Australasian lawyer 1.02

australasianlawyer.com.au Issue 1.2

The ground-breaking GCs proving the value of in-house counsel to corporate Australia CARMEL MULHERN ENGINEERING TELSTRA’S EVOLUTION

GEERED UP ADRIAN TEMBEL TALKS THOMSON GEER AND EVOLUTION

BREAKING GROUND THE FIRMS BUILDING AUSTRALIA’S INFRASTRUCTURE FUTURE

Congratulations Russell McVeagh congratulates Mike Cronin from Fonterra – the only New Zealand based member of the Australasian Lawyer In-House 10.

Congratulations to all the General Counsel named in this list.

www.russellmcveagh.com

AU C K L A N D V E RO C E N T R E 4 8 S H O R T L A N D S T R E E T P O B OX 8 AU C K L A N D N E W Z E A L A N D DX C X 1 0 0 8 5 T E L E P H O N E 6 4 9 3 67 8 0 0 0 FA X 6 4 9 3 67 8 1 63

W E L L I N G TO N VO DA FO N E O N T H E Q UAY 15 7 L A M B TO N Q UAY P O B OX 1 0 -2 1 4 W E L L I N G TO N N E W Z E A L A N D DX S X 1 1 1 8 9 P H O N E 6 4 4 4 9 9 9 555 FA X 6 4 4 4 9 9 9 55 6

CONTENTS

AUSTRALASIANLAWYER.COM.AU

22 COVER STORY

The 10 company general COUNSELS Á RMS SHOULD WATCH

18

FEATURE

FEATURES

14

39 | Billable hour disease The hard life of lawyers who don’t listen to clients 40 | NZ Special Report Why the country’s legal industry is growing again

Shanghai stories Shanghai-based Aussie lawyer Carl Hinze on practising in the world’s most energetic economy

54 14 | Teltra’s evolution Telstra general counsel Carmel Mulhern talks new legal opportunities 32 | Building Australia’s infrastructure future Industry developments in the infrastructure landscape

REGULARS

36 | Thomson Geer arrives Firm head Adrian Tembel explains his plans for the business

04 | Insight 06 | Deals round-up 10 | News analysis 12 | Appointments

54 | Blind courage Blind lawyer Darren Fitter completes A WORLD Á RST

JULY 2014 | 1

EDITOR’S LETTER / 1.2

YAWN. CAN WE STOP COMPLAINING?

Aidan Devine

I have a confession to make. At the risk of sounding silly, I must admit to not getting why so many lawyers have turned the debate about certain emerging issues in the legal space into a giant ďŹ asco.

There’s a range of focus areas that seem to get a particularly strong emotional response from lawyers, but I think much of it is misdirected. I refer speciďŹ cally to the debate around fees.

Waste your time at work scouring the blogs of dispirited lawyers, like I do, and you’ll ďŹ nd a range of articles bemoaning the fact that there is a tug of war currently going on between ďŹ rms keen to stick to their old ways of charging for legal services and clients looking for clever ways to pay less. Some are saying it’s the end of an era. They say the new ways of structuring fees are going to kill the incentive to offer good, reliable service.

I call bull on that. Let’s be realistic here. Clients, no matter what business they are dealing with, will always look for ways to pay less. That’s business. The fact that they are ďŹ nally extending this philosophy to law ďŹ rms shouldn’t come as a surprise.

Don’t get me wrong. I understand why the issue is important.

Like all businesses, ďŹ rms survive on their cash ow, and fee arrangements are a fundamental part of that. Change the way you extract money from your clients and you fundamentally change the way in which your business operates. But perhaps a little perspective is needed.

It’s worth remembering that the qualities that make for a good lawyer are pretty much the same as they have always been, regardless of how you structure your fees. There’s no substitute for the best legal mind and the ability to preserve strong and lasting relationships.

These qualities were exempliďŹ ed by the lawyers featured in our last issue’s Hot 40, but this issue we’re going one step further. This time around we’re paying homage to some of the best in-house legal talent in Australia and New Zealand, the lawyers whose skills we feel deďŹ ne the in-house profession.

This issue we’re also featuring China insights from Shanghaibased partner Carl Hinze, as well as Telstra’s Carmel Mulhern, who explains how technology advances are changing the way the company seeks new business. Happy reading!

COPY & FEATURES EDITOR Aidan Devine CONTRIBUTORS Renu Prasad, Ben Abbott, Mackenzie McCarty PRODUCTION EDITORS Roslyn Meredith, Moira Daniels

ART & PRODUCTION DESIGN MANAGER Daniel Williams DESIGNERS Loiza Caguiat, Adonna Saura

SALES & MARKETING SALES MANAGER Paul Ferris MARKETING EXECUTIVE Alex Carr TRAFFIC MANAGER Abby Cayanan

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HR MANAGER Julia Bookallil Editorial enquiries Aidan Devine tel: +61 2 8437 4719 aidan.devine@keymedia.com.au Advertising enquiries Paul Ferris tel: +61 2 8437 4703 paul.ferris@keymedia.com.au Subscriptions subscriptions@keymedia.com.au Key Media keymedia.com.au .EY 0EDIA 3TY /TD REGIONAL HEAD OêCE Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 2êCES IN $UCKLAND 7ORONTO 'ENVER 0ANILA australasianlawyer.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australasian Lawyer magazine can accept no responsibility for loss

Aidan Devine, editor, Australasian Lawyer

CONNECT

Contact the editor:

aidan.devine@keymedia.com.au

2 | JULY 2014

Printed on paper produced from 100% sustainable forestry, grown and managed VSHFLoFDOO\ IRU WKH SDSHU SXOS LQGXVWU\

INSIGHT

THE ‘TYPICAL’ AUSSIE LAWYER

No two lawyers are the same, but a portrait CONSTRUCTED FROM RESEARCH ÁGURES ON Australian and NZ lawyers shows where the PROFESSION IS AT IN TERMS OF AVERAGE PERSONNEL

Type of lawyer: Solicitor Location: Sydney

Gender: MALE

Size of workplace: 1-4 partners

$GE 38 Time in practice: 14 years

PROPORTION OF ALL LAWYERS PRACTISING IN EACH STATE Northern Territory

7%

South Australia

6%

Type of workplace: Unincorporated J?U ¿PK Queensland

1% Western Australia

THE AVERAGE LAWYER

14% Areas of practice: Corporate law, AMKKCPAG?J property law

NSW

41% ACT Victoria

2% Likely retirement AGE 68

28% Tasmania

1% Source: NSW Law Society, NZ Law Society

4 | JULY 2014

NZLAWYERMAGAZINE.CO.NZ

• <Box out> Proportion of all lawyers practicing in each state • • <Design instructions: Have these statistics spread around a map of Australia, but this section of the infograph should be secondary to the guy in the suit part> • • NSW: 41% • • VICTORIA: 28% • • QUEENSLAND: 14% • • WESTERN AUSTRALIA: 7% • • SOUTH AUSTRALIA: 6% • • ACT 2% • • NORTHERN TERRITORY 1% • • TASMANIA 1%

5 | APRIL 2014

NEWS / DEALS

Deals ROUND UP $347m

Transaction

Value (A$)

Adviser

Client

Lead lawyer(s)

Capital markets

Allity purchase from ECH of aged care facilities and property in SA

Undisclosed

)ISHER -EĂŠRIES

Allity

Julia Sweeney

Allity purchase from ECH of aged care facilities and property in SA

Undisclosed

Oâ&#x20AC;&#x2122;Loughlins

ECH Inc

%ANK OF &HINA NOTE OĂŠERING on ASX

$347m

Allens, Linklaters

Bank of China

Burson Group Limited IPO

$298m

Gilbert + Tobin Burson Group Limited

Peter Cook, Rachael Bassil

Burson Group Limited IPO

$298m

Allen & Overy

Underwriters

Tony Sparks

Challenger Life pursuit of whole ownership of Challenger property group

M OĂŠER

Allens

Challenger Life

Challenger Life pursuit of whole ownership of Challenger property group

M OĂŠER

Ashurst

Challenger 'IVERSIĂ ED 3ROPERTY Group

Sarah Dulhunty

$62m Devine Ltd and Leighton Properties sale of jointly owned retail buildings

Herbert Smith Freehills

Devine Ltd, Leighton Properties

Luke Simpson

$62m Devine Ltd and Leighton Properties sale of jointly owned retail buildings

Landers & Rogers

Capital 360

GPT acquisition of Northland Shopping Centre

$496m

Allens

GPT Wholesale Shopping

Nicholas Cowie

GPT acquisition of Northland Shopping Centre

$496m

King & Wood Mallesons

Canadian Pension Fund

Mark Bayliss

Horizon Oil merger with Roc Oil

$800m

King & Wood Mallesons

Horizon Oil

Stefan Luke

Horizon Oil merger with Roc Oil

$800m

Herbert Smith Freehills

Roc Oil

Robert Merrick, Tony Damian

Japara Healthcare IPO

$525m

Herbert Smith Freehills

Japara Healthcare Ltd

Michael Ziegelaar

#?LI MD $FGL? LMRC MçCPGLE Bank of China Limitedâ&#x20AC;&#x2122;s Sydney branch issued a 2bn RMB (A$343m) note OĂŠERING ON THE 2ĂŞCIAL /IST OF ASX Limited, marking the Ă RST EVER 50% OĂŠERING targeting Australian institutional investors.

7HE DEAL ALSO MARKS THE Ă RST TIME 50% DENOMINATED securities have been issued through an Australian branch of AN OĂŠSHORE Ă NANCIAL INSTITUTION Alliance partners Linklaters and Allens acted for Bank of China, led respectively by Linklaters partner Michael Ng in Hong Kong and Allens partner James Darcy.

$496m Real estate Northland Shopping Centre acquisition The GPT Wholesale Shopping Centre Fund (GWSCF) made a $496m acquisition of a 50% interest in Northland Shopping Centre (Melbourne) from the Canadian pension fund CPPIB. Allens and King & Wood Mallesons advised on the deal.

The acquisition was part of an arrangement under which GWSCFâ&#x20AC;&#x2122;s sister fund, *37 :HOLESALE 2ĂŞCE )UND will also acquire four Commonwealth Property 2ĂŞCE )UND OĂŞCE TOWERS with a value of approximately $679m.

6 | JULY 2014

James Darcy, Michael Ng

AUSTRALASIANLAWYER.COM.AU

DEALS REPORTED TO AUSTRALASIAN LAWYER Has the magazine missed an important deal?

Help Australasian Lawyer keep this information current by emailing the editor: aidan.devine@keymedia.com.au

Lead lawyer(s)

Transaction

Value (A$)

Adviser

Client

Insight Venture Partners investment into Campaign Monitor

US$250m

Herbert Smith Freehills

Campaign Monitor

Insight Venture Partners investment into Campaign Monitor

US$250m

Johnson Winter & Slattery

Insight Venture Partners

James Rozsa

MMG sale of its Avebury nickel mine

$40m

Clayton Utz

MMG Limited

Jonathan Li

Nexvet Biopharma proposed Ă NANCING FROM INSTITUTIONAL investors

US$31.5m

Hive Legal

Nexvet Biopharma Pty Ltd

Simon Davidson

Perth Airport bond issue

$400m

Allens

Westpac, NAB

James Darcy

Perth Airport bond issue

$400m

King & Wood Mallesons

Perth Airport Development Group

Ian Solomon

Parmalat Australia acquisition of Harvey Fresh

$117m

Williams and Hughes

Harvey Food and Beverages Limited

David Williams, Clare BarrettLennard

Parmalat Australia acquisition of Harvey Fresh

$117m

Minter Ellison

Parmalat Australia

Franki Ganter

Norilsk Nickel Australia on the sale of its North Eastern *OLDĂ ELDS OPERATIONS

$40m+

&LIĂŠORD Chance

Norilsk Nickel

Justin Harris

Port of Newcastle privatisation

$1.75bn

King & Wood Mallesons

International consortium

Mark Upfold

Spotless Group Holdings IPO

$1bn+

Herbert Smith Freehills

)OUR Ă NANCIAL institutions

Philippa Stone

Spotless Group Holdings IPO

$1bn+

Gilbert + Tobin Spotless Group

$400m Capital markets 1CPRF "GPNMPR žM?R Perth Airport Pty Ltd, a subsidiary of Perth Airport Development Group which operates and maintains Perth Airport, issued $400m bonds due 2021 in a deal arranged by NAB and Westpac.

The deal follows other recent bond issuances by Australian infrastructure entities that include the operator of the Eastern Distributor road in Sydney and the operator of EastLink road in Melbourne.

$1bn+ Capital markets

Andrew Bullock, Rachael Bassil

Spotless Group IPO Cleaning and catering contractor Spotless Group listed on the ASX in an IPO of over $1bn.

Gilbert + Tobin acted as issuerâ&#x20AC;&#x2122;s counsel to Spotless Group Holdings Ltd on the IPO, led by partners Andrew Bullock and Rachael Bassil.

7HE PRIVATE EQUITY Ă RM co-investors and management retain 49% of 6POTLESS 7HE BN Ă&#x20AC;OAT represented approximately 51% of shares on issue.

JULY 2014 | 7

NEWS / DEALS

$22bn Corporate 8CQR¿CJB BC@R PC¿L?LAGLE Allens made history by acting for a syndicate of 20 lenders IN THE BN DEBT ÁNANCING OF RETAIL GIANT :ESTÁELD 7HE deal will allow the shopping centre group to carry out its restructuring plans, and saw the lender syndicate funding commitments that included the biggest bridge facility in Australian corporate history.

The bridge facility includes a $14bn two-year bridge (with an option to extend for a further 12 months) and $8bn of two- to six-year bank facilities.

$2.15m M&A David Jones acquisition Retailer David Jones announced in April that it would be acquired by Woolworths Holdings Limited (South Africa) in a deal worth $2.15bn.

It is rumoured that the David Jones acquisition will make Woolworths South Africa one of the top 10 global department store operators. The African retailer entered a scheme of arrangement to acquire David Jones, including an INTERNATIONAL DEBT ÁNANCE package.

8 | JULY 2014

Lead J?UWCP Q

Transaction

7?JSC "

Adviser

$JGCLR

Spotless Group Holdings IPO

$1bn+

King & Wood Mallesons

Syndicate of banks ÁNANCING ,32

Sydney Airport BANK DEBT REÁNANCING

$1.5bn

Allens

Sydney Airport BANK DEBT REÁNANCING

$1.5bn

King & Wood Mallesons

Sydney Airport

<UEN <EE &HO

Union Investment Real Estate $200m purchase of Anthony John Group’s 6OUTHPOINT COMMERCIAL OéERING

DLA Piper

Union Investments

Les Koltai

Union Investment Real Estate $200m purchase of Anthony John Group’s 6OUTHPOINT COMMERCIAL OéERING

King & Wood Mallesons

South Bank &ORPORATION

David Bell

$200m Union Investment Real Estate purchase of Anthony John Group’s 6OUTHPOINT COMMERCIAL OéERING

Herbert Smith Freehills

)LIGHT &ENTRE /TD

:ESTÁELD DEBT REÁNANCING

Allens

:ESTÁELD *ROUP

Union Investment Real Estate $200m purchase of Anthony John Group’s 6OUTHPOINT COMMERCIAL OéERING

Ashurst

Queensland Government

$200m Union Investment Real Estate purchase of Anthony John Group’s 6OUTHPOINT COMMERCIAL OéERING

Allens, Minter Ellison

Anthony John Group

Multiple

Virgin Australia sale, lease of Brisbane headquarters TO &HARTER +ALL

Unknown

Herbert Smith Freehills

Virgin Australia

Luke Simpson

Virgin Australia sale, lease of Brisbane headquarters TO &HARTER +ALL

Unknown

&LAYTON 8TZ

&HARTER +ALL

Wesfarmers divestment from insurance brokerage business

$933m

&LAYTON 8TZ

Arthur J. Gallagher &O

David Stammers, David Gerber

Wesfarmers divestment from insurance brokerage business

$933m

Allens

Wesfarmers

Tom Story

:ESTPAC &APITAL 1OTES OéER

$725m

Herbert Smith Freehills

Westpac Institutional Bank (and six joint lead managers)

Philippa Stone

Woolworths South Africa acquisition of David Jones

$2.15bn

Herbert Smith Freehills

David Jones

Rebecca MaslenStannage

Woolworths South Africa acquisition of David Jones

$2.15bn

Gilbert + Tobin

Woolworths Holdings

Multiple

$22bn

-Eé &LARK Renee Boundy

Diccon Loxton

Firm Profile

DO PARENT COMPANIES BEAR THE SINS OF THEIR SUBSIDIARIES? THE NEW ZEALAND PERSPECTIVE Although far from the heady pre-GFC days of 2007 and 2008, we are seeing increasing signs of life in Australasian private equity deal-making. By their nature, private equity investors sometimes tend to tolerate a slightly higher risk threshold than more conservative institutional investors. But a more bullish appetite for investment risk should not diminish the need for thorough due diligence on target companies, and in particular due diligence on a target’s past and current compliance measures.

Recent developments in Europe should prompt local private equity investors to scrutinise the compliance culture of potential and existing portfolio companies both before and during their ownership. In early April 2014 the European Commission confirmed that a private equity investor can be jointly liable for the anti-competitive conduct of a portfolio company under its so-called “parental liability doctrine”.

An investigation by European competition regulators found that the private equity investor’s portfolio company had, both before and during its ownership, participated in a cartel involving market allocation and agreements to pre-determine ostensibly competitive tenders. The portfolio company was fined over ¤100m for its part in the cartel and the private equity investor was jointly and severally liable for ¤35m of those fines. The European Commission’s decision followed from its decision in January 2014 to hold a German private equity fund liable for over ¤10m in fines levied against one of that fund’s portfolio companies which had similarly participated in a cartel.

The question for local private equity investors following these developments is whether this “parental liability” approach might be adopted in New Zealand or Australia.

New Zealand’s courts largely respect the “corporate veil” and unlike their European counterparts, do not attempt to attribute liability further up the corporate chain to parent entities. For obvious reasons private equity funds rarely provide guarantees or letters of comfort in respect of their portfolio companies’ financial obligations. But there are nonetheless certain circumstances, albeit narrow, in which a parent company may be called upon to make good or be held partly liable for the defaults of a subsidiary.

For example, if a subsidiary has breached a contract, and it can be shown that the parent company induced that breach of contract by way of pressure or persuasion on the subsidiary to do so, the parent may be liable for such breach. However such cases are rare and typically require a degree of reckless action on the part of the parent company’s directors.

as those seen in Europe, the level of fines imposed by New Zealand’s courts in recent prosecutions highlights how anti-competitive conduct can have a costly impact on the (parent’s) bottom line – something all investors have their eyes on.

For now it appears that New Zealand law, where the limited liability doctrine reigns supreme, is unlikely to follow the European example. The notion of parental liability as adopted by European regulators in these latest proceedings seems unlikely to gain traction in New Zealand any time soon. That said, private equity investors should not simply assume that all is right within their portfolio companies. Oversight of regulatory compliance is an essential part of prudent investment management. While parent entities of New Zealand companies are unlikely to be on the hook for large fines such

Patrick Lilly Patrick specialises in corporate and commercial law and can be contacted on +64 9 356 1392 or patrick.lilly@buddlefindlay.com

This article was written by Grant Dunn (partner) and Patrick Lilly (solicitor) - both based in the Auckland office of Buddle Findlay.

Grant Dunn Grant is one of New Zealand’s leading private equity lawyers and focuses on M&A transactions. He can be contacted on +64 9 363 0636 or grant.dunn@buddlefindlay.com

www.buddlefindlay.com

NEWS / ANALYSIS

Private equity Back in action

Private equity funds are widely tipped to have a big year of exits – but lawyers say there is plenty of potential on the buy side too. Renu Prasad reports As the heavyweights from global and domestic private equity firms descended on Sydney earlier this year for the Asian Venture Capital Journal’s annual conference, one media correspondent attempted to sum up the general bullish mood of the moment.

“Private equity giants … are seeking to make 2014 either a banner year for exits or acquisitions,” the journalist wrote, hedging his bets somewhat. Still, that ambiguity may be appropriate in the current environment.

While much has been written about the forthcoming Spotless IPO and the potential for more PE exits to come, some commentators believe there are positive signs for acquisitions too.

“We have noticed a distinct pickup in activity in the last six to seven months, and we see the pieces being in place for a reasonably strong deal flow for PE over the next year or two on both sides of the equation – exits and new deals,” says Herbert Smith Freehills partner Damien Hazard.

Fundraising figures have been lukewarm.

New capital committed to Australian venture capital and later-stage private equity funds decreased by 77% (A$2.4bn) in FY2013, according to the ABS – the largest decline since the Bureau began publishing this data in FY2005.

Indications are that this trend has bottomed out and FY2014 fundraising had

10 | JULY 2014

already exceeded the FY2013 total by March, according to research by the Australian Private Equity and Venture Capital Association.

Hazard warns against reading too much into these figures.

“It’s such a thin market with a small pool of managers ... if four significant managers raise in one year, then that’s the ‘boom’ year for the next five – it doesn’t tell you anything about what’s going on underneath all that,” he explains.

Still, Gilbert + Tobin partner Andrew Bullock points to a number of recent obstacles facing local PE fundraising. The first is a diffidence by superannuation funds in relation to PE because of fee reporting issues.

“Because PE funds charge a percentage based on commitments as opposed to drawn investment funds, the fees appear heavily overstated until the fund is more heavily invested,” Bullock explains.

“Other factors include funds rebalancing allocations to other jurisdictions or being ‘overweight’. This was a particularly constricting factor until the last 18 months or so, during which time Australian private equity funds have returned billions of dollars to investors through exits and recapitalisations. With this money returned and the outlook

AUSTRALASIANLAWYER.COM.AU

improving, the fundraising outlook for established ďŹ rms is improving,â&#x20AC;? says Bullock.

NOT JUST FOR THE BIG BOYS 7HE LARGER PRIVATE EQUITY Ă RMS HAVE WELL ESTABLISHED RELATIONSHIPS WITH TOP TIER LEGAL ADVISERS AND IT CAN BE DIĂŞCULT FOR MID SIZE Ă RMS TO PENETRATE THIS SPACE +OWEVER MID SIZE Ă RMS CAN SOMETIMES BE FOUND ON THE VENDOR SIDE OF A 3( ACQUISITION OR MAY BE SPECIĂ CALLY BROUGHT IN TO ADVISE ON THE BESPOKE ISSUES FACING MANAGEMENT IN SUCH A TRANSACTION )IRMS THAT HAVE A PRIVATE ADVISORY PRACTICE ARE WELL POSITIONED TO BUILD A STEADY STREAM OF 3( WORK ON THE VENDOR SIDE )AMILIES AND HIGH NET WORTH INDIVIDUALS WHO HAVE BUILT THEIR OWN BUSINESSES WILL INVARIABLY FACE SUCCESSION AND EXIT ISSUES WITH THOSE BUSINESSES AT SOME STAGE AND IT MAY BE POSSIBLE TO ANTICIPATE A ROLE FOR 3( AT AN APPROPRIATE TIME IN THE FUTURE 0ILLS 2AKLEY PARTNER 0ARTIN &HECKETTS SAYS 3( Ă RMS ARE RECEPTIVE TO BEING INTRODUCED TO A POTENTIAL ACQUISITION PROVIDED THE LAWYER HAS DONE THEIR RESEARCH h$LL FUNDS ARE DIĂŠERENT AND YOU NEED TO UNDERSTAND WHAT IS OF INTEREST TO EACH FUND i HE SAYS h7HEYgRE OFTEN LOOKING FOR BOLT ON ACQUISITIONS WITHIN THEIR STABLE OF INVESTEES SO FOR EXAMPLE IF YOU KNOW THEYgVE GOT A FAST FOOD BUSINESS AND YOUgVE GOT A CLIENT WHOgS IN FAST FOOD OF COURSE ONE OF THEIR MODELS IS THAT THEY BUY THE CORE BUSINESS THEY BOLT ON TWO OR THREE MORE PACKAGE IT UP AND REALISE THE SYNERGIES k THIS IS ALL >BASIC@ 3( STUĂŠ i

IN AND OUT

FUNDRAISING BY AUSTRALIAN PE FUNDS â&#x20AC;&#x201C; BY FISCAL YEAR New commitments 10,000

20

8,000

6,000 10 4,000

No. of funds

15

A$m

Commentators are generally optimistic about exit activity â&#x20AC;&#x201C; private equitybacked IPOs on the Australia and New Zealand bourses generated proceeds of $3.1bn in 2013 â&#x20AC;&#x201C; but acquisitions are less easy to characterise.

In February, Asian Venture Capital Journal noted that there had been a â&#x20AC;&#x153;noticeable drop-off in activityâ&#x20AC;? by PE investors in the mid to upper deal space.

Private equity investment in Australia and New Zealand was worth A$11.6bn in 2013, slightly down on the previous year, but the journal noted that this ďŹ gure was inďŹ&#x201A;ated by one particularly large deal. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s harder to see where the next buy side deal will come from â&#x20AC;&#x201C; thereâ&#x20AC;&#x2122;s less of a clear pipeline than all those [anticipated] ďŹ&#x201A;oats ... but the fundamentals are in place,â&#x20AC;? comments Hazard. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;d be surprised if we didnâ&#x20AC;&#x2122;t have stronger levels of buy side activity. There are PE funds with still quite a lot of dry powder. A lot of that dry powder has a clock ticking against it so it has to be spent. There is no doubt that the managers of that equity are very focused on ďŹ nding deals.â&#x20AC;?

Bullock agrees that there is plenty of dry powder in the market. â&#x20AC;&#x153;Quadrant, PEP, CHAMP and Archer all have money available to deploy,â&#x20AC;? he says. â&#x20AC;&#x153;The globals â&#x20AC;&#x201C; Carlyle, KKR, Blackstone, TPG and Bain â&#x20AC;&#x201C; always have dry powder and have a broad range of different funds from which they can draw, depending on the transaction.â&#x20AC;?

While every fund has its own discrete focus, Bullock says some sectors will come under particular PE scrutiny. â&#x20AC;&#x153;Food businesses with room for growth, general industrial businesses that could beneďŹ t from a refocus, and businesses in the health sector should all attract interest this year.â&#x20AC;? AL

5 2,000

0

0 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 Amount raised (A$m)

No. of funds

Source: AVCAL

JULY 2014 | 11

NEWS / APPOINTMENTS

Appointments

Year of growth continues for Swaab

LATERAL PARTNER APPOINTMENTS NAME

PRACTICE AREA

GOING FROM

GOING TO

Brett Feltham

Employment

Hunt & Hunt

DLA Piper

Chris Shaw

Environment and planning

Shaw Reynolds

Swaab Attorneys

Danny Herceg

Corporate

Own practice

Hall & Wilcox

Deanna Constable

Corporate

Mitsubishi

Lander & Rogers

Gary Punch

Environment and planning

Landerer & Company

Bartier Perry

Heinz Lepahe

Employment

Australian Business Lawyers & Advisors

HWL Ebsworth

Jennifer Schlosser

Banking AND ÁNANCE

King & Wood Mallesons

Ashurst

Kon Tsiakis

Litigation

HWL Ebsworth

DLA Piper

Macaire Bromley

Corporate

Allen & Overy

DibbsBarker

Michael Byrom

Real estate

Holding Redlich

Bennett & Philp Lawyers

Michael Gough

Real estate

Landerer & Company

Rigby Cooke Lawyers

Peter Monk

Corporate

DLA Piper

Hive Legal

Ray Giblett

Insurance

Gadens

Norton Rose Fulbright

Ron Jorgensen

Tax

Sladen Legal

Rigby Cooke Lawyers

Tony Butler

Real estate

DLA Piper

Mills Oakley

Simon Adams

Energy and resources

Lavan Legal

Holman Fenwick Willan

Simon Champion

Corporate

Piper Alderman

Mills Oakley

Susan Warda

Family law

Coleman Grieg

Mills Oakley

Tony Butler

Property

DLA Piper

Mills Oakley

PARTNER PROMOTIONS FIRM

LAWYERS PROMOTED

Ashurst

Corey McHattan, Jon Lovell, Ken Nguyen, Nicole Gardner

&LIéORD &HANCE

Philip Sealey

DLA Piper

Gitanjali Bajaj, Amelia Kelly, Lyndon Masters, Sophie Devitt

Herbert Smith Freehills

Ante Golem, Julie Jankowski, Patrick Sands, Phillip Hart, Ruth Overington, Steve Bell

Mills Oakley

Dan Mackay, Gavin Douglas, Harry Giannakidis, Tim Cox

Norton Rose Fulbright

Toby Biddle, Wissam Abwi

12 | JULY 2014

Presented by

Chris Shaw, principal partner of Sydney firm Shaw Reynolds over the past 10 years, has been recruited by Swaab Attorneys, along with six lawyers and support staff.

Shaw and his team join Swaab’s property and projects group in July and specialise in environment and planning law, local government and property development.

The move follows a string of other appointments at Swaab this year. In March, the firm appointed the former senior legal counsel of Parsons Brinckerhoff to head its new construction and engineering group and also appointed its first managing partner in four years.

Slew of HSF promotions boosts partnership Six Australian-based lawyers across an array of practice areas joined the Herbert Smith Freehills partnership in May, signalling a big partnership increase for the firm.

The new partners included Steve Bell, an employment, pensions and incentives lawyer in Melbourne, and Ruth Overington and Patrick Sands, who both joined HSF’s disputes team in Melbourne.

Corporate lawyer Philip Hart and real estate lawyer Julie Jankowski were also promoted to partner in Sydney, along with Perth-based Ante Golem.

Bakers boss renews term Baker & McKenzie’s managing partner Chris Freeland has confirmed that his term as head of the firm’s Australian practice will be renewed until 2017, following a decision by the firm’s management committee.

Freeland told Australasian Lawyer he was happy to stay on as managing partner because he sees opportunities in the Australian legal market that “other firms are not spotting”.

“We can’t rest on our laurels,” he said. “The legal market is changing. The firms that will succeed in the next five years are those that will be the most flexible and nimble. I think that the firms that can’t do that are going to struggle.”

AUSTRALASIANLAWYER.COM.AU

Freeland said firms that aren’t adapting well to the current legal market are often those bogged down by size. “They also, perhaps, cling to their historic legacy,” he said. “There’s a satisfaction with past achievements and they cling to an old way of doing things without realising that the game has changed.”

DLA Melbourne head defects to Hive Legal The head of DLA Piper’s Melbourne office, Peter Monk, has joined Hive Legal, a firm launched earlier this year by corporate partners from DLA and Minter Ellison.

Monk began work at Hive Legal in May as a principal, after seven years as a corporate partner at DLA Piper. He joined DLA as head of the firm’s corporate practice in the Middle East, but relocated to Melbourne in 2010 to help facilitate the DLA Piper and DLA Phillips Fox merger in 2011.

Ashurst raids KWM King & Wood Mallesons special counsel Jennifer Schlosser has been appointed partner within rival Ashurst’s finance practice.

Schlosser joins the firm’s Sydney office in July and is a specialist in the securitisation and structured debt capital market.

in the form of general counsel of Mitsubishi Corporation (Japan) Deanna Constable. M&A lawyer Constable joined Landers’ Sydney corporate practice after being general counsel at Mitsubishi for seven years. The move sees Constable rejoining private practice, having been a senior associate at Herbert Smith Freehills before her tenure at Mitsubishi.

Chris Freeland

DibbsBarker gets ‘huge coup’

Macaire Bromley

Restructuring and insolvency specialist Macaire Bromley joined DibbsBarker’s Sydney office in May as a partner. Prior to joining the firm, Bromley spent three years at Allen & Overy in London.

Bromley has experience with some of Australia’s largest insolvency matters, including those involving Lehman Brothers Australia and Enron Finance Australia. In London, she acted on market-sensitive matters for numerous banks, including the restructure of a US$5bn debt owed by a Middle Eastern company and advising Her Majesty’s Treasury on the reorganisation of the Bank of Cyprus.

Scott Guthrie, head of dispute resolution and litigation at DibbsBarker, said welcoming Bromley into the practice was a “huge coup” for the firm.

Mitsubishi GC returns to private practice Lander & Rogers has got a boost to its partnership

JULY 2014 | 13

PROFILE / CARMEL MULHERN

“Our industry is highly regulated. The challenge for us is to grow and start doing other things, but within the constraints that we have”

14 | JULY 2014

AUSTRALASIANLAWYER.COM.AU

Enter the giant: Telstra’s new chapter Already a household name, Telstra has had to tap into new technologies and markets to reinvigorate its business.

General counsel Carmel Mulhern tells Australasian Lawyer ABOUT THE OPPORTUNITY THIS IS CREATING FOR Á RMS When Aussie developer John Papandriopoulous won the ‘Green Card lottery’, which allowed him permanent residency in the US and the power to start his own San Francisco-based tech company, few would have predicted what would happen next.

Developing an app that allowed the iPhone 5 to take 20 pictures a second, Papandriopoulous released an innovation so unique that his company SnappyLabs was bought out by Apple earlier this year for a figure rumoured to have made the 35-year-old a multimillionaire.

The San Francisco Bay area was also where the magic happened for Aussie tech entrepreneur Ben Keighran. The young entrepreneur, who taught himself to code in C++ by age 13, moved to San Francisco from Sydney in 2007 and eventually started Chomp, a mobile app search engine. His innovation was sold for roughly US$50m in 2012.

Papandriopoulous and Keighran aren’t alone.

As mobile app technology continues to evolve, Australians have become increasingly drawn to the sprawl of suburbs that forms the southern part of the Greater San Francisco Bay area, a region better known as Silicon Valley. Businesses and professionals of all types have come here following the scent of rags-to-riches tech startups. This has included Australia’s biggest name in telecommunications: Telstra.

The company has a Silicon Valley office, set up to explore opportunities for taking stakes in technology businesses. A primary focus has been companies releasing mobile apps.

Telstra general counsel Carmel Mulhern says the company is keeping an open mind about which entrepreneurs it partners with, promising flow-on work for law firms.

“Telstra is looking into applications that would use our network or potentially sit at the top of our

TELSTRA BY THE NUMBERS Revenue (2013) $25.5bn 1PM¿ R $3.9bn 5MR?J ?QQCRQ $39.5bn Employees 37,721

JULY 2014 | 15

PROFILE / CARMEL MULHERN

IMPENDING LEGAL WORK Roll-out of the governmentâ&#x20AC;&#x2122;s controversial National Broadband Network, which structurally separates Telstra from its copper network (as the government builds its own Ă BRE NETWORK HAS presented Telstra with a major challenge. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s incredibly complex from a legal perspective,â&#x20AC;? says Mulhern. â&#x20AC;&#x153;We took three years to negotiate a set of agreements with the government of the day, and the new government has changed [that] so there is a large piece of legal work we have to do with the government over the coming months.â&#x20AC;?

Mulhern adds that this will be one of the best deals for transactional lawyers to work on. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s an exciting [process], because you have to come up with the contingencies for a network that isnâ&#x20AC;&#x2122;t there yet and then establish a framework that will set up the company in the years to come.â&#x20AC;?

network. They need to be innovative; applications that we could learn from or package up with other products that would be on our network. We are open to anything that people come up. And thatâ&#x20AC;&#x2122;s the whole point,â&#x20AC;? Mulhern says, adding that this approach has called for the company to further engage the legal community. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s a lot of legal work in there because it doesnâ&#x20AC;&#x2122;t only involve setting up companies, but also the intellectual property side of things: trademarks and patents.â&#x20AC;?

Telstraâ&#x20AC;&#x2122;s involvement in the bustling tech startup scene in Silicon Valley has been complemented by its establishment of an innovation hub in Sydney.

The hub provides funding for tech entrepreneurs who are developing new ideas, which Mulhern says dovetails into the companyâ&#x20AC;&#x2122;s strategy of exploring new markets and opportunities. â&#x20AC;&#x153;Legally, this has some unique challenges,â&#x20AC;? she says. â&#x20AC;&#x153;Our industry is highly regulated and, of course, there is even a chapter in Australian trade practices law just on telcos. The challenge for us is to grow and start doing other things, but within the constraints that we have. This means itâ&#x20AC;&#x2122;s a really great and interesting place to work as a lawyer.â&#x20AC;?

TECHNOLOGY AND LEGAL SPEND Considering Telstra is already a well-established brand with a strong network infrastructure, the company has identiďŹ ed that growth is needed in service functions that are not yet a core part of Telstraâ&#x20AC;&#x2122;s offering.

This has propelled the company to venture into new technologies, and also to aim its sights at global diversiďŹ cation. One of the service platforms generating buzz is â&#x20AC;&#x2DC;the cloudâ&#x20AC;&#x2122;.

Also referred to as cloud computing, this entails

distributed computing over a network, where applications or content are accessed and shared on a server, rather than a single device. It is nothing new but has been generating interest as the scope of what can be accomplished utilising cloud-based platforms increases. â&#x20AC;&#x153;We see it as very important,â&#x20AC;? says Mulhern. â&#x20AC;&#x153;We see [this] as fundamental to our business and large enterprise customers in Australia and Asia.

Itâ&#x20AC;&#x2122;s a skill we have and are looking to expand to support our Australian enterprise customers as they move offshore.â&#x20AC;?

Rolling out services at a higher level has required signiďŹ cant ďŹ nancial investment by Telstra, helping shift how the company considers many of its other expenses, including its legal bills. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve had to be innovative,â&#x20AC;? Mulhern says. â&#x20AC;&#x153;We were the in-house law team that pioneered the â&#x20AC;&#x2DC;all you can eatâ&#x20AC;&#x2122; model. It was a really good way to introduce a new ďŹ rm to our panel and build greater efďŹ ciency in spending.â&#x20AC;?

The model was developed following an agreement with a large ďŹ rm that was new to the companyâ&#x20AC;&#x2122;s panel at the time. Telstra was concerned about being billed for additional hours brought about by learning on the job that often occurs when new ďŹ rms advise the company. â&#x20AC;&#x153;We had to think: how do we ensure we are not paying them to get up to speed?â&#x20AC;?

Mulhern says the company reached an agreement that it would pay the new ďŹ rm a set ďŹ gure for a yearâ&#x20AC;&#x2122;s work. Effectively, Telstra could brief the ďŹ rm as much as it liked, but the price for legal services would remain ďŹ xed. â&#x20AC;&#x153;The beauty of this is you could factor a ďŹ xed number into your budget of what youâ&#x20AC;&#x2122;d be spending with that ďŹ rm. There was risk for the ďŹ rm that we would go over that amount and they

TELSTRAâ&#x20AC;&#x2122;S EVOLUTION S

S 7HE 3OSTMASTER *ENERAL S 'EPARTMENT IS SPLIT INTO THE $USTRALIAN 3OSTAL &OMMISSION AND THE $USTRALIAN 7ELECOMMUNICATIONS &OMMISSION TRADING AS 7ELECOM %Y THE NEW BODY PROVIDES INTERNATIONAL DIRECT DIALLING TO COUNTRIES

16 | JULY 2014

early-model car phone

7ELECOM HAS ITS Ă RST VENTURE INTO THE MOBILE PHONE MARKET OĂŠ ERING A CAR PHONE IN 7HE SAME YEAR 7ELECOM SETS UP ITS Ă RST COMPUTERISED EXCHANGE IN 9ICTORIA

AUSTRALASIANLAWYER.COM.AU

would be giving us a lot of free work, but there was risk for the company that we wouldnâ&#x20AC;&#x2122;t use them enough and leave money on the table. We ended up getting it about right. We got certainties in what we were going to pay; the lawyers got encouraged to brief a new ďŹ rm because, effectively, you werenâ&#x20AC;&#x2122;t looking at every single bill in minute detail.â&#x20AC;?

In her own words: Carmel Mulhern AL: )MU F?TC WMS QCJCARCB UFGAF ÂżPKQ EM MLRM WMSP N?LCJ MD JCE?J QCPTGAC NPMTGBCPQ RF?R WMS PCESJ?PJW QCCI ?BTGAC DPMK Historically the panel was comprised of one or two large legal ďŹ rms that we used when Telstra was ďŹ&#x201A;oated. Over time, we, like the rest of the business world, have needed to ďŹ nd ways of simplifying things and cutting down costs, and this has required us to review how we engage external law ďŹ rms.

Today we have three top-tier ďŹ rms on the panel, which we use for strategic high-level work. We have diversiďŹ ed the panel by adding two or three mid-tiers. These are cheaper ďŹ rms that have great lawyers; many were senior partners in international ďŹ rms and have moved to these domestic, mid-tier ďŹ rms. We then have a couple of other ďŹ rms that are specialists in areas such as IT. We run a tender process and look for ways to get the best ďŹ nancial result from ďŹ rms and are open to whatever lawyers can come up with: it could be a volume discount, for example, in which guaranteeing ďŹ rms a certain amount of work gets us a discount.

AL: )MU MDRCL BM WMS PCTGCU RFC N?LCJ We review contracts every year to make sure they are running to the right rate, but we do a full review tender process every three years.

AL: 8F?R F?Q @CCL WMSP @GEECQR DPSQRP?RGMLQ UGRF J?UWCPQ WMS SQC Sloppy or incorrect advice is a major frustration, but it doesnâ&#x20AC;&#x2122;t happen often. A more frequent frustration is getting advice that doesnâ&#x20AC;&#x2122;t really help me, as in-house counsel, give the answer my client is seeking.

This usually happens when lawyers donâ&#x20AC;&#x2122;t take the time to look at what the companyâ&#x20AC;&#x2122;s strategic imperatives are, and follow this up with advice that is not tailored to the company and the outcome it is looking at.

The worst thing is getting black-letter advice listing all the problems but no solutions, or a number of options but no recommendation. You donâ&#x20AC;&#x2122;t want legal advice that just sits on the fence.

You also sometimes get advice that isnâ&#x20AC;&#x2122;t summarised. This means I have to spend as much time pulling [advice] into a form I can give my internal clients as I would if I had written the advice myself.

AL: *D WMS F?B RM QNCASJ?RC UFW BM RFGLI QMKC J?UWCPQ ?PC K?IGLE RFCQC IGLBQ MD KGQR?ICQ I often get the impression itâ&#x20AC;&#x2122;s because some lawyers perhaps have too many clients. I also think that you get a lot of lawyers that are trained as black-letter lawyers and havenâ&#x20AC;&#x2122;t tuned their mind to the possible commercial outcomes. This can sometimes happen when lawyers havenâ&#x20AC;&#x2122;t had a secondment in an in-house law team. Those who have are often much better placed to tailor advice to in-house lawyers, in my experience. AL

1990s Telecom merges with the Overseas Telecommunications Corporation and changes its name to Telstra in 1992.

2000s 1997 â&#x20AC;&#x201C; Telstra shares are listed on the ASX FOR THE Ă RST TIME High-speed broadband is available to the public through Telstraâ&#x20AC;&#x2122;s Cable service, and Big Pond is launched in 1996.

Innovations such AS OPTICAL Ă BRES and other technologies are introduced, culminating in the dawn of the smartphone era in 2007.

In 2007 Telstra launches its Next IPâ&#x201E;˘ network â&#x20AC;&#x201C; the largest fully integrated wireline and wireless national Internet Protocol (IP) network in the world.

JULY 2014 | 17

PROFILE / CARL HINZE

Shanghai stories Dorsey & Whitney partner Carl Hinze has lived in China since 2004 and tells Aidan Devine of his experiences as an Australian lawyer in the middle of the greatest Á NANCIAL BOOM IN WORLD HISTORY By almost every measure, Carl Hinze’s daily commute to the offices of Dorsey & Whitney in Shanghai is fundamentally different from what most Australians would be accustomed to.

“I have to wear a mask,” the corporate lawyer says. “I ride a bike, but you look at the sky and it’s usually grey. Sometimes it’s from the weather, but often it is pollution. I wear the mask to protect myself.”

On the rare days when the smog clears, Hinze gets a view of a city that is nothing short of breathtaking. Dwarfed by the world’s tallest skyscrapers, construction cranes and an army of neon signage, Hinze journeys through a city that is both mystically ancient and brand new.

It’s a commute in which Hinze is also frequently stopped by fellow commuters. In a city with more residents than the whole of Australia, a lot of people are curious about him and aren’t shy about asking him anything and everything.

“People ask where I am from, how much money I earn, how much I pay in rent. The idea of personal space is very different here.”

Hinze admits it is a hard way to begin the daily grind, but considering the massive changes taking place across the country – its coming status as the

18 | JULY 2014

world’s largest economy – he believes the difficulties can be summed up in one simple sentence: “Totally worth it,” he says.

After first visiting and falling in love with the country in 1991, Hinze has been practising in China’s big smoke since 2004 and, after various roles within the Shanghai offices of a range of international firms, he is now partner at Dorsey & Whitney.

Working on mergers and acquisitions, corporate restructuring and regulatory issues, the Southeast Queensland native practises at the epicentre of a mushroom cloud of economic activity that lawyers only get a small glimpse of from Australia.

That explosion has come in three separate waves and Hinze has experienced each in a profound and different way. Fluent in Mandarin, his insights into what has been happening in Shanghai on the legal and commercial fronts are uniquely informed.

“My own career has really reflected what has happened in China. What is interesting about the practice of law up here is that in the early days it was mostly about inbound investment into China.

That evolved into more sophisticated M&A and

AUSTRALASIANLAWYER.COM.AU

”I grew up on a dairy farm in Queensland.

That and living in Shanghai are at fundamentally opposite ends of the spectrum”

JULY 2014 | 19

PROFILE / CARL HINZE

HINZEâ&#x20AC;&#x2122;S CAREER PATH

â&#x20AC;?, Ă RST VISITED &HINA AS A STUDENT IN , HAD ALWAYS BEEN FASCINATED

BY THE CULTURE AND THE LANGUAGE AND WANTED TO LEARN MORE , SOON DECIDED TO INCLUDE &HINESE AS PART OF MY LAW AND ECONOMICS STUDIES â&#x20AC;?, HAD HEARD PEOPLE IN &HINA ALWAYS REFERRING TO THE CONCEPT OF fFACEg AND WHEN , ASKED THEM ABOUT IT THEY TOLD ME IT WASNgT IMPORTANT .NOWING HOW &HINA WORKS , REALISED IT MUST BE EXTREMELY IMPORTANT AND ENDED UP DOING A 3H' ON IT WHICH , Ă NISHED IN â&#x20AC;&#x153;$T THAT POINT , REALISED , SHOULD GIVE BEING A LAWYER A GO , GOT A RETURN TRIP TO &HINA FUNDED THROUGH A POSTGRADUATE PROGRAM IN AND AFTER SIX MONTHS OF FURTHER STUDY IN %EIJING , BEGAN WORK >IN THE PRIVATE SECTOR@ (VENTUALLY , JOINED /INKLATERS IN 6HANGHAI â&#x20AC;?

20 | JULY 2014

corporate as well as regulatory work, but over the last four years, assisting large Chinese companies going overseas has been taking up a bigger part of what we do.â&#x20AC;?

PRACTISING IN CHINA Hinze points out that one of the biggest, and most obvious, differences between practising in Australia and mainland China is that there are restrictions on the legal services foreigners can provide. Foreign lawyers cannot appear in court, are barred from being involved in litigation, and cannot issue formal legal opinions on Chinese law.

This makes informal partnerships with Chinese ďŹ rms something of a necessity for international ďŹ rms operating in the country. Such partnerships allow non-Chinese ďŹ rms to overcome many of the restrictions placed on foreign lawyers, but it entails deep cooperation: projects need to be approached through joint teams.

Not surprisingly, Hinzeâ&#x20AC;&#x2122;s ďŹ rm has done just that by forming a special counsel relationship with a local-run Shanghai ďŹ rm. They share the same building as Dorsey & Whitney and are even on the same ďŹ&#x201A;oor. â&#x20AC;&#x153;You go out the lift and itâ&#x20AC;&#x2122;s left to their ofďŹ ce and right to ours,â&#x20AC;? Hinze says.

CHINESE VS AUSTRALIAN FIRMS Another distinguishing point of practising in China is the difference in the way Chinese and Westernstyle ďŹ rms are structured and operate.

The leading Chinese law ďŹ rms tend to be 20 years old or younger, while the biggest and best foreign law ďŹ rms have often been around for well over a hundred years. This age gap lays the platform for business models that are almost unrecognisable, Hinze says. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;ll ďŹ nd that Chinese law ďŹ rms operate almost as a collection of different teams. Each partner has their own team that generates its own revenue.

Many of these partners wonâ&#x20AC;&#x2122;t know each other. â&#x20AC;&#x153;As the foreign lawyers, weâ&#x20AC;&#x2122;ll often ďŹ nd ourselves introducing partners of the same ďŹ rm. Youâ&#x20AC;&#x2122;ll be introducing a guy in their Fuzhou ofďŹ ce, for example, to his Beijing colleague.â&#x20AC;?

Such a model is an obvious departure from international ďŹ rms that have one partnership across the world in which partners regularly interact with each other. Chinese ďŹ rms are aware of this but most still favour their more fragmented model.

Hinze says he sees many ďŹ rms taking that tendency to operate independently even further.

â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve seen some models where law ďŹ rms are like a grouping of shopping brands,â&#x20AC;? he says.

In this model, the ďŹ rm acts in some ways like a shopping mall in the sense that it is a collection of different â&#x20AC;&#x2DC;shopsâ&#x20AC;&#x2122; that have almost nothing to do with each other. Each team generates its own revenue but pays a portion of it, almost like rent or royalty fees, for the opportunity to operate under a ďŹ rm name that has a national footprint. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s like a franchise in a way, and itâ&#x20AC;&#x2122;s a very common structure,â&#x20AC;? Hinze says.

â&#x20AC;&#x2DC;RED CIRCLEâ&#x20AC;&#x2122; FIRMS Of course, not all Chinese ďŹ rms employ a fragmented model, and the more united industry players are evolving rapidly. Hinze believes they constitute a genuine source of future competition for Magic Circle and other large international ďŹ rms.

Lawyers will be familiar with the footprint of King & Wood Mallesons, formed out of the 2012 merger of Hong Kong-based King & Wood with Australian ďŹ rm Mallesons Stephen Jaques, but mainland ďŹ rms Jun He and Zhong Lun are becoming just as sophisticated.

Hinze practises at the epicentre of a mushroom cloud of economic activity that lawyers only get a small glimpse of from Australia â&#x20AC;&#x153;These ďŹ rms are very curious about how foreign law ďŹ rm partners interact with each other and have hired some well-respected and regarded foreign lawyers to help them restructure their operations and develop more business. There is a major desire among Chinese ďŹ rms to grow like their Magic Circle counterparts.â&#x20AC;?

This desire sets Chinese ďŹ rms apart from the Japanese ďŹ rms of the 1980s, in Hinzeâ&#x20AC;&#x2122;s opinion. â&#x20AC;&#x153;Japanese ďŹ rms didnâ&#x20AC;&#x2122;t really grow with the expansion of Japanese business back then,â&#x20AC;? he says. â&#x20AC;&#x153;They developed their own strengths and entered strategic relationships with international ďŹ rms. â&#x20AC;&#x153;Chinese ďŹ rms arenâ&#x20AC;&#x2122;t keen to do that. They are much more interested in replicating the biggest

AUSTRALASIANLAWYER.COM.AU

British and American firms. These firms are probably aware of that, which would explain a lot of the consolidation we’re seeing among big Western firms.”

LEARNING TO ADAPT The fact that the Chinese legal landscape is evolving, not to mention the irrepressible economic changes sweeping China, gives Hinze reason to believe that he has the privilege of watching history in the making.

“I first started learning the Chinese language and culture in 1988. Back then, no one could comprehend why I wanted to do it. They’d ask, ‘Do you want to become a communist?’ I only studied it because it was interesting to me. From my perspective, it’s almost coincidental that the country is booming. In a way, I feel vindicated by it. It means I have skills that can help Australian businesses.”

Reflecting on his original reasons for learning about China, Hinze says a fascination with all things Chinese could still never have prepared him for the realities of living there – and for almost 10 years at that.

“There are just so many people here. I grew up on a dairy farm in Queensland. That and living in Shanghai are at fundamentally opposite ends of the spectrum. It’s meant I had to learn to adapt and bridge those different experiences. It has been the story of my life.” AL

LARGEST CHINESE LAW FIRMS Firm

Founded

Global fee earners

Headquarters

King & Wood Mallesons

2012*

2,700+

Hong Kong

'ACHENG /AW 2êCES

1992

2,676

Beijing

Beijing Yingke Law Firm

2001

2,220

Beijing

'E+ENG /AW 2êCES

1993

1,106

Beijing

Grandall Law Firm

1998

1,112

Beijing

$LL%RIGHT /AW 2êCES

1999

940

Shanghai

Zhong Lun Law Firm

1993

750+

Beijing

-UN +E /AW 2êCES

1989

480+

Beijing

*Date of merger. Source: Asian Legal Business, American Lawyer

JULY 2014 | 21

COVER FEATURE / IN-HOUSE 10

22 | JULY 2014

AUSTRALASIANLAWYER.COM.AU

Susan Leppinus General counsel, David Jones /EGAL TEAM LAWYERS AND SUPPORT STAé Company revenue: $1.85bn (2013)

Australasian Lawyer presents its annual showcase of the 10 corporate lawyers who epitomise the value in-house counsel brings to corporate Australia, helping their companies achieve a wealth of impressive strategic objectives

Retailer David Jones pulled a massive rabbit from its hat when it announced in April that it was being taken over by South Africa’s Woolworths in a deal reported to be worth $2.15bn.

Not surprisingly, it’s been a busy past 18 months for the David Jones in-house legal team as it has had to come to grips with the massive regulatory minefield that such a transaction entails. David Jones had originally been approached by Myer, but after its board favoured the deal with Woolworths, the path was set for one of the biggest retail takeovers in Australian corporate history.

Spearheading the David Jones legal team has been the tireless Susan Leppinus, who has had to work closely with senior management on the company’s transactional and strategic initiatives. She says making it possible for an eventual takeover by Woolworths South Africa – the South African Reserve Bank approved the acquisition in May – has required some canny juggling skills.

“The recent Myer and subsequent Woolworths proposal has increased the workload in the legal team, so strong project management skills across the team have been essential. The team has also enhanced the use of technology and moved to online compliance training to better utilise legal resources,” she says.

Firms that advised the various parties involved in the acquisition included Gilbert + Tobin, Herbert Smith Freehills, Linklaters and Webber Wentzel.

Outside of the Woolworths transaction, David Jones’ in-house counsel had their hands full with other highprofile work. The team negotiated and documented a retail brand management agreement with Dick Smith and also lay the legal groundwork for new Victoria stores at Malvern and Eastlands.

JULY 2014 | 23

COVER FEATURE / IN-HOUSE 10

VIRGIN TERRITORY

Itâ&#x20AC;&#x2122;s hard to mention Virgin without thinking of the man so deeply entwined with its brand: Sir Richard Branson. In this exclusive interview, the Virgin mastermind reveals some of the secrets to his success Youâ&#x20AC;&#x2122;re famous for your â&#x20AC;&#x2DC;screw it, letâ&#x20AC;&#x2122;s do itâ&#x20AC;&#x2122; approach, which has led to missteps as well as successes. How do you pick yourself SN DPMK KGQR?ICQ i @MRF NCPQML?JJW ?LB Âż L?LAG?JJW RB: Whenever I experience any kind of setbacks, I always pick myself up and try again. I prepare myself to have another stab at things with the knowledge I have gained from the previous failure.

My parents always taught me never to look back in regret but to move on to the next thing. The amount of time people waste on failures rather than putting that energy into another project always amazes me. I have fun heading the Virgin group of businesses, so a setback is never a bad experience, just a learning curve.

Another aspect of business is getting the right people around you. )MU BM WMS Âż LB RFC @CQR R?JCLR DMP WMSP @SQGLCQQCQ i ?LB FMU BM WMS ICCN RFCK GLRCPCQRCB ?LB CLE?ECB RB: We donâ&#x20AC;&#x2122;t really have a general recruiting process at Virgin â&#x20AC;&#x201C; it depends on the type of business and the position we are looking to

24 | JULY 2014

Ă LL +OWEVER AS A RULE WE TEND TO PICK OUT EMPLOYEES WHO ARE inquisitive about the bigger picture, and have a â&#x20AC;&#x2DC;can doâ&#x20AC;&#x2122; attitude, are positive and enthusiastic and, most importantly, have a strong sense of fun! I have found that choosing enthusiastic, talented and positive people has helped to shape a positive character for our businesses.

Virgin and Sir Richard Branson are known the world over. )MU GKNMPR?LR GQ ? QRP?RCEGA ?NNPM?AF RM @P?LBGLE 8F?R ?PC RFC KSQR BMeQ UFCL @SGJBGLE ?LW @P?LB RB: Brands ultimately belong to the consumer. While a business CAN INĂ&#x20AC; UENCE ITS BRAND BY WHAT IT DOES AND HOW IT BEHAVES IT IS what the customer thinks at the end of the day that is the only important thing. With this in mind, I think that it is important to try and identify early on what attitude you would like your brand to convey, and then go about building it!

Brands need to be constantly nurtured, to be kept fresh and be seen. When I was thinking about setting up my own airline, the late

AUSTRALASIANLAWYER.COM.AU

Adam Thatcher General counsel, Virgin Australia Legal team: 14 lawyers Company revenue: $3.9bn (2013) One of the standout qualities of a company like Virgin Australia is that itâ&#x20AC;&#x2122;s never easy to predict what the company might do next. This is a trait exempliďŹ ed by its co-founder Richard Bransonâ&#x20AC;&#x2122;s well-known business motto â&#x20AC;&#x153;Screw it, letâ&#x20AC;&#x2122;s do itâ&#x20AC;? â&#x20AC;&#x201C; a tendency that no doubt requires a particularly sharp legal team. â&#x20AC;&#x153;Team members are encouraged to think outside the box in order to ďŹ nd solutions to commercial issues, and weâ&#x20AC;&#x2122;re very conscious of the dynamic nature of [our] industry and the importance of timeliness,â&#x20AC;? says general counsel Adam Thatcher.

The Virgin Australia legal team supports the domestic and international operations of Virgin Australia by advising on the kinds of matters that typically fall under the responsibilities of in-house law teams, such as acquisitions and disposals, restructures, joint ventures and regulatory compliance.

The work this has entailed, of late, has included high-proďŹ le matters that have required in-house

counsel to ďŹ nd innovative solutions to support the commercial plans of Virgin Australia. It advised on the companyâ&#x20AC;&#x2122;s acquisition of a 60% interest in Tiger Australia and the public takeover of Skywest Airlines (by scheme of arrangement). The team also advised on the implementation of a $350m capital raising, along with the reauthorisation of an alliance with Air New Zealand.

Thatcher says in-house counsel has helped the company effectively navigate these changes through a commitment to teamwork. â&#x20AC;&#x153;The team works well together in a collegial manner, and this creates a productive environment.â&#x20AC;?

â&#x20AC;&#x153;Team members are encouraged to think outside the box to ďŹ nd solutions ... and weâ&#x20AC;&#x2122;re very conscious of the dynamic nature of [our] industry and the importance of timelinessâ&#x20AC;?

Adam Thatcher

Freddie Laker said to me: â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;ll never have the advertising power to outsell British Airways. You are going to have to get out there and use yourself. Make a fool of yourself. Otherwise you wonâ&#x20AC;&#x2122;t surviveâ&#x20AC;?. Iâ&#x20AC;&#x2122;ve been following his advice ever since and used myself to get the Virgin brand in the headlines and become more visible.

Itâ&#x20AC;&#x2122;s all too easy for management to get stuck dealing with the daily workings MD ? @SQGLCQQ )MU GKNMPR?LR GQ GR RM ECR MSR MD RFC Mè AC ?LB BM MRFCP RFGLEQ RB: , DO TRY TO KEEP Ă T k ANYTIME ,gM NEAR A 9IRGIN $CTIVE CLUB , MAKE SURE , GET IN THERE AND WORK OUT , LOVE TENNIS AND KITE SURĂ NG AND PRETTY MUCH DO SOME SORT OF EXERCISE EVERY DAY k WITHOUT MAKING IT TOO RIGID AS THAT JUST DOESNgT WORK FOR ME , ENJOY BEING OUTSIDE AND BEING ACTIVE k KEEPING Ă T AS A RESULT IS ALMOST A BY PRODUCT OF DOING SOMETHING , ENJOY , HAVE ALWAYS BELIEVED THAT , NEEDED TO Ă ND GOOD PEOPLE TO RUN my businesses and to delegate day-to-day management to others. I did this from a very early age and importantly that has allowed me to go and set UP NEW VENTURES SOMETIMES IN A NEW SECTOR OR country.

THIS ARTICLE ORIGINALLY APPEARED IN AUSTRALASIAN LAWYER SISTER PUBLICATION INSURANCE BUSINESS.

JULY 2014 | 25

COVER FEATURE / IN-HOUSE 10

Amanda Laing General counsel, Nine Entertainment Legal team: 10 lawyers Revenue: $2.6bn (2013) It’s been a busy two years for the legal team at Nine Entertainment Company (NEC). In late 2012, the company sold ACP Magazines, the largest magazine publisher in Australia, to German publisher Bauer for approximately $500m. This meant bidding farewell to lawyers in the team who had worked on the publishing business, and restructuring what had already been a well-regarded legal team.

Proof that this restructuring was a success came in early 2013 when the NEC legal team helped the company navigate the entering of a scheme of arrangement that followed a tumultuous period in 2012 in which NEC had to negotiate with its Australian and overseas lenders.

Following this, the legal team supported the business as it expanded into diverse industries over 2013. This saw in-house counsel advise on a staggering number of major transactions. These included NEC’s acquisition of the Perth and Adelaide television stations of WIN and the renewal of major venue agreements by Ticketek.

Such transactions added to the signing of several major touring agreements with international acts and a new rights agreement with Cricket Australia.

Mike Cronin General counsel, Fonterra Legal team: Unknown Revenue: NZ$18bn (2013) Milk, butter, cheese and occasional ice-cream products may not seem like the kinds of business activities that inspire the corporate imagination, until one remembers that in any given year Fonterra is responsible for roughly 30% of the world’s dairy exports and is New Zealand’s largest company.

As one of the elite Kiwi companies with a truly global business, Fonterra has needed a shrewd lawyer to head up its team of in-house counsel, and all evidence suggests that they have one in Mike Cronin. Cronin came to the company from Russell McVeagh after starting his career

26 | JULY 2014

A busy 2013 was rounded off with the legal team’s successful guiding of NEC through its preparation for an IPO in December of that year.

General counsel Amanda Laing says the key to having an effective in-house legal team is positioning the legal department as a fundamental part of the company. “Whether advising on a story for the nightly news bulletin, a business acquisition, or the next One Direction tour, the legal team … are seen as part of the business, not merely a service provider."

at Chapman Tripp. He has since helped the company navigate a range of issues and transactions, solidifying Fonterra’s eminent standing in the global food exports industry.

Cronin’s legal philosophy is rooted in a belief that in-house counsel should be as pragmatic as possible.

“Legal skills are a given,” he says. “What sets us apart is the ability to put a Fonterra strategic context across everything we do … one of our biggest challenges, one we focus on all the time, is to identify and stop things that are not on strategy and [which] Fonterra shouldn’t be focusing on.”

The Fonterra legal team has advised on imperatives that drive the company’s ‘V3 strategy’, a means to enhance volume, value and velocity. This has seen it work on Fonterra’s launch of large-scale farming hubs in China, a new distribution centre in Chile, and a whey protein venture in the Netherlands. In Australia, Fonterra has entered arrangements to become the exclusive own-brand supplier to Woolworths in Victoria and acquired Tamar Valley’s yoghurt business.

AUSTRALASIANLAWYER.COM.AU

Peter Horton General counsel, Woolworths /EGAL TEAM LAWYERS SUPPORT STAĂŠ Revenue: $58.9bn (2013) The list of transactions that Woolworths has been involved in over the last two years reads more like a telephone book than anything else â&#x20AC;&#x201C; the volume has been that extensive â&#x20AC;&#x201C; but thatâ&#x20AC;&#x2122;s almost to be expected from a company of Woolworthsâ&#x20AC;&#x2122; scale and turnover.

Some of the highlights of its recent transactions include the acquisition of the EziBuy online clothing and homewares business and of FAW Building Supplies (in the ACT). Woolworths also divested from Dick Smith Electronics and Woolworths Wholesale India.

The real heavyweight among the companyâ&#x20AC;&#x2122;s transactions, of course, was its creation in late 2012 of Shopping Centres Australasia Property Group â&#x20AC;&#x201C; an ASX-listed property trust â&#x20AC;&#x201C; and demerger of a portfolio of 69 shopping centres valued at $1.4bn. This was the

largest property-related transaction ever undertaken

by Woolworths, and it created what was then the largest real estate investment trust in Australia.

Leading the team responsible for making such transactions possible is a pervasive force in company general counsel Peter Horton. The Woolworths veteran claims that grappling with the companyâ&#x20AC;&#x2122;s many legal challenges would not be possible without some extremely hard-working lawyers on board. â&#x20AC;&#x153;The team enjoy being involved at the coal face of the companyâ&#x20AC;&#x2122;s day-to-day business and transactions,â&#x20AC;?

Horton says. â&#x20AC;&#x153;[The team] proactively works with and seeks to understand the business and its objectives, [collaborating] with the business and externals to provide tailored commercial legal solutions. â&#x20AC;&#x153;When you have all of these things in a team you end up with a virtuous cycle of the business having its needs met and regularly exceeded, which in turn leads to the business seeking a greater involvement from the legal team.â&#x20AC;?

JULY 2014 | 27

COVER FEATURE / IN-HOUSE 10

#CRRW *T?LMç General counsel, GrainCorp Legal team: 5 lawyers Revenue: $4.4bn There’s no ‘I’ in ‘team’, but there is definitely a ‘rain’ in GrainCorp, and it hints at the work of an impressive team of rainmakers in the legal department. The past 18 months has been very much the story of an in-house law team that has opened the way for a diverse range of transactions at ASX 100 agribusiness GrainCorp Limited.

#PCRR ,?SçK?L General counsel, Savills Legal team: (himself) Revenue: $1.6bn (global, 2013) The leadership of in-house law teams at prominent companies typically demands legal veterans – lawyers with decades of sharply honed experience – but in Brett Kauffman property developer Savills has a general

28 | JULY 2014

“We know that the business looks to us to help them make it happen, and that’s our line of vision,” says general counsel Betty Ivanoff.

Ivanoff joined GrainCorp in October 2008 after having worked in various corporate counsel positions at companies such as CSR Limited, Walter Constructions and Sinclair Knight Merz. She says that in managing a diverse legal team a razor-sharp business focus has been indispensable.

“The [GrainCorp] legal team works with the business and not against it, and is dedicated to the delivery of value, service and efficiencies – defined by the business, not by the lawyers,” she says.

GrainCorp has managed multijurisdictional acquisitions and joint ventures as it has looked to expand its focus from its traditional core: the storage, logistics and trade of grain commodities. As a result, the legal team has advised on some complex developments at the company, such as the regulatory landscape in relation to port access arrangements across the East Coast of Australia (as well as the possible deregulation of one port).

The legal team also navigated the GrainCorp board and management through a very public takeover bid by ADM, which was rejected by the Federal Treasurer last November.

counsel who has attained this standing at a young age.

Taking on the Savills legal mantle before his 30th birthday, Kauffman has impressed many in the industry throughout his two years as general counsel by embracing his company’s commitment to fostering an entrepreneurial environment within its ranks.

“The entrepreneurial culture and flat management structure make it a fantastic place to work. It provides for a dynamic and exciting workplace where no two days are ever the same,” Kauffman says.

As one of the world’s largest real estate service providers, Savills has engaged in a wealth of propertyrelated activity over the last 18 months. Kauffman has helped the company achieve compliance with amended privacy laws by paving the way for the implementation of a new privacy policy and creating Savills’ first internal privacy compliance manual.

Kauffman has also made big inroads into reducing the cost of the company’s public liability claims by, together with Savills’ insurer, refining the company’s panel of specialist public liability firms. Liability has also been reduced through the roll-out of more stringent trust accounting procedures, as well as a national training program to all of Savills’ asset management staff.

AUSTRALASIANLAWYER.COM.AU

Annette Spencer General counsel, UBS Australia Legal team: 15+ lawyers Revenue: $27bn (global, 2013) For UBS Australia, 2013 was a big year. The financial services company grabbed top spot in the country’s equity raisings, holding a 32% share of the market between 1 April 2013 and 31 March 2014. It was also number one in block trades over the same period with an even bigger market share of 47%.

The UBS legal team, led by Annette Spencer, has supported the company in its efforts to keep business growing and thriving by providing legal advice in connection with the establishment of the UBS Global Family Office in Australia. The new venture between the company’s investment banking and wealth management divisions has allowed it to better penetrate the family business market, and Spencer says being able to advise on these and other complex structures is a key trait of the UBS legal team.

“One of the team’s strengths in legal risk management is highlighting the relevant regulatory developments and assisting the business to prioritise relevant risks,” Spencer says. “An understanding of the strategic aim of each business request is imperative before being able to provide the applicable legal response. The quantity and scope of regulatory reforms underway mean it is also important that we keep up to date with which law firms are staying ahead and developing further expertise in those reform areas, so that UBS can leverage the best advice in the market.”

Other notable achievements for the UBS legal team were advising on the sale of the company’s Australian bond indices to Bloomberg, as well as on various legal and regulatory reforms that included FOFA, OTC derivatives and privacy policies.

JULY 2014 | 29

COVER FEATURE / IN-HOUSE 10

Paul Meadows General counsel, Wesfarmers Legal team: 40 lawyers, SUPPORT STAé Revenue: $59bn (2012) Conglomerates don’t get much bigger than Wesfarmers.

As Australia’s largest private sector employer and one of its biggest listed companies (representing brands such as Coles, Kmart, Target and many others), Wesfarmers’ business demands some apt legal skills. The corporate solicitors office has the big task of advising on business operations that are as vast as they are diverse. It’s a task that gives the legal office immense authority, but, as old wisdom suggests, great power comes with great responsibility.

Much of that responsibility rests on the shoulders of

Paul Meadows, Wesfarmers general counsel, who says a major challenge for the legal team is that it is relatively small compared to the size of the company.

The team has to provide legal support to operations that cover supermarkets, department stores, home improvement and office supplies; coal mining; insurance; chemicals, energy and fertilisers; and industrial and safety products. As a result, the team has had to pick up a range of competencies.

Significant transactions the Wesfarmers legal team has advised on include: • the December sale of the underwriting operations of Wesfarmers’ insurance division to Insurance Australia Group for $1.8bn • the April sale of the insurance broking and premium funding operations of the insurance division to Arthur J. Gallagher & Co. for $1bn • Wesfarmers Industrial and Safety’s August acquisition of Greencap Ltd for $21m by scheme of arrangement • Wesfarmers’ December sale of its 40% interest in Air Liquide W.A. Pty Ltd, which resulted in a pretax profit of roughly $95m

Brian Salter General counsel, AMP Legal team: 70+ lawyers Revenue: $5.1bn (2013) Brian Salter is as well known a general counsel as you’ll find in the world of finance and wealth management companies. He is a former chairman and national committee member of the Australian Securitisation Forum and, with his 30-odd years of experience in the industry, seems to appear on many of Australia’s major transactions.

Some of these transactions have included his legal team’s advisory on AMP’s merger with the Australian and New Zealand businesses of AXA Asia Pacific Holdings – rumoured to be the largest and most complex financial services transaction to occur in Australia over recent times – as well as AMP Capital’s strategic alliance with Mitsubishi UFI Trust Bank.

Salter’s team has also had to respond swiftly to the FOFA and Stronger Super regulatory reform programs, but this hasn’t slowed it down. It recently advised on AMP’s negotiation and documentation of a funds management joint venture with China Life, along with the oversubscribed issue of listed and subordinated AMP Notes 2.

30 | MARCH 2014

Salter attributes the contribution of the legal team in the successful conclusion of these developments to the office’s ability to attract good lawyers. “We’re also very proud of the supportive and flexible workplace we offer, which means we can attract [talent] to the AMP legal team,” Salter says.

“The team works well because we have highly skilled [lawyers] with deep corporate knowledge and a solid appreciation of the risks, challenges and opportunities for the business and … the ability to translate complex changes that have the potential to impact both our industry and AMP.” AL

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FEATURE / CONSTRUCTION

Breaking ground

7HE ÁRMS BUILDING $USTRALIAgS infrastructure future Australia’s economic fortunes – from the health of the unemployment rate to future productivity – depend heavily on new infrastructure development. But who’s going to build it? Ben Abbott speaks to the TOP TIER LAW ÁRMS MAKING IT HAPPEN

32 | JULY 2014

AUSTRALASIANLAWYER.COM.AU

Lawyers in Australia’s projects space have their shovels out, ready, and poised to dig. Infrastructure is at the top of the Federal Government’s agenda.

In fact, Prime Minister Tony Abbott has said he would like to leave a legacy as an “infrastructure prime minister”.

Federal Treasurer Joe Hockey delivered on this promise in the Budget in May, promising a $50bn infrastructure growth package to stimulate $125bn in spending on infrastructure.

“Over the next six years, the government will help build new roads, rail, ports and airports,” he said. “Our growth package will stimulate the construction sector and create thousands of jobs as the economy transitions from resource-led growth to broader-based growth.”

This is music to the ears of construction lawyers. With the mining boom investment phase now over, top-end practitioners have been looking for the next wave of front-end work.

And it appears they have found it.

“We have noticed a significant upturn in infrastructure and PPP [public private partnership] projects, brought about by state and federal funding,” says Herbert Smith Freehills partner Toby Anderson.

“Our projects team is very busy on current projects, and the pipeline looks very positive.”

Hockey promised that “shovels will start moving within a matter of months’’. Well, lawyers are a step ahead. They have their sleeves rolled up and are working to win the business.

A PROMISING PIPELINE Firms are already seeing more positive results from a public sector-fuelled drive for new infrastructure.

On top of the Federal Government’s announced infrastructure spend, state governments – such as Victoria’s – have prioritised critical infrastructure projects. Victoria’s state budget forecast a huge infrastructure spend of $27bn, including newly crystallised spending of up to $11bn for the Melbourne Rail Link project.

“In recognition of the infrastructure backlog, there has been recent significant growth in the infrastructure sector, with governments at all levels increasing public expenditure on projects,” says Clayton Utz construction partner Sergio Capelli.

Ashurst partner Grant Rowlands agrees. “In terms of government-sponsored infrastructure,

there have certainly been some larger infrastructure projects that have hit the market in the last 12 months.”

Rowlands, who is part of a wider practice acting in NSW for the NSW Department of Transport in relation to its light rail project, and for a bidder on the North West Rail Link, says the sector overall is looking promising for the firm’s lawyers.

“It’d call it an ‘optimistic’ market rather than a ‘buoyant’ market,” he says.

“People are feeling more confident about where the market is and the pipeline of prospective work coming up. While I wouldn’t say that has yet resulted in high levels of work across the country across the practice, it is definitely solid.”

Firms are also looking to sources of work even further ahead. Though a very long time coming, Sydney’s second airport looks at last to be a reality.

Australasian Lawyer can confirm that firms are already targeting roles on this project.

Given the plethora of projects of size available to firms in this sector – which include Sydney’s WestConnex – lawyers see a pipeline that is full of opportunity.

“All these projects suggest the pipeline will be very busy, and it’s encouraging to see that the pipeline looks enduring as well,” Anderson says.

CONTENTIOUS RESOURCES Construction lawyers were buoyed for some years by unprecedented mining boom activity. However, resources-related front-end construction has drastically dropped off.

“We are not necessarily seeing a lot of new mining and resources investment,” says Corrs Chambers Westgarth partner David Warren.

“These projects are now occupying the middle ground; they are moving towards the middle or end of the construction phase, and the middle ground is now becoming quite intense, with more disputes starting to come.”

Ashurst partner Rowlands adds that “there’s certainly been a bit of a downturn in the resourcesfocused infrastructure space”.

Likewise, Anderson says Herbert Smith Freehills has seen less mining and resourcerelated projects along with traditional thermal power plant projects.

“We have seen a general reluctance for developers to commit to large-scale renewable energy projects given the uncertainty surrounding

JULY 2014 | 33

FEATURE / CONSTRUCTION

the Renewable Energy Target scheme,â&#x20AC;? Anderson explains. â&#x20AC;&#x153;Despite this, there are a number of projects which are still been progressed, including projects supported by existing government programs.â&#x20AC;?

This translates to a more contentious landscape.

Anderson says Herbert Smith Freehillsâ&#x20AC;&#x2122; contentious construction specialist Hamish Macpherson is advising on two disputes related to LNG projects, and a dispute regarding Fortescueâ&#x20AC;&#x2122;s Pilbara rail mainline duplication. â&#x20AC;&#x153;The back-end disputes practice is busy,â&#x20AC;?

Anderson says. â&#x20AC;&#x153;It tends to follow a cycle; you will have a large amount of investment in LNG and in areas like the Pilbara, for example, and then the front-end aspects will drop off; then there is a lag, and disputes start to come through.â&#x20AC;?

3 TRENDS CHANGING INFRASTRUCTURE DELIVERY 1. PPP popularity: Public private partnerships (PPP) are back in vogue in Australia. â&#x20AC;&#x153;There has been renewed MARKET CONĂ DENCE IN PUBLIC PRIVATE PARTNERSHIPS FROM BOTH public and private sectors as a delivery method to increase THE DEVELOPMENT OF VITAL INFRASTRUCTURE THROUGHOUT $USTRALIA i SAYS &LAYTON 8TZ PARTNER 6ERGIO &APELLI 7HE Ă RM recently advised the Linking Melbourne Authority on Stage 1 OF THE (AST :EST /INK DELIVERED VIA AN AVAILABILITY 333 THAT retained the demand risk on toll revenue.

2. International bidders: International bidding consortia have been encouraged on large-scale projects, including CONTRACTORS OUT OF (UROPE AND 1ORTH $SIAN COUNTRIES SUCH AS 6PAIN ,TALY -APAN AND 6OUTH .OREA 7HE (AST :EST /INK Stage 1 involved two heavily Australian consortia, one (UROPEAN HEAVY BID WHICH INCLUDED SOME $SIAN MONEY and a non-shortlisted Italian-led consortium. â&#x20AC;&#x153;Those sorts OF ORGANISATIONS ARE GETTING ACTIVE IN THE $USTRALIAN market,â&#x20AC;? says Ashurstâ&#x20AC;&#x2122;s Grant Rowlands, who expects Ă RMS WITH INTERNATIONAL NETWORKS TO BENEĂ T 3. Super funds: 6UPERANNUATION FUNDS MAY GET MORE INVOLVED IN THE DELIVERY OF INFRASTRUCTURE PROJECTS IN THE NEAR FUTURE WHILE PRESERVING THEIR ESSENTIAL MISSION OF delivering returns to their members. â&#x20AC;&#x153;There is some CONSIDERATION OF THE STRUCTURES THAT WILL ALLOW THEM TO GET MORE INVOLVED IN GREENĂ ELD DEVELOPMENT OF INFRASTRUCTURE AS OPPOSED TO JUST THE RECYCLING OF EXISTING ASSETS i Rowlands says.

34 | JULY 2014

TRENDS IN DELIVERY Law ďŹ rms advising at both the front and back end of Australiaâ&#x20AC;&#x2122;s largest projects are not standing still when it comes to legal service delivery. In fact, they are adapting.

While by no means novel, ďŹ rms continue to be proactive about noting their ability to appoint the best talent on a particular project, regardless of where they may be based. â&#x20AC;&#x153;We have people regularly moving ofďŹ ces or working on matters outside their home jurisdictions,â&#x20AC;? says Rowlands. â&#x20AC;&#x153;This means we are able to resource large-scale projects in ofďŹ ces where we may not necessarily have the expert on the ground; we manage to bring in the expertise and resources to bear wherever it is needed,â&#x20AC;? he says.

An example is advice that Ashurst gave on the recently closed Next Generation Rollingstock deal â&#x20AC;&#x201C; the largest rolling stock deal PPP in Australia â&#x20AC;&#x201C; completed by a combination of Brisbane and Sydney lawyers, including the renowned rail expert Lee McDonald in Sydney.

Part of the reason for a national approach is the sheer scale of the projects in question. â&#x20AC;&#x153;More often than not a very large-scale project involves client groups scattered around the country, and often advisers on the project are scattered around as well. This means the home ofďŹ ce of a particular individual has become less important,â&#x20AC;? Rowlands says.

Firms are also providing an ever more seamless transition between the front and back end. Corrs Chambers Westgarth, for one, has developed a

dedicated subgroup in its construction practice that services the â&#x20AC;&#x2DC;middle groundâ&#x20AC;&#x2122;, providing what is called â&#x20AC;&#x2DC;project counselâ&#x20AC;&#x2122; advice overseas. â&#x20AC;&#x153;We are building expertise in the middle ground,â&#x20AC;? says David Warren.

With the size and complexity of some construction deals â&#x20AC;&#x201C; such as Corrsâ&#x20AC;&#x2122; advice to QGC on the $20bn-plus Queensland Curtis LNG project â&#x20AC;&#x201C; new approaches are needed. â&#x20AC;&#x153;The total cost and complexity is so signiďŹ cant that we have put people into the organisation to help with the middle ground, including contract administration,â&#x20AC;? Warren says.

Herbert Smith Freehillsâ&#x20AC;&#x2122; Toby Anderson says there is always a question in cradle-to-grave construction advice of when a matter will tip over into the hands of a construction litigator. â&#x20AC;&#x153;What we see is that project lawyers are involved in setting up the project, and will remain engaged on that project through its life cycle, handling the middle ground as well,â&#x20AC;? he says. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;ll be spotting issues as they arise, and assisting in the administration of that contract.

Itâ&#x20AC;&#x2122;s just a question of at what moment does it tip over to a full dispute, and then it would involve specialist construction litigators from that point.â&#x20AC;?

When disputes do arise, lawyers say clients are more conďŹ dent in arbitration, and are calling on lawyers to manage and resolve conďŹ&#x201A;icts with greater velocity than previously. â&#x20AC;&#x153;They are happening during the life cycle of the project,â&#x20AC;? says Corrsâ&#x20AC;&#x2122; Ben Davidson. â&#x20AC;&#x153;There is a lot of focus on ensuring disputes donâ&#x20AC;&#x2122;t interfere with the day-to-day workings of a project. Clients are trying to deal with whatever situation is prevailing at the time, and the goal is to get a certain result without it interfering with the rest of the project.â&#x20AC;?

This can involve stop-clock or bespoke arbitrations designed to achieve quick outcomes, with increasingly utilised Dispute Resolution Boards (DRBs) being engaged early in the process. â&#x20AC;&#x153;People were somewhat frightened of that a few years ago, largely because of the speed,â&#x20AC;?

Davidson says. â&#x20AC;&#x153;Now clients have been conditioned to move away from big, long disputes, and DRBs are more widely accepted. They are running all over the place really successfully.â&#x20AC;? AL

EXPORTING EXPERTISE 7OP END Ă RMS ARE INCREASINGLY EXPORTING THEIR INFRASTRUCTURE AND PROJECTS EXPERTISE TO $SIAN OĂŞCE NETWORKS WHEN REQUIRED IN ADDITION TO LEADING ON $USTRALIAN INFRASTRUCTURE DEALS +ERBERT 6MITH )REEHILLS FOR EXAMPLE ONLY RECENTLY MADE UP PROJECTS LAWYER 0ATTHEW 2SBORNE IN 0ELBOURNE +OWEVER HE RELOCATED TO THE FIRMgS 6INGAPORE OFFICE IN -UNE TO TAKE ADVANTAGE OF WHAT THE FIRM SAYS IS A POSITIVE PIPELINE OF PROJECTS IN $SIA 2SBORNE IS ONE EXAMPLE OF A LOCAL LAWYER WHO HAS BEEN INVOLVED IN A SLEW OF REGIONAL WORK INCLUDING ADVISING THE %RUNEI (CONOMIC 'EVELOPMENT %OARD IN RELATION TO THE DEVELOPMENT OF PETROCHEMICAL POWER DESAL WATER AND STEAM GENERATION FACILITIES IN %RUNEI /IKEWISE THE Ă RMgS PROJECT Ă NANCE PARTNER )ERGUS 6MITH k ALSO RECENTLY PROMOTED HAS ALREADY MOVED TO +ONG .ONG WHERE HE WILL FOCUS ON Ă NANCING OF ENERGY AND RESOURCES AND INFRASTRUCTURE PROJECTS +ERBERT 6MITH )REEHILLS PARTNER 7OBY $NDERSON SAYS THIS APPROACH YIELDS DIVIDENDS FOR THE Ă RM h7HIS IS ONLY REGARDED AS A POSITIVE FROM OUR PERSPECTIVE i HE EXPLAINS h,TgS SECURING TWO MAIN GOALS IT ALLOWS US TO NURTURE TALENT AND GIVE CANDIDATES MORE OPPORTUNITY IN TERMS OF WHERE THEY CAN GO AND OPERATE AS A PARTNER AND THE SECOND IS ALLOWING US TO RESPOND TO A HEALTHY PIPELINE OF PROJECTS IN $SIA WITH WORLD LEADING PROJECTS EXPERIENCE i 1ORTON 5OSE )ULBRIGHT IS TAKING A SIMILAR APPROACH ,T RECENTLY PUT IN PLACE A CROSS BORDER TEAM TO ADVISE THE ,NDONESIAN GOVERNMENT OWNED ,NDONESIA 3ORTS &ORPORATION ON ONE OF THE NATIONgS LARGEST INFRASTRUCTURE PROJECTS THE .ALIBARU 3ORT 3ROJECT 1ORTON 5OSE )ULBRIGHTgS $USTRALIA BASED 5OSS 5AMSAY WAS INVOLVED IN THE DEAL h,NDONESIA IS A KEY AREA FOR OUR Ă RM i 5AMSAY SAYS h,TS POPULATION IS LARGER THAN THE REST OF 6OUTHEAST $SIA COMBINED AND ITgS THE FOURTH MOST POPULOUS COUNTRY IN THE WORLD ,T ALSO HAS GOOD ECONOMIC GROWTH AND A CRITICAL NEED FOR NEW INFRASTRUCTURE i

Matthew Osborne (Projects & construction) 5ELOCATED TO 6INGAPORE FROM 0ELBOURNE AFTER RECENTLY ACHIEVING PARTNERSHIP

Fergus Smith 3ROJECTS Ă NANCE

$ NEW PARTNER WHO HAS ALREADY RELOCATED FROM %RISBANE TO +ONG .ONG

Ross Ramsay NORTON 5OSE )ULBRIGHT

JULY 2014 | 35

LEADERSHIP PROFILE / ADRIAN TEMBEL

Here to win: Thomson Geer Thomson Geer has burst onto the legal scene following one of 2014’s biggest mergers. Chief executive partner Adrian Tembel tells Aidan Devine WHAT THE Á RM PLANS TO DO NEXT Number 19 Gouger Street, a boxy mediumdensity office block along one of Adelaide’s popular restaurant strips, is not the kind of place a passerby would usually notice, and that’s its tragedy.

The building is modern but from the outside unremarkable. Its tinted glass facade, punctuated by occasional touches of white, blends with countless other buildings across the city that are just like it.

On the seventh level – one could almost imagine by accident – is Thomson Geer.

The firm, created this year through a merger between Thomson Lawyers and Herbert Geer, is not usually found in such modest settings. By contrast, its Melbourne offices are in one of that city’s tallest skyscrapers. The Sydney office is equally extravagant. In Brisbane, the firm tops a majestic amber-trimmed tower beside the Brisbane River.

Despite the Adelaide office’s more humble location, in some ways it represents the firm’s beating heart. It is Thomson Geer’s oldest office and is also where chief executive partner Adrian Tembel first cut his teeth as a corporate lawyer, joining an earlier incarnation of Thomson Lawyers in 1992.

“When I first started in practice, Adelaide was less relevant to the country

36 | JULY 2014

than it is today,” Tembel says. “I came to the firm as a graduate and developed my skills in a highly competitive and difficult market for legal services. That sort of hungry and industrious nature was bred in.”

True to its leader’s words, that unflagging nature, exemplified at 19 Gouger Street, is perhaps a closer reflection of the firm than its more glitzy offices elsewhere.

Thomson Geer has become known as a firm that, without pomp and ceremony, has committed itself to building client relationships, putting its head down and getting results.

“We’ve built a strong portfolio of marketleading services,” says Tembel. “We have strengths in some key industries and our goal has always been to keep building on them nationally.”

Following Thomson Geer’s creation from the Thomson Lawyers and Herbert Geer merger, the firm now has 80 partners and more than 250 lawyers under its wing.

This has put it within the top 10 biggest independent law firms in Australia, but the impression Tembel gives is that the firm is making minimal fuss of the significance of the move.

“From my point of view, my mind is firmly on the future,” he says. “The merger has given us bigger scale and with bigger

scale there is more capital freed up to invest. Our ability to move on opportunities has never been greater.”

EXPANDING THE MACHINE Despite Tembel’s unwavering eye towards the next opportunity, the merger signalled an anniversary of sorts for him, marking almost five years to the day that he first took up management of what was then Thomson Lawyers. Charged with reengineering the firm, the merger is perhaps a culmination of that directive, putting the firm on to a competitive footing now rivalling few in the industry.

Bigger and more resourced, the firm is looking to continue the re-engineering process by expanding further. It is now considering a move into the only major market where it lacks a fully-fledged office: Perth.

“We do aspire to be there, but we will only do that if we can add value to a local group of legal experts that is compatible.”

Labelling Perth as a medium-term aspiration, Tembel says expanding into the city is not about operating there simply for the bragging rights associated with being in every major capital city. He sees a Perth office as key to providing clients with a full perspective of the Australian economy.

AUSTRALASIANLAWYER.COM.AU

“I think clients are more sensitive to commercial conflicts than ever before. If you want to serve them properly and loyally, acting for their rivals doesn’t work in our view”

JULY 2014 | 37

LEADERSHIP PROFILE / ADRIAN TEMBEL

FACT FILE: THOMSON GEER Â&#x201E; 4R?ç 80 partners, 250+ lawyers Â&#x201E; 0èACQ Melbourne, Sydney, Brisbane, Adelaide Â&#x201E; &QRGK?RCB PCTCLSC $120m Â&#x201E; -?PECQR NP?ARGAC ?PC?Q Corporate, disputes, insurance, intellectual property, real estate

â&#x20AC;&#x153;If you want to present a truly leading Australian law ďŹ rm youâ&#x20AC;&#x2122;ve got to have a deep understanding of the most dynamic subeconomy in the country. And thatâ&#x20AC;&#x2122;s WA.â&#x20AC;?

THE IMPENDING STOP SIGN Plans to possibly expand into Perth may give the impression of a ďŹ rm thatâ&#x20AC;&#x2122;s hungry for rapid expansion, but Tembel explains that Thomson Geer is very clear on what it sees as the limits to its growth. The current plan is to not exceed 100 partners unless there is signiďŹ cant growth in the Australian economy. If such growth does occur, the ďŹ rmâ&#x20AC;&#x2122;s strategy is for expansion to mirror the rate of economic growth: if the Australian economy grows by 4% in a year, a 100-partner strong Thomson Geer will grow by four partners in a year. â&#x20AC;&#x153;We think anything north of a hundred in the current Australian economy is just too big and could bring about conďŹ&#x201A;icts. That means in real terms we would like to grow another 10â&#x20AC;&#x201C;15%.â&#x20AC;?

Tembel motivates such a strategy by taking a client focus. â&#x20AC;&#x153;I think clients are more sensitive to commercial conďŹ&#x201A;icts than ever before. If you want to serve them properly and loyally, acting for their rivals doesnâ&#x20AC;&#x2122;t work, in our view. We have no appetitive for pursuing [new] clients that might be in conďŹ&#x201A;ict commercially with our existing client base.â&#x20AC;?

HITTING TARGETS Thomson Geerâ&#x20AC;&#x2122;s position on future expansion is made all the more remarkable considering the level Thomson Lawyers was operating at when Tembel ďŹ rst took the reins as chief executive partner.

Tembel joined the ďŹ rm straight out of law school in the early 1990s and made partner in 1997. He became head of the ďŹ rmâ&#x20AC;&#x2122;s corporate practice in 2005, eventually taking leadership of the ďŹ rm in 2009. At the time, Thomson Lawyers had less of a national footprint and had just four ASX 200 clients. Today that number is 12, and having expanded into new cities the ďŹ rm is in a position of having trebled its (2009) revenue and average proďŹ t per partner, according to Tembel. â&#x20AC;&#x153;I took the role [of chief executive partner] with a mandate to drive a nationalisation of the business and position ourselves as one of the leading independent ďŹ rms in the country. Weâ&#x20AC;&#x2122;ve achieved enormous progress against that goal.â&#x20AC;?

With his current managerial term running to 2018, Tembel says he feels as fresh and motivated as he was on his ďŹ rst day in the position and has no desire to step down anytime soon. â&#x20AC;&#x153;I donâ&#x20AC;&#x2122;t believe you should limit these things by time. You do them while you are still adding value to the ďŹ rm â&#x20AC;Ś I always wanted two to three careers in my life. I view this role as a second career. I donâ&#x20AC;&#x2122;t believe in looking back. You always look ahead.â&#x20AC;? AL

TEMBEL TALKS ON...

7HE BIGGEST CHALLENGE FOR Ă RMS

â&#x20AC;?The market we operate in has become transparent, contestable and therefore highly COMPETITIVE 7HE SUN IS SHINING IN AND Ă RMS HAVE TO DEAL WITH THE GLARE ,F THEY Ă ND IT DIĂŞCULT TO COMPETE ON MERIT AND SOMETIMES price, they will struggle. â&#x20AC;?&OMPLAINTS FROM VARIOUS Ă RMS THAT IT is a tough market is as much about their struggle to adjust to operating in the kind of competitive marketplace that service providers in many other industries have been dealing with for a lot longer. â&#x20AC;?On the positive side, commercial lawyers have never had it so good. They live in a Western world that is risk averse. No one tolerates risk, and markets are highly regulated. The need for legal brain power to help business stay low risk through a legal MINEĂ ELD MEANS FOR REAL BRAINPOWER THE industry is a great place to be.â&#x20AC;?

38 | JULY 2014

1ON LAWYERS LEADING LAW Ă RMS â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ll see more of it. Lawyers are often not well equipped and trained to think like, for example, a computer salesman. These PROFESSIONALS Ă GHT EVERY DAY TO WIN BUSINESS They never have a sense of entitlement.

They work hard and compete on sales skill.

7HE Ă RM THAT CAN ADAPT TO BE MORE LIKE THAT computer salesman and less like a university intellectual is going to clean up. â&#x20AC;?7HE JOB OF ANY LAW Ă RM LEADER IN $USTRALIA NOW IS TO TRANSITION THEIR Ă RM TO THAT competitive footing.â&#x20AC;?

,NTERNATIONAL Ă RMS EXPANDING into Australia

â&#x20AC;?Australian partners who have joined mature INTERNATIONAL Ă RMS WILL QUICKLY BE ABLE TO DELIVER BENEĂ TS FOR THEIR CLIENTS SO THESE Ă RMS ARE A GENUINE THREAT TO ANY TIER ONE $USTRALIAN Ă RM >&ONVERSELY@ THE INTERNATIONAL Ă RMS THAT ARE A PRODUCT OF FOUR OR Ă VE MERGERS IN THE LAST Ă VE YEARS ACROSS DIĂŠERENT BORDERS , THINK WILL TAKE A LONG TIME to optimise. They may well achieve their objectives, but it might not be for a decade.

I believe many are still immature businesses Ă NDING THEIR WAY â&#x20AC;?If I was in my late forties, I wouldnâ&#x20AC;&#x2122;t be racing ahead to be part of that optimisation >PROCESS@ /IFE IS TOO SHORT â&#x20AC;?

OPINION

The billable hour: a cure or disease?

Most businesses look to customer FEEDBACK TO ENSURE THEIR OéERING REMAINS relevant. Trish Hyde asks: shouldn’t lawyers do the same?

Trish Hyde Hyde is the current CEO of the Australian Corporate Lawyers Association and has over 15 years of corporate leadership experience

If the billable hour is the cure, what’s the disease?

According to An Investigation of the Billable Hour, a recent article by LexisNexis, the billable hour is destructive, setting unreasonable and unachievable targets.

Equally damning is Christine Parker and David Ruschena’s paper titled The Pressures of Billable Hours: Lessons from a Survey of Billing Practices Inside Law Firms. The paper concludes that regardless of whether you are working with the billable hour (which can reward inefficiencies), or fixed fees (which can reward minimal effort), there is an inherent conflict of interest in the billing of clients.

The paper continues that billable hours, along with competitive cultures and beliefs about how lawyers achieve advancement, are more likely to push lawyers towards unethical behaviours than alternative billing methods and a culture focused on other forms of merit.

A further 2012 article by the Pittsburgh PostGazette estimated that firms required lawyers to do a minimum of 1,700–2,000 billable hours per annum, and this pressure could lead to the padding of hours.

The billable hour is not the answer for healthy, sustainable law firms.

In the course of preparing this column, I found an extensive commentary on achieving billable-hour targets; however, it made no mention of delivering value to the client. So is the billable hour good for in-house counsel?

Most commercial businesses look to customer research, feedback or insights to ensure their offering remains relevant. Those that don’t are not considering the environmental changes happening around them.

The facts are as follows: 1. In-house counsel are decision-makers within the business, accountable to the organisation, and assigning workflow based on value and effort.

2. In-house counsel are employing more options for managing workflow: insourcing; upskilling; project management; and outsourcing to the provider that represents best value – top-tier firms, mid-tier firms, boutique firms, direct briefing of barristers, legal process outsourcing, and contract labour firms.

3. In-house counsel are not content with the current situation. ACLA research shows that legal functions rate their main law firm (the one they wish to deal with most) as lacking in key aspects of the relationship: y 22% disagree that their main firm provides commercially applicable advice y 38% disagree that their main firm is up front and transparent about pricing, and 43% disagree that their main firm provides realistic quotes y 54% disagree that their main firm provides advice at a reasonable price y 89% disagree that their main firm offers alternative billing methods that work The research signals an important issue: current usage does not translate to fixed loyalty. Equally, a price-based business model must continually seek to undercut others. Therefore, a differentiation model based on the tangible and intangible value created (and exceeding the price paid) is a good starting point for a sustainable law firm model.

The billable hour is the disease. A cure is needed. ACLA is about to commence work on its next research report on the subject and we look forward to sharing the profession’s progress. AL

JULY 2014 | 39

NEW ZEALAND SPECIAL REPORT 2014

New Zealandâ&#x20AC;&#x2122;s changing horizon $ RESURGENT ECONOMY HAS LIT A Ă RE UNDER 1EW =EALANDgS LEGAL COMMUNITY PARTICULARLY IN THE AREAS OF 0 $ AND (&0 BUT AS Ă RMS CELEBRATE A RETURN TO GROWTH AND PROSPERITY FRESH CHALLENGES are emerging. Sarah Megginson REPORTS

40 | JULY 2014

AUSTRALASIANLAWYER.COM.AU

*R @CE?L ?PMSLB KMLRFQ ?EM HSQR NPGMP RM Christmas 2012, with a shift so subtle that many almost missed it. Amidst a steady stream of insolvency and litigation work, signs of improving economic activity โ from a law ๏ฌ rmโ s perspective, at least โ began to ๏ฌ lter through. โ There has undoubtedly been signi๏ฌ cant growth with an obvious uplift for us, particularly in the corporate area and ECM. Weโ ve de๏ฌ nitely seen the economy pick up,โ con๏ฌ rms Andrew Poole, managing partner at Chapman Tripp.

Early on, โ it felt like aspiration, instead of realityโ driving the increase in business and consumer con๏ฌ dence, he admits, โ but itโ s feeling more genuine nowโ .

Russell McVeagh chief executive Gary McDiarmid points out that there has been a lot of talk about NZโ s โ rock starโ economy, but that it โ might well be a little overstated, in particular when considering demand for legal servicesโ . โ Local and international market research reveals that, in real terms, the volume of legal services is around the levels achieved in 2006.

That was immediately before the peak of the boom, so itโ s pretty much what you would expect,โ he says.

A huge driver of activity has been the governmentโ s partial sell-down program, involving Air New Zealand, Mighty River Power, Meridian Energy and Genesis Energy. โ The big thing that got the capital markets going was the sell-down program; we played key roles in all four of those,โ Poole says.

SNAPSHOT: THE NZ LEGAL MARKET IN 2014 AND BEYOND h3EOPLE HAVE MORE CONร DENCE AND THEYgRE >PUTTING@ PROJECTS BACK ON THE TABLE SO WEgRE SEEING A LOT MORE TRANSACTIONAL ACTIVITY OR THE PREPARATION FOR ACTIVITY AT LEAST WITH THE CHANGES PLANNED IN $UCKLAND AND THE REBUILD OF &HRISTCHURCH THERE ARE SOME REAL OPPORTUNITIES FOR CLIENTS IN TERMS OF BIG INFRASTRUCTURE PROJECTS i โ Peter Chemis, national chair, Buddle Findlay h7HERE IS GROWING DEMAND FOR SPECIALIST LEGAL ADVICE IN THE ร NANCIAL SERVICES SPACE PARTICULARLY AROUND DEALING WITH INCREASED REGULATION AND THIS IS LIKELY TO CONTINUE ,NWARD INVESTMENT INTO 1EW =EALAND FROM &HINA ALSO CONTINUES TO BE A STRONG DRIVER OF GROWTH AND ITgS BECOMING MORE IMPORTANT FOR LAWYERS TO HAVE THE RIGHT LEGAL AND CULTURAL SKILLS TO DEAL WITH THE &HINESE STYLE OF WORKING i i ,CTGL +?รง C AF?GPK?L 4GKNQML (PGCPQML h,N RECENT YEARS WEgVE BEEN VERY BUSY WITH CAPITAL MARKETS ,32S AND THE SELL DOWNS OF THE ENERGY SECTOR *OING FORWARD WEgVE GOT LARGE CLIENTS WHO ARE LOOKING TO BANKS FOR FACILITIES k THEYgVE GOT THE GUN LOADED BUT MANY OF THEM HAVENgT USED THOSE FACILITIES YET :EgRE ALSO SEEING EXPANSION IN LITIGATION AND REGULATORY ,7 PROJECTS AND RESOURCE MANAGEMENT WORK i i (?PW .A%G?PKGB AFGCD CVCASRGTC 3SQQCJJ .A7C?EF h3ROJECTS WORK HAS BEEN VERY STRONG k WEgVE BEEN INVOLVED IN PROJECTS IN PRISONS SCHOOLS AND >MAJOR ROADS@ :E EXPECT TO SEE INCREASING LEVELS OF TRANSACTIONAL ACTIVITY 7HE ONE AREA WEgRE NOT SEEING A LOT OF NEW WORK IN IS BANK LENDING BUT THAT WILL FOLLOW INCREASED LEVELS OF 0 $ ACTIVITY i i 3MECP 1?PRPGBEC AF?GPK?L #CJJ (SJJW h7HERE WILL DEร NITELY BE AN ELEMENT OF fMORE OF THE SAMEg 7HE CORPORATE TRAIN HAS LEFT THE STATION BUT IF THE OUTCOME OF THE ELECTION IN 6EPTEMBER IS LESS BUSINESS FRIENDLY WHICH IS QUITE POSSIBLE IT COULD EXPLAIN WHY WEgVE GOT SUCH A RUSH ON CORPORATE WORK NOW :EgRE LOOKING FORWARD TO A GOOD ร OW OF INFRASTRUCTURE WORK ร NANCIAL SERVICES REGULATION WORK AND THE &HRISTCHURCH REBUILD WHICH IS REALLY GETTING UNDERWAY NOW i i "LBPCU 1MMJC K?L?EGLE N?PRLCP $F?NK?L 5PGNN h)OREIGN DIRECT INVESTMENT IN 1EW =EALAND k IN DAIRY ร SHING FORESTRY AND AQUACULTURE k IS GOING TO PRODUCE 0 $ ACTIVITY SO LAWYERS EXPERIENCED IN 0 $ WILL BE IN DEMAND )URTHERMORE THE INTERNATIONAL ร RMS MAY WELL BE EYEING 1EW =EALAND DUE TO ITS RECOGNISED fROCK STARg ECONOMY AND BECAUSE MULTINATIONAL CLIENTS NEED THEIR ADVISERS TO BE ON THE GROUND WHERE THEY ARE i i .?PRGL 8GQCK?L AF?GPK?L %-" 1FGJJGNQ 'MV

JULY 2014 | 41

NEW ZEALAND SPECIAL REPORT 2014

3 NEW ZEALAND TRENDS HERE TO STAY Growth of in-house counsel: â&#x20AC;&#x153;This trend continues. Lawyers working in private practice now have more options available to them and are able to transfer across to in-house roles with a comparable salary,â&#x20AC;? says Peter Chemis, national chair, Buddle Findlay.

1.

Client consolidation: â&#x20AC;&#x153;The legal market is still very competitive and, in quantum, has NOT GROWN A LOT OVER THE PAST Ă VE YEARS i EXPLAINS .EVIN -AĂŠ E CHAIRMAN 6IMPSON *RIERSON h<OU HAVE TO Ă GHT HARD FOR MARKET SHARE AND THE trend of clients consolidating their work around the TOP LAW Ă RMS CONTINUES i

2.

Results before reputation: â&#x20AC;&#x153;Clients are prepared to look more objectively at the value theyâ&#x20AC;&#x2122;re receiving from their lawyers,â&#x20AC;? says Andrew Darwin, DLA Piper COO and managing partner Australia. â&#x20AC;&#x153;Personal relationships continue to be very important, and if a trusted adviser in one jurisdiction is able to procure advice across many others, that is a compelling proposition. Itâ&#x20AC;&#x2122;s where we and DLA Phillips )OX IN 1= ARE Ă NDING A SWEET SPOT i

3.

42 | JULY 2014

â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s still some fragility in the economy.

No one is suggesting weâ&#x20AC;&#x2122;ve gone back to the preGFC days. But weâ&#x20AC;&#x2122;re seeing a lot of growth. In Christchurch, weâ&#x20AC;&#x2122;re winning major projects in terms of the rebuild, and that ďŹ&#x201A;ows through to Wellington, where thereâ&#x20AC;&#x2122;s a growing amount of earthquake strengthening work, due to what theyâ&#x20AC;&#x2122;ve seen happen in Christchurch. Auckland is also starting to see cranes on the horizon again.â&#x20AC;?

Bell Gully chairman Roger Partridge conďŹ rms that his ďŹ rm, too, has seen growth across all practice areas. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a nice thing to be able to say after an extended period where the market bounced along the bottom,â&#x20AC;? Partridge says.

He adds that the pick-up in activity appears sustainable. The NZ economy is strengthening, a trend that looks set to continue, while litigation has remained a feature of the post-GFC legal environment, aided by active regulators.

REGULATORY REFORMS Indeed, government regulators have become a major generator of work for ďŹ rms throughout the country, particularly in banking and ďŹ nance.

Right through the recession, this has continued, McDiarmid says, particularly with the Commerce Commission-related work on pricing.

NEW ZEALAND SPECIAL REPORT 2014

MAORI ECONOMY TO SPUR OPPORTUNITIES While the New Zealand and Australian economies are inextricably linked, there are certain opportunities exclusive to NZ that law Ă RMS SHOULD BE COURTING â&#x20AC;&#x153;One part of the NZ economy that is quite UNIQUE IS THE 0AORI ECONOMY 3AST SETTLEMENTS PAID BY THE &ROWN FOR PAST GRIEVANCES ARE SUBSTANTIAL AND THE PROCESS IS FAR FROM OVER Most recently, the Maori asset base was ESTIMATED AT BN WITH SETTLEMENTS FORMING A relatively small part of that, so itâ&#x20AC;&#x2122;s part of the ECONOMY THAT Ă RMS OUGHT NOT TO BE IGNORING i SAYS 3OOLE h:E HAVE A DEDICATED LEGAL TEAM 7E :AKA 7URE WHO UNDERSTAND THE CULTURE AND THE INVESTMENTS THAT TRIBES WANT TO MAKE ,TgS QUITE AN EXCITING PART OF THE 1= ECONOMY AND ITgS GOING TO DRIVE A LOT OF INVESTMENT AND ACTIVITY SO THATgS WHERE WEgLL BE FOCUSED i

44 | JULY 2014

â&#x20AC;&#x153;There is a lot of uncertainty and potential in this area; for example, a change in government [at the September national election] could see a change in the electricity market.â&#x20AC;?

Another example of regulatory reform can be found in health and safety, following a number of national tragedies, including the Pike River mine disaster in 2010, the Christchurch earthquakes and several forestry industry fatalities. â&#x20AC;&#x153;This has led to some massive reforms, which is a good thing and is opening the eyes of a lot of clients,â&#x20AC;? McDiarmid adds. â&#x20AC;&#x153;Health and safety is an area occupying a lot of lawyer time.â&#x20AC;?

THE NEW LEGAL LANDSCAPE While there are plenty of reasons to celebrate, there are also features of the new legal landscape that present challenges, and these pressures are here to stay, says Martin Wiseman, chairman of DLA Phillips Fox. â&#x20AC;&#x153;The legal market in New Zealand is under billing pressure and is being reshaped,â&#x20AC;? Wiseman

AUSTRALASIANLAWYER.COM.AU

explains. “First is the commoditisation of areas of law that once were significantly more remunerative – such as banking and finance work – which has been largely driven by technology. What was once solely the IP of self-styled elite firms is now available to all firms.”

On any given day, throughout the world, precedents and template documents related to various transactions and matters are routinely emailed between firms. As a result, clients can now complete many transactions, registrations and enquiries independently and directly, without the need for legal involvement.

Pressure in New Zealand has also come from another influencing factor in commoditisation: the rapid rise of senior, experienced and large in-house legal teams. Mirroring what is happening in Australia, clients are taking increasing amounts of legal work in-house.

They’re also incentivising in-house lawyers to reduce external spend.

Wiseman says the trend has changed the way external firms are used.

“The external lawyer is no longer the trusted adviser to the board and the executives; that role has been taken over by general counsel,” he says.

Buddle Findlay national chair Peter Chemis agrees, citing large, high-quality in-house teams as now a permanent part of the landscape.

“Clients are now far more discerning and strategic about when and how they engage and insert external lawyers,” he says.

“As a consequence, there is now far less focus on brand and more on the quality of the specialised services offered, and delivery and price.”

THE LURE OF LONDON Firms already face the prospect of losing key staff to general counsel roles, but they may also soon be farewelling talent who are heading across the pond in increasing numbers.

“For a while, it seemed like the ambition of half of our university graduates was to stay with us, or a firm like us, for two or three years before they moved to London. I felt that we were almost a post-tertiary finishing school,” Poole says.

Following the GFC and changes to visa entry requirements, the flood of lawyers leaving New Zealand for London had slowed in recent years.

However, it now seems that overseas markets, particularly the UK, are picking up.

“We do expect to see an increasing war for talent as people are drawn to practising outside of New Zealand,” says Kevin Jaffe, chairman, Simpson Grierson.

“We’re expecting the recruitment market to heat up again this year, which reflects both the strong local economy and the recovery of international markets, which are starting to look more attractive for younger lawyers.”

Availability of talent is “starting to be an issue for us”, adds Partridge.

“The OE [overseas experience] phenomenon is so ingrained in our psyche that before the onset of the GFC, New Zealand firms faced our lawyers leaving at close to 100% after three years or so,” he says.

“That had eased in recent years, but it’s starting to resurface. Both retaining talent in NZ and attracting talent back to private practice will once again become one of our biggest strategic challenges.” AL

JULY 2014 | 45

Working with foreign investors? The challenges for investors and their advisors

once it’s there transactions move at pace and details become less of a focus. Hierarchy is paramount.

This plays out in the formality of the introductions, the speaking order, the manner in which ideas are debated, and perhaps most importantly, a sensitivity about not undermining ‘face’.

The huge growth of inbound Asian, particularly Chinese, investment has added another dynamic TO THE MARKETPLACE CULTURAL DIéERENCE

To achieve success, an advisor must understand these dynamics and be aware of the potentially lengthy process involved in a transaction.

It can take a long time to achieve certainty about the outcome of a deal. This is especially relevant when a senior person may have to be challenged during the process of a transaction. Incremental and time-consuming changes in position can be a factor.

The time it takes to get deals done can have the greatest impact, but precedent is also critical. There is a real sensitivity to doing a bad deal, or setting a precedent for future investment by others. It’s important to remember that much Chinese inbound investment is state money.

As more deals are completed with Chinese investors, both sides will become more experienced in dealing with each other and more confident.

We look forward to learning more.

The issues faced by foreign investors and those who advise them are age-old. When it comes to understanding a country’s business culture and adapting to it, all investors face challenges. However, for Chinese investors looking to invest in New Zealand, the level of culture shift is arguably greater than for most.

Chinese investment in New Zealand is a hot topic. There has been significant growth in inbound Chinese investment in recent times. For many of these people they are working outside their home country for the first time. Therefore, the need to understand cultural differences and drivers takes on an added layer of complexity.

THE ROLE OF THE ADVISOR Just as there is a need for investors to appreciate cultural dynamics, advisors must be able to help negotiate their clients through them. Any excellent advisor will have the ability to educate a client in the challenges of working in New Zealand business culture, where the norms are considerably different.

Of the cultural differences faced by Chinese investors and their advisors, understanding the importance of hierarchy and its impact is crucial. The

46 | JULY 2014

personal and political connections someone has are of considerable significance, as is the concept of ‘saving face’. This concept is widely understood to be part of Chinese culture but it can be difficult to recognise in business relationships.

Another challenge is educating an investor about the customs of the New Zealand market and ensuring they are confident in their business dealings.

It’s common to encounter a degree of scepticism about local market norms, and this is completely understandable – there are different and often better rules elsewhere.

SUCCESS FACTORS

IN THE MEETING ROOM Business meetings are where many of these issues come to the fore.

A typical meeting in New Zealand is results-orientated – an opportunity has been identified and the focus is on making it happen. Strong relationships may develop but these are often a consequence of the opportunity rather than for political reasons. The hierarchy of who does the talking is not particularly important, and debate is encouraged. The focus is on detail.

For Chinese, the interpersonal aspects are more critical. Relationships and trust take longer to develop, but

Michael Pollard Partner, Head of Corporate and Commercial Simpson Grierson + 64 9 977 5432 michael.pollard@ simpsongrierson.com

BUSINESS STRATEGY / MANAGEMENT

THE (R)EVOL

OF MANAGEME

If you want innovation and growth, you need to engage your people on a whole new level, argues Therese S. Kinal

Management is in need of a revolution, and not just one on glossy academic paper, but one that actually changes how organisations think and act. Despite the inspirational stories we read about companies like Zappos, Innocent Drinks and Google, the truth is that most of us are using outdated management practices and failing to get the most out of our people. Not convinced? Consider this: • 65% of people are unhappy at work (Right Management, Manpower Group, 2012 online survey) • Only 14% understand their company’s strategy (Smither, J.W., and London, M. (2009).

Performance management: putting research into action) • 75% are seeking jobs as we speak (Jobvite’s Social Job Seeker Survey, 2012)

Today’s leaders face increased complexity and ambiguity, and employees and customers alike are demanding engagement, transparency and responsibility. One billion people are now on Facebook, and 500 million Tweets are sent every day. Customers don’t want to be sold to. They want to connect with brands and play a role in the development, sales and marketing of products. If we ever thought we had ‘control’, it’s definitely gone now.

All of this presents a new challenge for how we

48 | JULY 2014

think about and practise management and how we develop leaders that can excel in this brave new world.

But before we look at the future, let’s take a look in the rear-view mirror and see how we got to where we are today:

1910S–1940S: MANAGEMENT AS SCIENCE ‘Management as science’ was developed in the early 20th century and focused on increasing productivity and efficiency through standardisation, division of labour, centralisation and hierarchy. A very ‘top down’ management style with strict control over people and processes dominated across industries.

1950S–1960S: FUNCTIONAL ORGANISATIONS Due to growing and more complex organisations, the 1950s and 1960s saw the emergence of functional organisations and the human resource (HR) movement. Managers began to understand the human factor in production and productivity, and tools such as goal setting, performance reviews and job descriptions were born.

1970S: STRATEGIC PLANNING In the 1970s we changed our focus from measuring function to resource allocation and tools such

AUSTRALASIANLAWYER.COM.AU

UTION NT

as Strategic Planning (GE), Growth Share Matrix (BCG) and SWOT were used to formalise strategic planning processes. After several decades of ‘best practice’ and ‘one size fits all’ solutions, academics began developing contingency theories.

1980S: COMPETITIVE ADVANTAGE As the business environment grew increasingly competitive and connected, and with a blooming management consultancy industry, competitive advantage became a priority for organisations in the 1980s. Tools such as Total Quality Management (TQM), Six Sigma and Lean were used to measure processes and improve productivity.

Employees became more involved in collecting data, but decisions were still made at the top, and goals were used to manage people and maintain control.

We need to recognise that what worked before just simply isn’t enough anymore 2000S: BIG DATA Largely driven by the consulting industry under the banner of ‘Big Data’, organisations in the 2000s started to focus on using technology for growth and value creation. Meanwhile, oversaturation of existing market space led to concepts such as Blue Ocean Strategy and Value Innovation.

1990S: PROCESS OPTIMISATION Benchmarking and business process re-engineering became popular in the 1990s, and by the middle of the decade 60% of Fortune 500 companies claimed to have plans for or had already initiated such projects. TQM, Six Sigma and Lean remained popular, and a more holistic, organisation-wide approach and strategy implementation took the stage, with tools such as Strategy Maps and Balanced Scorecards.

A WHOLE NEW LEVEL After a century of trying to control people, processes and information, we have come to a point in organisational history where we need to recognise that what worked before just simply isn’t enough anymore. Traditional management is fine if you want compliance, but if you want innovation and growth, you need to engage your people on a whole new level.

JULY 2014 | 49

BUSINESS STRATEGY / MANAGEMENT

two go together, and that having happy and productive workforces is not about team-building exercises or lucrative benefit packages but about creating a working environment that offers purpose, mastery, challenge and autonomy, which in turn creates more business value than the traditional approach.

Recently, Steve Denning wrote about the management revolution that’s already happening at Forbes.com. In the article, he discusses organisations like Apple, Zara and Whole Foods that have successfully forged ahead despite the increasingly challenging environment: “None of these organizations has arrived at any final state or equilibrium: in each case, management practices continue to evolve. Nor are any of these organizations perfect, as they have to cope with a context that is filled with contradictions. Their virtue lies in the creative energy with which they are pioneering new ways of adding value.”

Steve makes some excellent points about the need to constantly reinvent ourselves, but I’m not sure if the revolution is already happening. In fact, I think it might be more of an evolution. And herein lies the problem. We need a revolution, not an evolution. We are armed with tons of research that supports a more holistic, human way of doing business. It is up to us to stop simply following best practice and translate our know-how into how we develop leaders and organisations that are more agile, innovative and purpose-driven… and, in doing so, breed the pioneers and market leaders of tomorrow. AL

In our research, we looked specifically at the evolution of the management approach and the approach to innovation/problem solving, and at how these would develop in the future (see graph, ‘The evolution of management’):

Therese S. Kinal is the CEO and co-founder of Unleash, a disruptive innovator in the management education and consulting industry.

She is the co-author of Unleashing: The Future of Work, and she writes, runs workshops and works with clients on a range of management issues.

1. Management approach: the style of top management, ranging from: a. Control (ie your boss tells you what to do and how to do it); to b. Set goals (ie your boss sets goals and expectations, but you have more freedom with regard to how you achieve them); to c. Inspire (ie your boss gives you scope and freedom to innovate on both the what and the how) 2. Approach to innovation/problem solving: how leaders solve strategic problems and develop new products and services. This ranges from: a. Top down (ie solutions are created and come from the top); to b. Top down with bottom-up data (ie the rest of the organisation contributes information and experiences, but solutions are still created at the top); to c. Participatory (ie solutions are created collaboratively, and throughout the organisational levels)

Organisations of the future are neither consensus driven nor top down. They aren’t dictatorships, nor are they anarchies. They’re not merely occupied with increasing shareholder value or making their people happy. Leaders of the future know that the

THE EVOLUTION OF MANAGEMENT Inspire

Participatory

Set goals

Unleashing Big data

Top down w/ bottom-up data

Top down

INNOVATION/PROBLEM SOLVING

MANAGEMENT APPROACH Control

Competitive advantage

Process optimisation

Strategic planning Functional organisation Management as science

1910-1950

1960

1970

1980

1990

2000

2013 ->

Source and copyright: UNLEASH SPP LTD. For more information, go to unleashteam.com

50 | JULY 2014

BUSINESS STRATEGY / CUSTOMER ENGAGEMENT

Transitioning: The Third Space The key to success in business is the ability to leave behind the baggage from your previous interaction and show up at the next one with a mindset that will help you gain the maximum amount of value FROM IT AND CREATE SATISĂ ED CUSTOMERS who will help drive your business forward.

In an article based on his book, The Third Space, Dr Adam Fraser explains all

8MPIGLE GL RFC Âż L?LAG?J QCPTGACQ GLBSQRPW WMS ?PC faced with many challenges. Keeping clients happy, managing the expectations of stakeholders, and keeping up with constant regulatory changes are all in a dayâ&#x20AC;&#x2122;s work. Of all the challenges you face, the greatest one is the huge number of hats you have to wear on any given day. One moment you are playing counsellor to a client; the next you are wrestling with a frustrating bank system, then selling your expertise to a prospective client. Finally you are expected to go home and turn off from work and engage with the people in your personal life. The challenge is how do you perform at your best in each space you inhabit and not carry a bad experience into the next one?

JULY 2014 | 51

BUSINESS STRATEGY / CUSTOMER ENGAGEMENT

Dr Adam Fraser is a leading researcher and expert in human performance. He has worked with elite athletes, the armed forces, and business professionals at all levels. He is at the forefront of how neuroscience and positive psychology can be used to improve workplace performance.

I first came across the concept of transitioning when Jim Loehr’s research showed that there was very little difference between the top 100 male tennis players in terms of speed, accuracy and power during the point. Where the elite players differed was what they did in between the points. First of all the elite players were able to reflect on the previous point and not carry what happened into the next point. Secondly, they were able to relax their bodies, which calmed their minds and conserved their energy. Finally, they moved into the next point with a focused, optimistic mind. It was not what the elite players did during the point; it was what they did in between the points that made them the best.

We are just like the tennis players moving from point to point: our lives are made up of moving between different spaces. The first space is the role/environment/task you are in now; the second space is the role/environment/task you are about to transition into. For example, you may go from checking emails at your desk to sorting out a personal issue, or you may go from an internal meeting about the strategy of your business to an external meeting where it is about your client’s world. Each space requires us to be different things to different people.

The key to success in business is the ability to use the ‘Third Space’ (the transitional gap between the first and second) to leave behind the baggage from the previous interaction and show up at the next one with a mindset that will help you gain the maximum amount of value from it.

DON’T TAKE WORK HOME One of the transitions we struggle with the most is the transition from work to home. In our research we found that people often carried the work mindset into the home; that is they tried to run their homes like their offices. This mindset is obviously not conducive to the home.

Our research found that only 26% of people came home with a positive mindset and only 43% came home in a good mood. We set out to determine if the transition between work and home could improve mood and mindset. After three years of research we found the magic formula.

The perfect transition between work and home consists of three elements: 5EÀ ECT This is where you reflect on the day. The key is to reflect on the positive things that happened; specifically, what went well, what did you achieve

52 | JULY 2014

and how did you get better? This activity gives you a burst of happiness and optimism.

5EST This is where you take time to be calm and focus on the present moment. This step relaxes the mind and sets you up for constructive behaviours.

5ESET The final step is where you become clear about your intention for the home space and articulate the specific behaviours you want to exhibit. This final step has a dramatic impact on people’s behaviour as it elevates their self-awareness.

In one experiment we asked a group of small business owners to practise these three steps between work and home. After a month of practising we saw a 41% improvement in their behaviour in the home.

A POSITIVE CUSTOMER EXPERIENCE NEEDS THE RIGHT MINDSET This strategy also applies to our business day.

Business owners in the financial services space have had to alter the way they interact with clients dramatically. They are expected to take a holistic view of their clients, talk to them about their hopes and dreams, manage their emotions, and spend more time justifying the fees they charge. We all struggle with change. In fact, 75% of change efforts in the workplace fail. One of the reasons we fail to change is that we get busy. We might go to a seminar about improving our business and write down some great strategies. However, we get back to the office and are greeted by 150 emails and a panicked phone call from a client. The change gets put on the backburner and we go into survival mode.

We have run a number of very successful cultural change programs. Our strategy is simple: 6TEP Map out what new behaviours need to be incorporated.

6TEP Each time people move from one interaction to another they remind themselves of those key behaviours. The likelihood of incorporating these behaviours is far greater since they are front of mind.

The customer experience drives your business.

Services firms, more than any other sector, are built on referrals. People refer when they have had a great experience. It drives consumer behaviour.

A challenge we face in Australia is that in-store retail spend has dropped. What is the average retail

AUSTRALASIANLAWYER.COM.AU

experience like in this country? It sucks! Staff seem more interested in updating their Facebook statuses than serving you; things are hard to find and you have to line up to be served. People are increasingly shopping online because the store experience is terrible. Yet Apple makes 50% of its profit from in-store shopping and is the most profitable store per square metre of space on the planet. When people were asked why they shopped at the Apple Store rather than going online, they said it was because of the experience. They loved going to the store: it was fun; it was cool; it felt good to be in there.

When I recently asked my Facebook community to refer me to a financial planner and a mortgage broker, the reasons they gave for recommending people all revolved around the experience of dealing

with them. It was things like: “They really listened to us and understood what we wanted from our financial plan”; “She was really nice to deal with, listened to us and took her time”; “They didn’t just push products on us, they understood our risk profile and tailored the plan to meet that”; and “Their level of service and care went above and beyond; they spent time understanding our needs and determined what was the best loan for us”.

How we interact with our clients determines if we are successful or not. As you transition into every client interaction, ensure you use the ‘Third Space’ to get yourself into the right mindset to give your clients a positive customer experience. Ask yourself: “How am I showing up?” The better you show up, the more you will create satisfied customers who will help drive your business forward. AL

THE

FIRST SPACE Role/environment we are now in

THIRD SPACE

SECOND SPACE Role/environment we are transitioning into

JULY 2014 | 53

PROFILE / OUTSIDE THE OFFICE

Blind courage Darren Fitterâ&#x20AC;&#x2122;s path from teen struggling with impending blindness to obstacle course extraordinaire proves the endless possibilities for lawyers who arenâ&#x20AC;&#x2122;t afraid to back away from a challenge

54 | JULY 2014

AUSTRALASIANLAWYER.COM.AU

All of his career, Darren Fitter has been bending peopleâ&#x20AC;&#x2122;s conceptions of the world. Then he has shattered them.

On ďŹ rst encounter over the phone or electronically, the Gilbert + Tobin lawyer strikes most as a talented but profoundly ordinary lawyer.

That impression has much to do with the unremarkable way he does his job. He returns client emails promptly and has the analytical skills to comb through documents as quickly as the best lawyers.

It is only when clients meet Fitter in person that they realise what sets him apart. Fitter, despite all the tasks he can perform, is blind.

Even more remarkable is what he does outside of practice. Drawing parallels with the Marvel character Daredevil â&#x20AC;&#x201C; blind lawyer by day, deathdefying superhero by night â&#x20AC;&#x201C; Fitter has become the ďŹ rst blind person in the world to compete in an array of high-octane, adrenaline-heavy obstacle courses.

The difference is that Fitterâ&#x20AC;&#x2122;s story is no comic book fantasy. The lawyerâ&#x20AC;&#x2122;s path from teen struggling with impending blindness to rainmaker in one of Australiaâ&#x20AC;&#x2122;s most prominent ďŹ rms is as inspiring as it is heart-breaking. â&#x20AC;&#x153;I grew up in a country town just west of Coffs Harbour. I was diagnosed with my condition at age ďŹ ve and began gradually losing my sight. By the time I was 13 and heading into a mainstream high school, it had mostly gone,â&#x20AC;? Fitter says.

He adds that growing up as the only blind student at a school of more than 1,000 pupils was a hardening experience. Frequently bullied and unable to access a lot of the same learning materials as other students, his high-school experience was more challenging than most. â&#x20AC;&#x153;I look back on those years at public school and I think they have helped me build the resilience I have now,â&#x20AC;? Fitter says.

DARREN FITTERâ&#x20AC;&#x2122;S HARDEST OBSTACLES TO DO BLIND Tough Mudder â&#x20AC;&#x201C; â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s this one called â&#x20AC;&#x2DC;Electro-shock therapyâ&#x20AC;&#x2122;.

There are these high-voltage electrical wires, which other people can dodge and weave past. I couldnâ&#x20AC;&#x2122;t do that. I got zapped every time,â&#x20AC;? he laughs.

Spartan Race â&#x20AC;&#x201C; h,TgS NOT SEXY BUT THE MOST DIĂŞ CULT THING FOR ME WAS A M BALANCING BEAM , TOOK ABOUT FOUR STEPS AND WAS OĂŠ IT i

It was at high school that Fitter began to slowly develop the attitude that has been driving his life since then. â&#x20AC;&#x153;My philosophy is that whatever obstacle comes to you, ďŹ nd a way. You go around things and ďŹ nd a way to succeed. You donâ&#x20AC;&#x2122;t give up.â&#x20AC;?

BECOMING A LAWYER After ďŹ nishing high school, Fitter went to university with the intention of doing a combined degree in law and social work but ended up studying only for the social work degree. He ďŹ nished this in 1996 and, after a stint travelling, was employed as a social worker.

A few years later he decided to set his mind to studying law again and resolved to graduate in law as soon as possible. After two years of summer school and intensive courses, he eventually became qualiďŹ ed as a lawyer, joining Gilbert + Tobin in 2004.

At ďŹ rst he was rotated around the ďŹ rm, gaining experience in a number of corporate practice areas.

This was followed by a few years in the ďŹ rmâ&#x20AC;&#x2122;s pro bono team, which inspired Fitter to eventually move to Gilbert + Tobinâ&#x20AC;&#x2122;s department specialising in charity law, which he now leads.

Throughout this time, Fitter says he became aware of his slipping ďŹ tness levels. â&#x20AC;&#x153;I was sitting at my desk and realised that I used to be ďŹ tter, and that if I didnâ&#x20AC;&#x2122;t change something I would wake up at age 40, wondering what I am doing with myself.â&#x20AC;?

Motivated to hit the gym, Fitter hired a personal trainer, and what started out as once-a-week sessions eventually evolved into three-times-aweek workouts. He tried CrossFit training for a while and a range of other exercise programs until an idea struck him. â&#x20AC;&#x153;I had heard that the Tough Mudder obstacle course was coming up,â&#x20AC;? Fitter recalls. â&#x20AC;&#x153;I said to my personal trainer, Dirk, â&#x20AC;&#x2DC;Weâ&#x20AC;&#x2122;re going to do itâ&#x20AC;&#x2122;. We pulled together a team of four and competed. Later it turned out that I was the ďŹ rst blind person to ever complete Tough Mudder.â&#x20AC;?

Following the success of his Tough Mudder experience, Fitter has since entered other obstacle course races, including the Spartan Race, which he claims is a lot more gruelling because, unlike Tough Mudder, it is timed and participants face penalties for failing at obstacles. â&#x20AC;&#x153;One of the obstacles was to throw a spear at a bale of hay. Well, of course I missed, so I had to do 30 burpees.â&#x20AC;?

Fitter explains that teamwork helps him get through the races. â&#x20AC;&#x153;I depend on my teammates

JULY 2014 | 55

PROFILE / OUTSIDE THE OFFICE

“My philosophy is that whatever obstacle comes to you, find a way. You go around things and find a way to succeed. You don’t give up” when running from one obstacle to another. I usually just grab onto a mate’s arm and we run together. Obstacles I have to do solo. Leopardcrawling through 100m of barb wire, there’s no teamwork there. I usually ask people for a description of the obstacle and try work out how to do it.”

BLIND OUTLOOK ON LIFE While Fitter may have started doing obstacle courses as a way to keep fit, his penchant for endurance activities is hardly out of character, considering that he qualified for the 1996 Paralympics in Atlanta. He wasn’t able to compete for financial reasons but managed to win in a much bigger way.

“The night the plane left to Atlanta I went on a pub crawl at my university. That’s where I met my wife. That was 18 years ago.”

Fitter says that, like any marriage, his requires a certain amount of give and take, but the challenges are compounded by his disability.

“I do the hard work in the garden and deal with the technical dramas, like helping our kids put things together, but there’s just a little more work than normal for her. She has to help me with other things, like telling me whether I’ve picked out the shirts I think I have chosen. She reads our printed mail.”

His advice to other people who feel they are facing insurmountable obstacles is to never underestimate what can be achieved in the long term. It is this thinking that has helped him gain the confidence to compete in gruelling physical challenges and, more importantly, compete on an equal footing with other lawyers.

“Most people overestimate what can be done in a year, but they underestimate what can be done in 10. Don’t expect things to happen immediately, but if you take an innovative approach, they come in time.” AL

56 | JULY 2014

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