QUINN EMANUEL’S AUSTRALIAN FORAY AUSTRALASIAN LEGAL BUSINESS
AUSTRALASIAN
LEGAL BUSINESS
www.legalbusinessonline.com
ISSUE 11.09 OCTOBER 2013
OCTOBER 2013
MASTERFUL MELBOURNE: Firms shape their destiny
MELBOURNE REPORT IP DOCUMENT MANAGEMENT
Roundtable technology
ISSUE 11.09
PART TWO: THE MOBILE REVOLUTION
ALB ROUND TABLE SPONSORED BY:
Partners: Send your practice skywards
We are having extraordinary success across Australia introducing partners to options they didn’t know existed. Call Paul Garth 0434 113 355
A selection of partner roles Sydney Corporate Partner
Melbourne
Tax Partner
Commercial/Property Partner
This is a great opportunity to learn more about a firm that offers a competitive price point to clients, gives flexibility underlined by an ability to provide infrastructure on major deals and one that is highly profitable. Any partner level move takes time. Consider your options now, even if you are only looking to move next year.
Our client is a leading firm in the Adelaide market, with a mix of corporate, SME and high net worth clients. Winners of numerous awards and recognised by its peers, the firm seeks to grow and expand its tax offering by acquiring a strong tax partner. Working closely with an established tax team, this is a rare opportunity to build on an established platform and take on a role with both leadership and potential future equity on offer. The firm offers a mix of tax and tax driven commercial advice from its existing team, which receives referrals from the other partners in the firm as well as from outside sources. While the ability to build a practice over time will be advantageous, (and any client base will be welcome) a lawyer who possesses the right blend of skills may also be considered. Work on offer will include structuring, advice on transactions, trusts and super, indirect and direct tax advice and commercial work flowing from tax advice. The firm offers strong salaries to its high performers, backs its lawyers to develop and grow, and rewards those who are successful with a real expectation of equity. With the benefit of a strong brand, supportive partnership and established practice, this is a rare role for a focussed senior tax lawyer.
To discuss call Paul Garth or email paulg@bplr.com.au
To discuss call Paul Burgess or email paul@bplr.com.au
To discuss call Doron Paluch or email doron@bplr.com.au
Within a soft M&A market, this firm is looking further ahead than most and is keen to position themselves for the future. Already a significant presence in the mid-cap market, they are keen to capitalise on increasing interest from the large cap players; a result of their growing stature among major domestic and global corporates. Accordingly, they are interested in taking on partner level lawyers with a solid M&A background, in their Sydney office. Any partner joining the firm would be well supported if coming alone, while those looking to move with a team can also be accommodated. With a national office footprint that is genuinely integrated, this firm will allow you to fully service your clients, no matter where they are.
BPL2837
Adelaide
Our client is an expanding national firm with key corporate clients and a successful, growing Melbourne office. With a platform of established clients and support services, the firm is well placed to continue its local growth. The firm now seeks an established commercial/property partner, or a partnerdesignate with at least the beginnings of a client following which will work in conjunction with substantial leverage off other internal and interstate property work. The firm has a relaxed, friendly culture and has attracted partners from a range of top-tier and mid-tier firms. It offers the chance to take on leadership roles for the right partners and rewards its partners by encouraging broader contributions than simply analysing hours. This opportunity will suit switched-on lawyers with good technical and interpersonal skills who are seeking a firm that focuses more on holistic success than mere billables alone. In return it offers a relaxed and professional environment, quality marketing and administrative support.
www.bplr.com.au Paul Burgess 0414 687 629 Doron Paluch 0438 004 445 Paul Garth 0434 113 355 Erin Kefalas 0413 581 739 paul@bplr.com.au
CONTENTS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
26
1
“THE MAGIC CIRCLE FIRMS HAVEN’T MADE SIGNIFICANT INROADS INTO THE US MARKET EITHER. DLA HAS 600 PARTNERS IN THE US AND 700 IN THE REST OF THE WORLD; WE’VE GOT REAL STRENGTH ALL OVER THE WORLD.” Bryan Pointon, DLA Piper
ALB TECHNOLOGY ROUNDTABLE – PART TWO
The technology debate continues with a look at cloud computing, 26 mobile devices and how to implement technological change.
COVER STORY MELBOURNE 2013
We’ve all heard about the new industry paradigm – but where do Melbourne’s law firms fit in?
36
FEATURES QUINN EMANUEL
16
DIBBSBARKER
46
DLA PIPER
18
INTELLECTUAL PROPERTY
48
A chat with Australia’s newest international entrant.
DLA could become the next M&A powerhouse, according to its latest recruit.
MEASURING PARTNER PERFORMANCE
20
M&A
24
How to split that all-important profit pie. A look at price adjustments in M&A transactions.
How to organise a partner conference with a difference. Will international firms commit to maintaining their IP practices?
BRAND RESEARCH
An overview of branding and intellectual property research – how should this function be managed?
DOCUMENT MANAGEMENT
Environment sustainability is said to be a key corporate value for law firms – but can lawyers get over their love affair with mass paper consumption?
REGULARS DEALS
06
SPONSORED UPDATE
09
Buddle Findlay
LEAGUE TABLES
10
NEWS
12
APPOINTMENTS
14
ACLA PERSPECTIVE
67
58
60
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
2
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EDITORIAL
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09 QUINN EMANUEL’S AUSTRALIAN FORAY AUSTRAlASIAn lEgAl BUSInESS
AUSTRALASIAN
LEGAL BUSINESS
www.legalbusinessonline.com
ISSUE 11.09 OCTOBER 2013
OCTOBER 2013
masterful melBOurNe: Firms shape their destiny
IN-HOUSE: THE NEXT FRONTIER FOR LPO GROWTH? ALB 30 POST GRAd
Roundtable technology
T
here’s an old sporting adage that sometimes the worst thing that can happen to a team is halftime. At the very point when a team has established a rhythm and is beginning to gain an ascendancy over its opposition, the hooter sounds and the players hit the sheds for oranges and a pep talk. Whether or not they can regain the momentum when they return for the second half depends on the chemistry of the moment. It’s a problem that has some currency in today’s economic climate as lawyers report a strengthening deal flow and more signs that clients are once again looking for business opportunities. It’s a more confident environment, but there’s a challenge ahead. It’s called Christmas, and the traditional January slow period. The economic momentum is gaining, but halftime is looming. So, we may have to wait till February to get a sense of the medium term health of the economy. In the meantime, no doubt there will be the usual prognostications and poring over central bank statements to see which way the monetary policy winds are blowing. The bulls have already begun to butt heads with the bears. It’s a little early. We’ve had too many false dawns since 2009 to be taken by a few months of data. There is, however, one important common theme which has been raised by the optimists: a greater sense of resilience on the part of clients and a disposition to push ahead with transactions even if some of the conditions are not optimal. According to one view, business has spent too long on the sidelines waiting for the next European catastrophe or the much-discussed slowdown in China. It’s time to act, whatever the result providence may bring. No one is promising a miracle recovery, but indications are that next year will be better than 2013…..no matter what happens to economic momentum during January. And who knows, those half time oranges might even do the team some good. RENU PRASAD Australasia Editor, Australasian Legal Business, Thomson Reuters
AUSTRALASIAN
LEGAL BUSINESS
ISSUE 11.09
No half measures
pART TwO: ThE mOBIlE REvOlUTIOn
ALB ROUND TABLE spONsORED By:
6
DEALS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
YOUR MONTH AT A GLANCE A$1.3 billion M&A JACOBS ENGINEERING GROUP ACQUISITION OF SINCLAIR KNIGHT MERZ
• Sinclair Knight Merz is unlisted and has a tight shareholder registry comprised almost exclusively of employees.
A$530 million IT SINGTEL OPTUS
NETWORK SERVICES CONTRACT WITH ANZ BANK
• Minter Ellison has been a key legal adviser to Optus since the company was established in Australia more than 20 years ago.
Julian Donnan, Allens
YOUR MONTH AT A GLANCE Deal
Value
Advisor
Client
Lead Lawyer
Origin Energy refinancing
A$7bn
Allens
Origin Energy
Alan Maxton
Origin Energy refinancing
A$7bn
King & Wood Mallesons
Lenders
Jacobs Engineering Group acquisition of Sinclair Knight Merz
A$1.3bn
Allens
Jacobs Engineering Group
Julian Donnan
Iron Bridge iron ore Joint Venture
US$1.15bn
DLA Piper
Fortescue Metals Group
Jim Holding, Stephen Webb
Iron Bridge iron ore Joint Venture
US$1.15bn
ClarkeKann
Formosa Plastics Group
John Toigo
Sydney Airport capital raising/ full ownership
A$1.2bn
Allens
Sydney Airport
Julian Donnan
Sydney Airport capital raising/ full ownership
A$1.2bn
HWL Ebsworth MTAA Super
Foodstuffs (Auckland) Limited and Foodstuffs (Wellington) merger
NZ$992m
DLA Phillips Fox
Foodstuffs (Auckland) Martin Wiseman Limited and Foodstuffs (Wellington) Co-operative
Westfield Retail Trust notes
A$720m
Ashurst
Issuer, guarantors
Westfield Retail Trust notes
A$720m
Allen & Overy
JLMs, co-managers
SingTel Optus network services contract with ANZ Bank
A$530
Minter Ellison
SingTel, Optus
Richard Dammery, Paul Kallenbach
SingTel Optus network services contract with ANZ Bank
A$530
Allens
ANZ
Michael Pattison
Murray & Roberts acquisition of Clough minority interests
A$462m
Ashurst
Clough Limited
Roger Davies
Murray & Roberts acquisition of Clough minority interests
A$462m
Corrs Chambers Westgarth
Murray & Roberts
Robert Franklyn
BWP Trust refinancing
A$430m
Allens
BWP Management
Ben Farnsworth
Woolworths acquisition of EziBuy Group
NZ$350m
Herbert Smith Freehills
Catalyst Investment Managers
Nick Wormald and Peter Dunne
Mirae Asset Global Investments acquisition of Four Seasons Hotel (Syd)
A$350m
Allen & Overy
Mirae Asset Global
David Wilkie, Jason Denisenko, Andrew Stals, Adam Stapledon
Robert Gibson and Robert Gardini
Paul Jenkins
DEALS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
YOUR MONTH AT A GLANCE Deal
Value
Advisor
Client
Lead Lawyer
Mirae Asset Global Investments acquisition of Four Seasons Hotel (Syd)
A$350 m
Ryan Lawyers
Eureka Funds Management
Robert Williams
Wesfarmers/Bunnings securitised lease transaction
A$304m
Herbert Smith Freehills
Wesfarmers, Bunnings
Justin O’Farrell, Patrick Lowden and Lachlan Roots
Wesfarmers/Bunnings securitised lease transaction
A$304m
Lander & Rogers
Wesfarmers, Bunnings
Nick Stocks, Lee Wolveridge
Wesfarmers/Bunnings securitised lease transaction
A$304m
Gadens
Investor consortium
Paul Brown, John Grimble
Australian Agricultural Company Limited capital raising
A$299m
King & Wood Mallesons
Australian Agricultural Company
Stefan Luke
Australian Agricultural Company Limited capital raising
A$299m
Minter Ellison
AA Trust
Costas Condoleon
Bunnings sale of 10 development properties to BWP Trust
A$271m
Lander & Rogers
Bunnings
Lisa Zonta and Lisa Gaddie
Barrick Gold Corporation divestment of Yilgarn South assets
US$300m
Clayton Utz
Barrick Gold Corporation
John Elliott
William Morris Endeavour partial acquisition of Droga5
US$225m
Corrs Chambers William Morris Westgarth Endeavour
Andrew Lumsden
Bunnings Trust equity raising
A$200m
Baker & McKenzie
UBS
Craig Andrade
360 Capital Property Group acquisition by Trafalgar Corporate Group
A$147m
Ashurst
Trafalgar
Bill Koeck
Gold One merger of West Rand Assets with Sibanye Gold
A$140m
Ashurst
Gold One
Roger Davies
G K Goh Holdings proposed acquisition of a 47.62% stake in Domain Principal Group
A$137m
Minter Ellison
G K Goh Holdings
Ben Smith
G K Goh Holdings proposed acquisition of a 47.62% stake in Domain Principal Group
A$137m
Clayton Utz
AMP Capital Managed Aged Care Investment
Perilya Limited Scheme of Arrangement with Zhongjin Lingnan
A$128m
Allion Legal
Perilya
Phil Lucas
Wolseley Private Equity sale of Guardian Early Learning Group to Navis Capital Partners
A$120m
Johnson Winter & Slattery
Wolseley Private Equity
Jeremy Davis
Wolseley Private Equity sale of Guardian Early Learning Group to Navis Capital Partners
A$120m
Herbert Smith Freehills
Navis
Wolseley Private Equity sale of Guardian Early Learning Group to Navis Capital Partners
A$120m
Ashurst
financiers
Stefan Luke, King & Wood Mallesons
A$299 million
EQUITY AUSTRALIAN AGRICULTURAL COMPANY LIMITED CAPITAL RAISING
• KWM is a longstanding advisor to AACo, having assisted with AACo’s initial ASX listing in 2001 and the company’s previous capital raising in 2011. • Minter Ellison has been acting for the AA Trust and its affiliates since they first acquired their interest in AACo.
Phil Lucas, Allion Legal
Justin O’Farrell, Herbert Smith Freehills
7
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
8
DEALS REPORTED TO ALB, SEPTEMBER 2013.
Is your firm missing from this table? Please help us keep this table current by emailing deals information to renu.prasad@thomsonreuters.com. You can also view weekly updates to this table on the ALB website at www.legalbusinessonline.com. YOUR MONTH AT A GLANCE Deal
Value
Advisor
Client
Lead Lawyer
DUET Group/DBP Development Group pipeline for Chevron Australia
A$100m
Allens
DUET Group/ DBP Development
Michael Hollingdale/ Tracey Greenaway
DUET Group/DBP Development Group pipeline for Chevron Australia
A$100m
UBS AG, Australia Branch
Sarah Dulhunty
Quadrant investment in City Farmers
A$93m
Gilbert + Tobin
Quadrant
Peter Cook and Rachael Bassil
Quadrant investment in City Farmers
A$93m
Clifford Chance
City Farmers
Michael Lishman
Ingenia Communities Group capital raising
A$62m
Gadens
Ingenia Communities Group
Paul Brown
Ingenia Communities Group capital raising
A$62m
Clifford Chance
RBS Morgans and Petra Capital
Lance Sacks
Australian Vintage Limited capital raising
A$42m
Kelly & Co
Australian Vintage Limited
Jamie Restas
99wuxian.com Ltd ASX listing
A$20m
HWL Ebsworth
99wuxian.com Ltd
Matthew Reynolds and Emma Cook
Capral acquisition of OneSteel Aluminium
A$19m
Baker & McKenzie
Capral
Guy Sanderson
Unilever acquisition of T2
Baker & McKenzie
vendors
Richard Lustig, Simon De Young
Unilever acquisition of T2
Johnson Winter & Slattery
Unilever
Andrew Williams
Sale of Buller Wines to undisclosed buyer
HWL Ebsworth
Deloitte (administrators)
Thomas Kim
Agfarm joint venture
Ashurst
Ruralco Holdings Limited
Bill Koeck
Smartpay dual listing
Arnold Bloch Leibler
Smartpay
Rick Narev
Interchange Vanuatu Cable Project financing
Rockwell Olivier
ANZ
John Ridgway
Nikkiso Co acquisition of CRRT business from Baxter Healthcare Australia
Baker & McKenzie
Nikkiso Co
Ben McLaughlin
Royalla Solar Farm financing
Gilbert + Tobin
FRV
Chris Flynn
AMP Capital proposed JV with China Life Asset Management Company
Clifford Chance
AMP Capital
Danny Simmons
Telstra acquisition of NSC
HWL Ebsworth
NSC
Grant Hummel Mark Payne
FEI Company acquisition of nanoTechnology Systems
K&L Gates
FEI Company
Jol Rogers
Ashurst
A$100 million
ENERGY UET GROUP/ DBP D DEVELOPMENT GROUP PIPELINE FOR CHEVRON AUSTRALIA
• Allens advised DUET Group on its 2011 acquisition of additional stakes in the Dampier to Bunbury pipeline and Multinet Gas, the sale of its stake in WA Gas Networks, and its $277 million capital raising. • This deal incorporated a A$100 million fully underwritten placement to fund the Wheatstone Ashburton West Pipeline Project.
Paul Brown, Gadens
Jamie Restas, Kelly & Co
Firm Profile
NZ Commentary
WHAT’S ALL THAT BUZZ ABOUT? A recent High Court decision (Muzz Buzz Franchising Pty Ltd v JB Holdings (2010) Limited (High Court, Toogood J)) involving Australian and New Zealand drive-through coffee businesses has created a buzz amongst intellectual property practitioners. The buzz centres on Justice Toogood’s comments about how the New Zealand and Australia markets should now be regarded as a single market when considering the enforcement of intellectual property rights. Muzz Buzz established a drive-through coffee business in Western Australia in 2002 and had expanded throughout Australia to the point where it had 51 outlets by 2012. Since its establishment, the Muzz Buzz business had developed a distinctive name, logo and get-up, which included unusually shaped drive-through kiosks. Muzz Buzz had also taken advantage of the internet and social media to advertise and market its business in Australia by setting up a website in 2005 and a Facebook page in 2009. Through its business activities, Muzz Buzz acquired significant reputation and goodwill for its business in Australia. By 2011 Muzz Buzz decided to further expand into the New Zealand market and entered into a master franchise agreement with a local New Zealand company. The expansion into New Zealand was consistent with Muzz Buzz’s anticipated expansion plans, noting that it had registered trade marks in New Zealand for the Muzz Buzz logo and Muzz Buzz name in December 2004 and September 2007 respectively. Unbeknownst to Muzz Buzz, a drive-through coffee business called Jitta Buzz had been established in New Zealand and opened its first outlet in Auckland in November 2010 and a further outlet in mid 2012. Muzz Buzz sued the operator of Jitta Buzz, seeking a permanent injunction and damages for its loss on the basis of copyright and trade mark infringement, passing off and misleading and deceptive conduct under the Fair Trading Act 1986. Muzz Buzz alleged that Jitta Buzz had effectively copied and taken as its own almost all aspects of the Muzz Buzz business, including the brand name, look and overall get-up as well as Muzz Buzz’s kiosk design and shape.
Justice Toogood concluded that Muzz Buzz should succeed on all four pleaded grounds and so was entitled to a permanent injunction, but declined to make an award of damages as no evidence of financial loss was presented. From the judgment, it is clear that the decision in favour of Muzz Buzz was heavily influenced by Jitta Buzz’s evidence as well as its denials and explanations for the identicality of its business name and get-up to Muzz Buzz, which Jitta Buzz largely attributed to coincidence, despite acknowledging an awareness of the Muzz Buzz business in Australia. Justice Toogood stated that some of Jitta Buzz’s denials and explanations “offend commonsense”, were “untruthful” and “implausible”. Justice Toogood’s comments about the allegation of passing off are most noteworthy, given his references to the earlier Dominion Rent A Car v Budget Rent A Car Systems (1970) Ltd [1987] 2 NZLR 395 (CA) case and the question of the existence and extent of reputation and of goodwill. In finding that Jitta Buzz had engaged in passing off, Justice Toogood relied upon the fact Muzz Buzz had operated since 2002 and concluded that it had established goodwill in New Zealand based upon Muzz Buzz’s Australian website and Facebook page to which New Zealanders had access and because the respective markets should be considered as one. In particular, Justice Toogood stated “in 2013, it can hardly be doubted that New Zealand and Australia may, for the purposes of enforcing intellectual property rights, be regarded as one market”. Justice Toogood reached his conclusion about Muzz Buzz’s goodwill despite the fact that Muzz Buzz had not operated in New Zealand prior to the launch of the Jitta Buzz business in Auckland. Justice Toogood’s finding is perhaps taking the close economic relationship between New Zealand and Australian markets a step too far, given that passing off is fundamentally about damage to a trader’s goodwill. It is hard to establish damage in one market when there appears to be no goodwill in that market. The finding that Muzz Buzz had acquired goodwill in New Zealand based primarily upon a website and Facebook page targeted
at Australian consumers indicates that the threshold for actionable goodwill is extremely low. It appears from the decision that Muzz Buzz may at least have had some reputation in New Zealand based on the travel by New Zealanders to Australia. It would be interesting to see if the low threshold for goodwill in the present case is applied in subsequent judgments and/or if an Australian court would reach a similar decision based on a similar factual matrix. What is clear from the case however is that fundamental principles have not changed for traders in either Australia or New Zealand when considering entering a new market. Traders should first conduct a thorough due diligence process to ensure they are aware of all potential competitors in a new market, their business activities and the extent of these intellectual property rights in order to minimise legal risk. This case also reinforces the fact that such enquiries should include both sides of the Tasman.
This article was written by Hamish Selby, a senior associate in the Auckland office of Buddle Findlay, one of New Zealand’s leading law firms. Hamish is a specialist intellectual property lawyer with extensive experience advising clients in New Zealand, Australia and overseas. He can be contacted by phone on +64 9 363 0703 or email hamish.selby@buddlefindlay.com.
HAMISH SELBY
Buddle Findlay
LEAGUE TABLES
10
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09 TOP M&A FIRMS - COMPLETED DEALS, YEAR TO DATE 2013
TOP M&A FIRMS - ANNOUNCED DEALS, YEAR TO DATE 2013
1
NO.
1
HERBERT SMITH FREEHILLS
15,235.64 DEALS: 40
NO.
VALUE ($MIL)
MARKET SHARE: 30.7
RANK LEGAL ADVISOR
VALUE ($MIL)
MKT. DEALS SHARE
HERBERT SMITH FREEHILLS
10,407.02 DEALS: 40
VALUE ($MIL)
MARKET SHARE: 28.4
RANK LEGAL ADVISOR
VALUE ($MIL)
MKT. SHARE
DEALS
2
Minter Ellison
12,372.70
24.9
40
2
Corrs Chambers Westgarth
9,638.98
26.3
23
3
King & Wood Mallesons
10,343.66
20.8
48
3
Gilbert + Tobin
9,632.61
26.3
17
4
Corrs Chambers Westgarth
8,615.86
17.3
28
4
King & Wood Mallesons
8,906.04
24.3
38
5
Allens
8,149.43
16.4
31
5
Minter Ellison
7,560.08
20.6
33
6
Gilbert + Tobin
6,947.43
14.0
21
6
Allens
4,454.35
12.2
27
7
Allen & Gledhill
4,160.43
8.4
6
7
Baker & McKenzie
3,266.83
8.9
28
8
Baker & McKenzie
3,937.08
7.9
34
8
Ashurst
3,174.68
8.7
23
9
Ashurst
3,850.19
7.7
34
9
Clayton Utz
2,719.36
7.4
25
10
Johnson Winter & Slattery
3,578.26
7.2
9
10
Paul, Weiss
2,280.19
6.2
1
11
Clayton Utz
2,274.97
4.6
29
11
Blake Cassels & Graydon
1,959.10
5.3
4
12
Linklaters
1,810.42
3.6
9
12
Skadden
1,831.47
5.0
4
13
Simpson Grierson
1,507.54
3.0
3
13
Simpson Grierson
1,739.91
4.7
4
14
Thomsons Lawyers
1,267.22
2.5
9
14
Linklaters
1,519.63
4.1
8
15
Jones Day
1,196.65
2.4
2
15
Allen & Overy
1,186.88
3.2
11
15*
WongPartnership LLP
1,196.65
2.4
1
16
K&L Gates
1,167.38
3.2
6
15*
Paul Hastings
1,196.65
2.4
1
17
Stikeman Elliott
1,099.80
3.0
5
18
Allen & Overy
1,141.32
2.3
11
18
Thomsons Lawyers
1,088.92
3.0
7
19
Skadden
1,057.35
2.1
2
19
Gowling Lafleur Henderson LLP
1,080.95
3.0
2
20
Chapman Tripp
906.62
1.8
2
20
Dorsey & Whitney LLP
1,078.75
2.9
1
21
Debevoise & Plimpton
904.11
1.8
1
20*
Squire Sanders LLP
1,078.75
2.9
1
22
Squire Sanders LLP
800.00
1.6
1
20*
1,078.75
2.9
1
23
Torys
644.90
1.3
1
Lawson Lundell Lawson & McIntosh
24
DLA Piper LLP
562.94
1.1
16
23
Chapman Tripp
906.62
2.5
2
25
Vinson & Elkins LLP
533.00
1.1
1
24
Debevoise & Plimpton
904.11
2.5
1
Subtotal with Legal Advisor
39,276.69
79.0
323
25
DLA Piper LLP
726.61
2.0
17
Subtotal without Legal Advisor
10,427.70
21.0
790
Subtotal with Legal Advisor
30,866.31
84.3
261
Industry Total
49,704.39
100.0
1,113
Subtotal without Legal Advisor
5,765.74
15.7
527
100.0
788
Industry Total Based on Ranking Value inc. Net Debt of Target Source: Thomson Financial Date: 2013-09-25 08:29:52 EDT
Based on Ranking Value inc. Net Debt of Target Source: Thomson Financial Date: 2013-09-25 08:16:53 EDT
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NEWS
TECHNOLOGY IN PRACTICE
Q&A with
Damian Huon Damian Huon is a Legal Technology Strategist and CEO of Huon IT. With over 24 years supporting Australian law firms, Huon IT deliver business-wide outcomes with ‘everything technology’.
Internal and external security: Is your firm at risk?
No firm wants to fall victim to data security breaches or IP loss, but the reality is that both internal and external attacks are on the rise. Seasoned IT advisor, Damian Huon, provides his insight on preventing cyber trespassing. has been in the media a lot lately. What Q1 ITkeysecurity issues should I be addressing within my firm? Start by looking within your own four walls. When it comes to security, we often think of external threats – however according to the 2012 Australian Cyber Crime and Security Survey report, 44% of cyber attacks actually occur inside organisations. Of these organisations, 90% had their external security covered (via anti virus software, spam filters and firewalls etc) yet were still suffering breaches. How are so many internal vulnerabilities going undetected? New technologies that empower users through self-service IT, such as mobile devices, mean that we have inadvertently opened a multitude of security loopholes in our systems. So as a business manager, frequently query the security of your filing structure, complexity of passwords, access-control procedures for sensitive documents, Mobile Device Management tools and, most importantly, provide regular staff training on technology do’s and don’ts.
anti-virus protection enough to prevent internal and Q2 Isexternal breeches?
Not necessarily. Cyber criminals are certainly getting more creative and finding ways to bypass anti-virus protection, made easier if it’s not updated regularly. A concerning example that I have recently witnessed on a small business is ‘ransomware’, which seeks out security vulnerabilities and locks IT systems via encryption. The hacker then effectively holds the business at ransom by demanding a sum of money to return the files back to normal. This is of course crippling to business, and too often, victims choose to pay instead of going through the authorities as the hackers behind these attacks are often foreign-based so outside of jurisdiction. Unable to wait for justice to prevail, companies are left with little choice but to pay the fee or risk loss of business. And worse, even after paying the fee, there is no guarantee files weren’t replicated and shared elsewhere, another unfortunate outcome particularly for businesses that handle confidential client-privileged information.
often should we assess our systems to ensure we Q3 How don’t get caught out? IT security and data storage are no longer just IT’s responsibility; they are duties that must be understood and shared inter-departmentally, as nearly everyone is responsible for creating and retrieving data. Your clients will expect that certain protocols and security measures are in place that you understand and manage well. As your client’s trusted advisor and gatekeeper of sensitive information, you will be expected to keep pace with technology and adapt along the way. Ensuring there are no loopholes or weaknesses in your network, updating your IT infrastructure so it is running at its optimum and staying current with security patches and anti-virus updates are prudent actions to take now to thwart trespassers from infiltrating your firm. To keep on top of ever emerging threats, an independent security audit is recommended every 12-24 months. Email your questions to alb@huonit.com.au
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
In case you missed it….. THE MONTH’S TOP HEADLINES FROM WWW.LEGALBUSINESSONLINE.COM
INDUSTRY
Baker & McKenzie PPP tops $1.2 million Baker & McKenzie has released its financial results for the 2013 financial year, citing “record global fee income and double-digit profits per partner (PPP) growth.” Global fee income totaled US$2.4 billion, up five percent, while PPP rose 10 percent to US$1.2 million, on net income of US$862 million. The breakdown of revenue by region was 37 percent for EMEA, Asia Pacific 28 percent and 35 percent in the Americas. The firm did not release any standalone figures for its Australian practice.
Clyde & Co makes second assault on Australian market A year after it raided Allens for its Australian launch, Clyde & Co has unveiled a second wave of expansion with partner hires from King & Wood Mallesons, Norton Rose and HWL Ebsworth. In a step beyond its previous insurance focus in Australia, the firm has announced the launch of a Perth-based projects & construction practice. The practice will spearheaded by two new recruits: Beth Cubitt, a construction specialist and 12 year veteran of King & Wood Mallesons, and mining & energy infrastructure specialist Glen Warwick, previously of Norton Rose. Clyde & Co has also made a lateral hire in Melbourne, recruiting shipping, trade and commodities specialist Maurice Thompson from HWL Ebsworth. With a significant practice across both Victoria and Western Australia, Thompson will be joined by senior associates Renee Amundsen and James Cooper.
Slater & Gordon takes place in S&P/ASX 300 Listed firm Slater & Gordon has secured a place on the S&P/ASX 300 index, recognising the firm’s status among the country’s 300 biggest companies based on criteria including market capitalisation and share turnover. Slater & Gordon chief financial officer Wayne Brown said the inclusion followed strong results for the 2013 financial year, which saw the firm deliver significant earnings and revenue growth. “Our inclusion on this index is a reflection of investors’ confidence in the growth strategy we have adopted,” Brown said.
IN-HOUSE
Outlook grim for external legal spend, finds study External legal spend is likely to remain flat or decline, according to a new study of 200 Australia-based in-house counsel. The study, conducted by King & Wood Mallesons in June 2013 under the guidance of partners Joseph Muraca and Jason Watts, also concluded that the market had “effectively repriced,” meaning that cost was not the number one factor for clients when selecting law firms. Most respondents expected that external legal spend would
NEWS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
either remain flat or decrease over the next 12 months. About half indicated that they expected no substantial change in spend; while just under a third were expecting a decrease. Some sectors, such as the telecommunications, media, entertainment and technology sector and the government sector recorded a higher proportion of respondents who expected to reduce their external legal spend. When asked to nominate the most common ways in which the briefing of external counsel had changed, the most common response was “cost containment”, which included measures such as fixed and capped fees and other alternative arrangements. There was also an increased use of pitches and tenders, and a greater tendency to confine work to panel firms. But when asked to nominate the most important reasons for choosing a particular external advisor, the most common response was the “expertise and depth of knowledge of the external counsel team”. Cost was also mentioned, but not to the same extent, leading the survey authors to propose that “the market has effectively re-priced, meaning that organisations can focus on more qualitative factors when briefing external counsel.” Relationships and the behaviour of key individuals on particular matters also remain an important factor in this area.
CAREERS
35 percent of lawyers plotting career move in next 12 months Over a third of lawyers expect to change jobs in the next 12 months, according to new study. The survey, conducted by legal employment specialist Sofee, was based on 233 responses from Australian-based lawyers. Even more disconcertingly for employers, a further 35 percent of respondents said that they expected to change jobs within one to three years, meaning that a total of 70 percent were expecting to be on the move over the next three years.
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IN-HOUSE Q&A VIRGINIA HAZARD General Counsel
Aspen Pharmacare Australia Pty Ltd
Presented by
your opinion, why have in-house lawyers become an 1 Inincreasingly indispensable part of an organisation? The volume, complexity and speed of business transactions and decision making, and the high level of regulation requires nuanced advice from a legal professional who is close to the business and understands the industry and the business’ risk appetite. recent times, the role of the General Counsel has 2 Indiversified into a multi-faceted role, (where the
General Counsel can wear the ‘hat’ of Lawyer, Legal Manager, Compliance Manager, and Company Secretary). In your opinion, do you believe this has increased your risk profile?
Yes, given the breadth of the (combined) roles and the fact that while in-house counsel gives advice and recommendations she does not have the final call. Most decisions are ultimately commercial decisions based on numerous inputs, including the legal input. There is also a much greater awareness of potential liability (which has always existed) but is now more focused on given the broader role of in-house counsel and recent court decisions.
TRANSACTIONS
M&A completion rates down: study The success rate for deal closures fell to 63 percent in FY2013, down from 81 percent in FY2012, according to a new study into Australian M&A. This was one of the key findings of the latest iteration of the Herbert Smith Freehills Australian Public M&A Report, now in its fifth year. The finding reverses the trend of recent years where success rates increased year on year. In the energy and resources sector success rates fell to 71 percent last year, from 90 percent in FY2012. “This is in stark contrast to the trend we have seen in recent years where announcing a takeover bid in Australia had almost automatically led to control passing in the target,” said report coauthor and HSF partner Simon Reed. “This decrease brings success rates in deals traditionally difficult to execute, for example hostile deals and deals by unlisted foreign bidders, back to what we would consider more ‘normal’ levels.” The report said that deal volume fell to 59 deals from 82 the previous year, while the value of deals dropped by A$50 million. Transactions most likely to be successful were those with deal components that included schemes of arrangement, premiums and less conditionality. It noted that nearly every scheme in FY2013 that reached the point of lodgement of a scheme booklet went on to close successfully, while bidders who offered control premiums of 40 percent or more were invariably more successful.
your opinion, what do you consider to be the main 3 Inchallenges for inhouse counsel in your particular industry sector?
Pharmaceuticals is a highly regulated industry so regulatory compliance is always important; the sector has become increasingly competitive since the start of the ‘patent cliff’ a couple of years ago ( expiration of patent protection on large and valuable molecules) and PBS ‘reforms’ of 2008 (price disclosure). Global pharma industry consolidation has created changes locally and product portfolio expansion (or contraction). There is a higher volume of commercial transactions as industry players seek to position themselves better for the future. As businesses expand into overseas markets there are more cross – border transactions and challenges in managing cross – border legal risk and a legal team.
JLegal is a global specialist legal recruitment consultancy focused solely on providing recruitment solutions to the legal profession. For a confidential discussion about your career, contact one of our senior consultants today.
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APPOINTMENTS LATERAL PARTNER APPOINTMENTS Name
Practice area
Coming from
Going to
Alex Regan
Banking & finance
King & Wood Mallesons
Corrs Chambers Westgarth
Andrew Norman
Property
King & Wood Mallesons
Clayton Utz
Andrew Stephenson Construction
Clayton Utz
Corrs Chambers Westgarh
Beth Cubitt
Construction
King & Wood Mallesons
Clyde & Co
Bryan Pointon
Corporate
Gilbert + Tobin
DLA Piper
David Perks
M&A
King & Wood Mallesons
Gadens
David Ryan
Corporate
Ashurst
DLA Piper
Erica Hartley
Workplace relations
Herbert Smith Freehills
HWL Ebsworth
Glen Warwick
Mining & resources
Norton Rose
Clyde & Co
Graham Read
Construction
Ashurst
Henry Davis York
Greg McCann
Workplace relations
Sparke Helmore
Colin Biggers & Paisley
Jamie Palmer
M&A
Allen & Overy
DibbsBarker
Jason Lambeth
M&A
Ashurst
Kemp Strang
Kevin Arkwright
Construction
Ashurst
Henry Davis York
Maurice Thompson
Shipping
HWL Ebsworth
Clyde & Co
Melissa McGrath
IP
Ashurst
DibbsBarker
Michael Down
Insurance
DLA Piper
Mills Oakley
Michael Earwaker
Construction
Clayton Utz
Corrs Chambers Westgarth
Nick Crang
Public Law
Buddle Findlay
Duncan Cotterill
Nick Miller
M&A
Clayton Utz
Hunt & Hunt
Shahriar Mofakhami
Commercial
Greenfields
HWL Ebsworth
Paul Wilson
Property
Minter Ellison
HWL Ebsworth
Tom Cantwell
Property
DLA Piper
Mills Oakley
Tom Lennox
Financial services
DibbsBarker
Squire Sanders
Trent Waller
Family Law
Carne Reidy Herd
M+K Lawyers
DLA SIGNALS CORPORATE PUSH WITH G+T, ASHURST HIRES DLA Piper has signalled an intention to build its corporate practice in earnest with a pair of high profile hires from Gilbert + Tobin and Ashurst. The new hires are Bryan Pointon, previously at G+T and David Ryan, previously at Ashurst. The pair will be based in Sydney. Pointon, a well known private equity specialist, will also be heading up the Asia Pacific corporate team. “These appointments signal our commitment to develop our corporate practice in Australia and across Asia Pacific,” said Andrew Darwin, DLA Piper’s Australia managing partner.
KWM REAL ESTATE PARTNER MOVES TO CLUTZ KWM partner Andrew Norman is set to join Clayton Utz in Melbourne. Norman has over 20 years’ experience in the property industry, having acted
for and advised a range of clients on the acquisition, development, leasing and sale of land in the commercial, industrial and retail sectors.
PERTH: ENVIRONMENT/PLANNING EXPERT MOVES TO CORRS Corrs Chambers Westgarth has welcomed Brian McMurdo as a special counsel in the firm’s Perth office. He was previously at Lavan Legal. McMurdo’s areas of expertise include native title, Aboriginal heritage and land acquisition arrangements and his clients include the WA Government, which he has advised in relation to land acquisition issues for stage two of the Ord River Irrigation Scheme.
DIBBSBARKER MAKES HIRES FROM ASHURST, A&O DibbsBarker has made two lateral hires to its IP and private equity practices.
Melissa McGrath returns to the firm after a stint with Ashurst. She is an IP litigator with a particular expertise in pharmaceutical patent litigation, having acted for both generic and originator companies on various patent-related disputes. She also has expertise in the both the registration and enforcement of trademarks. Jamie Palmer is a private equity specialist who was previously at Allen & Overy. He said that he was attracted to DibbsBarker because of its footprint in the mid-market PE space.
CBP APPOINTS WORKPLACE EXPERT FROM SPARKES Colin Biggers & Paisley has appointed workplace relations and work health and Greg McCann safety lawyer Greg McCann, who joins CBP as a partner from Sparke Helmore. McCann is an expert in work health and safety with over 18 years’ experience. He has worked for national corporations in a wide range of industries including transport, mining, retail, labour hire and oil and gas.
PERTH: GADENS RECRUITS MALLESONS M&A PARTNER Gadens has announced the appointment of corporate/M&A partner David Perks from King & Wood Mallesons. Perks specialises in energy, resources and projects and his clients include BHP Billiton, CITIC Resources, Goldcorp and Focus Minerals. He has also presented at a number of high-profile industry conferences including the Australian Petroleum Production and Exploration Association Conference and the Australian Mining and Petroleum Law Association WA Conference.
CORRS RECRUITS FINANCE SPECIALIST FROM MALLESONS Corrs Chambers Westgarth has welcomed leveraged finance lawyer Alex Regan to the partnership. Regan was previously a partner with King & Wood Mallesons and specialises in leveraged finance and projects in the energy, infrastructure and resource sectors.
DLA PIPER PARTNERS TO MOVE TO MILLS OAKLEY Two senior DLA Piper partners are set to join Mills Oakley in Sydney and Melbourne: Tom Cantwell will join the Melbourne property team and Michael Down will join the Sydney insurance practice. Cantwell was previously head of the Melbourne real estate team at DLA Piper. He has more than 20 years’ experience on complex
APPOINTMENTS and high-value, property-based transactions and chairs the State Taxes Committee of the Property Council of Australia. Down joins from DLA Piper’s insurance team and acts in the areas of general liability, professional indemnity, insurance and defamation. He has acted in a number of cases before the High Court and in many matters regarding the NSW Civil Liability Act.
ASHURST PARTNERS MOVE TO HENRY DAVIS YORK Henry Davis York has raided Ashurst to bolster its construction/infrastructure practice. The firm has announced the appointment of Graham Read and Kevin Arkwright to the partnership and in doing so has secured two experienced commercial and construction lawyers with particular experience in construction and infrastructure projects for the NSW and the Commonwealth Governments and also in the private sector. “We are extremely pleased that Graham and Kevin will be joining the firm. Their appointment as partners will enable us to accelerate our
strategy and achieve our vision of being a tier one firm, with a tier one government practice,” said Sharon Cook, HDY’s managing partner.
CORRS HIRES CONSTRUCTION DUO FROM CLUTZ Corrs Chambers Westgarth has bolstered its partnership with the lateral hire of two new construction and projects partners from Clayton Utz. The new hires are Andrew Stephenson and Michael Earwaker, who will join the firm’s Melbourne team.
SQUIRE SANDERS HIRES FINANCIAL SERVICES TEAM FROM DIBBSBARKER Squire Sanders has significantly expanded its financial services group with the appointment of partner Tom Lennox, who joins the firm’s Sydney office from DibbsBarker. Lennox is also a 19 year veteran of Mallesons (now King & Wood Mallesons), where he was partner in charge of the firm’s Sydney and Hong Kong offices.
PERTH: HWL MAKES ANOTHER TOP TIER RAID HWL Ebsworth Lawyers has announced two new partner appointments for its recently launched Perth office. Erica Hartley, previously at Herbert Smith Freehills, will be joining the firm as the head of the Workplace Relations & Safety Group in Perth and Paul Wilson, previously at Minter Ellison, will be joining as a partner in the Property Group.
KEMP STRANG RECRUITS ASHURST M&A SPECIALIST Kemp Strang has recruited Jason Lambeth to its Sydney M&A practice. He was previously at Ashurst. Lambeth has advised on a broad range of commercial and corporate matters including listed company takeovers, schemes of arrangement, contested takeovers and Takeover Panel proceedings. Recently Lambeth advised Virgin on the restructure of its international airline operations as well as Mitsubishi Development in its joint bid with Rio Tinto for Coal & Allied Ltd.
16
ANALYSIS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
UP THE GARDEN PATH GARDENING LEAVE AND CROSS-REFERRAL OF WORK WITH SPECIALIST FIRMS ARE SOME OF THE TOPICS COVERED IN THIS CANDID INTERVIEW WITH AUSTRALIA’S NEWEST INTERNATIONAL FIRM: LITIGATION SPECIALIST QUINN EMANUEL. PARTNERS MICHELLE FOX AND MICHAEL MILLS AND FOUNDING PARTNER JOHN QUINN SHARE THEIR VIEWS WITH ALB’S RENU PRASAD. ALB: Michael and Michelle, you’ve both had to negotiate some kind of exit agreement with your old firm, Herbert Smith Freehills. How did you find that process? MILLS: Michelle and I came to an agreement with Freehills that was sensible – unfortunately that’s not something we can divulge. QUINN: Maybe I could comment on this. It does seem that as the English firms merge with Australian firms, they are imposing extraordinarily long gardening leave and restraint periods. In the U.S., these types of provisions would be unenforceable. There’s a reason why no U.S. firms have these types of limitations because the attitude of the court would be that the interests of the client come first, not the law firm. ALB: So U.S. firms are less likely to put their lawyers on gardening leave, for example? QUINN: Well as a general proposition U.S. firms don’t have any gardening leave provisions. The idea that you would tie up a lawyer and make him or her unavailable to clients is antithetical to the viewpoint in the U.S. that the client’s interests come first and the client should be able to engage whoever they want to engage and the law firm has no business in that. ALB: Finding premises is obviously part of the process of opening a new operation. How did you find the Sydney property market? MILLS: It was interesting….we had plenty of law firms that were very keen to sublet to us at very attractive prices. But in terms of the [Sydney] commercial market, I’ll let Michelle comment on that. FOX: There’s a lot of vacancy around, but it depends where you want to be. If you want to be on the other side of George St or up a bit, there’s quite a bit around. If you want to be around Martin Place and the courts, it’s a much tighter market and I think people in
our U.S. offices who have experience of different markets were a little surprised at the rents in Sydney. It’s an expensive market. ALB: It’s interesting to hear that other firms were keen to share office space with your operation. Is it possible that they are also motivated by the prospect of sharing work with Quinn Emanuel too? MILLS: Yes I think people are beginning to realise that Quinn Emanuel only does one thing and that’s litigation. So in actual fact we have a terrific history of getting on extraordinarily well with full service firms and I think this is beginning to dawn on some firms who have approached us that, given Quinn Emanuel’s fabulous client list and its reputation that in fact it’s a relationship that is worth encouraging. ALB: Have you reached any agreements with other firms yet? MILLS: The approach at Quinn Emanuel is to have preferred relationships and to give very careful thought to those. The firm regards referrals as an asset of the firm and they should be used appropriately. Obviously we’re only two days into this market; we’ve been talking about the relationships we want to develop but we haven’t come to a landing on preferred relationships but we’ve been encouraged by some firms – and we’re talking top firms – who’ve reached out and extended the hand of hospitality to us. ALB: How do you see the Australian market evolving down the track? MILLS: We’re seeing signs that this is a relatively mature legal market. But we’re seeing with that maturity, the market beginning to fracture. If you talk to lawyers outside Australia they’re always surprised that the market has been dominated to the extent it has by five firms in terms of top tier work. You just don’t see that elsewhere in the world, because you have a lot of world class specialists doing one thing and reaping the advantage of doing the one thing. It’s like politics – everyone observes that politicians underestimate the intelligence of the electorate; professional services do that a bit with their customers. It’s a bit odd that every ‘one stop’ corporate firm is trying to tell their clients that they have the best lawyer in every area of the law. It’s just not possible. FOX: The other thing with specialisation is that it does give the client a predictability about quality; because you’re specialising and you’re only hiring the best, the clients have the comfort of knowing no matter who’s put on their matter they’re going to have high quality lawyers. ALB: What will be your initial focus in this market? MILLS: We are going to start out doing what Michelle and I were doing in this market for the last 10 years. We now know the Americans call it complex corporate litigation: directors’ and officers’ liability, class
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
actions, torts, product liability and so on… those are all strong suits at Quinn Emmanuel. ALB: How will the current economic conditions affect your plans? FOX: In many respects the downturn hasn’t affected our practice…we don’t see it as having a continuing impact. It has not really affected litigation and certainly not business litigation. Corporations are getting more complex, more sophisticated and going off shore and doing all sorts of things and doing that gives rise to disputes. So we don’t expect the downturn to affect us in any way. QUINN: In 37 years of doing litigation I have never seen any type of correlation between the volume of litigation and the state of the economy. You can point to certain specialised areas like insolvency and bankruptcy which are very much cyclical but on the whole I don’t think there’s any correlation with the economic cycle. ALB: And will you be recruiting for additional talent? QUINN: We’re always in the market for outstanding, market leading lawyers. ALB: But are you recruiting right now? QUINN: Yes, I meant that literally – in every jurisdiction that we practise we are always looking to recruit the very best lawyers that are doing what we do.
ANALYSIS
17
ALB: What will be your approach to pricing? MILLS: We are definitely saying we will provide better value. We don’t need to be in fancy offices; we’re not trying to be a one stop shop, we don’t have the administrative burdens and costs that go with that. Our expenses will be less by choice and that works out well for the client. ALB: Do you have a particular hourly rate in mind? MILLS: Our single aspiration is to be the leading business litigation boutique law firm in the country. We’re only employing top lawyers who can deliver top tier service for our clients and, as you’d expect, we’re paying our lawyers accordingly. Our rates are consistent with that standard of service. That’s going to put us in a similar ball park to the top tier firms in this market. QUINN: In no jurisdiction do clients come to us because we’re a bargain law firm in terms of the quoted hourly rate. In terms of what litigation can cost you on the defence side, what the liability exposure could be, we think we’re a good choice in terms of the economics. But we’re not going to be low balling with unreasonably low rates. ALB: What kind of alternative fee arrangements will you offer? QUINN: I can talk about what we do in the U.S.; I can’t talk about what are the parameters today in this market but certainly in the U.S. a lot of the work we do is based on something other than a straight hourly rate. We do cases on a flat fee arrangement where the flat fee is a flat fee for a month or a flat fee for a particular phase of the case; discovery, summary judgment, different phases of litigation. Or caps and success fees if we achieve an agreed objective, reduced hourly rates with an element of small contingency where we participate in the upside if we get a particularly good result or we settle a case within certain parameters – by dollar amounts or time periods. To the extent that it’s permissible to offer those arrangements within Australian rules, we’ll certainly do that.
18
ANALYSIS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.08
IN DEPTH:
Why I switched to DLA Piper GLOBAL GIANT DLA PIPER SHARES THE SAME “RESTLESS AMBITION” AS AUSTRALIA’S GILBERT + TOBIN, ACCORDING TO THE FIRM’S NEWEST RECRUIT. BRYAN POINTON, WHO MADE THE SWITCH TO DLA FROM G+T LAST MONTH, TALKS ABOUT HIS MOVE WITH ALB’S RENU PRASAD. ALB: Moving from Gilbert + Tobin to DLA Piper is perhaps a rather unusual move. What motivated you to make the switch? BP: For me it was an opportunity to join a global firm with an outstanding global platform where I could have a role in leadership in the Asia Pacific. For me it was really an opportunity and a challenge and one I’m very excited about. ALB: There are a number of global firms in Australia – how was DLA different? BP: Yes, [the difference] is something that really needs to be understood better…some of the international firms that have merged with large Australian firms have a skeleton presence in the U.S. for example. The magic circle firms haven’t made significant inroads into the U.S. market either. DLA has 600 partners in the U.S. and 700 in the rest of the world; we’ve got real strength all over the world. I would say that’s the difference… I think DLA has come in a little under the radar, but if you look at what the firm has to offer across the globe, particularly for clients who are globalising it has a very, very powerful platform. ALB: When one thinks of the top transactional firms, DLA is perhaps not a name that comes up a great deal in the context of this market? BP: No and so with both David and myself joining, that is part of changing that market perception and really changing and strengthening the corporate group in Sydney and Melbourne as well. My background is Mallesons, then G+T for the last seven years. In my time at G+T we really grew and developed the corporate practice. This is an opportunity to try and leverage the global platform to do a similar thing and build the corporate group profile here and in the region. In the corporate space in Australia, DLA is a bit like G+T was when I joined – it is a challenger brand and that’s what I like about it. We’re going to be doing our best to develop the practice.
David Ryan and Bryan Pointon, DLA Piper
ALB: Will you be targeting the same kinds of work at DLA? BP: I’ll be looking to do the same sorts of transactions for the same sorts clients as I [did at] Mallesons or G+T. Now that might not happen overnight but that’s the ambition I have. [DLA] is not a firm that’s been…well established with intermediaries or investment banks or PE firms but it does have some very strong corporate and ECM capability. All of those areas I’ll will be looking to develop. ALB: Clearly you’re attracted to the global platform the firm can offer. Do you think the “fly in, fly out” model has now been discredited? BP: I think that’s right. I’m on a number of matters for Australian companies; not necessarily massive companies – but mid-sized Australian companies, their businesses are globalising and the deals they are doing are not here; they’re in UK, China and Europe. They want their trusted advisors in Australia but they want to be able to have trust and confidence that their deals can be executed in other jurisdictions. ALB: What else has attracted you to DLA Piper? BP: Look at the ambition of the firm – Nigel Knowles built the practice up from a mid-size firm in the UK into the world’s largest law firm. What I found attractive about that was there was the same sort of restless ambition as there is with G+T. That’s why I joined G+T at the time. It’s that combination of a global platform and ambition and it’s still a challenger brand. Maybe it’s my personality but I enjoy a challenge and setting goals and seeing where we can get to in a period of time.
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20
ANALYSIS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
Measuring Partner Performance:
THE ART OF THE POSSIBLE IN THE LAST ISSUE, CONSULTANT BILL FAZIO OF FAZIO ADVISORY SHED SOME LIGHT ON THE MURKY WORLD OF LAW FIRM PROFIT SHARING. THIS MONTH, HE LOOKS AT A PARTICULARLY CONTROVERSIAL PART OF THIS PROCESS: MEASURING PARTNER PERFORMANCE.
ANALYSIS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
N Bill Fazio, Consultant
o matter what system you have for dividing profits, at some point you need to measure partner - or potential partner - performance. There are many ways to do this, and changing a measurement system can be very difficult. Current partners are normally survivors under the present system and it is hard to get people to support a change that is not in their personal short term interest. So you end up in that interesting zone of “The art of the possible”. This article looks at some of the things you can include in a system and how you might measure them. Doing this well will help the firm meet its strategic and cultural aims. In the case of any partner admission system, including lock step systems, there are usually hurdles which must be cleared before you can be considered. It is often said that you must be “performing at or near a partner level”. What does this mean? In the case of systems which measure partner performance - even if only to decide if your performance on a lock step is still within the band - or have a bonus pool, a more granular measurement of partner performance is required. So, what is normally meant by performing at or near a partner level? This is usually shorthand for the generic concept that you are or are likely to grow into a practitioner resembling one of the current partners. Of course, likely to grow into a practitioner equal to the lowest current performer is not really enough so it might actually mean about average for the current partners. However, most firms are trying to improve quality and performance - no matter how good they presently are - and so it may well be the case that the bar is set a little higher. In making this general assessment there will be a few common measures: financial performance, client following through retention or personal acquisition and people skills. Some firms will add technical expertise or specialisation and some will overlay strategic compliance: does the firm need this person’s skills/clients now or in the future? In smaller firms or teams, succession gets a look in as there is a need for renewal and replacement of the skillsets of retiring partners. On financial performance the most lenient system will require strong personal performance against budget with general compliance with firm KPIs on things like recorded and billed time, write offs of WIP and collection of debtors. Others will want to see something often called practice size,
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“THE MOST LENIENT SYSTEM WILL REQUIRE STRONG PERSONAL PERFORMANCE AGAINST BUDGET WITH GENERAL COMPLIANCE WITH FIRM KPIs.” the amount of fees of all operators on all your personally supervised files or all your introduced files. Either of these measures can be called “controlled fees” and the first is often called “supervised fees.” Fees sent to another partner or group are often called referred fees. Firms will have their own benchmarks for these, which are sometimes aspirational. Depending on the firm, these financial figures may be turned into a profit figure. Creating a profit figure requires an exercise in allocating overheads and this can be a difficult process. Different views of overhead allocation can actually turn a partner practice from profitable to unprofitable! Putting overhead allocation differences to one side, fees directly produced on a partner’s own files are usually given full credit. In some systems, if the file is referred the receiver loses some credit to the referrer. In some firms this relationship continues for the life of the client with the firm and regardless of why the particular piece of work made it to the firm. Where work is referred, this is often acknowledged, sometimes adding the full value of that work to the referring partner’s performance figures. In other systems a referring fee is added, often around 10% to 15%. Other criteria which may be taken into account include the number of new clients added, staff turnover, graduates taken, partners made in the group, contribution to specific initiatives like knowledge, or migration of clients or opportunities to other teams or other offices. These can be measured numerically in various ways or can be graded on a five point scale - poor, below required, okay, above required, excellent - or can simply be graded as satisfactory or not satisfactory. Management contribution, through being a practice unit leader, board member or holding a special role such as Staff Partner is often recognised. This recognition is often through budget fee relief - for example, reducing the person’s own budget by 10% to 50%. Obviously fee relief works better in a system where performance against budget is measured rather than profit contributed. So let’s look at the sort of things you can measure and how you can measure them:
CORE FINANCIAL MEASURES Item Time recorded, hours or $ value Time billed, hours or $ % of time recorded which is billed (realisation) $ collected $ outstanding and aging Bad debts, $ or % All of above for you individually or your files
How to measure Practice management system tracking (PMS) PMS PMS PMS PMS or other reports PMS or other reports PMS or other reports
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ANALYSIS
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
Most firms measure and take note of the above. Many have benchmarks for acceptability - budget or a % of budget or financial benchmarks for issues such as realisation. Some choose to look only at billed and collected and so do not track all of the above.
WIDER FINANCIAL MEASURES Item
How to measure
Work referred to others Most PMS allow for recording an “originator” or “referred by”. The trick is getting people to enter this information and checking it. The other issue is for how long you will allow this referral to be counted. Some firms say for all work for all time. Others say for one job, one year etc.. Profit generated from above
FRH0043_TheAge_T21_R1.indd 1
Some firms don’t measure profit and operate at what the accounting profession would call gross profit, taking account only of perhaps salaries of the staff on the team - sometimes only legal staff although often all staff, including paralegals, EAs, PAs and word processor staff. Others have standard overheads (per person, per author, per partner, per $) and still others look to the real cost of a team. It is easy to see that if you don’t allocate the cost of, say paralegals, to the team then work with a high paralegal content will be recognised more favourably than if their cost followed the work.
The most difficult question is how to benchmark the measurements? Do you measure partners against each other, or against an aspirational ideal? If you measure against other partners, do you look at an average partner, or the best partner? What use do you make of industry benchmarks? Once you have some measures agreed, and some data from these measurements, what do you do with it? Well this seems to depend in part on your system. The more granular your assessment needs to be - such as a full meritocracy - the more important all of these things become. In a pure lockstep, all of these measurements are about falling in line with firm requirements, including keeping up on financial performance. Any slippage will be seen as an area for encouragement or training. It won’t tend to have an immediate direct financial impact. In a modified lockstep, say with a bonus pool, qualification for the bonus will depend largely on financial performance but other factors are usually included. So how might a partner’s total performance be measured? Usually a firm decides to weight financial and non-financial factors. Sometimes there are weightings inside these two broad categories. It might feel like 99%/1%
3/08/12 3:34 PM
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
ANALYSIS
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Now we look at what are often called ‘Non-financial” matters:
‘NON- FINANCIAL” MATTERS: Issue
How to measure
Quality
Often discussed, with the bluntest measure being no PI claims, or not too many PI claims. Others also look at complaints from clients and, the more enlightened, from internal referrers. Listing in directories such as Chambers or winning an ALB Award or other accolades can be included here. It is certainly possible to acknowledge and reward awards directly. Other systems may wait for the value of the awards to show through more, or better, work.
Publications/speaking engagements
Same as Quality.
Community service
Unless actually required by the firm, same as above.
Contribution to knowledge
Unless there is a minimum performance level, same as above.
People management
Often only noted in the negative – e.g how many complaints recorded by HR. Can be measured in various ways: turnover ratios, internal feedback scores through surveys with responses separated between legal, non-legal, peers, superiors, management, clients etc, as you wish. You can require a minimum score, or improvement in last year’s bad scores, or reward good scores…..
Compliance with office systems
Offices have systems so things work better. Some are mandatory (professional requirements, trust accounting etc) while some are internal (managing staff performance review deadlines, pay review deadlines, feedback on the budget process, internal authority limits, etc) but are nevertheless important to the firm working smoothly or having accurate information. This can be measured holistically through feedback from management or can actually be tabulated: how many deadlines missed etc.
Recruiting
Many firms reward staff for assisting with recruiting. Should partners be rewarded for attracting a lateral partner, or key senior associate or the best graduates or key staff in management? If they aren’t, why would they prioritise this? Easier to ask HR, particularly if you are not paying a user pays fee!
Strategic compliance
This refers to things partners are asked to do to move the firm or the partner’s practice in the direction desired. Many firms ask partners to achieve particular things over the coming year: grow a particular type of work or client, assist someone else to position for new work, head the firm’s push into market acceptance in a new area, retain an existing panel appointment, fix staff quality issues, deal with succession. The list is endless. In reality, there is a tendency for strategic and holistic objectives to be subordinated to financial contribution; it is uncommon, for example, for a partner’s revenue performance to be discounted simply because that revenue came from a non-strategic area or client. Omissions are easily forgiven. No wonder partners tend to focus on good financials to the exclusion of everything else. KPIs can be set and measured. It is what you do with this measurement that matters.
financial to non-financial but the firm will often say 70%/30% or even 50%/50%. If it is really 50%/50%, then half of partners earnings would depend on the non-financial measurements. If this was applied rigorously then partners should be desperately focused on getting good scores in these areas. A Partners personal contribution would be calculated like this: Financial factors X firm weighting + Non-financial factors X firm weighting = total score Partner individual score X 100 Total of all partner scores = Partner % contribution to the firm This contribution can be compared to a partner’s equity share in the firm, and depending on your system, the equity share can be adjusted. This all sounds logical but it is very hard to implement in the real world. If you were a Remuneration Committee member, would you pay a bonus to someone who had a bullying claim upheld against them but had strong financials? What about a partner with strong financials, but lost a panel appointment important to many parts of the firm? It isn’t easy, and how you decide these things does reflect your culture, and is the real world outcome of “I hear what you say but I know what you value”. The full details of a partner performance measurement system and the implications of this system are extremely important indicators of how things are done at a firm. There is no right or wrong, but how you do it affects the way people act. You will get more of what you measure and reward and less of what you don’t measure or reward. If you had to decide, how would you measure performance? How much weight would you put on the so-called “soft skills”? Or, should we just leave it to that philosophy from Jerry Maguire, “Show me the money!”
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DIBBSBARKER
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
CLIENTS TELL
DIBBSBARKER WHERE TO GO LOOKING FOR A GUEST SPEAKER FOR YOUR NEXT PARTNER CONFERENCE? WHY NOT INVITE A CLIENT…..OR TWENTY?!
M
ost law firms hold partner conferences or ‘retreats’ to discuss their performance and set their strategic direction. In recent years, it has been common practice for firms to invite a client or two, usually from the ranks of in-house counsel, to give their perspectives on the market, the performance and perception of the firm itself and how they would like their service providers to engage with them. DibbsBarker continued to take client involvement to a whole new level this year at the firm’s annual partner conference. Held at the Sheraton on the Park in Sydney, the event included a staggering total of 22 clients spanning senior executives and board members from the likes of the Bank of Queensland, Biota, Chubb, Credit Suisse, Infigen Energy, NAB, QBE, Woolworths and Zurich. This is a ratio of one client attendee for every two partners in the firm. Also, of the executives in the group, only one held a dedicated legal counsel role – the others were all either in general management positions or they led functions such as finance, business development, risk and claims. The conference comprised ‘all in’ plenary sessions accompanied by breakout sessions dedicated to the five industry areas on
which the firm focuses – Energy Resources & Infrastructure, Financial Services, Insurance, Medical Pharmaceutical and Property. Clients participated in the breakout sessions relevant to them, but they were also invited to attend the plenary sessions and to network with the partners and other participants during the breaks in between. Commenting on the reasoning behind involving so many clients, DibbsBarker Managing Partner Alan McArthur says, “We originally developed our industry strategy with significant input from clients. It has made sense to continue the engagement by getting them involved in our annual partner conference, enabling us both to gauge our progress and to drive our change program. Lawyers naturally listen and respond better to the firm’s clients than their managing partner!” “The fact that so many clients are willing to give up their time to participate is terrific. They bounce off each other and the diversity of their backgrounds and perspectives leads to highly productive, wide-ranging discussions. They also enjoy themselves and take away fresh insights and new contacts of their own – their feedback every year is very positive,” Alan concluded. Donal O’Dwyer, Chairman of AtCor Medical and Director of Cochlear, Fisher & Paykel Healthcare and Mesoblast, participated in the Medical Pharmaceutical sessions. Although close to DibbsBarker, he was surprised to be invited to a partners’ conference and the style of forum was new to him. He was impressed with the firm’s efforts to reach out and understand the client’s perspective. Donal said afterwards: “I found the perspectives of both the industry participants and the DibbsBarker people very interesting. Rather than anybody presenting or lecturing, there was excellent interaction and a natural ‘two way flow’
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
DIBBSBARKER
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DibbsBarker Managing Partner Alan McArthur (standing) with AtCor Medical Chairman and Cochlear Director Donal O’Dwyer (left) and Hanwha Q CELLS Australia Managing Director Dr Oliver Hartley (right)
of comments and ideas. The focus of the content was squarely commercial rather than legal and I found the whole experience quite stimulating.” The open flow of insights also impressed Victor Hoog Antink, Chairman of South Bank Corporation and the Property Industry Foundation, Director of Macau casino developer Sands China Ltd and former CEO of DEXUS Property Group. He is a strong advocate of the line ‘nobody has a monopoly on good ideas’ and he was impressed that DibbsBarker had the foresight to incorporate a range of independent views into the firm’s strategic planning discussions. “While external participants in a conference like this may not contribute fully-formed solutions because they do not know the inner workings of the firm, they will sow the seeds of thought. I also didn’t pull any punches in the sessions I attended and I liked how open all of the attendees were to being challenged and to running with fresh thinking and new ideas,” said Victor. For Dr Oliver Hartley, Managing Director of Hanwha Q CELLS Australia, subsidiary of the German-based world leading solar cell manufacturer, the conference was an opportunity to look beyond his own sphere in the fast-paced renewable energy sector.
“Sharing views with the other industry leaders and DibbsBarker’s partners from around the country was very interesting and valuable. I was also impressed at both the size of the firm and how active it is in the market.” Oliver described DibbsBarker’s legal role as “oil in the machine of business”. In his view, “As the focus of Australian solar industry expands from residential to commercial and industrial systems, issues like contracts, structured financing and long term risk assessment are key. Efficient, commercial legal input on all of these is crucial. The firm understands this well and is working hard to make sure it is ahead of the game despite the constantly shifting political and regulatory landscape.” The conference obviously required a major organisational effort, it yielded valuable discussions and insights, and the numerous clients and industry participants enjoyed being involved. But did it confirm that DibbsBarker is on the right strategic course? “Time will tell,” says DibbsBarker Managing Partner Alan McArthur. “We certainly uncovered a number of new areas of opportunity, we validated and fine-tuned key components of our positioning like our strong industry focus, and we fleshed out a range of new ideas we had discussed internally. The most important short term outcome has been to ramp up our already strong capabilities and profile in the agribusiness and renewable energy spaces. We are also maintaining our focus on ‘good’ growth aligned with our industry strategy, despite the challenging market conditions. Since the conference, we have added four partners in a matter of months – two internal promotions and two laterals.” As the firm grows, DibbsBarker may struggle to maintain a ratio of one client attendee for every two partners at its annual partner conference, but the approach is clearly paying dividends and it has both industry and other firms taking notice.
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Technology
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
Technology
Our panel of law firm technology experts returns and this month they’re tackling one of the signature issues of this decade – coming to terms with mobile devices and cloud storage. They also explore the cultural issues associated with technology change and what firms can learn from other industries and their use of online systems.
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
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SPONSORED BY:
Moderator: Renu Prasad
AUSTRALASIA EDITOR, ALB MAGAZINE
The Panel: (l to r)
Jonathan Prideaux, National Manager - Legal Technology Services, Clayton Utz Cristina Libro (seated), Legal Technology Solutions Manager, Henry Davis York Berys Amor, Director of Technology, Corrs Chambers Westgarth Luke McLean, NSW State Manager, Thomas Duryea Consulting Dean MacDonald (seated), IT Director, Ashurst Australia Anthony Bleasdale, General Manager of KM, Maurice Blackburn Danny Simmons (seated), Partner, Clifford Chance Russell Wright, Chief Information Officer/ Chief Knowledge Officer, Gilbert + Tobin
ON THE
MOVE
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Technology
ALB: Clearly mobile devices are transforming legal practice – what are the implications of this? DANNY: You know, if we go back in time, 25 years ago faxes came about and it started to change legal practice. Before then you’d send a letter on the telex, it was very slow. All of a sudden faxes came about and suddenly clients expected their lawyers to be available. Often that meant people sitting at desks and waiting for things to arrive. Email then arrives, then the mobile environment. Clients are on them, lawyers are on them and they expect you to be available, not necessarily to immediately work on something, but you are contactable wherever you are. The clients are expected to be contactable within their organisations and they expect their service providers to be as well. LUKE: You need to enable [mobile] technology whether you have [the relevant] policies or not. I work with a lot of clients who say “we don’t support bring-your-own-device” but guess what? I look at the users in your environment, whether it be handhelds or other devices, they are using your corporate network. You need to make it easy for these guys to interact and have policies and procedures around that. And how are you going to manage that information? You’ve got corporate data going on someone’s device with pictures of their children as well on there, you can’t just wipe that device because it has non-corporate data on there as well. So, you need to have policy around that regardless of where you are at in your life cycle, because people are using those devices already. BERYS: Absolutely. You have to secure the corporate data on personal devices, I agree. It’s interesting, I read an article a couple of weeks ago that said a large North American financial institution has actually mandated to their law firms that they can not use BYOD. They said that “our employees are not allowed to put their
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
“AT THE BEGINNING WHEN THERE WERE SECURITY ISSUES BETWEEN DEVICES, CLIENTS WERE SAYING TO US, YOU CAN’T USE CERTAIN KINDS OF DEVICES. IT’S STARTING TO GO NOW, BUT WE DO HAVE THAT ISSUE.” - DANNY SIMMONS
corporate data on personal devices, so neither can yours.” It’s interesting, I’m not sure that that would ever come to Australia, but I think we need to keep an eye on it, because some of these large corporations, they may start to dictate what we do with their data. DANNY: I think it does come into play. I think, particularly mobile devices, at the beginning when there were security issues between devices, clients were saying to us, you can’t use certain kinds of devices. It’s starting to go now, but we do have that issue. RUSSELL: And going mobile is not necessarily about the device. It is more
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
about the network than the device. You’re on the train, but doing some stuff on your tablet, there are periods when it just doesn’t work. So when you are providing a solution to people you’ve got to be conscious about the fact that they are not always online. LUKE: But it links back to the first question about costs and cost savings. I’m constantly [on the move] so my business gets a lot more efficiencies and return from me [by supporting mobile devices]. When I’m on the train, yes I can be in and out of signal, but I’m still answering emails, I’m still typing responses. If you don’t support that then your staff are going to be less productive and costs are going to increase. JONATHAN: Mobile devices are here to stay and the younger generation use them quite religiously. They’re very used to touch screens, you know, half of them probably don’t know what a keyboard is! So they are here to stay, there is some great functionality with them. Obviously with the industry we are in, we are very conscious of security. In our mobile device policy there is a lot of strict security around using those devices, particularly your own devices. But we are seeing great benefits. An iPad can replace a couple of trolleys’ worth of documents, they’re much more user friendly, it is easier to search and find things. From the security point of view, I have heard of people leaving their folders on the train – hard copy – and that is really insecure. You can remote wipe an iPad, but once you lose a piece of paper, you’ve got no way of tracking it down. DEAN: In the past 24 months we’ve rolled out mobile management across our entire fleet. So we’ve got a 40/60 split of people who’ve brought their own devices and [those who use] our own. But it was interesting, in the first six months we had three personal devices lost. Every one of them, [the owner] asked for us to do a complete wipe. Don’t worry about our user data [they said], we want it all wiped and we want the phone disabled. What we found from that is people have flipped their perception, because they can’t ring Telstra or their supplier and ask them to do that, so we can secure all their data.
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“SO THEY’RE NOW SEEING OUR SECURITY PLATFORM AS AN EXTENSION OF THEIR OWN SECURITY AND THEY’RE BEING ABLE TO UTILISE THAT IN A MORE ACTIVE WAY.” - DEAN MACDONALD
Their banking data is wiped, everything. So they’re now seeing our security platform as an extension of their own security and they’re being able to utilise that in a more active way. So rather than hobbling it, which is what it was seen as at the start, it’s now enabling them to be a bit more secure about what it is. They don’t like all the passwords, they don’t like all that stuff, but they like it when we can destroy the devices for them. ALB: The more popular devices are iPhone and Blackberry – without wanting to start a war, do your firms have any particular preference in terms of what you’d issue your staff with? CRISTINA: I think when I first came to HDY there was a definite preference for Blackberry and I think, even up to about three or four years ago, I didn’t think there was going to be a day where there was a fleet of iPhones, but
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Technology
it seems that that is now the case. Never say never, but that is definitely the preference at this point in time. It is definitely the iPhone. BERYS: I think we need to keep an eye also on the Microsoft tablets and phones. I know they have come late to the market, but that may work to their advantage. When you look at the iPhone or iPad, they are fantastic tools, there’s no doubt about that, but when you try to open and edit a Microsoft office document you are going to lose your formatting. I think that’s the most common complaint that we get. So I think we need keep an eye on the Microsoft products, because once they develop good tablets, people may find they get a better experience. I not saying they will, but we should keep an eye on it. LUKE: The other benefit of the Microsoft area is that it can be managed the same way as every other corporate device. So if you’re using Microsoft systems centre and patching and delivering applications, no longer do you need other third party tools to containerise stuff. If you can provide a device that is a tablet, that is running Windows 8 you’ll cut off a lot of these BYOD people because they’re happy with the device they’ve got and it means it is just an extension of how you currently support the rest of your fleet. So there are a lot of economies of scale there in reducing costs. RUSSELL: Yes we are just commencing our trial of Windows 8 right now. We offer Android IOS and Blackberry handsets to people, they can come in and we take them through the choices. The reality is that we have to support our apps in the market, so supporting them on our devices internally, well that’s a good test to see if you’ve got it right. With Windows 8 we are in the same position as Berys, you know, is it going to take off or not? What we have seen though is that it has actually changed the definition of what a tablet is. So we’ve got a number of different styles of devices we are actually having a look at. Again the ability to maintain document or content format across your devices, including tablets is quite compelling. DANNY: Microsoft is also changing strategy with Apple devices. It is starting to release some of its software for those devices. No, you can’t access Microsoft Office on your iPhone or iPad yet, but they recently released their web access application, so they’re definitely moving in that direction as part of their subscription services. ANTHONY: If you go back to the period when Blackberrys were dominant in the marketplace, I think everyone knew what that annoying red light meant. The process that people have gone through as they’ve picked up iPhones is, they know they are going to be working longer hours, but it’s not just the work experience that they get from that phone. I remember just trying to use the internet on my Blackberry, it was so difficult to do. Obviously that’s not the case with the iPhone. So it is interesting that Blackberry have come back to the market with more of that work and play ideology, whereas in the past it was always billed as the prominent work device, you would get the scowls on a Sunday afternoon because the red light was flashing. With the iPhone, you can say you are just checking Twitter, but you can be replying to a couple of emails. With iPhones it doesn’t feel like you are constantly working. ALB: How do firms approach their procurement of these devices, would you keep both Apple and Blackberry in stock? Or do you have a policy of aligning your business with one provider? BERYS: We’ve gone down the path of choosing your own. We are actually just about to launch that, we’ve got a new mobile services
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
“IT IS INTERESTING THAT BLACKBERRY HAVE COME BACK TO THE MARKET WITH MORE OF THAT WORK AND PLAY IDEOLOGY, WHEREAS IN THE PAST IT WAS ALWAYS BILLED AS THE PROMINENT WORK DEVICE, YOU WOULD GET THE SCOWLS ON A SUNDAY AFTERNOON BECAUSE THE RED LIGHT WAS FLASHING.” - ANTHONY BLEASDALE contract, so if you have a corporate device you can now choose one of five different devices, including a Blackberry. I’ll know in a few weeks what the preference split is between the iPhone, the Samsung, the HTC and the Blackberry. RUSSELL: We turn it around with the vendors, we don’t carry any in stock. So a person comes in and if they want something, it usually arrives within a day. It’s personal choice as to what they actually want. A lot of it depends on what template they have got personally. You see different trends coming out in the market in terms of what’s in favour at the moment. DEAN: We carry a float stock and I think we have about six devices as well. But it’s interesting seeing the shift…we are seeing a shift towards the Samsungs. ALB: We haven’t talked much about cloud storage, is that pretty much a reality now? Or is it something firms are still testing the waters with? RUSSELL: Well we’ve had the conversation about security, which has been part of all the conversations. There are different flavours of cloud and you’ve got to be very careful about what you do. If you just use a generic cloud service, then I think you are putting your content at risk. DANNY: But I think you have to offer something, otherwise your users will go for that type of service. RUSSELL: That’s correct. You’ve got to have a secure solution that the firm is comfortable with and is easy.
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
SPONSORED BY:
“I THINK PEOPLE ARE BECOMING MORE COMFORTABLE WITH THE IDEA OF THEIR DATA BEING IN THE CLOUD. THERE ARE SOME TYPES OF DATA WHICH YOU DO NOT WANT TO BE IN A CLOUD ENVIRONMENT THAT IS OFFSHORE, FOR A NUMBER OF OBVIOUS REASONS, BUT USING THE CLOUD HAS CERTAINLY BECOME MORE ACCEPTABLE I THINK.” - JONATHAN PRIDEAUX
JONATHAN: I think people are becoming more comfortable with the idea of their data being in the cloud. They certainly want to know where it might be physically. There are some types of data which you do not want to be in a cloud environment that is offshore, for a number of obvious reasons, but using the cloud has certainly become more acceptable I think. We’re often finding clients using things like Dropbox to transfer documents to us, whereas a couple of years ago we would have seriously warned clients away from doing that because of security concerns. [There are] still some risk concerns but it is much more accepted. LUKE: There are also different types of cloud; public cloud does have security concerns. But when you look at private cloud, that is a much stronger proposition. We’re seeing a lot of clients using a hybrid. They are putting mail into the cloud or something that is less business critical, but using private cloud for the really critical information. BERYS: I think that is a good point, you almost classify the information, don’t you? And you can apply different models to what the information is. ALB: Is that what you meant earlier Russell by different flavours of cloud, public and private? RUSSELL: Oh yes. You can actually have your own firm brand cloud for the user community. Then they know it is more secure – education is a big part of the solution. People must understand the risks and, as I’ve said earlier, you just have to make it easy. It just has to be as easy to use as the other generic ones, otherwise you won’t win drive adoption. ANTHONY: I think also, if you go back to one of the points made earlier about being able to wipe someone’s device remotely, most people back their devices up to a cloud now, they back up their photos and calendars etc. Actually getting rid of someone’s phone
altogether isn’t the pain it used to be, where you then had to send a generic email to everybody. I think when the cloud first started being a part of everyday life there was a cost element to it, but certainly in this region with firms like Amazon opening up down here, the cost has suddenly started to really drop. That’s been one of the interesting observations we’ve had, where Amazon can actually come and give you that full service offering that other firms were trying to introduce. So it will be interesting to see how they maintain and stay competitive. JONATHAN: Certainly a lot of organisations are moving to Gmail. So they’ve got their own branded Gmail, rather than managing their own exchange environment, which has overhead and cost. There’s probably a lot more companies than you would imagine actually using Gmail and being quite comfortable with Gmail. I mean, to my knowledge I don’t remember the last time Google or Gmail crashed or needed an hour’s outage to do an upgrade. So there’s definitely a lot more comfort with using those sorts of systems. ALB: Are these SMEs that are using Gmail, or the larger companies? JONATHAN: It’s a range. Certainly the SMEs would have been quicker about
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taking up Gmail, but you would be surprised. There a quite a number of large organisations using Gmail or moving to Gmail for their standard email service. DEAN: But part of the problem that we’ve got is, yet again, we hold other people’s data. What we’d have to do is we’d have to then backend it with every client security and say to them, we’re intending to put this onto this service which lives within this jurisdiction, or doesn’t live within this jurisdiction, or we can’t guarantee which jurisdiction it will live in. We’ve looked at it a couple of times to try to cross-clarify the data and we’ve worked out, every time we do, we hit a large client like the Australian government or a resources company who says “our data is potentially a focal point of various activity, you have to secure it like we would.” ALB: Let’s talk about the cultural issues associated with technology. What’s challenging about encouraging people to take up new technology? RUSSELL: I think we have to accept that we work in a time-poor environment and there’s a lot of people under a lot of pressure. So when driving change, people are always asking you: “well what’s in it for me?” So you need to be very clear and concise about what that actually is. Be very flexible about how you are delivering change, across all facets. From online training people do themselves, to the training days and even the one on ones; at the end of the day you are taking up people’s time, which they haven’t actually got. CRISTINA: I think that lawyers by nature are very traditional. By nature they have a reluctance to change. So I think before you commence any type of change, whether it be an introduction of a piece of software or a mobile device, you have to be very aware of what it means to your clients, or whoever it is that you are releasing this product to. I think it is about incorporating champions, about understanding what lawyers value and pitching it in a way that it is actually really there to support them. I think that is very important because if they feel like they are losing control, or if they don’t like the product, it can die very quickly. JONATHAN: Following that point, I describe lawyers as “riskaverse”, especially in the space that I work in. If you are working on a big case for a big client, you don’t really want to be experimenting
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“I THINK IT IS ABOUT INCORPORATING CHAMPIONS, ABOUT UNDERSTANDING WHAT LAWYERS VALUE AND PITCHING IT IN A WAY THAT IT IS ACTUALLY REALLY THERE TO SUPPORT THEM.” - CRISTINA LIBRO on new technology. So you have to find a way to introduce it that is very low risk and part of that would be low cost. So the first predictive coding project that we ran we partnered with a firm. We didn’t have to pay for the software and we didn’t do it on a particularly risky part of the case. We found we had a really steep learning curve from doing it in that way and, having had that experience with our lawyers, they are now a lot more willing to consider it as a solution going forward. CRISTINA: I think it is also about becoming that trusted advisor, about having those runs on the board. I think that’s very important, especially in my role, because we have been rolling out a very commoditised product, to then all of a sudden managing one of the largest insolvencies in Australia’s legal history. Because we’ve managed that wide range of matters, we now have a reputation of
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You can also view video footage of this roundtable at www.legalbusinessonline.com
delivering those sorts of products. So they do value them, they do support them. ANTHONY: I think you’re right, I think it’s that old argument of trust versus experience. If you meet a partner that, every time technology has been introduced to that group, has had a bad experience, and you need them to trust you, that can be a difficult conversation. That’s where [you need] real true engagement and having their involvement in the selection of a system or a solution, understanding it and actually letting them be in the forefront of those kinds of conversations and letting them lead their practice through that change. Whether it be the new version of Office, explaining to someone what a drop down list is as opposed to a ribbon, things like that, there are so many different things you can do to increase engagement. After a few projects you understand that you can’t just walk into a room and expect everyone will understand what you are trying to do, but you need to have enough knowledge to lead the conversation so they feel comfortable that you’ve engaged with them and they’ve been involved in that decision. RUSSELL: Certainly structuring your pilot groups, you can’t always just get the technologists in, because you’re really then just preaching to the choir. You need a broad range across the firm and, because having the trust of the firm is vital to implementing change, getting pilot groups now in organisations is not hard. They’re very savvy about technology and you find, if you’re launching something different, there are a band of people who want to be involved. It’s then running a pilot solution and using the champions to get out there and sell the message to the rest of the firm. That way it is not just IT talking. JONATHAN: Those points are very valid. It’s important to have your lawyers at all levels involved in the project right from day dot. If you come up with a whizz-bang technology solution and you just deliver that to them, then they are likely to be more hesitant about using it. If they have been more involved in the project, evaluating and testing, then you are going to find that it is a lot easier to gain that acceptance. DEAN: Part of that is being brave as well, identifying the people who have been your detractors in the past. Whether or not you’ve got their trust, you should bring those people, because generally they voice their opinion to other strong partners. If you get the strong voices early in the journey and use them as the mouthpieces for it...it is one of the quickest ways to turn around the bad news you’ve had in the past. BERYS: One of my greatest experiences with software deployment was really early on in my career, where one of the most senior legal secretaries tried the product and told me
“YOU NEED A BROAD RANGE ACROSS THE FIRM AND, BECAUSE HAVING THE TRUST OF THE FIRM IS VITAL TO IMPLEMENTING CHANGE, GETTING PILOT GROUPS NOW IN ORGANISATIONS IS NOT HARD.” - RUSSELL WRIGHT
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that she hated it and that no one would use it. Well, within that week, of course she kept using it and it began to win her over, she began to see the benefits of it. She…became one of the most vocal champions for us. Sometimes it is a matter of turning those people around, I really agree with that. CRISTINA: I think as well, being able to develop and design something in-house does help. You can then actually offer the fact that it isn’t set in stone, once it is out there refinements can be made. You let them know that you can work on it together as clients change and as workflows change, to get it right every time. ALB: How can the legal sector learn from firms such as Qantas and Expedia, to create systems that are simple and easy to use? ANTHONY: For me when the ‘improving client experience’ topic comes about, I take a further step back and think my clients are the lawyers, the legal assistants and the people who use the technology. I guess I was fortunate in that my firm supported a project where we went around and did analysis on how people work with their different systems. So we actually spent a lot of time working with partners and watched them buy something on Amazon, or browse through Carsguide, things like that, to the point that we ended up engaging with the technology provider of Carsguide and they’ve actually come in and created our enterprise search tool across all of the different databases and relationships. We’re actually really fortunate that the firm supported what we were doing there. Sometimes people do laugh because we ended up with the provider of Carsguide, but the way people get
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to information with that system is maybe much more efficient than what we’ve provided in the past. CRISTINA: I think you raise quite an interesting point because, especially if we’re designing products for clients or internally, the environment around the way people use technology and the sort of websites they visit really influences the user experience and the way they are going to react to your product. So, to me, that makes perfect sense because what they are used to doing, even predictive searching and stuff like that, that’s what they’re expecting. They have a very high expectation. I think we have to really focus on that because systems will either thrive or die based on how easy they are and how alike they are to other systems your users are used to using. BERYS: And one of the things I think that has been holding us back from that, as Russell [said], is agility. We have these legacy proprietary systems that take 12 months to upgrade; by the time you’ve upgraded a lot of those features are out of date. It’s almost like you’re handcuffed to them and if you upgrade one system then
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it’s a domino effect with the others. We’re certainly trying to move towards a more agile state where we can implement tools quickly. RUSSELL: Well certainly the mobile devices have just changed the IT landscape completely. The demand to be adaptive, the demand to present the most important content for the user on the right device. We’re not [just] following what we distribute to our people, our internal clients, we’re following what’s going on in the market. And also understanding that the market out there is demanding the information in those formats. We recently, for our recruitment drive, we pushed out an app. It’s very much tailored to the future partners of the firm. You know: “come and see G+T”, we’ve delivered a lot of high, rich video content for them to actually see the firm in a different light. We’ve released a number of apps and there’s more on the way. It’s just what you need to do to share information. DEAN: That’s a great example. Technology, particularly the consumerisation of devices, is driving people towards saying it can solve everything. Russell’s saying they’ve been providing something specific to the young 20-year olds who have just finished their degrees as a targeted solution. And part of what we come up against is that we can develop an app for everything. You know, [partners] are used to just downloading a $2.95 application. The number of times I’ve spoken to senior partners who say they can get this for $2.95 and we [say], yes, but there’s a massive set of infrastructure that has to sit behind that. ANTHONY: I think search is one of the things we fight against every day because Google dominates the market and you have the Yahoos and everybody chasing them. And one of the things that you learn as you spend more and more time with different clients and their demands get greater, is simple visualisation tools that really work.
We implemented a tag cloud…so when someone completes a search [they are] able to see that they’ve got other kinds of content that they hadn’t taken into account, or maybe it will highlight an expert in that area. That kind of visualisation helps people to understand again that searching isn’t just about hitting a Google search box and hoping it is on the first page; it is more about enabling people to take that first step and through a visual tool feeding them into that kind of process. Client demands are always going to be “can we search this” or “can we search that” but actually providing them that second step without them knowing that they’re going through that process is where you are going to get your real benefits. They will start to see what they’re doing and how they are collating that and I think that is where the search sometimes falls down and there is room for improvements. ALB: Thank you everyone for a very stimulating exchange of ideas – many thanks for taking the time to participate.
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THE NEW RULES OF THE
GAME MELBOURNE LAW FIRMS ARE SCRAMBLING TO STAND OUT FROM THE PACK AS SEISMIC LEGAL MARKET SHIFTS PRESENT BOTH NEW OPPORTUNITIES AND THREATS. BEN ABBOTT REPORTS.
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A
Elspeth Arnold, Ashurst
John Nerurker, Mills Oakley
Peter Monk, DLA Piper
Damian Paul, M+K Lawyers
ustralia’s new Prime Minister, Tony Abbott, declared the country ‘under new management’ and ‘open for business’ when he led the Coalition to election victory on September 7th. The sentiment was well received by Australia’s business community – and, no doubt, by Melbourne’s corporate lawyers. Beset by the widely perceived uncertainty of Labor’s last three years in power, as well as a similarly lengthy period of challenging local economic conditions in Victoria, many have been eager for the stability and certainty a new majority Coalition Government has promised – repeatedly – to deliver. “The current composition of the government has caused ongoing market uncertainty, which has adversely impacted Australian markets and business activity remains cautious as a consequence,” said Gadens’ Melbourne CEO Grant Scott-Hayward prior to the election result. “Political certainty after the election will provide market confidence and likely more positive economic trends.” Lander & Rogers’ Derek Humphery-Smith agreed clients were enthusiastic about majority government. “This is expected to provide greater economic certainty than we have had over the last three years,” he said. Victoria’s economic outlook has been uncertain for some time. A June 2013 survey of the Victorian Employers’ Chamber of Commerce and Industry found just nine percent of member companies surveyed expected the Victorian economy to strengthen over the year ahead. A large slice – 61 percent – expected it to weaken. The stratospheric rise of the Australian dollar over a prolonged period had impacted the local economy, and high profile setbacks – such as the closure of Ford’s Broadmeadows and Geelong plants – combined with rising unemployment to dampen overall business sentiment. M+K Lawyers national managing partner Damian Paul says the result is a pipeline of legal work that has not changed radically over the past two years. “Front-end corporate and commercial work is still a bit patchy, as it has been since the GFC,” Paul explains. “While it’s enough to keep us busy, there hasn’t been an overcapacity of work and that side of the practice is still really just chugging along.” A change of government may be the circuit breaker the state’s businesses – and law firms – have been waiting for. With the state government under premier Denis Napthine pursuing an agenda that gives primacy to new infrastructure projects, including the $8 billion East West Link tunnel development to which the Federal Coaliton has already pledged $1.5 billion, a Metro Rail project and developments at the Port of Hastings, conditions are aligning that will likely boost business confidence in the state.
“WE COULD EITHER ADOPT A PESSIMISTIC APPROACH, OR USEFULLY SPEND OUR TIME GETTING OUT THERE AND CONTINUING TO DEVELOP OUR KEY RELATIONSHIPS.” Elspeth Arnold, Ashurst
“Overall, we expect conditions to remain challenging for the remainder of 2013 and in 2014 expect to see positive growth trends commencing, although at measured rates,” says Scott-Hayward. “Lower interest rates and the declining Australian dollar will have economic benefit including growth in consumer and business spending and investment over the medium-term, as well as the attraction of more inbound investment generally.” Likewise, Paul is expecting an improvement. “It’s business as usual in our case, and we are looking forward to seeing an improvement in commercial deal flow over the next 12 to 24 months which will also result in more work across our full service offering,” he says. ‘BULLET PROOF’ PRACTICES Though Melbourne – like other states – has not seen the spike in insolvency work that might have been expected through a financial crisis, counter-cyclical practice areas are still holding firms in good stead. M+K Lawyers, for example, cites major commercial litigation work as well as workplace relations advice as being central to its 11 percent growth in firm revenue over the past 12 month period. “In Melbourne we have seven principals and 15 or so lawyers doing workplace relations work,” says Paul. “Our team is doing more training; we are going in to train senior management teams in areas like occupational health and safety law and managing employee underperformance. It’s often more proactive work we are generating, rather than waiting for the client to ring.” Lander & Rogers likewise expects an uptick in workplace relations work, seeing opportunities emerging in the area of workplace bullying, with legislative changes due to come into force on 1 January 2014. Ashurst has seen IP-related litigation work take up a front-running position, acting for clients that have included pharma giant AstraZeneca and Samsung in its battles with Apple. The firm’s restructuring and M&A lawyers have also been kept active on the Gunns and Banksia Securities restructurings. “We made the move almost a decade ago to ensure that regardless of where we are in the economic cycle, our practice would be very
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“IT’S FAIR TO PREDICT THAT STRUCTURAL CHANGE WILL BE AN ONGOING FEATURE OF THE AUSTRALIAN LEGAL MARKET IN THE SHORT TO MEDIUM TERM.” John Nerurker, Mills Oakley
resilient; our commitment to sustainability is very important,” says Humphery-Smith. In fact, moves to ‘bullet proof’ practices by ensuring full-service offerings that include counter-cyclical buffers have kept firms with Melbourne offices steady through tougher times. “The depth and strength of our team across the board has assisted the Melbourne office in riding out the ebbs and flows in the market – particularly the GFC – through which parts of the Melbourne office performed incredibly well,” observes Ashurst’s Elspeth Arnold. Lander & Rogers has been assisted by the size of its litigation practice, which has seen continued activity in general insurance and commercial disputes, as well as other assets such as its family and relationship law practice. “Our family and relationship law group focuses on the high-net-worth market, and we’ve been strategic in expanding these capabilities particularly in the expat market, out of places such as London, Hong Kong and Singapore. Often these clients want to turn to a firm that has a broader commercial offering for more complex matters rather than a boutique practice,” says Humphery-Smith. Mills Oakley Lawyers is also seeing its family law team as a key area of growth, in tandem with its private client advisory team, recently launched by former Treasurer Peter Costello. It was set up initially as a means to demonstrate commitment to long-term private clients but has been much more successful than initially planned. “It provides a dedicated service for non-listed companies and individuals who seek the reassurance of dealing with a large commercial law practice, while enjoying subject matter expertise in areas that are particular to private and family businesses,” Mills Oakley CEO John Nurerker says. Many firms note that M&A work is proceeding at a steady pace, even if the market remains in low gear. Mills Oakley partner Daniel Livingstone, for one, has acted on three resources deals in July and August; for BCD Resources in its JV with Malachite Resources for the development of the Lorena Gold Mine in Queensland, Augut Clean Energy in a JV with Wasabi Energy, as well the $140 million sale of Stonewall Mining by Stonewall Resources to Shandong Qixing Iron Tower. M+K Lawyers’ Paul suggests that should more buyers enter the mid-market M&A space with fresh funding, there are a glut of business owners eager to sell, who have been stymied by lower exit multiples since the GFC.
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Firms agree that property, projects and infrastructure is the shining light likely to buoy them into 2014, based on the Napthine Government’s ambitious agenda. Should projects such as the East-West Link proceed, firms expect this to flow through the civil contractor chain and boost the local economy. Until then, there are still other deals available. Gadens’ Melbourne team assisted on Epsworth Healthcare’s $600 million redevelopment of the Epworth Hospital in Richmond, and has bagged a slew of commercial property deals, including the $400 million development of National Australia Bank’s Bourke Street commercial office building, the $250 million development of Medibank’s commercial office building, also in Bourke Street, as well as the $300 million development of the Victorian Police Headquarters. Lawyers at global firms are seeing the oft-touted multi-jurisdictional work find its way to local Melbourne offices. DLA, for example, sent a number of its lawyers to South Africa as part of a team advising
SkyPower Global, a JV between Canadian Solar and SkyPower USA, which bid for four solar PV projects under Phase 3 of South Africa’s Renewable Energy Program. The firm also advised AIMlisted Waterlogic plc on its $60 million purchase of Cool Clear Water Group, including arranging financing from HSBC and Clydesdale Bank, and SEEK Ltd on its first foray into Africa, with a US$20 million investment in One Africa Media, Africa’s leading online multi-classified business. Ashurst says its global integration – which makes Melbourne its third largest office when measured by headcount – is also bearing fruit. “We are seeing terrific things happening already, flowing through not just from our Asian combination but also our colleagues on the other side of the globe,” Arnold says. “We are seeing joint instructions and joint bids with expertise development across the globe of which partners here have been an integral part.” IN THE LINE OF FIRE According to Scott-Hayward, firms are currently operating in an “all time high” competitive and dynamic legal market. “In many firms there is currently more capacity than work, and firms are generally under pressure,” Scott-Hayward explains. “Growth is very difficult, and a number of areas have been declining. In the past year few firms have grown and many saw flat or decreasing revenue and profits, a trend which is likely to continue,” he says. This has been all-too-evident in Melbourne. Only recently, firms in Victoria’s capital were talking about the decision from many global firms to bypass the state in favour of either Sydney or Perth.
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“I THINK IN THE LAST THREE YEARS THE GAME HAS CHANGED COMPLETELY IN THE LEGAL SERVICES MARKET AND THAT INCLUDES THE MELBOURNE MARKET.” Peter Monk, DLA Piper
But Melbourne firms have not escaped the structural ramifications of these legal market entrants. “Melbourne has had a front-row seat during this period of change,” says Nerurker. “While we may have been bypassed by global firms setting up in the last few years, the implications for things such as recruitment and practice development have been felt here keenly.” Nerurker says that the ensuing competitive battle facing Melbourne firms over the next few years – and others around the country for that matter – is “not for the faint hearted”. “It’s fair to predict that structural change will be an ongoing feature of the Australian legal market in the short to medium term,” Nerurker says. “The domestic market is a big playing field. Where a firm sits on the field will largely be a factor of its capacity to position itself away from the pack, which requires clear value propositions and a capacity to attract the right legal talent to grow a stronger brand,” he says. DLA Piper’s Melbourne managing partner Peter Monk, who was flown in from the Middle East to oversee the firm’s integration
with DLA Phillips Fox, has been in a prime position to witness this. “Since 2010 there has been a galloping move towards real globalisation of legal services, and DLA is an example of that trend,” Monk says. “I think in the last three years the game has changed completely in the legal services market and that includes the Melbourne market.” He cites the fast-paced expansion from the old ‘big six’ nationals to a ‘credible 20’ or so, where clients will shop around. “It is causing firms to really have to review their business strategy and model to address a new market reality.” Indeed, ‘focus’ is something many Melbourne firms are talking about, even if it is in different ways. For M+K Lawyers for example, this has meant expanding on and further tailoring to its mid-market business client base. “In Australia, we’ve had to get a bit more focused about the way we go about getting the work, and that means sticking to what you are good at. For us, that is mid-market businesses,” Paul says. This has meant a continued focus on the growth of the firm’s Dandenong office, something Paul says has been a ‘boon’ for the firm. “Having a presence in the catchment area of the South-East means we have a competitive advantage among the thousands of businesses that operate there, giving us geographic access to a cross-section of our target clients,” he says. The firm is also strategically buying up boutique additions to its practice. For example, the firm added a 10-lawyer team under partners Craig Finlayson and Michael Fernon from Clarendon Lawyers earlier in the year, as well as commercial litigator Victoria Nomikos’ A’Beckett Lawyers. Humphery-Smith, meanwhile, says Lander & Rogers is talking a lot more about being a ‘truly Australian’ firm. “We want to be an Australian law firm of choice for inbound investment into this country,” he says. For Lander & Rogers, this independence has become a key differentiator in a more globalised environment. “There are very few independent firms left, and we have always taken the view that we do not wish to merge. We would rather back ourselves than hitch our wagon to a global firm,” he says. “We are comfortable and secure with our strategy. There is a huge opportunity for an independent Australian firm to do very well in this market.” This will not necessarily mean new offices outside Melbourne and
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Sydney, despite a national client base that includes the likes of Wesfarmers. For Ashurst, focus has meant combating “intense” competition by building on the underlying strength of its relationships. “We could either adopt a pessimistic approach, or more usefully spend our time getting out there and continuing to develop our key relationships,” says Arnold. “It has been very competitive, but we remain confident that we do not take any client for granted, and we remain confident in the strength we can offer across our multiple practice areas.” Depth is also key, with the firm appointing two new partners in IP and corporate this year, as well as bringing back at the senior end David Williamson after three years at the helm of BHP Billiton’s legal and compliance team. THE NEW NATIONALS The rise of mid-tier firms in Melbourne is perhaps the most obvious result of the competitive pressures playing out in the current environment. With in-house teams putting costs under close scrutiny, these firms are benefitting from demonstrating value as well as premium service. “Clients have become far more astute and discerning in how they use external legal services,” says Scott-Hayward. “Clients have been seeking to derive greater value from their external legal service providers. They are more specific with what they want and have greater power in their relationships with firms. They have real choice and one key change is that many of the previously perceived differences
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between mid-size and large firms have gone.” Anthony Wright, director of operations at Plexus, which provides flexible legal outsourcing services and secondments to inhouse teams, says in-house teams are becoming smarter about outsourcing, benefitting those who can offer value. “Clients are becoming much more accustomed to looking for alternative solutions rather than going to traditional large law firms on their panel,” he says, adding that Plexus is being utilised primarily for lower risk routine legal work including common commercial contracts. Scott-Hayward says larger firms have been “letting go” of certain practice areas in recent years, including insurance, workplace relations and IP, if these areas are seen as non-core to their service offering, are less profitable or are of less relevance for international strategic positioning. “These trends of ‘non-core’ or ‘middle market’ work moving to mid-size firms looks set to continue,” he says. Part of this dynamic is the lateral movement – or interest in moving - by some partners in newly established global law firms, who may be interested in a more domestic client base. “I’m seeing the increasing migration of partners from large national or top tier firms, who are voting with their feet against the globalisation of the Australian legal profession and are specifically looking to join medium sized firms such as ours,” says Nerurker. Humphery-Smith agrees this is a trend. “Some of the cost pressures and hourly rates that the global entrants are demanding will certainly create difficulty for partners in those firms who have traditionally done domestic Victorian work,” he says. Nerurker gives one example: senior property lawyer Tom Cantwell, who has joined from DLA Piper. Monk says the changing marketplace has caused a number of choices to be placed in front of partners in Melbourne and other states that they didn’t have four or five years ago. “The international firms coming in and the decisions being made in some cases at a strategic level to perhaps change the core strategy and focus areas of the firm has made some people question this,” he says. Monk says in DLA’s case, some partners with more localised practices have seen it in their best interests to join other firms that have a much more local focus. “We have 78 offices and about 4,000 lawyers around the globe, and that’s not necessarily the preferred outcome for everyone,” he says.
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However, Monk sees this structural change as positive for lawyers and the firm. “The flipside of the coin is that as a consequence of the global platform we have, we have the biggest M&A practice by deal volume of any firm in the world, and a large number are touching multiple jurisdictions. This is really attractive to a large number of senior, experienced practitioners, and the number of calls we are getting now from quality individuals is greater than at any earlier stage in the firm’s history,” he says. Arnold says the firm places as much emphasis on its domestic and state-based clients as it does on any international deals, and also disputes the idea that
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the firm’s fees do not demonstrate value for state-based clients. “They [clients] are all important to us, and a number of our clients are Victorian domestic clients. That said, a lot of our clients are certainly national and a number have operations globally. Our client base is a mixture, and they are all equally important. We do take a national approach to our clients that brings the best expertise available to them from other offices,” she says. Melbourne’s managing partners argue that the ensuing few years will see the continued emergence of a global or international tier of law firms in Australia, under which a new national tier of premium mid-tier firms is likely to solidify. Nerurker says the biggest challenge will be for mid-tier firms to “break from the pack” to service the premium end of the value chain, rather than being relegated to the potentially “cluttered” segment that could emerge in the mid-market. “If you are doing mid-market work in a medium-sized firm, it could be a crowded marketplace in a few years time,” he says.
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M&A
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DEFINITE BUZZ FOR M&A THE LONG AWAITED TURNAROUND IN M&A ACTIVITY MAY FINALLY BE HERE, ACCORDING TO A RESPECTED M&A PARTNER.
Tony Damian, Partner, Herbert Smith Freehills
“There’s a definite buzz in deal land – I’m going to put that out there,” Herbert Smith Freehills partner Tony Damian told ALB. “My sense is that if you surveyed firms now you’d find increased levels of activity. There is a definite buzz. The investment bankers almost have smiles on their faces. Almost. A lot of them are very busy; that won’t mean too much if the deals don’t close but they are saying they have very good pipelines and they’re feeling for the first time in years a little optimistic about what the next six to 12 months will bring for them.” This turnaround in fortunes is not solely due to the Federal election, which Damian says is only one part of the “landscape of confidence” which also includes the international economy and industry-specific factors. He attributes the optimism in part to a more measured, mature understanding of the deal environment. “People have accepted that Europe’s not going to hit seven percent growth any time soon and there will always be some concerns here and there with China but equally there will be growth in the Asia region, maybe not as high as the past but still very good and there’s quite a bit of optimism about the States,” he said. “People have got a more mature and tempered view and a longer term view.” Damian is encouraged by the announcement of significant deals in the United States, including Nokia’s recent sale of its handset division to Microsoft for A$5.6 billion. “It just takes one big deal to get things going and you have to wonder if the Microsoft [deal] is it. If the US M&A market kicks off, our market will kick off. You may say there is no rational explanation for that and perhaps there isn’t but that is what will happen,” he said. In the meantime, Damian says that the local market is far from moribund. “There are plenty of deals out there…I know people are saying you must have a lot of spare time
Source: Thomson Reuters. Figures relate to announced deals in the market. Source: Thomson Reuters. Figures relate to announced deals in the market.
“CERTAINLY THE LAST MONTH OR SO, THERE HAVE BEEN A LOT OF THINGS KICKING AROUND FOR A WHILE THAT HAD A RENEWED BURST OF ENERGY AND SEEMED TO HAVE STARTED TO GET MORE SERIOUS.”
on your hands if you’re an M&A lawyer, but that hasn’t been the case,” he said. The official figures paint a somewhat more subdued picture. While the Thomson Reuters’ M&A service shows that Australian M&A announced activity spiked in July to US$9.6 billion, this was followed by a slow August in which deal activity slumped to US$3.7 billion, less than half of the equivalent figure last year. However, Damian points out that there may be a lag between initial deal activity and its arrival on the tally sheet. “The stuff people are toiling away on - some of it has come out, but a lot of it hasn’t,” he said. “The numbers are the numbers, but I don’t think that necessarily makes me feel any less optimistic. In the months between now to Christmas I think you’ll see more announcements. Certainly the last month or so, there have been a lot of things kicking around for a while that had a renewed burst of energy and seemed to have started to get more serious.”
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PRICE ADJUSTMENTS
IN M&A TRANSACTIONS IN THE CHALLENGING ECONOMIC ENVIRONMENT THAT HAS FOLLOWED THE GFC, CLIENTS ARE MORE INTERESTED THAN EVER IN THOSE DEAL TERMS WHICH GO DIRECTLY TO VALUE. SIMPSON GRIERSON’S JAMES HAWES LOOKS AT HOW PURCHASE PRICE ADJUSTMENTS CAN HELP.
James Hawes is a senior associate in Simpson Grierson’s corporate group.
A FOCUS ON VALUE The Australasian market in mergers and acquisitions has struggled to return to deal volumes seen before the global financial crisis due, amongst other things, to tight credit conditions. Private equity buyouts in Asia-Pacific (excluding Japan) in 2012 were down 30.7 percent on 2011, the worst year since 2009, and the market has refused to show a substantial improvement in 2013. Given the prevailing headwinds, clients are as interested as ever in issues affecting value and M&A practitioners would be well served to focus on those areas of the sale and purchase agreement (SPA) that go directly to price. Chief amongst these is the purchase price adjustment mechanic. PRICE ADJUSTMENT MECHANICS The adjustment aims to ensure neither vendor nor purchaser is prejudiced by changes in the target business between the time at which the business is valued (with a price locked in) and the time at which the transaction is closed. However, this benign intent can hide a multitude of sins. Opposing lawyers will often seek to gain advantage for their clients in the drafting and it is essential for lawyers to understand the various forms which the adjustment might take and the implications of each. The fundamental issue is what type of
mechanic will be used. There is a basic choice between two forms: • Completion Accounts - Completion accounts provide a mechanic for agreeing an enterprise value on the signing of the SPA, based on an agreed balance sheet and key line items (such as “net tangible assets” or “working capital”). Following closing, that balance sheet will be re-cut as at the closing date and the purchase price will be adjusted based on the change in those line items. Importantly (and in contrast to the Locked Box (see below)), the mechanic reflects a deal whereby the purchaser only takes business risk/reward from closing. The mechanic assures a purchaser that, up to a point, adverse changes in key financial metrics during the sign-close period will translate into a reduction in price. Note, however, that over a certain critical level, it will not be in the interests of either party for price to be reduced further and a condition may be the more appropriate recourse. • Locked Box - A locked box, similarly, provides a mechanic for agreeing an enterprise value on the signing of the SPA by reference to a set of historical accounts. Here, however, value will be “locked in” to the business via “no leakage covenants” which prevent payments from being made by the target to the vendor or related persons (unless in the context of an arms’ length arrangement) between the date of the reference accounts (the “locked box date”) and closing. In contrast to completion accounts, the Purchaser takes risk on the performance of the business from the locked box date. WHICH MECHANIC TO ADOPT The choice of mechanism will ultimately depend on the commercial deal, the nature of the transaction and the parties’ aims. Relevant factors include: • A locked box will not provide the purchaser with protection from
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“THE MECHANICS OF VALUE PROTECTION AND VALUE SHIFT ARE A DEVELOPING AREA. THERE IS CONSIDERABLE SCOPE FOR INGENUITY BUT ALSO FOR CONFUSION AND MISUNDERSTANDING.”
ordinary course changes in the value of the business between the date of the reference accounts and closing. As noted above, once the SPA is signed (assuming no conditionality agreed separately), the purchaser takes the economic risk and reward of the business on a retrospective basis from the locked box date until closing. As a result, such a mechanic is unlikely to be acceptable to purchasers where: • the target business is of a seasonal nature and the values in a closing balance sheet will differ wildly from those in the reference accounts; • the target business is highly integrated into the operations of the remainder of the vendor’s business. This will make the definitions around “no leakage” extremely difficult as both parties will need to determine, on a case by case basis, which of the cashflows are arms’ length/ ordinary course and which need to be trapped in the box; or • there is a long period of time between the reference accounts and closing. This obviously affords a long period in which payments can leak between the target business and the retained group. • A locked box mechanic will allow a vendor to close down the value discussion at an early stage when there is likely to be more competitive tension in the process. As a result, the locked box may lead to a better pricing outcome for the vendor. Completion accounts, by contrast, will allow a purchaser to chip away at the price following closing. • A locked box affords the vendor a clean exit with no question of the purchaser seeking adjustment post closing (other than in the unlikely event of a claim under a No Leakage Undertaking). For private equity (or indeed other) vendors looking to return value to their stakeholders, this avoids trapping cash at the fund level and is a key reason why the locked box was developed. THE IMPORTANCE OF FINANCIAL ADVICE Regardless of mechanism, it will be important to work closely with the client and its financial advisers to understand those metrics which are important to them and to the valuation.
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The closing adjustment will need to be tailored around these. Note that completion accounts can be as complicated as required. However, it would be extremely unusual for the closing balance sheet to re-test every line item in the target’s statutory accounts. More commonly, a subset of those items which are particularly susceptible to change (such as working capital) would be included. VALUE PRESERVATION VS VALUE SHIFT The purchase price adjustment allows lawyers (for both vendor and purchaser) to add significant value for their client. A successful mechanic will prevent value transfer between purchaser and vendor. Contrast this with the alternative set of mechanics, of equal importance in the current economic climate, specifically designed to provide additional performance based consideration after closing in order to bridge a gap between the cash price a purchaser can offer and the vendor’s expectations. Once again, lawyers can add value at a fundamental commercial level and counsel might consider: • a simple earn out, paying out additional cash to the vendor on satisfaction, by the target business, of certain future metrics; • a vendor loan note, repayment of which may or may not be linked to future business performance; or • options over purchaser shares the vesting of which may, again, be linked to future performance of the target business. THE ROLE OF CORPORATE COUNSEL The mechanics of value protection and value shift are a developing area. There is considerable scope for ingenuity but also for confusion and misunderstanding. As a result, it is essential that counsel have a detailed knowledge of the available mechanisms so that they can execute the commercial intention of their client as well as identify potential areas of risk where the counterparty may seek commercial advantage.
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THE INTANGIBLE
ASSET WILL IP PRACTICES BE SQUEEZED OUT OF GLOBAL LAW FIRMS – OR WILL THEY FLOURISH? ALB’S RENU PRASAD INVESTIGATES.
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I
t’s becoming a common theme in the legal industry: the “ugly duckling” practice area that suddenly blossoms with a change of fortunes. We saw it happen last year with industrial relations….is IP the next hot area to be rediscovered by firms? “It’s interesting because in good times the IP practice looks a bit anaemic because we trudge along doing what we’re always doing but in bad times we’re fantastic because we’re still trudging along and the other departments are not looking that great,” observes Baker & McKenzie partner Robert Arnold. At first glance, IP seems to lend itself to the front end/back end analysis which is found in other practice areas such as construction. During the good times, IP practices benefit from the activity associated with clients pursuing their normal business development activities. “During buoyant economic times, our clients significantly increase their focus on brand development and protection,” explains Minter Ellison partner Lynne Peach. “This leads to an influx of work for our trademark prosecution practice. Likewise we experience a significant increase in commercial IP work including licensing and distribution arrangements.” Conversely, clients may become more litigious during a downturn although, as we will see, not all IP lawyers are in agreement as to the nature of this correlation. Certainly it is clear that there is a significant level of IP disputation at present, the most prominent example being Apple and Samsung’s litigation in the Federal Court, a matter of such scope and complexity that the Court has appointed, for the first time ever, a two judge panel to hear the matter at first instance. Pharmaceuticals are another busy area for IP litigators. But protecting IP is a process which must continue regardless of the economic cycle, as statistics from IP Australia demonstrate. While these figures show a decline in applications in some categories of IP, there is no dramatic trend downwards. Patent applications have in fact risen dramatically this year, although there are peculiar reasons for this. “The general wisdom is that [patent activity] lags 18 to 21 months behind whatever the economic cycle is, because the way patents are filed internationally….you file in one jurisdiction and when that occurs, that filing is used as a basis for filing in other jurisdictions,” explains Griffith Hack principal Wayne Condon. “So you’re probably looking at activity driven by what the economy was doing 18 months to two years ago.” There’s another strategic reason for the spike in patents activity: a rush to beat the introduction of the Raising the Bar Act earlier this year. “Certainly lately there’s been a massive increase….so last year has been unprecedented in filings because a lot of the big filers want to
“THERE’S ANOTHER STRATEGIC REASON FOR THE SPIKE IN PATENTS ACTIVITY: A RUSH TO BEAT THE INTRODUCTION OF THE RAISING THE BAR ACT EARLIER THIS YEAR.” John Dower, Freehills Patent Attorneys
get their patents in before the law changed and provisions become stricter,” explains Freehills Patent Attorneys partner John Dower. The Act came in on 15 April this year, so there were massive increases in filings last year because of that.” However, he is not sure that activity would have dropped off even without this incentive. “A lot of companies that are investing in patents are investing for the next 20 years and the cycle continues,” he says. BOLT ONS AND SPIN OFFS Patent attorney firms have historically been separate entities from law firms, although many patent attorney firms now have associated law firms; conversely there have been various attempts by top tier firms to augment their IP offering with a patent attorney service. Legacy Freehills, for example, has made a considerable investment in its patents practice although this practice was “spun off” into a separate entity, Freehills Patent Attorneys, last year. This practice has 25 registered attorneys and there are no current plans to rebrand this practice under the HSF banner because legacy Herbert Smith does not offer patent attorney services. Another top tier firm is also rumoured to be considering a “spin off” patent attorney practice. There are mutual incentives for patent attorneys and law firms to try to build their relationship, as Herbert Smith Freehills partner and Australia IP head Sue Gilchrist explains: “The old set up was you’d have a patent attorney firm and if they got something litigious, they’d look around to refer it to a law firm or the client might decide where that goes,” she said. “So at the patent attorney end you’d see really interesting work going out the door and from the firm side, it was a bit ad hoc as to where the work was coming from.” Gilchrist says that the objective is not just securing work, but also improving the range of expertise available to the client throughout the life cycle of a matter. “In traditional patent firms they file it; if it becomes contentious the file gets wrapped up with a bow and then the litigators deal with it. We don’t do it that way because the patent attorneys are going to have more of the technical expertise relating to the particular technology, so the client should
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Sue Gilchrist, Herbert Smith Freehills
Robert Arnold, Baker & McKenzie
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John Dower, Freehills Patent Attorneys
Lynne Peach, Minter Ellison
continue to get the benefit of that on the enforcement side,” she says. “That only works if you’ve got a practice a bit different from the traditional patent attorney practice where the patent attorneys are used to being involved in the enforcement side – many don’t want to be or that’s not their skill set.” The other side of the equation is that patent attorney firms are upgrading their capacity to provide legal advice. This trend has been in progress for many years now, although there still remains a perception these services are simply “bolt ons” designed to facilitate litigation. Griffith Hack’s Condon says that this perception is largely outdated. “Some attorney firms might still have that type of model, but to be honest I think they’re a dying breed,” he commented. “I don’t think that’s where the real opportunities lie and I don’t think it’s what clients are looking for…they’re looking for a much broader service offering that will enable those clients to extract value from
“WE CONSIDER IT A HOLISTIC IP SERVICE, BUT EXTENDING BEYOND [LEGAL ADVICE] TO IP CONSULTING SERVICES THAT ARE NOT STRICTLY LEGAL OR ATTORNEY FOCUSSED – FOR EXAMPLE IP MANAGEMENT FROM A COMMERCIAL BUSINESS MANAGER PERSPECTIVE.” Wayne Condon, Griffith Hack
their IP.” Condon says that Griffith Hack’s legal practice is designed to provide a holistic legal service. “It’s certainly not a bolt on legal capability,” he said. “It’s an integrated practice; it was intended to be so from day one. We consider it a holistic IP service, but extending beyond [legal advice] to IP consulting services that are not strictly legal or attorney focussed – for example IP management from a commercial business manager perspective.” He added that both sides of the practice contributed equally to the firm’s overall revenues. CHERRY (OR APPLE) PICKING Samsung’s global stoush with Apple and other high profile IP disputes represent the more glamorous side of IP practice. There is no doubt firms will continue to be interested in this big ticket litigation and they will also continue to see their IP capability as an important adjunct to the M&A practice. It remains to be seen, however, whether the big firms will continue to pursue the more routine IP work – for example, general IP portfolio management. “We’ve seen the realignment of Australian law firms to fit in better with their merger targets and they’ve tended to reorganise themselves so that they reflect the structure of the firms they’re merging with,” observes Baker & McKenzie partner Robert Arnold. “Many don’t consider IP to be a core practice. So the very largest firms have kind of moved away from IP … [they keep it only] as
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“WE SEE THINGS LIKE PORTFOLIO MANAGEMENT AS THE BASIS AND FOUNDATION WHICH ENABLES YOU TO GET THE JUICY WORK.” Robert Arnold, Baker & McKenzie
support for transactions and of course the juicy litigation, they’re still very interested in doing very large pieces of patent, copyright and trademark litigation. But they’ve moved away from portfolio management, trademark registration, that sort of stuff. A number of them have disbanded their IP practices and merged them into their commercial practice and litigation practice. That has been a change over the last two or three years. What they would consider to be commoditised work – trademark registration – just doesn’t fit into where they want to be in terms of high end high level services.” Arnold adds that this analysis is not intended to be critical. “I’m certainly not saying their model is incorrect or inappropriate,” he says. However, his view is that the more routine work is an important stepping stone to winning sophisticated work. “We see things like portfolio management as the basis and foundation which enables you to get the juicy work,” he comments. Arnold’s observations are consistent with other stories in the market of IP work being performed by lawyers for whom IP is not a particular area of expertise: for example, general commercial partners managing the IP aspects of a transaction. There may also be more cross-over between the work performed by IP litigation specialists and other members of an IP practice, depending on how the team has been resourced. However, there are also firms, including those at the global level, who have made the strategic decision to include IP as one of their core practice areas. Arnold nominates his own firm as one such example. “Bakers is a firm that is heavily invested in IP; it’s one of our major practice areas around the world. For us it’s something that is part of our DNA,” he says. “With the large law firms in the UK and Australia de-emphasising that aspect of the practice, it’s been great for us because we’re the obvious alternative for clients to go to.” Arnold also nominated Norton Rose as another example of a firm which has prioritised IP. “It’s not the Magic Circle type firms, it’s more the Silver Circle that are seeing the benefits,” he says of the English firms. However, it is not clear whether the scaling back of IP practices is a current trend, or a trend which has peaked and may already be in decline. Condon, for example, associates this scaling back phenomenon with the pre-GFC days when the overriding focus was on servicing M&A transactions: “It was back five to 10 years I think… there was a move away from a discrete separate IP capability,” he says. “But I think that’s come back a little and now there’s a
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perception amongst those firms that there is space for a discrete IP practice. Not all of them have that view, but many do; there’s been a bit of a retreat back from that disdainful outlook on IP – but perhaps not universal. You can tell that by the individuals who are moving between firms – there’s a fairly significant lateral dynamic at the moment; I know some of the big firms are attempting to attract high profile IP partners. They are really only able to do that if they are offering an environment which is positive, growing, dynamic and emphasises that type of work within the firm – otherwise they simply wouldn’t be attracting those types of partners.” LITIGATION There are divergent views on the extent to which an economic downturn affects IP litigation. Herbert Smith Freehills’ Sue Gilchrist thought that the downturn might have a dampening effect on infringing activity and therefore litigation. “The market does have an effect in the sense that
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people who might engage in infringing conduct might be a bit more reluctant to do that in difficult market conditions where they don’t have the money to risk being sued – but clients at the top end are not really affected by that,” she observed. However, Minter Ellison’s Lynne Peach believes the opposite may be true. “During more challenging financial climates competitors become more aggressive in testing the boundaries of intellectual property rights and companies are forced to defend the rights they have invested in,” she says. “Also, during such times there is a significant increase in disputes relating to allegations of misuse of confidential information, particularly by departing employees. This ‘soft’ IP work escalates during challenging times, when departing employees appear to take liberties in order to get ahead in their new roles, and companies are forced to take action to defend their valuable property from leakage to competitors.” One thing all lawyers agreed upon was the strong level of patent litigation. Pharmaceuticals and mining are said to be particularly busy. “The significance of the mining and energy sector to the stability of the Australian economy necessarily means that a significant amount of investment is contracted in this sector,” explains Peach. “In the past 12 months this has translated in part into an increased number of patent disputes in the sector. I am currently acting for ESCO Corporation against Bradken Limited in significant patent litigation relating to the mining sector.” Pharmaceutical patent litigation in the Federal Court was mentioned by a number of lawyers as a busy area. “[Pharmaceutical
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companies] are always active and there’s an issue with the life cycle of the drugs that the patents relate to; that [activity spike] was always expected this year and last year and it will probably remain busy for another two years,” predicts Gilchrist. However, activity is currently in a lull. “We went through the so-called patent cliff where a lot of these pharma patents expired three to two years ago and we’re in a bit of a lull at the moment and there’s another raft of expiries due in the next 12 months to two years,” explains Condon. “So we’ll see a bit of an uptick in litigation as a result.” Copyright litigation also attracted some divergent views. Some lawyers felt that activity was on the wane in light of recent decisions, such as iiNet’s High Court victory last year, which did not particularly advance the position of copyright owners. “[iiNet] was an issue that needed to be clarified and while it remained unclarified there was certainly a lot of activity and speculation, but once the High Court ruled on it, it sort of took the wind out of the sails a bit,” observes Condon. However, there is continuing tension created by the changing digital landscape which bodes well for the future level of activity. Clearly content owners are not happy with the level of IP protection they are being afforded in the digital age and the issue is likely to recur in one form or another. In May, technology news service Delimiter reported that Marque Lawyers had written to several major Australian ISPs, requesting they hand over the details of users who were thought to be engaging in copyright infringement activities. ISPs, it appears, are not completely out of the woods yet. Similarly, Baker & McKenzie’s Arnold describes trademark activity as “trending quite well”, something which he attributes to the Australian dollar which was, until recently, trading at a high level. “[Companies are] not going to sue unless they can really see the benefit,” he says. “With the high Australian dollar and the [increasing popularity of] the Australian market, more and more global brands are moving into the Australian market; they’re just flooding in now: Zara, Abercrombie & Fitch, Banana Republic. They’re building their brands here and they need to protect those brands.”
“THE FEEDBACK WE’VE RECEIVED FROM CLIENTS IS THAT THERE WAS A VERY SIGNIFICANT INCREASE IN THE NUMBER OF PATENT APPLICATIONS FILED IN THE LEAD UP TO THE HIGHER PATENTABILITY STANDARDS THAT TOOK EFFECT ON 15 APRIL 2013.”
RAISING THE BAR ACT The Commonwealth Intellectual Property Laws Amendment (Raising the Bar) Act 2012 is now in force. Among other provisions, it aims to bring the requirements for Australian patents in line with those in force in the U.S. and Europe. As mentioned earlier, it appears a number of clients attempted to “beat the Act” ahead of its implementation earlier this year. “The feedback we’ve received from clients is that there was a very significant increase in the number of patent applications filed in the lead up to the higher patentability standards that took effect on 15 April 2013,” says Minter Ellison’s Peach. “We have also had a number of clients seeking advice in relation to the research exemption and the feedback from clients is that they are finding the exemption unclear. We expect that the main impact that we will see affecting clients will be the increased patentability standards making it easier to invalidate patents. However, it will be some time before this effect flows through into litigation.” Freehills’ Dower adds that one consequence of the pre-April 15 spike is that, at the time of interview, the full consequences of the new Act may be yet to emerge. “A lot of clients requested examination before 15 April and got in under the old Act; so we’re yet to see examination results from the Patents Office under the new Act to see how that all pans out. So far there are no major issues from clients as far as we can see,” he says. The Act also contains reforms to the process for trademark applications, something which Arnold describes as “challenging.” “I can’t speak for the patents side, but on the trademarks side, they’ve introduced very stringent deadlines and timetables and are being quite inflexible about how you can obtain further time if necessary,” he says. “That has been quite challenging to educate clients that this deadline [is absolute]. It’s a very major change procedurally although I’m not saying it’s a bad thing. They did it because trademark opposition was taking years and years to get resolved. So they wanted to sharpen things up and that’s a good thing, but it’s a dramatic change.” GLOBAL LITIGATION The Apple v Samsung dispute is testimony to the complicated and fraught nature of global IP litigation. Unfortunately – or fortunately,
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depending on your viewpoint – there is no “one stop shop” for multinationals to air their grievances. “If you have a case that is running in several jurisdictions, unfortunately for the client if they want remedies in each jurisdiction you need to run it in each jurisdiction so you need people who have expertise in each jurisdiction,” observes Gilchrist. Legacy Freehills had a relationship with Apple which resulted in the firm being asked to represent the company in Australia. As firms globalise, it will be interesting to see whether clients will continue to appoint counsel locally or ask a global firm to coordinate this for them. Even where the client appoints the local firms themselves, these firms may have to work under the supervision of a global firm. “What we see on these global matters is generally the client will appoint someone in one of the firms – generally in the UK or the U.S. – as having a supervisory role,” says Gilchrist. “They’ll be heavily involved in litigation there but they also will have a supervisory role helping the client on the decisions you make about strategy and arguments. In global litigation, if we say something down here, the other side could potentially use that against the client in the UK. You’ve got to have someone who has the role of making sure they’re across all jurisdictions sufficiently to make sure that doesn’t happen.”
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What does an INTEGRATED IPlook PRACTICE like in 2013? BY ROBERT WULFF, PRINCIPAL AND KELLIE STONIER, SENIOR ASSOCIATE, GRIFFITH HACK
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F Robert Wulff
Kellie Stonier
or many organisations, IP has moved from the R&D and marketing department to the boardroom, with IP management often representing a key strategic plank of an organisation. No longer is IP simply about defence and avoidance; for many, it has become a key component of sustaining competitive advantage, operating freely and capturing and monetising innovative endeavour. A truly integrated IP practice can support organisations to maximise IP value, and to produce IP that outperforms. So what does an integrated IP practice look like in 2013? An integrated IP practice requires patent attorneys, trade mark attorneys, lawyers, information and data analysts, and finance and business professionals with a diverse range of skills, and extensive local and global connections, to meet the needs of 21st century organisations that are driven by research, marketing and/or technology. It is critical to seamlessly bring the right mix of these skills and assets to each such organisation to ensure that IP value is captured, monetised and outperforms its rivals. RESEARCH ORGANISATIONS Public and private research organisations demand a high level of technical expertise of the patent attorneys they employ. Patent information analysts can supplement the researcher’s own investigations, and can also help guide research. Increasingly, many research organisations are developing spin-off technology/ companies, requiring lawyers with strong IP licensing credentials, and business analysts that can value the associated spinoff IP, from both related-IP and market perspectives. Here too, private research qualifies for tax concessions and grants, with expert R&D tax consultants providing valuable support to the legal team. IP is global, and IP brokering services have recently emerged as a new and important offering in the IP monetisation space. Research organisations may not be structured to exploit IP in offshore markets. For example, business professionals, assisted by the information analysts, can again play a critical IP brokering role through the valuation and then sale or out-licensing of under-utilised IP assets in foreign markets.
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“A TRULY INTEGRATED IP PRACTICE CAN SUPPORT ORGANISATIONS TO MAXIMISE IP VALUE, AND TO PRODUCE IP THAT OUTPERFORMS.”
MARKETING ORGANISATIONS Take for example a marketing company operating globally in the FMCG space. In an integrated IP firm, the IP team comprises patent and trade mark attorneys that quickly search, clear and establish the IP, with the information analysts running frequent clearance searches. IP lawyers manage both commercial and often rapid-fire enforcement actions that can be required in a highly competitive field. An integrated IP practice pools together expertise and client knowledge for efficient enforcement of IP rights. Again, much of the IP generation can also qualify as eligible R&D, so expert R&D tax consultants again play a valuable role. Further, for marketing organisations, it is usually all about the brand, so the trade mark attorneys pair excellently with the business consultants to supply brand care and brand valuation services and with IP lawyers to put in place licence agreements for authorised users. TECHNOLOGY ORGANISATIONS For many organisations, say for example IT and biotech start-up companies, IP and people comprise the major organisational assets. Again, patent attorneys with excellent technical expertise are crucial. Good commercial IP lawyers can establish the optimal organisational structure, and also ensure that valuable trade secrets and know-how remain with the company when key employees leave, or when engaging with third parties. Accessing the right (e.g. state and federal government) grants can supplement often scarce shareholder funds. Again, much of the research and IP generation can qualify as eligible R&D, with expert R&D tax and grant consultants frequently playing a crucial, early role. Early IP valuations and marketing appraisals by a business analyst, and excellent connections with, and introductions to, angel and early-stage investors by the attorneys, lawyers and analysts can accelerate commercial deployment of the technology. THE INTEGRATED IP PRACTICE Many years ago we abandoned the silo-handling of clients. We have since found it enormously rewarding and enjoyable to play our part in the right team, trusting and learning from each other and the client. The integrated IP practice starts with the client at the centre, and brings the right expertise to bear at the right time. This century, as the knowledge economy develops and matures globally, fully integrated and diverse IP practices can add real value to globally-focused organisations. Griffith Hack’s IP practice comprises patent attorneys, trade mark attorneys, lawyers, information & data analysts, R&D tax and IP valuation professionals.
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BRAND TRENDS
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BRAND
RESEARCH
TRENDS HOW DOES YOUR ORGANISATION HANDLE BRANDING AND INTELLECTUAL PROPERTY RESEARCH? AMANDA TRELEAVEN, AND LARISSA BEST OF AVANTIQ OUTLINE SOME OF THE PREVAILING TRENDS.
W Amanda Treleaven
Larissa Best
hen it comes to branding and intellectual property research, industry wide this area is constantly evolving. Those requiring research need to decide whether to conduct internally or outsource, make use of online tools, purchase software, or work across a combination of these options. However what is the most cost-effective process? Over the past few years some trends have emerged from both corporations and law-firms that have stemmed from the economic pressures faced by those actively branding. WHERE DOES THE RESEARCH EXPERTISE EXIST? Prior to undertaking any research, an attorney or marketing team need to assess the level of expertise available within their business. Does the level of experience exist within the senior staff, and given their hourly value to the business is the internal cost too dear? If senior staff members undertake research work the cost will likely be out of reach for clients.
Do junior team members have the necessary research experience? This must entail a breadth of understanding of both the research process and the ‘product’, being tangible advice, expected by the client, whether an internal department or a client outside of the business. Can the business afford the potential extra time that a junior may take to work through brand research and marketplace assessment, and will the end client pay for it? If there is no experience in-house, does a respected external option exist, what are its costs in both outgoing dollars and time, and can it properly understand the requirements of the work and execute the research process to produce the results expected by clients? TO INSOURCE OR TO OUTSOURCE? Within the corporate sector the brand research business has cycled in recent years. Where once companies were utilising external agencies to undertake creative work, brand research, marketplace investigations, competitor analysis and more, the tide has turned and in many global corporations, where an in-house IP expertise exists, marketing and legal departments are undertaking more work internally and by utilising online platforms. Online platforms have developed greatly over the past few years making more information more widely and easily accessible – whether it be the improved online access provided by Patent and Trade Mark Office (PTO) websites or the greater opportunity to investigate competitors’ activities via regional platforms such as the European TMview.
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INTERNAL EXPERTISE If the IP expertise exists within a corporation and staff are experienced in accessing trade mark data via a PTO website, interpreting Companies Office competitor information and/or accessing a multi-use, multi-country platform to check in-use data, domain availability or last sales dates on a particular pharmaceutical, this is obviously an efficient option. Where money could be spent externally to pay one or a number of specialist companies, corporations are now spending the money within their businesses and using internal knowledge and networks to get the job done. Internal expertise allows total control of the branding and research scope to be maintained in-house. The review process becomes more robust with a greater number of internal team members participating across projects, harbouring a greater depth of discussion. There should be a harmony between legal and marketing departments (not always the easiest harmony to come by), time-efficiencies must be achieved, and to begin with there should be a good breadth of ideas. In a corporation where the research or interpretations skills do not reside in-house, results can obviously not be knowledgably assessed for a successful, professional outcome. Some IP specialist firms maintain a research department in-house composed of experienced researchers who can conduct the required work efficiently. IP researchers however are hard to find and training a person in the intricacies of IP related research and the information professional staff require to best advise clients is time consuming and costly. Research practice over the past few years has changed, with systems updating, re-formatting and becoming obsolete. Those who are trained must continually keep up with changes or risk missing important information for end clients. Also, as generation Y comes out to work IP research is perhaps not the area to which they are committing in the long term. Many firms realise this and are adjusting their practices as the need arises. EXTERNAL EXPERTISE Law firms and IP specialist firms are currently tending towards outsourcing. Times have changed over the past 5-8 years and the fee schedules associated with IP advice or related research cannot
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be charged as they have been in the past. Since the 2008 global economic downturn clients, law and IP firms alike have all required to tighten their belts. Numbers have been cut in the areas of support and research teams in the firms, along with the streamlining of professional staff. Each firm with an IP practice has had to assess whether their research expertise still exists inhouse. If it does reside with remaining support staff, they are now often multi-tasking across many disciplines and potentially do not have the time available to apply to IP research. If it is within the professional staff, there are other areas of IP where their time is better spent to achieve greater profit for the business. Where an IP specialist firm sits in the boutique category and where law firms do not have a large IP practice there has been a tendency towards outsourcing specialist research, freeing up the time of staff to keep higher-rate invoicing moving. The aim of this is obviously so that less money is spent hiring, training and retaining a person in-house, and capitalising on the specialist work conducted by external companies as their core business. External vendors should be flexible to provide research data according to clients’ unique specifications, making the role of the attorney or lawyer as straight forward as had the work been conducted in-house. Vendors’ price points must allow for an increased opportunity for profitability on the part of the firms. SEEK EFFICIENCY AND VALUE-OPPORTUNITY Whether a private corporation or a legal firm, all businesses will obviously seek out the most efficient and profitable way of conducting the IP research necessary to advise their clients, be they internal departments or external entities. Businesses need to monitor the internal capabilities of staff and the products on offer from external providers, and assess the value opportunity each provides for company profitability.
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AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
DOCUMENT MANAGEMENT
GREEN
IS THE
NEW
BLACK LAW FIRMS AND COURTS ARE EMBRACING ENVIRONMENTAL SUSTAINABILITY AND REDUCING THEIR PAPER CONSUMPTION – BUT THERE’S STILL PLENTY OF ROOM FOR IMPROVEMENT. REPORT: GINA DOMBOSCH.
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T
he average person in an Australian law firm uses approximately 125 kg or 25,000 sheets of paper per year. Using a conservative estimate of 100,000 persons employed in the legal industry, that means that annual paper usage amounts to 12,462 tonnes or 25 billion sheets of paper per year. This equates to 601 times the height of the Empire State Building, 873 times the Statute of Liberty, 1,988 times the Sydney Harbour Bridge and the weight of 9,586 Ford Focus cars. (Cue: Gasp!) The life cycle of a ton of paper from production to landfill or recycling generates about nine tons of carbon dioxide equivalent greenhouse gas emissions as well as other air and water pollution. Therefore, most would agree that paper leaves a large ecological footprint. The legal industry is tackling this problem and, some would argue, is leading the way amongst professional services by establishing a new standard of sustainable practice. But it is hard to ignore the paper intensive nature of the legal industry. In a study conducted by Colmar Burton on behalf of Fuji Xerox Australia across more than 100 law firms with 300 or less employees, 80 percent of firms print some or all documents which they receive electronically and 79 percent use mainly hard copies when exchanging documents. The most common reasons given were force of habit (43 percent), legal requirements (42 percent) and easier access (31 percent). Fuji Xerox Australia has seen paper usage in the legal industry remain reasonably steady over the past three to five years. “There has been no significant drop in print volumes, and adoption of document digitisation in the legal market is slow,” says Vicki Flower, Customer & Market Insights Manager at Fuji Xerox Australia. “This can largely be attributed to current legislation and fear of legal action which means that everything is still kept in hard copy.” Precedent has been a fundamental driver of the legal industry for over a century, however, there are positive signs that the industry is embracing the concept of sustainability and willing to make changes for the better. THE AUSTRALIAN LEGAL SECTOR ALLIANCE The Australian Legal Sector Alliance (AusLSA) is a not for profit enterprise consisting of law firms who share a mission to work collaboratively to promote sustainable practices across the legal sector. AusLSA was established by eight foundation members – Clayton Utz, DLA Piper Australia, Henry Davis York, Jackson McDonald, Maddocks, McCullough Robertson, Norton Rose Fulbright Australia and Swaab Attorneys. It has grown since
“GRADUALLY SOCIAL EXPECTATIONS ARE CHANGING; PEOPLE ARE BECOMING MORE MINDFUL OF THE IMPACTS OF THEIR DECISIONS. FOR LAW FIRMS, THIS PRESENTS AS INCREASING EXPECTATIONS FROM CLIENTS AND POTENTIAL CLIENTS, STAFF AND PROSPECTIVE STAFF TO BE MORE SUSTAINABLE.” Emily Wilson, Manager, AusLSA
inception and has now attracted 45 members including all of the largest 10 Australian firms, 80 percent of the top 20 and 70 percent of the top 50 firms. Emily Wilson, manager of AusLSA, explains that a core principle of AusLSA is a commitment to sharing and collaborating. “We encourage members to provide casestudies on their sustainability initiatives and we have established forums and events where members can present or discuss their programs or share the successes and challenges,” she says. AusLSA has been analysing law firm paper usage since 2010 and publishing its findings annually. The analysis reveals some good news and some continuing challenges. Paper use continues to decrease. The first report in 2010 revealed each person in a law firm uses approximately 140kg per person per year but the 2012-2013 data indicates an 11 percent decrease to 125kg. One firm which has reformed its paper usage is Jackson McDonald, which has seen paper consumption decrease by 30kg a person per year with initiatives such as a firm-wide eFiling policy. “By our calculations we estimate each staff member is using 12 less reams of paper per year and collectively as a firm we are saving 2,700 reams of paper per year,” says Jackson McDonald CEO Malcolm Shelton-Agar. Interestingly, AusLSA surveys have found that paper consumption per head does
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
not appear to be impacted by the size of the firm or the number of its geographic locations. However, it appears that the particular types of matters on hand do impact on paper consumption – no great surprise for the litigators! THE DRIVING FORCES BEHIND SUSTAINABILITY The motivating factors behind sustainable practices are not limited to a simple desire to “do the right thing”. More compellingly, the market expects firms to have environmentally sustainable practices. “Gradually social expectations are changing; people are becoming more mindful of the impacts of their decisions. For law firms, this presents as increasing expectations from clients and potential clients, staff and prospective staff to be more sustainable,” says Wilson. “Clients, particularly from government and financial sectors, are introducing more rigorous procurement processes that require law firms to detail their sustainability initiatives. The weight allocated to sustainability within these processes is also increasing: there is the real prospect of missing opportunities solely because a firm’s sustainability program is lacking.” Sustainable practices are therefore an important criterion for consideration. “I think instead that there is
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now a disadvantage where a firm’s green commitment is sub-par,” Wilson says. But is going paperless a great cost saver for firms? U.S. financial services company Citigroup determined that if each of its employees used double-sided copying to conserve just one sheet of paper each week, the company would save $700,000 each year. In another example, DLA Piper Australia saved $70,000 a year in paper costs when they defaulted to double-sided printing. “There are also other benefits for health and the environment such as reducing use of printer ink and [less need to] move boxes of paper,” says Wilson. “And most significantly there are opportunities for efficiency gains with electronic documents such as automated filing, automated billing, document searching and document mobility.” Some studies suggest there are significant costs surrounding the millions of documents stored in filing cabinets which require employees to maintain. One study in the U.S. found that more than 70 percent of businesses would fail within three weeks if they suffered a catastrophic loss of paper records due to fire or flood. THREE STEPS TOWARDS RESPONSIBLE PAPER CONSUMPTION: USE LESS, USE DIFFERENT AND DISPOSE BETTER Experts recommend three broad ways that law firms can improve the way they consume paper. The first is to review the firm’s use of paper and how printers and copiers are used within the organisation. What, if any, existing protocols are in place for printing and copying? Do certain people have their own printer? Does everyone need a code or key to print or copy which can be reviewed quarterly or annually? “Even though volumes have remained the same, due to tougher economic conditions and increased competition legal firms in general have been focusing more on sustainability measures and adopting technology solutions to reduce print wastage,” says Fuji Xerox Australia’s Vicki Flower. “This includes cutting back »
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CASE STUDY
FEDERAL COURT OF AUSTRALIA
The Federal Court of Australia has introduced several initiatives to improve its practices in relation to paper consumption. Several of the Court’s registries trialed the use of recycled paper, but the results were less than satisfactory. “Problems became evident with a number of the Court’s printing devices,” a court spokesperson told ALB. “We understand our experience mirrors a number of other Government departments and due to these difficulties the Court has largely reverted to using ‘carbon neutral’ paper.” While the Federal Court does not keep statistics regarding paper consumption, it has introduced measures to reduce consumption both by the Court and the Court’s users: • The default setting on the majority of the Court’s printers is double sided. Staff are encouraged to minimise printing where possible. • Judges and senior court staff have been
provided with iPads and are encouraged to use them to read meeting or other papers. • Following amendments to the Federal Court Rules, all documents prepared for filing in the Federal Court have been able to be printed on both sides of the paper if the party or lawyer preparing that document wishes to do so. Previously all documents had to be printed on one face of the paper only. • In October 2000 the Federal Court was the first Australian national court to introduce electronic filing. It allowed for the lodgement of applications and supporting documentation and the credit card payment of filing fees. In 2010 the eLodgment system was significantly enhanced and integrated with the Court’s case management system. The Federal Court also provides an eLodgment service for general federal law matters filed in the Federal Circuit Court of Australia. In the last financial year the number of active users of eLodgment increased by 82 percent to almost 5,500 and over 57,000 documents were electronically lodged. This equates to approximately 41 percent of all documents filed during the year in both the Federal Court and the Federal Circuit Court general federal law matters. At present these documents are printed and placed on the Court File, however with the introduction of the Electronic Court File in 2014 the paper court file will be progressively phased out.
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“THE DECISION TO USE RECYCLED PAPER WAS NOT A DIFFICULT ONE: RECYCLED STOCK IS OFTEN MORE EXPENSIVE THAN OTHER PAPERS, BUT THIS HAS BEEN EASILY OFFSET BY REDUCED USE.” Kelvin O’Connor, COO, Henry Davis York
« on waste through cost control and cost management solutions such as ‘Follow you Printing’ which is enabled through a ‘swipe and release’ process.” McCullough Robertson has implemented some of these measures with success. “When we replaced our copy and print fleet in 2010 we implemented a ‘follow me/secure’ print management system which eliminated waste paper left at printers. This, coupled with setting double-sided printing as default on all printers resulted in a marked decrease in the amount of paper we use,” says David Goener, COO, McCullough Robertson. Henry Davis York reported that over the last five years they have reduced their paper consumption by 16 percent despite revenue increasing by 34 percent. AusLSA estimates that between 80-90 percent of firms have printers set to double sided printing as a default. More fundamentally, is printing even necessary? Many document management companies now routinely offer scanning and electronic storage as part of their offering. “Firms spend significant costs every month on document storing and archiving,” says Flower. Many firms have replaced thick legal binders filled with paper onto CD. Documents can also be made available via internet or extranet and many firms even now send their holiday cards electronically to save paper. Emails are another area ripe for reform. “We have used electronic document management systems for many years and currently use Interwoven’s FileSite product. The email management functionality has allowed the
firm to remove the need to print and file emails,” says Goener. The second step recommended by experts is to institute protocols involving the purchase of copier, printer, letterhead and bond paper, as well as business and manila envelopes. According to AusLSA’s 2012 study, 55 percent of all paper content used by firms is from recycled material. Some examples of policies which firms have implemented in this area include stipulating that 100 percent of copier/printer paper be at least 30 percent post-consumer recycled content. One expert said that, ideally, paper should be 100 percent recycled content (certified), carbon neutral and Australia made. Paper conforming to this specification has recently begun to be produced by Reflex. Henry Davis York has implemented policies regarding the use of recycled paper throughout the firm. “The decision to use recycled paper was not a difficult one: recycled stock is often more expensive than other papers, but this has been easily offset by reduced use,” says Kelvin O’Connor, Co-Chair, AusLSA and COO, Henry Davis York. “In fact, the biggest challenge was finding a recycled paper that matched our letterhead stock, so instead we decided to use recycled paper for our letterhead. The issue of what is the most environmentally friendly paper is complex and we are constantly looking to make the best decision. AusLSA has been an excellent vehicle for providing and sharing information on paper,” he says. The third step recommend by experts is, unsurprisingly, to recycle. Recycling efforts can even extend to the shredding of confidential documents rather than incineration. Goener advises that the shredding company used by McCullough Robertson recycles and was a consideration when choosing this supplier. “We use a paper shredding company (ShredX) that provides reports on the volumes of paper we send for shredding which includes estimations of the environmental gains from recycling our paper. Most firms also have established policies of [placing] recycling bins throughout the office and that personnel have ready access to them. We have also considered the waste facilities we provide in our offices in order to maximise recycling and minimising volumes to landfill,” Goener explains. “For each lawyer we provide an under desk box to collect the waste paper and [we have] a number of larger collections bins spread around our premises.”
fri 25th
Financial
OctOber
2013
& MEDia MarkEts
Location
Middle Harbour Yacht Club Mosman
charity rEgatta
cost of entry
yacht entry: $2,000 (plus GST) per yacht Price per Guest: $150 (plus GST) ViP spectator Guest: $300 (plus GST)
free with entry All competitors will receive: • a polo shirt • a cap • gourmet lunch pack • entry to beach after party including BBQ, complimentary drinks, auction and raffle draws.
This fun sailing event is a great way to help support worthwhile charities whilst entertaining your clients, networking or even thanking your staff!
ViP Boat A spectator boat will follow the race. This is an alternative to racing. Guests are able to view the regatta whilst enjoying a seafood buffet served with fine wines.
For entry Forms or sponsorship applications please contact: david.brocklehurst@thomsonreuters.com or call 02 9373 1984 or 0412 411 366
All class of boats are welcome. Race operated on a handicap basis. Current cup holder: Deutsche Bank Yacht name: Sputnik
visit www.asxreutersregatta.com.au
on illi m $1 han help raise more t
ity ar h rc fo
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Last Year sponsors
AUSTRALASIAN LEGAL BUSINESS ISSUE 11.09
ACLA
67
WORKPLACE BULLYING
– How prepared are you for the new regime? BY TONY DE GOVRIK, LEGAL AFFAIRS & COMMUNICATIONS DIRECTOR, AUSTRALIAN CORPORATE LAWYERS ASSOCIATION, THE PROFESSIONAL BODY FOR IN-HOUSE LAWYERS.
I
Tony de Govrik
nternational businesswoman and author of a number of best sellers including Women on Top, Margaret Heffernan, recently said “Those in powerless positions aren’t about to complain about bullying bosses, abusive supervisors or corrupt co-workers. There is no safe way to do so and no process that promises redress.” Hopefully that perception is about to change here in Australia with the current industrial relations landscape set to embrace further amendments to the Fair Work Act 2009 (FWA) from 1 January next year. We are yet to see what additional IR changes will flow from the new Federal government after that date. This second tranche of amendments will, amongst other things, bring in some sweeping changes in relation to workplace bullying and the rights of the worker to have such issues properly addressed. Under the changes a “worker” will be able to apply to the Fair Work Commission (FWC) for assistance with bullying complaints. It is not intended that the ability to approach the FWC on such matters be to the exclusion of these types of issues being dealt with under an employer’s workplace policy on bullying. It is, however, an additional remedy which a worker may rely on to stop workplace bullying quickly. The FWC is required to deal with such applications within 14 days and it will have broad powers to make orders which require the individuals concerned to stop certain behaviour and also for employers to monitor such behaviour. Failure to comply with an FWC order will make a company liable to a maximum penalty of $51,000. Importantly, the term “worker” is much broader than employee and will include contractors, sub-contractors, labour hire personnel and persons on other types of workplace engagements. The term “bullying” is defined as repeated and unreasonable behaviour directed towards a worker or group of workers that creates a risk to health and safety. Repeated behaviour refers to the persistent nature of the behaviour and can involve a range of behaviours over time. Unreasonable behaviour means behaviour that a reasonable person, having regard to the circumstances, would see as unreasonable, including behaviour that is victimising,
humiliating, intimidating or threatening. Public comment on a draft Code of Practice for Preventing and Responding to Workplace Bullying released by Safe Work Australia (www.safeworkaustralia.gov.au) closed in July and the revised Code will now be considered by the Ministerial Council for adoption as a model Code of Practice. The FWC will be required to have regard to the Code when dealing with complaints against workplace bullying. It is instructive to note that in the draft Code the following examples are given of behaviours, whether intentional or unintentional, which, if repeated and unreasonable, may amount to workplace bullying if they can be seen as creating a risk to health and safety: • abusive, insulting or offensive language or comments • unjustified criticism or complaints • continuously and deliberately excluding someone from workplace activities • withholding information that is vital for effective work performance • setting unreasonable timelines or constantly changing deadlines • setting tasks that are unreasonably below or beyond a person’s skill level • denying access to information, supervision, consultation or resources such that it has a detriment to the worker • spreading misinformation or malicious rumours • changing work arrangements, such as rosters and leave, to deliberately inconvenience a particular worker or workers • excessive scrutiny at work. However, a single incident of unreasonable behaviour is not considered to be workplace bullying although it may have the potential to escalate and should not be ignored. The draft Code also makes it clear that reasonable management action taken in a reasonable way to effectively direct and control the way work is carried out does not constitute bullying. This may include setting reasonable performance goals, standards and deadlines, rostering and allocating working hours where the requirements are reasonable and transferring a worker for operational reasons. Bullying should not be confused with discrimination and harassment although it is possible to be bullied, harassed and discriminated against at the same time. However, according to Safe Work Australia, “unlike bullying, discrimination and harassment may be single incidents and are based on some characteristic of the affected person. Discrimination generally occurs when someone is treated less favourably than others because they have a particular characteristic or belong to a particular group of people, such as age, race or gender. Harassment generally involves unwelcome behaviour that intimidates, offends or humiliates a person because of a particular personal characteristic such as race, age, gender, disability, religion or sexuality.” There are a number of other laws, including the Workplace Health and Safety Act 2011 and anti-discrimination legislation, which deal with discrimination and harassment issues. In-house counsel would be well advised to take a pro-active approach to the new regime for workplace bullying and embark upon an internal education program for the benefit of both employee and employer alike.
MASTER CLASS
www.thomsonreuters.com.au/events
CONTRACTUAL RISK & COMMERCIAL ARBITRATION Sydney | 17-18 October Melbourne | 24-25 October Brisbane | 29-30 October ABOUT This two day Masterclass will examine recent developments in the areas of contractual risk, focusing in particular upon how to minimise and manage risks that arise before a contract is entered into, and also commercial arbitration. It will provide attendees with essential tools to assist in how to think about and manage pre-contractual risks, and how to more effectively conduct arbitration proceedings. WHY ATTEND Through the analysis of recent legislative developments, day one will provide attendees with essential tools to more effectively mitigate risks arising before a contract is entered into. Day two will allow attendees to get the latest update on commercial arbitration practice. SPEAKER HIGHLIGHTS • Marcus Jacobs QC, Barrister, 12 Wentworth Selborne Chambers • Peter Callaghan SC, Barrister, Nigel Bowen Chambers • Michael Rudge SC, Barrister, Nigel Bowen Chambers • Jeffrey Goldberger, Special Counsel, Ashurst PROGRAM HIGHLIGHTS Day 1 - Contractual Risk: • Risk considerations in entering into pre-contractual documentation • Tips and tricks in managing risk in procurement processes • Contractual mechanisms for allocating risk Day 2 - Commercial Arbitration: • New opportunities – revised commercial arbitration act • Innovation in dispute resolution • Future opportunities for domestic commercial arbitration • Shaping arbitral procedures to the dispute at hand
SECURE YOUR SEAT BY 20TH SEPTEMBER AND SAVE WITH THE EARLY BIRD RATES! HOW TO REGISTER ONLINE: www.thomsonreuters.com.au/contractualrisk PHONE: 02 8587 7960 EMAIL: savitha.viswanathan@thomsonreuters.com