewhurst to partner of its dispute resolution team, after she served for five years in the credit management and insolvency and Kim Dewhurst banking and finance teams. Managing partner Gordon Grieve said the firm has experienced increased demand for its litigation and insolvency services. Piper Alderman’s team incorporates both insolvency and banking and finance, which have seen increased business from clients due to the current economic climate. “What’s happening in the economy obviously has had a direct impact on those two areas,” Dewhurst told ALB. “In banking and finance we’re doing the back end recovery side and for the insolvency side we’re acting for the accountants, liquidators, receivers and banking trustees.” Dewhurst is active in industry bodies and serves as secretary of the Victorian Branch of the International Women’s Insolvency and Reconstruction Confederation. She is also a member of the Insolvency Practitioners Association of Australia. Reflecting the increased business flowing to the firm’s dispute resolution practice, Piper Alderman has also promoted Florian Ammer to senior associate in Sydney and James Nunn to associate in Adelaide.
GE Money
Langes
GE Money GC finds ‘humanity’ at Langes GE Money’s general counsel of home lending, Patrick Dwyer, has moved to finance and insurance specialist firm Langes+ Dwyer found out about the role through a former colleague. “I have known partner Rob Surmon since we both worked at Cuscal. We discussed Patrick Dwyer the possibility of my joining Langes, and I moved because the firm had a good financial client base, small team with humanity, and vast experience,” he said. Working for GE Money, Dwyer acted on the Aussie Home Loans-Wizard Home Loans acquisition, Commonwealth Bank’s acquisition of a loan book worth A$2bn, and implementing the latest financial services reform regime.
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“It would be nice to keep advising GE, but I have other financial industry contacts too,” he said. “Working as an in-house lawyer for six years has enabled me to quickly grasp issues and translate the law into practical and commercial options for clients.”
Moray & Agnew
Moray & Agnew upswing builds team Specialist insurance firm Moray & Agnew has bolstered its liability and professional indemnity credentials, with the addition of partner Michael Martin to its Melbourne office. Martin joins the firm along with special counsel Nigel Kemp from Sparke Helmore. “The recent boost to our insurance practice is timely as we continue to experience a significant Michael Martin upswing in claims activity,” said Bill Papastergiadis, head of the Melbourne office. Papastergiadis said that the two additions expand Moray & Agnew’s offering to sectors it previously did not have access to, such as telecommunications, manufacturing and the state government. Martin said that the recent economic conditions have contributed to the growth in claims activity. “There has been a lot of growth in the general liability area as well as the professional indemnity area particularly arising out of the global recession,” he said. “There have been quite a few claims against financial advisers and the like so it’s a growth industry there, but people are also more aware of their legal rights in terms of general liability.” In his 26 years as a lawyer, Martin has advised Australian insurers and other corporations as well as several Victorian state government departments and local government councils. He also has defended recovery action claims brought by the Victorian WorkCover Authority and the Transport Accident Commission. Kemp’s areas of expertise include advising in public liability, WorkCover recover claims and property damage recovery claims.
The move comes after strong M&A performance in the first half of the year. According to Bloomberg’s recently released M&A league tables, Johnson Winter & Slattery was the biggest winner, jumping from 44th place to ninth with two deals worth US$1.6bn (A$1.9bn). The firm has also promoted the following staff to senior associate level: Ben Renfrey (dispute resolution, insolvency), Natalie Tan (energy and resources), Frances Willis (dispute resolution), and Andrew Wilton (energy and resources).
DEVERES Deveres
Eight promotions at Johnson Winter & Slattery Johnson Winter & Slattery has promoted four employees to partnership and a further four to senior associate. Among the new partners are Jee-Seon Lee (corporate, energy and resources), Richard McMullan (corporate, M&A), Kerry Morrow (corporate, M&A), and Paul Svilans (dispute resolution, media). Richard McMullan
Jee-Seon Lee
MILLS Mills OAKLEY Oakley
Mills Oakley hires partner for litigation The global financial crisis and growth in other commercial practice areas has seen Mills Oakley experience increased demand for its commercial litigation and insolvency services, prompting the firm to recruit Stephen Dickens to join its Brisbane office. “Our commercial litigation and insolvency team has grown progressively for the past three years, but [in] the last 12 months there’s been a marked increase,” chief executive officer John Nerurker told ALB. “It’s a hard area to market because you only really want a litigation lawyer if you wish to sue somebody or you are being sued – neither of which are happy circumstances.” Nerurker said he is also bullish on the building, construction and IP practice areas, which he expects to see experience strong growth. Mills Oakley is looking to grow its corporate and property teams, and Nerurker said Dickens will not be the last addition to its commercial litigation practice.
Crisp Legal
Johnson Winter Slattery
Paul Svilans
M+K Lawyers
M+K Lawyers adds to litigation team More evidence that the litigation area is heating up emerged as Macpherson + Kelley added Chris Frawley as principal of its commercial litigation and insolvency practice in Sydney. Frawley joined from Crisp Legal, with more than 17 years experience Chris Frawley in litigation and commercial disputes, supporting clients with complex contractual issues, intellectual property concerns, business insurance issues, trade practices and a variety of contract related disputes.
Australasian Legal Business ISSUE 7.9
editorial | Harriss Wagner >>
THE RELATIONSHIP BETWEEN IN-HOUSE COUNSEL AND PRIVATE PRACTICE
A
supportive and open partnership between inhouse counsel and their selected legal panel firms is a crucial ingredient towards fostering a mutually beneficial relationship. However, is there more to
consider? Over recent years, in-house counsel has enjoyed a significant rise in status as corporations seek to leverage more value from within their organisations. The evolution of the industry has lured many high-profile lawyers out of private practices to head up growing in-house teams. Armed with intimate knowledge of legal firm operations, including the approach used by private practices to maintain healthy margins, in-house counsel has applied greater scrutiny to the cost of legal services. With the challenges of the economic downturn, such scrutiny has been magnified and appears to have led to an increase in the number of mid-tier firms being appointed to the panels. While this approach may address shortterm financial pressures, we question if it is the catalyst for creating greater value for money in the longer term. There are always two sides to the story, and we hear the panel firms questioning ways to maintain what are often considered to be archaic processes imposed upon them. As an independent observer of the legal industry, we are often astonished at how much simpler it could be for both parties to achieve more effective outcomes through the use of available technologies to systemise the processes between both parties. The underlying problem is the high level of administration panel firms must adhere to, without what appears to be sufficient consideration to the cost this imposes upon both parties. While the panel firms may be motivated to pass on the cost of the administration to maintain margins, this exacerbates the problem and does nothing to improve the mutual value of the relationship. Further, the investment made by panel firms in infrastructure and resources necessary to meet the requirements of in-house counsel, often precedes an expectation that volume work will follow to justify the investment. However in an attempt to create a more competitive playing field, in-house teams today are engaging more
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panel firms, reducing work volumes and consequently discouraging stronger relationships. This remains a complex issue while in-house legal teams are viewed as cost centres by their own organisations. Under this model, the in-house team’s perceived value is often limited to its ability to minimise legal expenditure. The challenge is that while viewed as a cost to the business, in-house teams typically operate on shoe-string budgets, which prohibits them from breaking through the bureaucracy. So how can the problem be addressed? In Australia, the industry has not sufficiently embraced technologies that can automate processes and/or enable effective online collaboration. Unlike purpose-built systems used within international jurisdictions or technologies used in larger corporations where in-house counsel operate, Australian legal firms tend to develop a multitude of home-grown solutions to service in-house counsel, which are both limited in functionality and cumbersome to maintain. These often require significant levels of manual processing that is costly and fraught with the potential for errors and omissions. Investing in better technology and building contemporary business processes often goes a long way towards reducing the cost of business. Perhaps improving automation and collaboration is a worthy investment to consider for firms seeking selection or re-selection onto legal panels.
“Whether you are a supplier of legal services, or a client receiving legal services, both parties have a role to play in creating value-for-money.� Amanda Harriss Partner, Harriss Wagner Management Consultants
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FEATURE | In-house 20 >>
In-house
Revealed: ALB’s showcase of Australasia’s top 20 in-house lawyers It’s time to pay tribute to the in-house lawyers who have distinguished themselves and the legal profession during 2009 – and also to ponder the challenges of the day
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W
hile in-house lawyers in the past have been preoccupied with trying to establish their legitimacy and to explain the value of their role to business, perhaps it is time to declare that particular round won. If there was ever any doubt about the value of in-house counsel, it now surely has been dispelled by the profession’s robust passage through the economic downturn. “The standout trend of 2009 has been the amazing resilience of the in-house profession,” says Australian Corporate Lawyers Assocations chief executive Peter Turner. “While there have been hiring freezes and salary freezes, there has been none of the wholesale slaughter of legal teams that we have seen in previous downturns. That is a good reflection of the value proposition of in-house teams – companies are recognising that these teams are an integral part of the business.” The influence of in-house lawyers is also a reflection of the growing
importance of appropriate corporate governance and compliance. Turner refers to in-house lawyers as the “keepers of the corporate conscience” and says that the variety in the work undertaken by in-house lawyers, particularly at the senior level, explains why so many private practitioners have been attracted to general counsel roles in recent years. “They’re multiple hat roles – you have GCs who are lawyers, company secretaries and managing compliance all at once,” he says. Yet the downside is the increased risk profile attached to the profession. “As lawyers take on more of a management focus, they can also get caught up in any subsequent enquiry when the organisation runs into difficulty,” says Turner. “There have been a couple of examples of this and hopefully this is just an aberration, not a longer term trend.” A worrying trend is the number of GCs who are identifying workload and time pressures as the top challenges of the role. Surveys of the profession have found that the GFC Australasian Legal Business ISSUE 7.9
FEATURE | In-house 20 >>
ALB In-house 20: the list for 2009
1 2 3
Andrew Hamilton
4 5 6 7
Carl Rowling
8 9
Helen Conway
former general counsel, ACN Pacific
Annette Spencer Head of legal counsel, UBS
Bob Mitchell Director, legal risk and governance, World Vision Australia
General counsel, Auckland City Council
David Cohen General counsel, Commonwealth Bank
David Matthews General counsel, Fonterra
Francesca Lee General counsel and company secretary, OZ Minerals
General counsel and company secretary, Caltex
James Baulderstone Vice president, corporate development and legal, Santos
10 11
Katrina Sharman
12 13 14 15
Lesley Power
16
Peter Taylor
17
Rebecca Holbrook
18 19
Richard Willcock
20
Will Irving
Corporate counsel, Voiceless
Kerry Gleeson General counsel and company secretary, Incitec Pivot
General counsel, SBS
Louise Leaver Legal counsel, Australian Health Management
Michael Cripps General counsel, IAG
Peter Horton General counsel and company secretary, Woolworths
General counsel, Commerce Commission of New Zealand
General counsel, Fisher & Paykel Appliances, CLANZ president
former general counsel, Westpac
Robyn Briese Senior lawyer, Australian Government Solicitor (AGS)
General counsel, Telstra
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has increased the workload of inhouse lawyers. Further increases are predicted as regulatory work increases – and all this at a time when cost base pressures are greater than ever. “There is a risk of going back to the bad old days of management by cost and headcount, rather than by value,” says Turner. Fisher & Paykel GC and Corporate Lawyers Association of NZ president, Rebecca Holbrook, says that an additional challenge is the expectation of rapid service delivery. “Technology changes mean that business can be transacted very quickly. Corporate counsel need to balance meeting time expectations with the provision of properly considered advice and contractual documentation, including seeking third party input where appropriate,” she says. Holbrook nominates the control of external costs and the changing nature of business – including trends such as outsourcing or changing suppliers – as the other key challenges faced by in-house lawyers. Yet it is clear that controlling costs, in particular, is the issue du jour. Nearly all of the in-house lawyers interviewed for this feature expressed concern over their legal spend and had implemented strategies for making savings. It’s a trend which Ronald Pol from TeamFactors, a specialist client legal services consultant, says is confirmed by recent research from ACLA and CLANZ. “The stand-out way to improve working relationships is for law firms to be more concerned with costs,” Pol says. “This doesn’t mean cheap wins,
although that certainly helps. There are a series of measures to better reconnect legal costs with value.” One of the classic cliché questions posed to in-house lawyers is on how law firms can improve their service to clients. It’s a well-worn topic, but one which any professional service provider needs to consider and reevaluate ad nauseum if they are serious about building client relationships. This is a lesson which Pol suggests is starting to sink in. “In the past, it took some pretty determined GCs to get law firms to agree to do things differently; resisting the tyranny of billable hours and inexorable annual rate increases. Today, so many companies are under so much pressure that we might just be at a tipping point,” he says. Pol believes that firms are wellplaced to rise to the challenge: “The right combination of strategies, by clients and law firms, can quickly reconnect costs with value,” he says. “This will be better for clients, and for proactive law firms - but perhaps not so good for those who think doing nothing is a strategy.”
METHODOLOGY This list is a subjective look at some of the most inspirational figures in the corporate/ in-house legal industry. Some of these lawyers are well known industry figures, but there are also some faces which will be new to ALB readers. This is not intended to be a complete or exhaustive list – rather, it is a tribute to the substantial business and social contributions made by inhouse lawyers across Australia and New Zealand.
Ron Pol, TeamFactors.com
Peter Turner, ACLA
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FEATURE | In-house 20 >>
Men and women of the moment Economic conditions and political circumstance combine to create unique challenges for each industry and the lawyers giving advice. In this category, we look at a group of in-house counsel whose skills are particularly at a premium, as a result of the current climate. Some, like James Baulderstone at Santos and Francesca
Lee of OzMinerals, are being kept busy by the rapid pace of activity in their industry. Others, such as Peter Taylor of New Zealand’s Commerce Commission and Carl Rowling of Auckland City Council, have found themselves in the hot seat of reform, in competition enforcement and local government areas, respectively.
Peter Horton, general counsel and company secretary, Woolworths Woolworths’ business optimism has been an ideal foil to the conservatism of the economic downturn. In the past 12 months, Horton has added seven new lawyers to his team to keep up with the legal work generated by the company’s expansion activities, which include the acquisition of organic supermarket chain Macro,
taking a stake in Western Australian brewery Gage Roads, as well as making alliances with Qantas and Vodafone. Woolworths carries heavy compliance and competition law obligations and Horton is wellregarded for his ability to build robust relationships with regulators.
What firms do you use? Allens Arthur Robinson, Corrs, Clayton Utz, Henry Davis York, Gilbert + Tobin, Mallesons, Sprusons Has your legal spend changed? Yes, both the work we do in-house and externally has increased. What advice can you give firms on improving service to clients? Communication is the key – and that’s a two way street. If our instructions aren’t clear, we are happy to be told that. Conversely, if we are unhappy with a firm, we will give that feedback.
James Baulderstone, Vice president, corporate development and legal, Santos Coal-seam gas is attracting a great deal of interest both from investors and the media. One man who knows more about it than most is Santos’ James Baulderstone, who has been involved in some of the headline deals in the field. These include creating the world’s first coal-seam gas to LNG plant concept,
and the subsequent 40% sell-down to Malaysia’s national oil company Petronas for US$2.5 bn dollars, acquiring a significant stake in Eastern Star Gas for $476m and most recently, announcing a further partnership with GDF Seuz to develop what may be the world’s first floating LNG facility.
What firms do you use? Freehills is our principal corporate advisor, while Blake Dawson and Vinson & Elkins are also used. There is also an Adelaide panel of law firms consisting of Finlaysons, Kelly & Co and Thomson Playford Cutlers which enables us to access quality local lawyers, at cheaper rates than their eastern states counterparts. Has your legal spend changed? All costs associated with doing business, both internal and external, are closely monitored to ensure the most efficient and effective outcome is achieved. We have put in place a number of measures to ensure our legal spend is absolutely targeted at achieving outcomes for Santos. This has included building an in-house team of expert energy lawyers, selectively briefing work where specialised skills are needed and utilising the rates that can be obtained outside of the eastern seaboard. Advice for firms? I don’t think law firms have grappled with the changing nature of business, and continue to hold on to an old-fashioned business model. The nature of a partnership makes it difficult for them to adapt quickly or provide novel service solutions. I encourage the firms I use to spend more time learning about the business their clients are in, and to put forward greater risk/reward cost incentives. In my view, companies will not accept the standard annual hourly rate increases and a new service model will need to be found, otherwise more work will shift in-house.
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FEATURE | In-house 20 >>
David Cohen, General counsel, Commonwealth Bank What a year it has been for David Cohen and his Commonwealth Bank team! The acquisition of BankWest, a stake acquisition in Aussie Home Loans, and the lightning-fast $2bn Wizard Home Loans loan portfolio acquisition and A$2bn capital raising, are just some of the projects Cohen has been juggling.
In the past twelve months he has also implemented a strategic review of his team’s work mix, outsourcing “low strategic value, high effort” work. And yes – Cohen’s team also managed to pick up the gong for “Australian In-house Team of the Year” at this year’s ALB Awards.
Firms used Cohen has a very large panel of around 15 firms including all of the “big six”, as well as mid-sized firms such as Gadens, TurksLegal, HWL Ebsworth and Henry Davis York. Cohen says having a high number of firms is required, in order to service the large amount of work generated by the bank. Has your legal spend changed? Overall spend has decreased slightly [due to the effect of the GFC] and would have decreased by much more without the large one-off transactions. Our team has a reduced headcount, which is a result of the outsourcing of “low strategic value, high effort” work. Advice for firms? There is no one particular “silver bullet’, but a deep understanding of the client’s business is very important. My advice would be to try and understand the business – where it’s going, what the strategy is and what its goals and priorities are.
Francesca Lee, General counsel and company secretary, OZ Minerals There were a few sleepless nights for Lee and her team over the last few months as they worked around the clock to make the US$1.38bn asset sale transaction with China Minmetals happen. This is a deal which is credited with rescuing one of Australia’s largest mining companies from dire straits.
It was the latest chapter in Lee’s long involvement with the evolution of Oz Minerals: six years leading the legal team of predecessor company Zinifex, through to the formation of Oz Minerals last year. Lee’s extensive experience in M&A and financing was duly recognised with her appointment to the Takeovers Panel in May.
What firms do you use? We have a panel of firms and worked particularly closely with Freehills on the China Minmetals deal. Has your legal spend changed? Spend increased dramatically on the back of the China Minmetals transaction, but has dropped since then. The intensity of legal work has also lowered and we have fewer assets following the deal, so the need for external legal services work has lessened, for the time being. Advice for firms? Offer solutions, not problems – and know your client. This means not only understanding the business but also having a clear idea of who you are reporting to.
“All costs associated with doing business, both internal and external, are closely monitored to ensure the most efficient and effective outcome is achieved.” James Baulderstone, Santos
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FEATURE | In-house 20 >>
Will Irving, General counsel, Telstra The spotlight is back on the telecommunications sector, as the industry waits to see what form the Rudd government’s proposed A$43bn broadband network will take. Watching with interest will be Will Irving, a general counsel with a reputation for strong strategic leadership. But Irving has plenty of other work on his plate.
In the past twelve months he has advised on Telstra’s acquisition of majority stakes in two more Chinese online advertising companies, reached a favourable settlement on a major internet rights case against News Ltd, and won a Federal Court case challenging the ACCC’s decision relating to an access dispute brought by Optus.
What firms do you use? Blake Dawson, Freehills, Mallesons, Gilbert + Tobin Are you expecting to significantly increase your legal spend in response to the government upping the ante on the National Broadband Network? Not at this stage. NBN legal work will be spread over a period of time as the government works through the implementation study and other things. Has your legal spend changed? We are reducing budget and not increasing headcount, reducing spend in some operational areas via alternative fee arrangements and [making] greater use of legal technology – which is more than offsetting increases in others. Overall, do you expect to have a busier workload over the next year? About the same. Hopefully there will be more ‘green shoots’ across the economy, but it is unclear whether that will drive legal work in the early phases.
Peter Taylor, General counsel, Commerce Commission of New Zealand Taylor’s reign as GC of the Commerce Commission has seen the organisation emerge with a new sense of confidence, and capacity to undertake the kind of enforcement work which is a necessary part of the Commission’s brief. Over the past year, the Commission has brought proceedings against alleged
cartel activity in the cardboard packaging industry and alleged anti-competitive conduct in the air freight and credit card industries. The Commission is also set to play an increasingly important and influential role in the conduct of New Zealand business. Taylor and his team will be at the forefront of that activity.
What firms do you use? Meredith Connell (Crown Solicitor), Kensington Swan, Gilbert + Tobin Has your legal spend changed? While we are always looking to control costs, running major cases is expensive and spend has increased in line with the portfolio of cases that we are pursuing. Advice for firms? It’s important to recognise that in-house lawyers often have more experience in their given area, than external advisers who are brought in to assist with capacity. An alertness to the risk of conflicts is particularly relevant to us, as is an understanding of what the organisation is trying to achieve.
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Carl Rowling, General counsel, Auckland City Council As the first-ever general counsel appointed to the council, Rowling is credited with making sweeping improvements to the way council receives legal advice, from streamlining previously piecemeal relationships with firms through to introducing a new rigour to the cost estimates process.
These and other reforms are estimated to have saved the council in excess of NZ$1m last financial year. Is this a sign of things to come? With the Auckland Supercity project on the horizon, integration authorities are sure to be taking an interest in Rowling’s ideas on organisational efficiency.
What firms do you use? Our main advisers are Simpson Grierson and Buddle Findlay Has your legal spend changed? Workflow has remained steady, but improvements in efficiency have reduced our spend. Advice for firms? It may sound hackneyed, but firms do need to have a deep understanding of the client’s business – and councils are no different in that respect. It’s important to provide practical, easily applied advice.
Richard Willcock, former general counsel, Westpac
While Willcock is no longer the general counsel for Big Four bank Westpac, he didn’t leave the post before the conclusion of the largest corporate merger in Australian history – Westpac’s A$47bn merger with St. George Bank. This was a deal which had to navigate the complexities of the “four pillars” policy.
It went on to win M&A Deal of the Year at this year’s ALB Awards. When Willcock left for the role of president of the Corporate Lawyers Association of New Zealand, Westpac subsequently announced the appointment of John Arthur, previously of Freehills and Gilbert + Tobin, as group executive and counsel.
“It may sound hackneyed, but firms do need to have a deep understanding of the client’s business” Carl Rowling, Auckland City Council
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The leading lights There is no greater praise for a lawyer than receiving simple recognition and respect from their colleagues. In this category we look at in-house lawyers who have achieved that peer recognition. Some, like Annette Spencer at UBS, have collected accolades such as an ALB Award for their leadership excellence.
Others, such as Fisher & Paykel’s Rebecca Holbrook are acting in a leadership capacity for the profession itself. And others, such as Louise Leaver of Australian Health Management have already been earmarked as future leaders.
Kerry Gleeson, General counsel and company secretary, Incitec Pivot Competition for the coveted title of “In-House Lawyer of the Year” at the ALB Awards was hotly contested this year; it was Gleeson who ultimately claimed the prize. The award was the culmination of a huge year which saw Gleeson and her team take a lead role in
the A$3.3bn Dyno Nobel acquisition and a A$1.17bn entitlement offer. This was all part of the broader transformation of Incitec Pivot from an Australian fertiliser business to a leading international chemicals enterprise, now an S&P/ASX 50 company.
What firms do you use? Gleeson uses a panel which includes Allens Arthur Robinson and Mallesons. Has your legal spend changed? As a company, one of our corporate values is a commitment to treating the business as our own. As part of this, we aim to achieve the best financial outcomes, including the control of costs. Accordingly, while the GFC has certainly increased focus on our level of external legal spend, minimising and controlling costs is part of the company’s corporate culture. Advice for firms? I would say, first and foremost, to know your client and their business and to be timely and targeted in the provision of legal advice. In addition, having regard to the current economic climate, I think it is important for firms to be responsive to the changing nature of transactional timetables, with transactions being conducted in much shorter time frames than perhaps was historically the case. It is also important for firms to explore new ways of approaching fee structures on transactional matters, in light of the focus on external spend within in-house legal teams.”
Helen Conway, General counsel and company secretary, Caltex Conway has received high praise from her colleagues in the legal industry, who describe her as “not just a good lawyer, but a great leader who can attract, develop and inspire great lawyers.” Conway and her team are highly regarded for their business acumen and leadership in developing a compliance culture at
Caltex. The team has a strong reputation for being aligned with – and adding value to – the business. They received due recognition for their achievements at the 2008 ACLA In-House Lawyer of the Year awards last November, being named as Australian In-house Legal Team of the Year.
What firms do you use? Top-tier adviser is Freehills, with mid-tier firms assisting on less complex work. Has your legal spend changed? We are always careful about expenditure and have contingency plans, but we have not made any substantial cutbacks to date. We are extremely busy at present, with a lot of M&A and regulatory work. Advice for firms? The presentation of the advice is important – it needs to be clear and commercially focussed. Firms should be prepared to work collegiately with us to understand the business. They are part of the extended team. Some of our work is very complex, so high technical capability is important.
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David Matthews, General counsel, Fonterra Matthews and his team were recently named the New Zealand In-house Team of the Year at the 2009 ALB Law Awards. It was due recognition for a team which has a remarkably diverse and international workflow – from M&A transactions such as the acquisition of the Ski Yoghurt license from National Foods, to the praiseworthy handling
of the Chinese San Lu crisis. Despite the fact that Fonterra is a NZ$15bn business which accounts for more than 7% of NZ’s GDP and 25% of its exports, Matthews’ team comprises only eight lawyers. It has been cited as the model for a tight, efficient and highly experienced corporate team.
What firms do you use? A myriad of firms, as Fonterra is a global business. However, our New Zealand advisers are Chapman Tripp and Russell McVeagh Has your legal spend changed? Absolutely – there is a need to reduce costs. We have not reduced internal headcount, but we have reduced external spend. That said, there are some matters, such as capital structure or debt raising, which we needed to proceed with. We have deferred some training programs. Overall, spend has become more “chunky”. Advice for firms to improve relationships with GCs? Cost estimates are important and we ask that firms keep in touch with us on costs and do not exceed budget without approval.
Lesley Power, General counsel, SBS Power’s SBS practice is considered to be one of the most unique and diverse in Australia, covering commercial transactions, pre-publication advice, intellectual property, technology, fulfilment of the SBS charter – and
even compliance with anti-terrorism legislation. Highly regarded for her specialist knowledge of media law and strategic judgment, Power was named ACLA’s 2008 Australian Government Lawyer of the Year last November.
Has your legal spend changed? Our legal spend has remained steady. Keeping costs steady can be challenging as the demand for legal services has increased, in response to issues raised by new technology and so on. Advice for firms? What I value the most from our external advisers is that they take the time to understand the unique issues facing SBS and give us tailored advice in a form which is most useful for us.
Michael Cripps, General counsel, IAG While Australian business has long recognised the strategic importance of the Indian economy, action often lags behind ambition. Cripps and his team take particular satisfaction in their role in IAG’s A$170m stake acquisition in a new general insurance business in India, in partnership with the State Bank of India. This is believed to be
the largest investment to date by an Australian company in India. The IAG team, who were this year’s Insurance In-house Team of the Year at the ALB Awards, were also kept busy with an A$550m capital raising and handling the legal issues associated with the rollout of a new national marketing campaign.
What firms do you use? We have a tightly managed panel which is not large, but has a mix of top-end and smaller specialist firms, which allows for sufficient market choice. Has your legal spend changed? Cost pressure is always part of the picture, but this pressure has increased in the past six to 12 months. We have introduced tighter management controls on our panel, which were mutually agreed upon with firms. Advice for firms?
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The key is for the firm to be a trusted adviser with whom a robust relationship can be built. This makes it easier to manage all aspects understanding that the [feedback] is not a criticism.
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Annette Spencer, Head of legal counsel, UBS As head of the UBS team which won the gong for Investment Bank In-house Team of the Year at the 2009 ALB Law Awards, Spencer is well regarded for her handling of sophisticated capital markets transactions and her legal support and advice covering a wide spectrum of innovative products.
Against the background of the unique challenges presented by the economic downturn and the rapid shift in the regulatory environment, Spencer has shown strong leadership in maintaining team morale and direction.
What firms do you use? We instruct firms based on their expertise in the relevant area. Costs are a factor in our decision, all else being equal. Has your legal spend changed? There is an increased emphasis on managing our legal spend this year but I am pleased to say that we have found our key law firms to be receptive and realistic about our focus on ensuring we continue to get value for money. Advice for firms? Be proactive in issue-spotting and expand or reassess the partner contact points at their practice. Introduce in-house counsel and senior management to partners with expertise relevant to the current hot topics for the finance industry, if there isn’t an established connection already.
Rebecca Holbrook, General counsel, Fisher & Paykel Appliances (FPA) Fisher & Paykel, the iconic but troubled New Zealand whitegoods manufacturer scored some major runs earlier this year in a turbulent period, which general counsel Holbrook describes as “the most challenging, yet rewarding period of my career to date”.
Holbrook and the FPA team completed a series of key transactions including the completion of the restructuring of debt with a banking syndicate, placement of 20% of the group’s share capital to the China-based Haier Group, and a fully underwritten capital raising.
What firms do you use? In terms of New Zealand and Australia, our key law firms are Bell Gully (main provider, NZ), AJ Park (IP, NZ) and Simpson Grierson (employment advice, NZ). In Australia Freehills (corporate), Gilbert + Tobin (competition and IP) and Dibbs Abbott Stillman (franchise matters). Has your legal spend changed? The transactions that the company completed in May 2009 required a significant legal spend, so we will be decreasing our legal spend in the coming months. What would you say are the primary issues confronting corporate counsel in the current climate? Reducing external legal costs. Unfortunately annual law firm fee increases continue to be substantial, whereas generally corporate counsel legal budgets are static or smaller than previous years. Second, there is also the expectation of rapid service delivery. Technology changes mean that business can be transacted very quickly, and corporate counsel need to balance meeting time expectations with the provision of properly considered advice and contractual documentation, including seeking third-party input where appropriate. Finally, both the private and public sectors are reviewing the way they conduct their businesses, including reducing costs and increasing output. This can lead to a variety of changes, including outsourcing, changing suppliers and looking at global opportunities. Many of these changes require significant input from a legal perspective, often in a number of foreign jurisdictions.
Louise Leaver, Legal counsel, Australian Health Management Leaver’s bright career trajectory was apparent when she was named ACLA’s 2008 Australian In-house Lawyer Young Achiever of the Year. She has been called upon to manage some remarkably complex multi-jurisdictional matters, for example the drafting and negotiation of an association
arrangement between Lund University School of Aviation in Sweden and the University of Wollongong’s commercial arm, ITC. Leaver is a familiar face at the university, where she mentors young lawyers-to-be and is a regular guest presenter at the university’s legal practice course.
What firms do you use? Our team currently uses Mallesons, Clayton Utz, Swaab Attorneys and Kells. What can you tell young lawyers looking to pursue an in-house career? It’s important to understand that in-house offers different opportunities for career progression from private practice, because the teams are often quite small and will frequently have a flat structure. It means you have to be really proactive in pursuing personal growth opportunities. How has the GFC affected your work? I have had to be a lot more selective about briefing out to firms and placing a greater emphasis on the justification for briefing matters out. Advice for firms? Particularly in the current climate, firms need to understand the commercial realities of our business and make a call about what work and fees are commercially realistic to achieve the desired outcome. This is the sort of approach that I’d like to see firms take on all matters and be on the front foot, rather than clients having to push back on estimates.
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Inspiration in the house The pursuit of a worthy cause is not always compatible with the notorious time pressures on the modern lawyer. It is one thing to have an opinion or a passion, but another matter altogether to be able to translate that passion into action.
In this section, we feature a selection of in-house lawyers who have followed their hearts. Some have stepped into new roles, while others have taken on extracurricular commitments to fulfil their aspirations of conscience.
Robyn Briese, Senior lawyer, Australian Government Solicitor (AGS) While there has been incremental recognition by the profession of the importance of sustainability issues, some lawyers are keen to accelerate the pace of change. Briese has been a strong ambassador for the campaign against climate change.
She presented a paper at the annual conference of the British Institute of International and Comparative Law and has undertaken pro bono work for the Environmental Defender’s Office and is involved in the pro bono committee of the AGS.
Why should lawyers do pro bono work? To broaden their focus. Particularly being immersed all day at work in legal issues, I think it would be beneficial to look for outside interests and activities to contribute to, outside the legal sphere. While this pushes you out of your comfort zone a little more, I think it brings more balance to life, exposes you more to different perspectives and ultimately enhances the contribution you can make in all spheres of life.
Katrina Sharman, Corporate counsel, Voiceless Sharman left a successful private practice career at Minter Ellison to become corporate counsel for Voiceless, a nonprofit organisation dedicated to the protection of animals. As corporate counsel, Sharman aims to bring lawyers together to raise awareness of animal rights, create more legal advocates
for animals and lobby for Australian law reform to assist with animal protection. As well as speaking at law schools and law firms, Sharman has also been called upon to speak at Harvard Law School on developments in laws relating to animals.
Why should lawyers do probono work? Although those of us who work in corporate law may sometimes feel worlds away from the horror that befalls animals in society today, I believe that the professional skills and training that lawyers have, place us in a unique position to take action to alleviate their suffering. At the present time animals remain voiceless in law and though they may never pay us the way that conventional clients can, I believe with passion and dedication, each of us can make a difference.
Bob Mitchell, Director, legal risk and governance, World Vision Australia After spending years as a tax partner at PricewaterhouseCoopers, Mitchell made the switch to facilitating international development work at World Vision. He is a board member for a range of not-forprofit organisations, including community services provider BlueCare, the Timor Children’s Foundation and
PricewaterhouseCoopers’ own charitable foundation. Mitchell was recently selected as a member of the Attorney General’s International Pro Bono Advisory Group, which aims to improve links between the Australian legal profession and international development programs.
Why should lawyers do pro bono work? It is so important to apply your professional legal skills for the greater good. A role such as mine at World Vision is unique in drawing together the threads of legal skill, social justice and applied theology. Most firms may have pro bono programs, but these don’t always exist for in-house counsel - so why not start one? In-house lawyers can also consider professional volunteering and become involved in law reform processes or a community legal centre. It is crucial to test the waters and see where it takes you.
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Andrew Hamilton, former general counsel, ACN Pro bono work can change a person’s life and it can also change the law. Andrew Hamilton knew that important issues were at stake when he took on a complicated pro bono family law matter concerning custodial rights to four children. The matter was unusual because the father was in Israel and the mother was in Australia. Hamilton believed that the mother had a viable case, despite Legal Aid initially
rejecting it on the basis that the case had limited prospects of success. After disappointment in the Family Court, Hamilton’s persistence was vindicated in due course, with the High Court subsequently following the New Zealand adoption decisions which Hamilton had argued for in the Family Court. The result was a shift in important aspects of Australian law on crossborder custodial disputes.
Why should more lawyers be involved in pro-bono? It is personally rewarding to take on a case which is helping an individual in distress. Furthermore, this type of work can be intellectually rewarding. Lawyers should never be scared to go outside their own area of legal experience. If you are a good lawyer, you can apply those skills to other areas of law, as long as you are prepared to do the research. On both levels, pro bono can be so rewarding.
“Lawyers should never be scared to go outside their own area of legal experience.” Andrew Hamilton, Acn Pacific
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ALB guide: building & construction 2009
Building & Construction state of the market
INTRODUCTION ALB Guide: Building & Construction 2009 is the latest in an exciting series of detailed insights into specific practice areas and the leading firms and lawyers operating within them. By combining specific new research (among peers, barristers and client companies) with third-party market information, ALB Guides arrive at lists of ‘leading firms’ and ‘recommended firms’ as well as ‘leading lawyers’ in each of the practice areas covered.
METHODOLOGY In the preparation of this report, ALB conducted independent and referee-led telephone interviews with Australian and New Zealand companies. These results were cross-checked with opinions from Australian and New Zealand partners, and third-party market information. Local firms were listed first followed by national firms, arranged according to feedback received. Interviews were mainly conducted in the two-week period from 6 to 16 July 2009.
CONTENTS 42.
State of the market
43.
Leading and recommended firms
44.
Leading lawyers 42
Since the global financial crisis began privately-funded construction has steadily decreased, due to the lack of available debt. Those areas hardest hit have been private and some resources development work. Some projects have slowed down to the point where they are being stalled, according to Minters partner Ian Briggs. “The Northern Link Project (A$2bn) in Brisbane has been on hold for most of the year, and property development in all capital cities has hit a brick wall. Grocon, the construction company, had commenced to build the highrise Brisbane CBD Vision Tower (A$900m), but the project has not been able to secure funding and has been shut down,” he says. In New Zealand a number of factors have led to a slowing down of frontend work. This includes the economy, a change of government occurring in November 2009 and the introduction of a ‘Supercity’ for Auckland (which is due to be in place by October 2010), says Kensington Swan partner and business director Paul Buetow. Perhaps the only shining light in energy & resources has been a raft of proposed LNG projects, which have largely been unaffected by the GFC. Briggs says projects that are around still range from A$1bn to A$4bn, because natural gas markets have not been as hard hit as has coal, nickel and other base-metal commodities. At many firms the balance of front and back-end work has recently shifted from an even split, to 60-40 in favour of dispute resolution. However, there has not been the volume of litigation that lawyers had initially expected. “When the GFC started we expected lots of back-end work, but we have not seen the same tidal wave of long arbitrations and disputes
that we saw back in the early 1990s. Clients are not committing to running long court cases, because of painful memories of costly cases back then,” says Briggs. Various forms of alternative dispute resolution have become increasingly popular, as some can offer greater control and progress monitoring to clients. One of the most obvious examples is the adjudication process, which has been in place in the United Kingdom, throughout Australia and in New Zealand for a number of years. “Adjudication is a sharp, short and sometimes brutal process, but it is now the most preferred construction dispute-resolution process” says Kensington Swan partner Stuart Robertson. “It represents about 40% of our practice. We have claims in the pipeline that are potentially NZ$15m to NZ$20m” adds Kensington Swan partner Chris Booth. “Leaky building-related litigation continues to strain the resources of the High Courts, with an estimated A$2bn of claims still to see the light of day” he adds. “Kensington Swan’s team is currently acting on more than 20 such claims, some up to NZ$20m. It has also recently been appointed the Ministry of Education’s preferred provider of leaky building resolution legal services, for the large number of New Zealand schools suffering from such defects” Robertson says. However, the ‘dispute-resolution dam, will eventually burst, making way for a tide of work, maintains Mallesons’ Peter Pether. “There were so many major projects during the boom period, where c-rated contractor’s teams and c-rated project managers and client teams were used, because the
a-rated teams were unavailable. It’s an industry that requires precision, high quality management and control. “If there are not good contractors, project managers and designers at work then clients will get into disputes very quickly,” he says.
SYDNEY In Sydney one client felt that lawyers should carefully consider when committing to work, drawing from previous instances where lawyers “over-promised” and “underperformed”. Herbert Geer was the cream of the crop for construction disputes, front and back-end work. The firm was generally efficient and knowledgeable. Paul Deschamps was practical in his advice and able to listen and consider different positions. He got on well with clients and was respected for refraining from bullying others into a decision. Deacons was chosen for being available, obliging, good at meeting deadlines, particularly when it came to builder-related negotiations and soliciting. Keith Redenbach had a good knowledge of the law, was quickly able to grasp building issues and was known for drafting contracts for major projects. Mark Waddell was a quiet but acknowledged achiever, while David McErvener was also singled out for praise. Holding Redlich was among the most highly regarded, with Grant Parker known for his front-end work on PPPs, green buildings, and contracts. Clients said he was good at interpreting contracts, identifying risk, and paid “close attention to detail”. Colin Biggers & Paisley was named a major player for construction legal matters. Geoff Standen was Australasian Legal Business ISSUE 7.9
20 09 mentioned for “traditional building cases”, particularly those involving major CBD construction. Maddocks was another popular choice, with Mal Fielding and Andrew Chapman singled out for praise. Thomson Playford Cutlers also rated highly, with David Campbell-Williams considered quite an expert. Corrs Chambers Westgarth’s Robert Regan was known as a construction veteran, while Simon Ashworth was praised for his broad construction expertise. Frank Lawson was chosen for his construction risk work. Gadens Lawyers’ Scott Laycock gave “value-for-money advice” on every occasion, while Robert Riddell was strong on client liaison. In other firms, DLA Phillips Fox’s Scott Alden, Tresscox Lawyers’ Brian Ambler, Piper Alderman’s Anne Freeman and Tim Coleman were also mentioned favourably. Rashda Rana was praised for her ability to think “outside the square”. She had vast knowledge, was excellent at dispute resolution and offered both practical and pragmatic advice. ALB has not been able to ascertain whether Rana, who recently left Holding Redlich, has joined a new firm or is working alone. Mallesons Stephen Jaques was highly praised among clients ALB interviewed, particularly noted for its strength in construction. Peter Pether was named as an “excellent lawyer” and a “top strategist”, notably for his back-end litigation work. Julie Wright, on the other hand, offered practical and pragmatic advice and was “excellent” at disputes, as she offered practical and pragmatic advice that “delivered outcomes”. Geoff Wood and Adam Wallwork was chosen for front-end negotiating, while David www.legalbusinessonline.com
Storr was also highly regarded for infrastructure and project finance. Clayton Utz was also named a premier firm for construction law, with Doug Jones being described as “head and shoulders” ahead of the rest. One client chose him for major overseas projects and contractual disputes because he was “incisive, accurate and articulate”. Owen Hayford was a “thorough lawyer”, who was good for large-scale and complex matters. Freehills was considered to be one of the best firms for construction matters and David Templeman was praised for his PPP project work. Cameron Hanson was noted for dispute resolution, while Peter Paradise, Toby Anderson and Jim Theodore were also highly regarded Allens Arthur Robinson was highly regarded, with Leighton O’Brien considered the best at front-end work, particularly infrastructure and PPPs. John Dorter was also recommended. Minter Ellison was also a strong contender for both front- and backend construction matters. Pamela Jack, Elizabeth McKechnie and David Fabian were mainly chosen for litigation and dispute resolution.
MELBOURNE Baker & McKenzie won the most praise in Victoria, with Timothy Garrood the PPP and construction specialist. He was one of the “top five” in non-contentious work, commercial in his legal advice, was responsive and had a good grasp of the energy and construction industries. One client said that his ability to structure a deal made projects “bankable” to financiers, which was the “buzz word” for clients. Anthony Whelan was similarly favoured for his acumen, and ability to understand and resolve
leading firms NB: Firms are listed alphabetically under each subheading
f l
sydney
ADELAIDE
• COLIN BIGGERS & PAISLEY • DEACONS • HERBERT GEER • HOLDING REDLICH • MADDOCKS
• FINLAYSONS • FISHER JEFFERIES • THOMSON PLAYFORD CUTLERS
MELBOURNE
• CORRS CHAMBERS WESTGARTH • DEACONS • JACKSON MCDONALD
• BAKER & MCKENZIE • DEACONS • DLA PHILLIPS FOX • HOLDING REDLICH • MOLINOCAHILL LAWYERS
BRISBANE • Carter Newell • HOLDING REDLICH • HOPGOODGANIM • McCULLOUGH ROBERTSON
PERTH
NATIONAL TOP TIER • ALLENS ARTHUR ROBINSON • CLAYTON UTZ • FREEHILLS • MALLESONS STEPHEN JAQUES
NEW ZEALAND • BELL GULLY • CHAPMAN TRIPP • KENSINGTON SWAN • SIMPSON GRIERSON
f r
other recommended firms
NB: Firms are listed alphabetically under each subheading
SYDNEY
ADELAIDE
• CORRS CHAMBERS WESTGARTH • GADENS LAWYERS • THOMSON PLAYFORD CUTLERS
• CRAWFORD LEGAL
MELBOURNE • CORRS CHAMBERS WESTGARTH • MIDDLETONS • MILLS OAKLEY
BRISBANE • CORRS CHAMBERS WESTGARTH • DEACONS • DLA PHILLIPS FOX
NATIONAL TOP TIER • BLAKE DAWSON • MINTER ELLISON
NEW ZEALAND • BUDDLE FINDLAY • MINTER ELLISON RUDD WATTS • RUSSELL MCVEAGH
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ALB guide: building & construction 2009
leading lawyers NB: Listed in alphabetical order
IAN BRIGGS Firm: Minter Ellison Location: Brisbane • Practice areas: construction, arbitration, infrastructure, projects, project finance • Leader in alliance contracting, acted on North Queensland Gas Pipeline, Wivenhoe Dam, Burnett River Dam and Anglo’s Dawson project • Memberships: Infrastructure Association of Queensland, Institute of Arbitrators Australia
PAUL DESCHAMPS Firm: Herbert Geer Location: Sydney • Practice areas: construction • Acted for clients preparing project documentation for high-profile projects, including airport and railway infrastructure, recycling facilities and property developments • Specific experience in court proceedings, arbitrations, mediation and adjudications
ST JOHN FRAWLEY Firm: Holding Redlich Location: Melbourne • Practice areas: construction, infrastructure, energy & resouces, planning, environment • Has over 17 years’ of experience in construction, engineering and commercial disputes • Advised insured clients on project administration, risk-management, indemnity and policy interpretation for construction/engineering projects
TIMOTHY GARROOD Firm: Baker & McKenzie Location: Melbourne • Practice areas: construction, infrastructure, project finance, energy • Memberships: Law Society of South Australia, Law Institute of Victoria
BASIL GEORGIOU Firm: Jackson McDonald Location: Perth • Practice areas: building, construction, engineering, arbitration & mediation, insurance, OH&S • Acted on building construction & engineering contracts, construction works insurance, litigation, professional negligence & liability, dispute resolution. • Memberships: Law Society of Western Australia, Western Australia Professional Services Network,
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issues. He also had one of the biggest international infrastructure practices. Leigh Dutie was chosen for litigation matters. Deacons was favoured for its long-standing client relationships. Having worked in the industry for many years, John Sharkey was strong at construction, an intellectual and treated clients with respect. Grant Ahearn was commercial in his legal advice and provided sensible advice. Matthew Croagh was known for his success at disputes. DLA Phillips Fox’s Mark Huntington and Kyle Siebel were construction specialists with a “significant presence”, while John Gallagher was also noted for his projects and infrastructure know-how. Holding Redlich demonstrated strong capability in building and was adaptable, innovative, timely and cost effective. St John Frawley and his team consisting of Catherine Bell and Kane Barrett provided “excellent” service in a range of front and backend contractual, dispute resolution and project structuring. His depth of legal technical expertise, breadth of industry knowledge, common sense and commercially minded approach won great respect among clients. MolinoCahill Lawyers was an “up-and-coming” boutique firm, where Tony Molino had a growing construction team with national toptier expertise. Mills Oakley was favoured for its competitive fees, and work on backend matters and disputes. Andrew Brown was singled out for praise. Corrs’ Andrew Pitney was known for his project delivery in construction and infrastructure. Middletons’ Nathan Abbott was also mentioned. Freehills was considered to be the Victorian favourite national firm. Jim Theodore was “excellent” and “strategic” at construction, projects and PPPs. Michael Pryse was “excellent” at dispute resolution, offering practical, pragmatic advice, Alan Rosengarten was good at PPPs, David Opperman was a commercial savvy, “big case litigator”while Geoff Hancey was also highly regarded. Mallesons’ Peter Megens was one of the “heavy hitters” for infrastructure and construction litigation, and James Forrest was also mentioned. Clayton Utz’s Andrew Stephenson
was good for top-end construction and engineering litigation and arbitration, Naomi Kelly was the one for PPP and infrastructure-related work, while Steve O’Reilly was the construction and projects “star”. Minters was also a top pick. Phillip Greenham was quick in responding, while Peter Wood and Stuart Nankervis also received kudos.
BRISBANE With noted expertise in both front- and back-end construction work Carter Newell received numerous mentions from clients with both Patrick Mead and David Rodighiero getting a special mention. HopgoodGanim was the preferred Queensland firm for constructionrelated tenancy, property and leasing matters. Bruce Humphrys was accessible, able to cross-refer the right advisers to help clients address all aspects of matters. McCullough Robertson was strong on CBD-related construction and engineering, and both Guy Humble and Bill Morrissey were good for litigation. Holding Redlich made itself known in the Brisbane market with its construction contract and BCIPA claims work. Scott Lambert was innovative, timely and cost-effective. Stephen Pyman was also highly regarded. Corrs’ Peter Schenk was widely known for his mining, civil and building projects in Australia and overseas. DLA Phillips Fox’s Roger Quick had long experience in procurement and management of services to the construction industry. Deacons’ Rob Buchanan was also mentioned favourably. Freehills was considered one of the best in the Sunshine Sate. Hamish Macpherson was an excellent dispute resolution practitioner, who offered practical and pragmatic advice. Peter Butler did a fantastic job of bringing multi-disciplinary teams together. Clayton Utz was also a top firm mentioned. Dale Brackin was hailed for his “commercially relevant” back-end and front-end work, while Arch Fletcher offered practical and pragmatic advice. Minters was also considered highly in Brisbane. Ian Briggs was talented at creating alliances, was an effective facilitator of agreements and ensured Australasian Legal Business ISSUE 7.9
leading lawyers BRUCE HUMPHRYS Firm: HopgoodGanim Location: Brisbane • Managing partner of the firm • Practice areas: property, projects • Acted on several Raptis Group developments, and the development of Couran Cove Resort and Baulderstone Hornibrook’s Teneriffe Wharves
PETER OWLES Firm: Buddle Findlay Location: Auckland • Practice areas: projects, infrastructure, PPPs, transport, M&A, banking and finance • Leading lawyer in infrastructure, and both project and acquisition financing • Acted on numerous project-financed infrastructure developments
DOUG JONES
ROBERT PARKER
Firm: Clayton Utz
Firm: Chapman Tripp
Location: Sydney
Location: Auckland
• Practice areas: construction, projects, transport, government, arbitration, capital markets • Acted on domestic and international matters involving project finance, dispute resolution, infrastructure, Department of Defence facilities and equipment acquisitions, airports, sea ports, roads and rail projects
• Practice areas: construction, infrastructure, projects, property, transport • Has extensive experience in all aspects of construction law • Acted on Royal & SunAlliance Centre, Metrowater’s construction projects, New Zealand Transport Agency’s Alpurt B project, and Manukau Harbour Crossing alliance
HAMISH MACPHERSON
PETER PETHER
Firm: Freehills
Firm: Mallesons Stephen Jaques
Location: Brisbane
Location: Sydney
• Practice areas: construction, projects, litigation, dispute resolution • Acted on United Group’s construction dispute at the Supreme Court of South Australia over blast furnace reline project; Mitsui’s ‘process plant’ disputes over Victorian water treatment plants; and NSW Waterways Authority’s defence against unsuccessful tenderer over redevelopment of Sydney’s Finger Wharf
• Head of firm’s property construction and environment team • Practice areas: construction, dispute resolution, infrastructure, international arbitration • Extensive litigation, arbitration and dispute-resolution experience in construction, engineering, resources and infrastructure sectors • Memberships: Law Society of New South Wales, Institute of Arbitrators and Mediators Australia
DAVID MARTIN Firm: Finlaysons Location: Adelaide
Antony Riordan Firm: Colin Biggers & Paisley Location: Sydney
• Practice areas: construction, property • “Unrivalled” experience in acting on major property development projects • Membership: Urban Development Institute of Australia
• Experienced in all areas of commercial, construction and engineering litigation and ADR, including expert appraisal, expert determination, mediation and arbitration • Has acted for large international corporations, smaller businesses, public sector, professional indemnity and public liability insurers, architects, engineers, local councils, liquidators and administrators.
PETER MEGENS
KEITH REDENBACH
Firm: Mallesons Stephen Jaques
Firm: Deacons
Location: Melbourne
Location: Sydney
• Practice areas: construction, infrastructure, energy & resources, dispute resolution, defence, international trade • Acted on Melbourne City Link Project, international arbitrations about hydro-electric schemes and infrastructure assets • Memberships: Institute of Arbitrators and Mediators Australia, Australian Centre for International Commercial Arbitration
• Practice areas: construction, engineering, international arbitration • Acted on projects involving resources, mining, infrastructure and transport; PPPs and alliances; and reviewing Australian Standards construction contracts • Clients: principals, contractors and consultants across a range of industry sectors
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ALB guide: building & construction 2009
leading lawyers NB: Listed in alphabetical order
TONY SAINT Firm: Thomson Playford Cutlers Location: Adelaide • Practice areas: construction, infrastructure, corporate and commercial, government • Depth of experience in projects, joint ventures, infrastructure, developments, projects • Memberships: Law Council of Australia, Australian Corporate Lawyers Association, Australian Institute of Company Directors
JOHN SHARKEY Firm: Deacons Location: Melbourne • • • •
Practice areas: construction and engineering More than 30 years of exclusive experience in construction law Has acted on construction contract drafting and dispute resolution Memberships: Victorian Skills Commission
DAVID TEMPLEMAN Firm: Freehills Location: Sydney • Practice areas: construction, PPPs, projects, infrastructure, transport, defence, energy • Acted on commercial property developments for Goodman, Valad Property Group, Leighton Properties; Jacksons Landing development in Sydney; IKEA’s Rhodes store development in Sydney, and industrial waste treatment plant development in United Arab Emirates
ADELAIDE Thomson Playford Cutlers was good for work across the board, but the firm was singled out for its documents and contracts. Recognised for its national capability, it was often chosen by clients for its “valuable” local focus. Tony Saint was effective, knowledgable, broad in his offerings, “cut to the chase” and offered “highlevel service”. Finlaysons was considered to be on par with most national firms in terms of expertise and offering. David Martin was responsive, knowledgeable and provided a high level of service. Anthony Floreani was recognised for his hands-on industry experience in construction and property development. Fisher Jefferies was also strong in construction work. Karen Thomas was known for her commercially minded litigation work. Crawford Legal was popular for building contracts and Victor Daminato was “detail focused” and always put in an extra effort.
JIM THEODORE
PERTH
Firm: Freehills
Jackson McDonald was a top Perth firm. Basil Georgiou was the main person to see for dispute resolution and offered practical and pragmatic advice. Deacons’ Bill Ryan was also noted for providing sound advice. Corrs’ Chris Ryder was a top construction project development specialist. Mallesons also made its presence known in Perth and Simon Lee was highly regarded in the field. Blakes’ Paul Riethmuller was also acclaimed for his construction and litigation work. Minter Ellisons’ Greg Steinpreis and Clive Luck were also mentioned.
Location: Melbourne • Practice areas: construction, PPPs, infrastructure, projects, transport, defence, water, technology and communications • Acted on Melbourne City Link; Royal Children’s Hospital; ABN AMRO, Wyuna Water, Veolia Water Treatment Plant; Transfield Services’ SWIS I Peaking Power plant • Clients: Transurban, Connex, Alstom, United Group, ERG, Santos
MICHAEL WEATHERALL Firm: Simpson Grierson Location: Auckland • Head of the firm’s construction team • Practice areas: construction, energy & resources, transport, local government • Acted on Victoria Quarter development project, Transpower’s transmission line project, Christchurch International Airport expansion project, Auckland City’s indoor stadium (PPP/BOOT basis)
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the final contract was as intended. Ross Lansberg and Julia Whitehead were also mentioned favourably. Blake Dawson’s Chris Mitchell was considered the construction and project expert, Georgia Quick was a dispute-resolution and riskmanagement professional, while Kevin Arkwright was the one to see for construction and engineering projects. Mallesons’ Scott Budd was also highly regarded.
new zealand Bell Gully was named as the premier trans-tasman firm by clients. Garry Downs and Andrew Brown were considered to be experts in infrastructure and energy contracts. Jane Holland, Andrew Petersen, David McGregor and Andrew Beatson were also highly regarded in the field. Chapman Tripp was another premier Kiwi firm, particularly for urban redevelopments. Robert Parker was a specialist property lawyer who was talented at the building side of major infrastructure projects. Bill Sandston and Matt Carroll were also highly regarded. Simpson Grierson was similarly chosen for urban redevelopments. Michael Weatherall had valuable civil engineering experience that proved useful for putting complex engineering structures into legal contractual form. Greg Towers and Graeme Christie were also recommended. Kensington Swan was a highly regarded firm. Paul Buetow was singled out for praise for front-end work, Chris Booth was known for his construction dispute work, while Stuart Robertson was mentioned for his building expertise and construction dispute work. John Meads, Andrew Skelton and Hayden Wilson were also mentioned in this field. Buddle Findlay had clients who kept choosing the firm for its work on contracts and construction-related financing. Peter Owles was named as a “top guy” and “one of the best” with respect to turnaround, availability and completion of deals. Michael Tinkler and Paul Farrugia were also mentioned in this area. Russell McVeagh was praised for its work on urban redevelopments. Sally Fitzgerald, Greg Thompson and Ed Crook were mentioned. DLA Phillips Fox’s Sharon Skinner, Brian Bray and Susan Hesp were mentioned favourably, as were Minter Ellison Rudd Watts’ Andrew Monteith, Paul Radich, Rachel Devine, Ross Pickmere and Stephen Price. Other firms also considered to be strong players in this area included Hesketh Henry, Anthony Harper, Dawson Harford & Partners, Greenwood Roche Chisnall, Gregory Simon, and Grimshaw & Co. Australasian Legal Business ISSUE 7.9
featured firm
Mills Oakley With a growing eastern seaboard presence, Mills Oakley is intent on assuming a place at the top of the mid-tier firms, providing a genuine alternative for clients who might currently be using top-tier and large national firms. We are already working for some of Australia’s largest and best-known companies, and Mills Oakley provides a level of service that is on par with top-tier firms, but offering a better value proposition.
The building and construction team at Mills Oakley aims to exceed the expectations of clients with the best possible service. “Whether you are in the building and construction, property or engineering industries, your legal work requires lawyers with a deep understanding of the risks and stages of building, construction and property development processes,” says John Nerurker, chief executive officer of Mills Oakley.
The mills Oakley building and construction team
Roland Burt, Partner, Building & Construction Roland works across all aspects of construction law, with particular interests in dispute resolution, payment claims and contract negotiation and drafting. Roland also has many years’ experience in commercial litigation. Roland leads Mills Oakley’s Melbourne construction practice.
Darren Ho, Partner, Building & Construction Darren’s experience in the building and construction industry is in providing both front and back-end legal services to building contractors, engineers, architects, private certifiers, (building) industry associations, government authorities and developers. Darren drafted the amendments to Queensland’s Master Builders Commercial Building Contract. He regularly provides presentations and advice to the members of Master Builders Queensland.
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“The team at Mills Oakley understands these different industries. We offer the ability and confidence to apply this understanding to everything you need us to do – particularly when we negotiate, draft and review contracts or advise on claims, dispute resolution and litigation.” Mills Oakley specialises in:
• Negotiating, drafting and managing entry into development and construction contracts which meet your commercial requirements. • Advising on potential claims and disputes, with a view to maximising your position while minimising expenditure on costly disputes. • Acting in whatever dispute resolution process is contractually required or appropriate to your situation. The firm’s extensive experience and involvement in highly technical landmark cases puts Mills Oakley at the forefront in practice of building and construction law.
Kelvin Oldridge, Special counsel, Building & Construction Kelvin has more than 12 years of experience advising and acting for clients in construction law related to civil engineering, infrastructure, commercial and large-scale domestic developments. In addition, Kelvin has a further 11 years of project management experience in civil engineering, infrastructure, tunnelling and commercial and multi-storey construction. His project management experience includes single-storey domestic, multi-storey domestic, commercial and industrial projects. Brett Wilson, Partner, Building & Construction Brett specialises in drafting building and construction contracts, providing contract management advice and resolving construction disputes. He acts for various participants involved in the construction industry including developers, contractors, subcontractors, consultants, government agencies and local councils. One of Brett’s specialities is drafting plain English, commercially-focused building contracts and related project documentation, such as user manuals, financier’s side deeds and consultancy agreements. Andrew Wallis, Partner, Building & Construction Andrew is a respected building and construction lawyer who specialises in effectively managing and resolving major construction issues and disputes. He drafts, negotiates and advises on complex construction contracts and assists his clients to strategically manage contracts to minimise or avoid unnecessary litigation. He is also a skilled litigator, regularly acting for developers, contractors, subcontractors and other industry participants, in all forms of dispute resolution.
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Feature | insurance law >>
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The
claim game Legal firms are pondering the claims spike that never came – but there’s still plenty of work to go round 48
he claims environment is busy, but not as busy as was expected. While firms are generally upbeat about their workflow (would they tell us if they weren’t?) the absence of anything resembling a counter-cyclical surge in claims work has insurance lawyers intrigued. “People were expecting a greater spike in claims than what has actually occurred,” says Thynne & Macartney partner John Moore. That position seems to be the consensus. IAG general counsel Michael Cripps says that while there has been an increase in the amount of “week to week” claims work he has referred to external advisers, he would not describe this increase as significant. Moore says that there is also a variation between different types of claims. He describes professional indemnity claims relating to architects, for example, as being fairly quiet while claims relating to engineering were up. “Often there is no particular pattern,” Moore says. “It’s possible that some people are keeping their powder dry and not wanting to jump into expensive litigation. The [expected wave] of claims may still be yet to come.” In the meantime, there is still plenty of work for broad-based professional indemnity practices like Thynne & Macartney. “The practice is much busier, but we can’t pinpoint it to any one sector,” says Moore. And while it is clear that the global financial crisis is having some effect on the level of professional indemnity claims – particularly those by disgruntled investors – arguably, this is the result of specific instances of corporate distress, rather than an indicator of an industry-wide spike in claims.
Prosperity rules However one might describe the claims environment, law firms operating in this area have generally had a positive year. “Our revenue has increased by 50 to 60% in the past year and we’ve put new people on in Melbourne and Sydney,” says boutique insurance law firm Wotton + Kearney’s managing Australasian Legal Business ISSUE 7.9
Feature | insurance law >>
partner, David Kearney. Part of this growth has occurred as a result of the recruitment of partners and teams from bigger firms HWL Ebsworth and DLA Phillips Fox, but Kearney says that about 50% of the firm’s growth is organic. Another notable story is Moray & Agnew’s Melbourne office, which experienced a 50% increase in new instructions in the professional indemnity and public liability areas last financial year, and revenue growth of 15%. However, the firm’s Melbourne managing partner, Bill Papastergiadis, warns against drawing the inference that claims work across the market is up by a similar figure. “We’ve had more work because we’ve managed to get onto more panels,” he says. “There has been a slight increase in claims, but we haven’t seen a sudden increase from any one insurer.” Perhaps a better indicator of the rise in claims work would be found in Moray’s national revenue growth figure, which is 4.2 %
Firing line Spike or no spike, there is no doubt that claims activity arising from corporate distress is already keeping firms busy. When unhappy investors begin exploring their options, company directors and officers, mortgage brokers, financial planners, securities lenders and accountants are all within the potential line of fire. “Accountants are often involved due to jointly hosted seminars with financial planners or on a mere referral basis,” says Paul Hopkins, senior partner at Carter Newell Lawyers. “Accountants are also being sued for poor performance of businesses by business owners who are alleging inadequate due diligence.” Australian Securities and Investments Corporation investigations into corporate collapses are already underway, giving rise to a fresh round of claims. “The defence costs [of the investigations] are covered by most D&O wordings,” says Hopkins. “There has also been a rise in the willingness of shareholders to take action against directors, in relation www.legalbusinessonline.com
to mismanagement issues, and also claims for misleading and deceptive conduct against directors relating to the preparation of the prospectus, prior to listing.” As ASIC investigations are still in progress, this can only increase an already busy line of work. Wotton + Kearney, for example, is already advising on matters arising from claims against Storm Financial, Opus Prime and Centro Properties Group.
Claim areas Carter Newell has noticed an increase in defect claims in the construction and engineering space. At present, the firm is advising on some major claims relating to very large government infrastructure projects. “This has arisen, in part, due to dilution in the skill level because of capacity constraints that arose at all skill levels, during the period of economic boom prior to the financial crisis,” says Paul Hopkins. Tort law reform is commonly thought to have killed off personal injury claims, but Hopkins says that the new legislation has proved a useful vehicle for claimants, to engage in prelitigation disclosure and investigation with minimal cost implications. “Consequently, we have seen a steady increase in claims over the years, with many now failing to settle at the compulsory conference stage and proceeding to the litigation phase,” he says. Injury claims arising out of labour hire contracts are also on the rise. “The courts have traditionally awarded primary liability to the “host employer” with the worker’s compensation insurer bearing only minimal liability for what is essentially
Michael Cripps, IAG
Bill Papastergiadis, Moray & Agnew
“Our single focus as an insurance firm has definitely helped us weather the GFC” David Kearney, Wotton + Kearney
David Kearney, Wotton + Kearney
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Feature | insurance law >>
Paul Hopkins, Carter Newell
a worker’s claim,” he states. “Many underwriters are concerned with this spike in claims and are now trying to ensure that premiums reflect this growing risk. This is a necessary outcome of the substantial growth Queensland has seen in the mining and resources industry.” Aviation is one area which has experienced severe GFC turbulence of late. In spite of – or perhaps because of – this, Carter Newell has seen an increase in liability, property damage and business interruption claims in the industry. “This increase in litigation may also reflect the Australian government’s recent ratification of the Montreal Convention which has introduced a two-tiered system of liability, an increase to carriers’ maximum liability for delay and loss or damage to cargo, a broadening of the scope for a family member to make a claim, and an obligation to make advance payments.”
MORAY & AGNEW • AUSTRALIA’S PREMIER SPECIALIST INSURANCE FIRM
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oray & Agnew differentiates itself by providing full east coast coverage with genuine insurance specialisation. Over 80% of the firm’s 170 lawyers practise exclusively in insurance law and litigation. This specialisation, combined with large offices in Sydney, Melbourne, Brisbane, Canberra and Newcastle, sets Moray & Agnew apart from all its competitors. Moray & Agnew receives instructions from Australia’s major insurers together with numerous boutique insurers, brokers, underwriting agencies, government agencies and blue-chip corporations. Insurers from the United Kingdom, United States and Europe also regularly instruct Moray & Agnew on matters arising in Australia or throughout the South Pacific.
Areas of expertise Regulatory compliance and risk Policy advice, drafting and interpretation Directors and officers liability
Carter Newell is keen to build up this area as a signature practice, having recently produced a national “Australian Airports Liability and Compliance Guide”.
Single focus “Our single focus as an insurance firm has definitely helped us weather the GFC,” says Wotton + Kearney’s David Kearney. “In a downturn, firms tend to eliminate non-core activity. We have a single focus on insurance and a simple organisational structure, so we haven’t had the issue of being weighed down by non-core parts of the business.” He says that an insurance practice can be lucrative if it is structured properly. “A single-firm focus means that the firm’s marketing strategy is targeted at one industry. You can put in place an effective strategic plan and you have a common goal – there are no divergent practice groups or
National Contacts Geoff Connellan, Partner Office – Sydney Ph: (02) 9234 4506 E: gconnellan@moray.com.au Suzanne Wallace, Partner Office – Sydney Ph: (02) 9234 4536 E: swallace@moray.com.au
Class actions Medical negligence Marine insurance Life and disability insurance Product liability
Bill Papastergiadis, Partner Office – Melbourne Ph: (03) 8687 7358 E: bpapastergiadis@moray.com.au
Professional indemnity Reinsurance Construction and all risk Builders warranty Coronial inquests and inquiries Catastrophic accident claims Compulsory third party Workers compensation Captive insurers / self insurers
David Flint, Partner Office – Brisbane Ph: (07) 3225 5905 E: dflint@moray.com.au
Andrew Muller, Partner Office – Canberra Ph: (02) 6210 4205 E: amuller@moray.com.au
Dust and toxic tort litigation Property damage Public liability Sports insurance Travel insurance
Peter Utiger, Partner Office – Newcastle Ph: (02) 4911 5412 E: putiger@moray.com.au
Bloodstock insurance
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Australasian Legal Business ISSUE 7.9
Feature | insurance law >>
disagreements over chargeout rates.” The expansion of Moray & Agnew in Melbourne is a case in point. Since entering the market in June 2006, the Melbourne operation has grown from five to 13 partners and increased revenues by 126%, a result achieved through the selective targeting of particular clients and specialist areas. The firmed earned a spot on the panel of an insurer covering 76 Victorian local councils and continued its strategy of pursuing work from state and federal government instrumentalities. The firm has also built on its specialisations, with new partners in regulatory compliance and life insurance. “The trend is for insurers to have fewer firms on their panels,” says Papastergiadis. “Having that sharp expertise is an important differentiator.”
In recovery “Insurance is known as a counter-
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“In mature insurance practices like ours and especially in professional indemnity, claims have a long tail so the work is not affected so much by cycles” John Moore, Thynne & Macartney cyclical practice area, but work is also fairly steady during good economic times,” Kearney says. He is in a good position to comment, having spent the past seven years building Wotton + Kearney in largely benevolent conditions. However, he describes his outlook for the future as buoyant.
John Moore , Thynne & Macartney
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Feature | insurance law >>
Geoff Connellan, Moray & Agnew
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“One thing we’ve proved over the years is that if you concentrate on the fundamentals, there are plenty of growth opportunities. There won’t be as many claims, but there will be opportunity for front-end work – such as regulatory work.” Moray & Agnew Sydney partner, Geoff Connellan, agrees a renewal of economic fortune does not necessarily mean the claims work will disappear. “When investment begins to flow again, people start to be more entrepreneurial and take risks, which gives rise to a different type of claim.” There is also the opportunity for more work from international insurers, called upon by foreign clients to insure risks arising from activities in Australia. “We have seen the international insurers return to the Australian market,” says Moray’s Connellan. “For example, the United States insurers are showing a greater interest in Australia of late.”
Thynne & Macartney’s Moore is unsure whether counter-cyclical strategies work for insurance practices. “In mature insurance practices like ours – and especially in professional indemnity – claims have a long tail, so the work is not affected so much by cycles,” he says. Moore is ambivalent about a shift to front-end work. “Professional indemnity is a very specialised area and frontend work means operating in a very different manner,” he says. The Insurance Council of Australia is considering changes to the General Insurance Code of Practice, while the federal government plans to introduce a uniform national consumer law which will also have an impact on how insurers operate. Insurance lawyers are watching with interest. “The changes may have an impact going forward, but as for the impact on business, I doubt it will increase or decrease work,” Kearney says. ALB
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Feature | document management >>
Safely assessing risk on outsourcing and insourcing document management
After lawyers have individually finished creating and revising their documents on their desktop computers, laptops and mobile devices, having differing versions of the same documents can lead to lost productivity and higher costs. ALB looks at the issue of better document management
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Feature | document management >>
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raditionally, professional service firms have chosen to process documents internally but increasing costs and operational issues underpinning the economies of scale, many law firms are now looking to outsource or insource these processes. Insourcing is often the preferred and more cost effective choice for larger scale ongoing projects but boutique firms and smaller projects may look to outsource parts of their document management systems (DMS). “Reducing costs and concentrating more on core business activity is driving the strategic planning of law firms, to rethink their document management processes,” says SarahJane Ward, who is the communications director at specialist legalsupport services provider LitSupport. “Improving operational performance and enhancing client services are important factors as well as keeping in step with the next generation of logic in shared-services management.” However, Ward says that the overriding consideration for professional services firms is maintaining security and confidentiality levels. A careful risk assessment of any third-party service provider can mitigate most pitfalls and provide necessary reassurance to key stakeholders, with independent accreditation of service providers offering a benchmark for assessment.
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►► Introducing DocsCorp
DocsCorp is an Australian software developer that provides a range of software solutions for document management professionals, to share critical information in a format that is safe, secure, complies with industry standards and is universally readable. DocsCorp has more than 3,500 clients worldwide, including professional service firms (accounting, legal and in-house legal counsel), government departments and corporate enterprises. The pdfDocs Solutions Suite (pdfDocs Desktop, compareDocs, OCR Server, formFiller) integrates into leading DMS’s Autonomy iManage WorkSite, NetDocuments, Open Text eDOCS DM and DOCS Open, TRIM, Worldox, and Microsoft SharePoint, to help law firms and in-house legal counsel: • manage their business-critical documents efficiently and securely • standardise PDF creation, document comparison, metadata management, form creation and distribution, Matter Bibles and OCR imaging, conversion and profiling across the firm or department • enhance productivity and workflow • reduce costs and risks associated with distributing electronic documents beyond the company firewall DocsCorp released an upgrade to its flagship product this month – pdfDocs Desktop 3.1 – which provides dual integration into Microsoft SharePoint and a DMS. For example, convert documents from your DMS to PDF and publish to Microsoft SharePoint all through pdfDocs Desktop. info@docscorp.com, www.docscorp.com
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Feature | document management >>
Ensure security
Global technology solutions provider Workshare’s Asia Pacific director, Matthew Moore, says there are a host of document security solutions available to protect confidential information. These include removing hidden metadata, securing a document with PDF technology (or even encryption), and controlling where the document is allowed to go and who is allowed to read it. Moore says finding the right document security solution is about meeting your business objectives and achieving a balance between security and business continuity. “Securing the intellectual property within a law firm is often achieved with a combination of desktop applications and network solutions,” he says. “End-users often rely on document redaction, metadata removal, PDF and rights restrictions to secure their documents. In addition, a law firm will typically leverage ethical walls, data monitoring and policy driven data enforcement across the entire
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organisation.” He says law firms have a unique risk, in that if a document, or a piece of a document, was leaked outside the firm it could have a ripple effect – with lawsuits, lost clients and violations of compliance standards. General manager of software management company i2 Management, Frank Ciarniello, says that credibility is the key issue for law firms. “It is essential that they can demonstrate to their clients they have a credible security module in place, to mitigate client risk in relation to confidentiality of information,” he says. “Given they are the profession that pursues organisations which have revealed confidential information, it follows they must be ‘squeaky clean’ in their approach to confidential information they hold, on behalf of their clients.” LitSupport’s Ward agrees, saying that the legal sector is particularly sensitive to any risk – either real or perceived – of breaches in confidentiality and security. She says for this reason more than any other,
law firms are often reticent about change in the internal management of document production, for good reason. “The repercussions a firm or individual fee-earner faces can be severe,” she says. “The loss of a client through a breakdown in trust and confidence; damage to a significant case or even increases in a firm’s indemnity insurance, due to lawsuits over professional negligence, all hang in the balance,” Ward says.
“Reducing costs and concentrating on core business activity is driving the strategic planning of law firms to rethink their DMS processes” Sarah-Jane Ward Litsupport
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Feature | document management >>
“Not to mention the goodwill associated with a firm’s reputation if such a breach should leak into the public arena.” She says it is important to seek out suppliers that are specifically geared to servicing law firms. “This specialist industry is experiencing significant increases in business since the credit crunch, especially those providers able to demonstrate stringent process and procedures and risk mitigation through independent accreditation. “Providers who successfully manage and negotiate the potential minefield of risk prevention on breaches of security and confidentiality, can present law firms with a significant competitive advantage,” Ward says.
Provider choice
There are a number of document management service providers in the market, so finding one that works well with your business needs is important, says Workshare’s Moore. Once your business needs are identified, he says that the typical due diligence required
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with any purchase is necessary, by thinking of the following issues. “Are the solutions or features right for your firm, will the vendor be able to provide the necessary support, is there a dedicated user community you can leverage, and is the organisation stable and investing in long term growth?” LitSupport’s Ward says that while cost reduction is an important driver in utilising bureau services, it is by no means the sole indicator of value for money, especially in the legal space. The common consensus among law firms is that the costbenefit analysis in any change project involving document production, must demonstrate metrics for maintaining and improving confidentiality, timeliness and accuracy, service levels and operational performance. “A good service provider will offer grassroots transparency in their operations, through independent accreditation, a track record of operational efficiency and client satisfaction, coupled with a commercial advantage over costs,” Ward says.
“Securing the IP within a law firm is often achieved with a combination of desktop applications and network solutions” Matthew Moore Workshare
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“Visiting a provider’s operations centre or asking to inspect their internal process-management manual will allow firms to compare operational standards. Considerations around the financial stability of providers as well as staff retention or attrition can also provide valuable insights into operational consistency.” i2 Management’s Ciarniello has a checklist that he says law firms should look at when selecting a service provider. He believes success comes from a combination of the supplier’s abilities and the software used. Firms ought to keep in mind the following: • The ability of the vendor to understand the firm’s business objectives • Can the vendor document and structure the DMS design to deliver the business objectives? • The software application’s ability to provide the operational base to deliver • Can the vendor manage the implementation approach to deliver the business objectives to the client’s satisfaction?
• Is there quality training and ongoing support of staff who use the DMS? Ciarniello also says “in addition, the client must be committed to the process and be prepared to fund the implementation program, most importantly through the training and change-management process’s associated with implementation.”
Boost bottom lines
The current economic climate is forcing law firms to look at minimising costs and maximising efficiencies wherever
possible, in an effort to reduce operating expenses and increase cash flow. Effective document management can assist in boosting the bottom line – especially with respect to reducing a businesses’ operating costs. Some firms are implementing document management strategies not only to meet financial challenges but to gain a competitive edge for the eventual recovery. LitSupport’s Ward says successful firms tend not only to focus on realising such gains in this essentiall but non-core business area,
“Given they are the profession that pursues organisations which have revealed confidential information, it follows that they must be squeaky clean in the approach to confidential information they hold on behalf of their clients” Frank Ciarniello i2 Management
Should you scan all of your hardcopy documents? By Allison Stanfield* Should you scan everything? Given the ever-growing costs of hardcopy document storage, compared with the ever-decreasing costs of hard disk storage, it is only prudent for organisations to consider scanning all of their hard copy files and retaining them in electronic format instead. However, there may be evidentiary consequences for doing so. Legal requirements for “copies” Section 11(2) of the Electronic Transactions Act 2000 (NSW) provides that if a person is required to retain, for a particular period, a document that is in the form of paper, an article or other material, that requirement met if the person retains, or causes another person to retain, an electronic form of the document throughout that period. However, this provision applies in certain circumstances only. Examples of copies of documents that may be adduced include: • A copy of the document produced by a device (for example, a photocopier, scanner or a word processor) that reproduces the contents of documents • A transcript of a document recording words (for example, an audio tape or shorthand notes) • A printout of computer output or a document reproducing the contents of an optical laser disk • A business record being an extract, summary or copy.
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The weight afforded these copies will depend upon the evidence adduced as to the authenticity and integrity of the copying process. Section 146 of the Evidence Act 1995 (NSW) provides that a document produced by a process, machine or other devices, it,is presumed to be authentic unless other evidence suggests the device or process was not working properly at the time of producing the document. Any relevant scanned copy of a document can be admitted as evidence but it will be accorded more weight where the process of scanning is properly documented. How to document the scanning process? To prove that the copy fulfils the requirements, an affidavit should be made by the person who made the copy, around the time it was made. This affidavit should contain a number of particulars including: • Indicating when the copy was made and describing the process of copying; • Stating the copying process was carried out properly and in good faith; • Confirming the legibility of the original document.
*Allison Stanfield is a founder and CEO of e.law Australia, a company specialising in digital evidence Australasian Legal Business ISSUE 7.9
Feature | document management >>
they also leverage new approaches that can transform process efficiency and drive down costs. “The global financial crisis has acutely sharpened some firms’ focus into closely examining business practices,” she says. “Around half of a large law firm’s employees are non-fee-earners. Correctly deployed staff is key to a firm’s efficiency and profitability. There’s always room to improve operational management and the incentive, palpably felt across all law firms at the moment, is the derivative cost reduction.” Document management providers are able to cut costs and ensure consistency for a profession that is as documentreliant as it gets. The key to finding a working solution lies in identifying your firm’s needs; talking to a variety of providers about security, solutions and support; and selecting the best fit for your business. Whether outsourcing document management and printing or insourcing software to create a DMS, the right option will depend on your firm’s business objectives. ALB
►► ADERANT ACQUIRES ecm SOFTWARE SUITE ADERANT, a provider of business and financial management software for law firms, has purchased a suite of enterprise content management (ECM) applications, developed by legal firm StarLaw. This acquisition adds to ADERANT’s current product portfolio by including offerings in integrated document management, records management, and email management solutions. Michael Kohlsdorf, who is president and chief executive officer for ADERANT, says “acquiring StarLaw’s advanced applications enables us to greatly expand the breadth of solutions we are able to deliver to law firms. This transaction moves ADERANT closer to becoming a single-source software vendor for law firms, providing integrated solutions for both the front and back office that reduce information technology complexity and costs.” Early adopters of the ECM application suite include major US-based law firms Cooley Godward Kronish LLP and O’Melveny & Meyers LLP. ADERANT is currently working on the next generation of its new enterprise content applications. These new document management offerings will enable firms to effectively control and monitor electronic content throughout the entire document lifecycle process, including storage, retrieval, modification, review, and preservation. The records management application will archive, track, and retrieve all firm-protected electronic and physical content. The email management functionality will allow lawyers and legal staff to efficiently file and organise all relevant email messages, as well as associated attachments. ADERANT’s new ECM applications will be generally available in Q1 2010.
The Verdict is In: Why a Desktop Print is a Billable Copy By Michael Rich, President & CEO – Equitrac Corporation
O
ne of the leading causes of this downward trend in cost recovery is that digital technologies have changed some common law firm workflows from processes that have always been tracked and billed to those that are not. In particular, thanks to widespread use of networked multifunction products (MFPs) and document management systems, firms are producing fewer copies and faxes. Printing from the desktop to the MFP is replacing copying on the glass, and scanning documents to PDF and email is replacing faxing. But firms for the most part are not capturing and charging these activities as the reimbursable costs that they are. One solution is to simply start tracking and charging for prints. With clients’ agreement, firms can show “prints” on their invoices as a reimbursable cost item in the same way they do copies. Or firms can apply a different name, www.legalbusinessonline.com
such as “desktop copies” or “digital impressions” to convey that they aren’t necessarily charging for routine prints. In fact, seeing as MFP prints are the same thing as MFP copies, and firms are printing what would otherwise be copied, a case could be made that prints could be simply be categorized and charged as copies. To assure clients are only charged for extraordinary, non-routine, printing, their print cost recovery policies could waive charges for single-use prints (those that are printed, viewed once, then discarded), provide “first set free” pricing for the printing of multiple copies of large documents, or even offer a monthly printing allowance or quota below which printing is not charged. To help manage print costs that are not being charged, firms could establish policies requiring papersaving duplex (double-sided) printing for internal review drafts and memoranda and limiting the use of color. Equitrac Professional cost
recovery software can help firms to track and quantify all printing activity so that they can understand their printing activity and establish the practices and policies for recovering a reasonable and defensible share of print expenses. Once that policy is in place, Equitrac Professional can help put it into action, automatically allocating all prints to the correct client matters. At the same time, Equitrac Professional can capture client billable costs from all sources and seamlessly transfer all cost items to the firm’s time and billing system — for timely and complete invoicing, faster cash flow, and a healthier bottom line. The delivery of legal services requires firms to incur significant, identifiable and chargeable expenses that any reasonable practice, policy or observer would view as the client’s responsibility rather than the firm’s cost of doing business. 59
Feature | CPD >>
Online CPD:
the way of the future?
Campbell McGlynn, Mallesons
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The question for lawyers is whether to learn online, stick with traditional hardcopy coursework or face-to-face training. Those looking to accumulate their next round of CPD points have plenty of options available.
Australasian Legal Business ISSUE 7.9
Feature | CPD >>
C
PD or CLE (continuing legal education, as it is referred to in some parts of Australia) is a mandatory requirement for Australian lawyers, encompassing four subject areas: ethics and professional responsibility, professional skills, substantive law, and practice management/ business skills. Now there are a host of new products entering the market and alternative approaches to fulfill the CPD requirements, destined to make the life of lawyers just that little bit easier. Natalie Wieland, who is a director of professional development solutions provider CPD Interactive, says that products (particularly online options) have developed substantially in the past few years. Online offerings are giving the traditional methods a run for their money. “Online training has enormous capacity, and can be tailored to fit the content of the training as well as the audience,” she says. “For example, in some cases video may be used to enhance the learning experience, in others drafting exercises fulfils this role. Being online also means you have access to all of your other online resources, including those of your firm. “You can learn about new legislation or recent cases while doing CPD training, bookmark references, then go and read related articles, which then reinforces your learning,” Wieland adds. “For large firms, being able to utilise an online system also offers many benefits – such as the ability to track training, flexibility for lawyers, and the ability to customise a range of courses suited to the firm’s needs.” Online training can also be very costeffective – a paramount consideration for most companies weathering the current economic climate. www.legalbusinessonline.com
“For example, there are subscription models that offer a range of courses to an unlimited number of users, over a period of time,” says Wieland. “It ends up being much cheaper per lawyer than sending them to a course, or even running training in-house, particularly in the current climate when all costs are being carefully scrutinised and staff numbers may be reduced.” Kate Rogers, the communications consultant at Minter Ellison, agrees and says that the time and moneysaving qualities of using online professional development courses are one of the major incentives for firms such as Minters to increase their online training. “Time and cost-saving are definitely a consideration. The current economic climate has the potential to make this form of training more attractive to firms,” she says. “Although face-to-face learning is an important form of training, due to the value of personal interactions and discussion, there are definite time advantages to using online CPD training. With the introduction of the core areas to the New South Wales scheme, it has become more important to ensure practitioners are provided with a variety of learning opportunities across multiple skill sets,” she adds. Online CPD seems to be the way of the future, with advances in technology cementing its role as a staple for continuing professional training requirements. According to CPD Interactive’s Wieland, it’s already a training tool that has taken off in the United States. It’s only a matter of time before Australian firms fall into line. “Online CPD training is fairly new in Australia, it has only recently been explicitly included in legal practice rules as an accepted way to undertake training, so the legal industry is really
only just starting to understand how well it can work and see its value,” Wieland says. “In the US online training is a multi-billion dollar industry, and it is only expected to grow exponentially, worldwide.” “[It] is responsive, flexible and an effective training tool in an increasingly regulated environment, where the expectations on professionals continue to increase. Firms are now taking the opportunity to utilise technology and mould it to their needs.” For Mallesons, who currently use a mix of online, in-house and outsourced CPD training products, it’s the convenience of using online CPD in particular that is indispensable. “Convenience is the biggest driver for online learning at Mallesons. The key benefit is that online learning can be completed “on-demand”, which is attractive to lawyers with busy and unpredictable practices,” says Campbell McGlynn, head of learning and career development at the firm. Although Mallesons only uses online CPD courses for about 10% of its training purposes now, McGlynn says that recent advances in the online professional development training area mean that the firm will be looking to increase their online training uptake. “Online training is flexible and convenient because it enables a lawyer to complete CPD requirements at a time and location of their choosing ... prior to CPD schemes allowing lawyers to accrue the same number of points for online learning as for in-person learning, watching videos or completing e-learning modules was done as a last resort,” he says. “Recently, CPD schemes have changed to allow lawyers to accrue the same number of CPD/MCLE points for online training as in-person training. 61
Feature | CPD >>
As such over the next few years we expect to offer more online training.” CPD Interactive’s Wieland says that it’s common for firms to use a mix of products, but she recognises that many firms currently don’t use online CPD predominantly, yet. Increased time constraints, along with the economic turmoil and added pressure on lawyers and firms, is fuelling a revolution. “Our understanding is that most people prefer to attend seminars and workshops (whether in-house or external), and that this is supplemented by online training and using audio and video materials. A proportion also accrue CPD credits by delivering training or writing or editing articles for legal journals or publications,” she says. “It is changing, though. In the US, for example, where online CPD is huge, online training may constitute 15% of all training [offerings]. It also depends on the situation of the particular lawyer. A lawyer working in the CBD may have access to a range of seminars, but if you work part-time
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or in a regional area it can be more difficult. One of our clients, a senior lawyer in a large Australian firm, was able to complete all 10 units through us while working in the US. “ Queensland law firm Carter Newell, a QLS-accredited training provider, believes the choice of whether to use online CPD as opposed to workshops, conferences and face-to-face tutorials comes down to individual learning styles. As such, the firm has taken CPD training into its own hands to provide tailored options, with successful results. “On-line training does provide the flexibility of being able to fit training into a busy schedule and attending such training when time is available,” says Catherine Humphery, the communications coordinator. “However, it really boils down to the learning techniques of individuals. Some practitioners learn more effectively through workshops and active participation, whil others prefer online training or seminars.” Carter Newell’s in-house sessions meet the requirements of CPD with
sessions at the right level of complexity, duration, structure and content – including provision of notes and handouts on topic areas. “We accommodate individuals needs [and] provide all alternatives, as well as offering most CLE programs as either early-morning breakfast or in-lunchtime sessions, to make it as easy as possible for lawyers to attend,” Humphery says.
Natalie Wieland, CPD Interactive
Feature | CPD >>
“Presenters are typically senior practitioners such as partners, special counsel or senior associates.”
Online CPD issues
Despite the benefits of online CPD, several Australian firms still seem slightly skeptical about the programs, maintaining one of the negatives of online training is the lack of interaction with tutors and peers. “We currently do not participate in any online training, apart from basic online research,” says David Kearney, managing partner at insurance firm Wotton + Kearney “Of course, attending courses and workshops can take a number of hours out of a lawyer’s week. However, the upside of the benefits from interaction with one’s peers outweighs any downside from the time commitment involved,” he says. Kearney also believes that “CPD workshops and seminars are an excellent way for our lawyers to network with their peers and industry leader and mix with clients.”
He adds “as well as being a practical forum in which topical issues can be explained and discussed, the format is concise, relevant and applicable to their daily work.” Mark Roberts, a partner in the Melbourne office of Davies Collison Cave, agrees with Kearney and says that although online training has not yet taken off at the firm, he can see where it would come in handy. “I am aware that some of the organisations which our partners and professional staff are associated are now offering online CPD training. I am not aware that the use of online training facilities has become very popular amongst our people. I suspect they prefer the opportunity to meet up with other members of the profession at the same time as participating in training,” he says. “However, it seems that online training is going to be of great assistance in the case where a partner or professional staff member gets close to the end of the CPD year and needs to increase their hours
in particular areas,” Roberts adds. “[They] then have the flexibility to select an appropriate course that can be undertaken at a convenient time.” Kearney is of a similar school of thought, but concedes that changing times and the increase of flexible working schedules will only increase the popularity of online CPD training offerings. “We currently hold a number of seminars in-house as we find it is more practical, cost-effective and easier to manage running face to face sessions,” he says. “Feedback from our lawyers is that by having a structured program in place, it ensures they take the appropriate amount of time out of their schedules to invest in developing their skills regularly,” he says. “However, as the percentage of our legal team with flexible working arrangements grows, I can see a move towards online CPD training. “It is obviously also very well-suited to those employees within our firm who are employed part-time or are working from home.” ALB
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Photo: Thilo Pulch, www.pulchphotography.com
profile | managing partner >>
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Australasian Legal Business ISSUE 7.9
profile | managing partner >>
ALB/LexisNexis 2009 Managing Partner series
Michael Bradley, Marque Lawyers
No barriers There are some law firms and practitioners who are looking outside the current box when it comes to chargeout rates and client service
T
here is no traditional reception area at Marque Lawyers. When visitors walk through the door of the firm’s Sydney offices, they are immediately met with the sight of rows of busy work stations. Seated on the couches which act as the firm’s informal reception area, visitors can watch lawyers and their support staff at work – or even eating lunch in the nearby “breakout area”. That is how managing partner Michael Bradley likes things. “In a typical law firm experience, the public area is shut off from the workings of the firm,” he says. “That’s part of the mystique of the law and how it is impenetrable to clients. We set out to break down those barriers so that nothing is hidden.” Bradley is referring to both literal and figurative barriers. He insists on Marque lawyers using direct and clear language, without the use of any legal jargon, to communicate with clients. 65
www.legalbusinessonline.com
He also takes an interest in the subtext of client communications. “For example, [traditional] advice is often couched in the language of risk, where lawyers talk from a negative standpoint instead of talking about what can be achieved,” he says. Finely attuned to language (he enjoys creative writing in his spare time), the managing partner dislikes the use of the passive voice in client advice. “It has a defensive tone, so instead of talking about what you will do, one talks about what might happen if this or that were done,” he states.
Legal costs
Bradley sees pricing as one of the critical differentiating factors at Marque Lawyers, as the firm offers fixed or capped fees for any particular piece of work or transaction. Fixed fees are also offered for litigation work, where clients can opt to pay a single advance fee, regardless of the outcome.
Alternatively, for litigated matters clients can opt to pay a monthly charge during the preparation phase and a daily fee during the hearing. For work of a continuing nature, the firm offers a fixed monthly fee, for example, a set fee to vet advertising. Work volumes may fluctuate periodically and retainers are negotiated on the understanding that terms can be reviewed, in the event of a change of circumstances. In effect, it’s a system built on trust and the assumption that both firm and client will reach an understanding as to what constitutes a reasonable fee, if the workload has changed. “What we’ve discovered is that clients want to pay what’s fair,” says Bradley. “They don’t want to rip us off and we don’t want to rip them off. That’s not the basis for a healthy relationship. “So there is a mutual understanding that there will be a regular review of the terms.” 65
profile | managing partner >>
Personal touch
Bradley has always had a reputation for originality – which came to the fore during his time as a partner at Gadens, when he paid all of his staff $400 to buy a pair of shoes for themselves as part of an end-offinancial-year present. Recently, Bradley has been busy writing all the content, such as firm information and staff biographies, for Marque Lawyer’s website. Bradley’s brand of irreverent and self-effacing humour (his own biography refers to himself as an “idiot savant”) has attracted something of a following in the profession and helped the fledgling firm gain exposure. “Most people do have a sense of humour,” he says. “There is no reason why that should be taken out of the equation when you are dealing with lawyers. Clients appreciate that we don’t have a different personality when we’re being lawyers from when we’re outside of work. It’s conducive to building relationships.” It all comes back to the issue of breaking down barriers, he believes. Bradley speaks of the “lawyer voice” – the overly serious tone which lawyers use when talking shop.
“There are a lot of dissatisfied clients out there. The salad days of charging whatever you want will soon be over”
66
“From early in the career, lawyers learn to talk in the lawyer voice,” he says. “You try asking a lawyer a lawrelated question at a party and just listen to how the voice changes. I don’t see why it has to be like that.” As Marque Lawyers recently celebrated its first birthday, it meant this young firm was finding its feet at the same time that the global financial crisis was wreaking havoc on the economy. But Bradley did not see this as a disadvantage. “If anything, our prospects were improved by the GFC,” he says. “Clients were more willing to consider alternatives. We don’t market ourselves
as a low-cost firm, but we do have a different way of charging which clients are more receptive to, in a downturn.” He also credits the firm’s smaller size and flexibility with helping Marque Lawyers survive the downturn. What of the future? There are plans for the firm’s moderate expansion, but these will not involve partner recruitment or any dramatic changes. Opening new offices and national expansion are not on the agenda, but Marque still has big plans to make an impact on the legal community. “Our distinguishing characteristic is our entire approach to the practice of law,” says Bradley modestly. ALB
Photo: Thilo Pulch, www.pulchphotography.com
This vision sounds the death knell for traditional time-based billing practices. Bradley predicts difficult times ahead for top-tier firms, where the business model revolves exclusively around this structure. “There are a lot of dissatisfied clients out there. The salad days of charging whatever you want will soon be over,” he predicts.
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Australasian Legal Business ISSUE 7.9
www.legalbusinessonline.com
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market data | M&A >>
Equity Capital Markets List Australia, New Zealand Aug 12-Sep 8 NB: Does not include transactions valued at less than than USD10m, best efforts transactions and private placements Issuer
Proceeds (USDm)
Issue date
Currency
Bookrunner(s)
Sector
Australia Telstra Corp Ltd
1,974.40
20/08/2009
AUD
UBS
Telecommunications
Amcor Ltd
998.5
19/08/2009
AUD
Deutsche Bank, Commonwealth Securities, Merrill Lynch , JP Morgan , UBS
Materials
SEEK Ltd
364.2
26/08/2009
AUD
UBS
High Technology
ConnectEast Group
257.9
25/08/2009
AUD
Macquarie Capital Partners LLC
Industrials
Bank of Queensland Ltd
189.3
19/08/2009
AUD
RBS, ABN Amro
Financials
Ramsay Health Care Ltd
185.5
27/08/2009
AUD
Goldman Sachs
Healthcare
Mirvac Group Ltd
172.3
21/08/2009
AUD
Deutsche Bank
Real Estate
Apollo Consolidated Ltd
138.2
4/09/2009
AUD
Patersons Securities Ltd
Healthcare
Healthscope Ltd
115.7
26/08/2009
AUD
Goldman Sachs
Healthcare
SKILLED Group Ltd
67.5
21/08/2009
AUD
Bell Potter Securities Ltd
Consumer Products and Services
Spotless Group Ltd
59.2
25/08/2009
AUD
UBS
Consumer Products and Services
Photon Group Ltd
21.9
17/08/2009
AUD
Morgan Stanley
Media and Entertainment
Sedgman Ltd
21.7
21/08/2009
AUD
Wilson HTM Corporate Services
Industrials
Issue date
Currency
Source: Thomson Reuters
Debt Capital Markets List Australia, New Zealand Aug 12-Sep 8 Issuer
Proceeds (USDm)
Bookrunner(s)
Sector
Australia Westpac Banking Corp Govt Gtd
3,497.40
2/09/2009
USD
Banc of America, Goldman Sachs
Government and Agencies
WEA Finance LLC
1,976.40
26/08/2009
USD
Bank of America, Citi, Deutsche Bank, UBS, Credit Suisse, RBS
Real Estate
Westpac Banking Corp
1,498.50
24/08/2009
USD
Bank of America, JP Morgan
Financials
ING Bank(Australia) Govt Gtd
1,329.90
25/08/2009
AUD
Commonwealth Bank of Australia, JP Morgan, UBS
Financials
Apollo Series 2009-1
1,228.80
20/08/2009
AUD
RBS, Macquarie Bank
Financials
Citigroup Pty Ltd Govt Gtd
1,050.70
13/08/2009
AUD
Citigroup Global Markets Aust
Financials
Bank of Scotland (AU) Govt Gtd
840.6
27/08/2009
AUD
Royal Bank of Scotland, JP Morgan, Westpac Banking
Financials
New South Wales Treasury
660.6
18/08/2009
AUD
JP Morgan
Government and Agencies
Wesfarmers Ltd
423.4
4/09/2009
AUD
ANZ, Commonwealth Bank of Australia, National Australia Bank, Westpac Banking
Industrials
Westpac Banking Corp
300.8
27/08/2009
USD
Bank of America, JP Morgan
Financials
Macquarie Countrywide Finance
222.3
27/08/2009
AUD
National Australia Bank
Financials
GBS Receivables Trust No.4
220.4
28/08/2009
AUD
Westpac Institutional Bank
Financials
Westpac Banking Corp
158.8
17/08/2009
JPY
Citi
Financials
106
21/08/2009
JPY
Citi
Financials
28
24/08/2009
AUD
Shareholder
High Technology
National Australia Bank Ltd
25.8
24/08/2009
HKD
Standard Chartered Bank
Financials
Westpac Banking Corp
23.3
14/08/2009
AUD
Morgan Stanley
Financials
100
12/08/2009
USD
Goldman Sachs
Government and Agencies
Commonwealth Bank of Australia Bravura Solutions Ltd
NEW ZEALAND ANZ National Intl Ltd Govt Gtd Source: Thomson Reuters
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Australasian Legal Business ISSUE 7.9
mergermarket M&A deals update
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Australasian Legal Business ISSUE 7.9 OzLB7-9-MA.indd 1
9/09/2009 2:19:15 PM
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