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ISSUE 7.1

Employment law More regulatory change, more work for lawyers

Mid-tier mergers revisited How are they faring now?

Rudd’s infrastructure boost How it will affect legal work

brisbane 09 Still shining... for now

n DEALS ROUNDUP n LATERAL MOVES n UK, US REPORTS n news review n Regulatory UPDATES

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ISSUE 7.1

EDITORIAL >>

Employment law More regulatory change, more work for lawyers

Mid-tier mergers revisited How are they faring now?

Rudd’s infrastructure boost How it will affect legal work

Withdrawn M&A deals: not a product of financial turmoil

A

ccording to figures released by Thomson Reuters, turmoil in the financial markets is the cause of Australia seeing the highest volume of M&A deals being withdrawn in the Asia-Pacific region. This would amount to a rapid fall from grace, considering that, according to figures released for January to August 2008, Australian companies were the most favoured M&A targets, with 1,146 deals worth US$84bn. So, the question is: What has changed? According to Allens Arthur Robinson partner Cameron Price, the answer is: “absolutely nothing”. “Over the past six months, we have been flat out,” he said, and, it appears the AAR M&A team are not the only ones. M&A partners right across the top end of town are reportedly very busy working on deals. So, what do these latest figures really tell us? Apart from the failed Rio Tinto–BHP deal that the Thompson Reuters survey excluded, it appears that none of the ‘failed’ deals listed below were directly affected by the financial turmoil, if at all. The top five Australian M&A deals withdrawn, presented as evidence of the negative effects the financial uncertainty has had on M&A activity are: Origin Energy and BG, Orica and investor group (private equity), Insurance Australia and QBE, Consolidated Media Holdings and investor group (private equity), and Midwest and Murchison. In the case of Origin Energy and BG, the directors of Origin Energy rejected BG’s offer purely on commercial grounds. During the course of the BG takeover bid, they simply received a better offer from US oil major Conoco Phillips. The reluctance of BG to amend its offer did not have anything to do with the financial crisis. In fact, the coal price during this period remained largely unaffected by it, which is one of the key reasons the deal was particularly attractive to both BG and Conoco Phillips. In the case of private equity approaching Orica, the bid was rejected by the board in April 2007, long before the current financial crisis began. Similarly the Board of Insurance Australia Group rejected the offer by QBE. The Midwest and Murchison scenario was similar to the case of Origin Energy and another matter in which the bidder, Murchison Metals, was outbid by a more determined rival – Chinese steel maker Sinosteel – and most certainly had nothing to do with the crisis. Indeed, the only deal on the list that may actually have been affected by it is Consolidated Media Holdings, which did not go ahead as a result of Lachlan Murdoch’s failure to get the private equity financing together. These are some of the reasons that, in spite of the financial crisis, ALB is not quite ready to write off the Australian M&A market just yet.

BRISBANE 09 Still shining... for now

 DEALS ROUNDUP  LATERAL MOVES  UK, US REPORTS  NEWS REVIEW  REGULATORY UPDATES

www.legalbusinessonline.com

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IN THE FIRST PERSON “Generation Y lawyers’ … attitude to employers was ‘what are you going to do for me?’ Now law firms are turning the tables … with ‘what are you going to do for us?’… ” Signature Recruitment consultant Steve Cole describing the shift in the recruitment landscape

“If unfair dismissal is regarded as a matter of sufficient importance that it should attract a legal remedy, you’ve got to have a procedure for adjudicating that remedy … ” Deacon IR partner David Cross lamenting the exclusion of lawyers from Fair Work Australia

“We haven’t had any projects put on hold … the merger puts us in a good position to handle any hits better” Cridland MB partner Tony Morgan on the power of merger

Apart from the failed Rio Tinto–BHP deal, it appears that none of the ‘failed’ deals were directly affected by the financial turmoil, if at all 2

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Australasian Legal Business ISSUE 6.12

28/01/2009 4:48:56 PM


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OFFICIAL PUBLICATION

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CONTENTS >>

contents

ALB issue 7.1 40

32

10

COVER STORY 32 ALB Special Report: Brisbane 09 Brisbane is still the land of opportunity for firms with longterm plans.

ANALYSIS 10 Infrastructure – a winner for 2009 Infrastructure projects appear to be high on the Federal government’s agenda, and so law firms are expecting a major increase in work 12 Kiwi climate change – freeze expected The Key government’s decision to suspend the carbon emissions trading scheme may be good for business but how will it affect work flows for climate change lawyers? 14 Mid-tier mergers – the story so far Three recently merged firms provide some perspective on how to make a law firm merger work in the long term

FEATURES 30 Job marke – power swingst The tables are turned: Generation Y lawyers are now being asked to prove themselves 40 Marketing report ALB investigates how firms need to adjust marketing strategies during a market downturn

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42 ALB guide: private equity 09 A comprehensive overview of the private equity sector – market conditions, major deals and the leading lawyers and firms in the field. 54 Industrial relations ALB speaks to the leading IR lawyers about how the new IR bill will impact clients and employment law practices 60 In-house perspective: Felicity McDowell ALB gains insight into Johnson & Johnson’s in-house legal department

REGULARS 10 NEWS • South Australia: the new frontier • Allens, Freehills get slice of Westpac capital raising • Credit crunches BHP-Rio Tinto merger, lawyers still optimistic • Dust settles on Mallesons, Clifford Chance talks • Allens, Mallesons, Blakes – all quiet on BA-Qantas merger proposal • Trimming the fat: firms review staffing in a slow market • Sustainable enterprises: a new type of lawyer

60 • Middletons expands to Perth, merges with two firms

COLUMNS 19 UK report 21 US report 64 Sign off

COMMENTARY 22 NZ update: Buddle Findlay

PROFILES 35 Macdonnells Lawyers 39 Mills Oakley 49 Kemp Strang

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australasian Legal Business can accept no responsibility for loss.

australasian legal business ISSUE 7.1

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NEWS | deals >>

Firm: Challenger Legal Lead lawyer: Blair Beaton Client: Challenger Financial Services Group

deals in brief

Mark Standen,

• Challenger’s Minter Ellison acquisition of AXA’s immediate annuity business required the coordination of a large number of work streams, principally M&A, regulatory, actuarial, tax, stamp duty, competition and dispute resolution • because the vendor and purchaser were joint applicants to the proceedings, passage of the scheme called for a high degree of cooperation, coordination and task sharing between the commercial parties and their advisors • scheme was approved on 24 November 2008

| Australia | | Australia, UK | ►► TERMINATED BA – Qantas merger proposal A$10bn Firm: Allens Arthur Robinson Lead lawyers: Andrew Finch, Fiona Crosbie Client: Qantas Airways Firm: Mallesons Stephen Jaques Lead lawyer: David Friedlander Client: British Airways Firm: Blake Dawson Lead lawyer: John Field, Matt Stott Client: Qantas Airways Firm: Sullivan & Cromwell Lead lawyers: Daryl Libow, Andrew Solomon, Frank Aquila Client: British Airways

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• merger negotiations failed after parties were unable to agree on key terms • merger was to take place via a dual-listed company structure; lawyers did receive some due diligence and compliance work

Andrew Finch, AAR

• British Airways was limited to acquiring 49% stake in Qantas – Qantas would have remained a majority Australian-owned company • merger talks also occurred between BA and Spanish airline Iberia, which would have seen merger create world’s biggest airline

David Friedlander, Mallesons

• BA previously acquired 25% stake in Qantas during 1993 when Australian carrier began to privatise • terminated mid-December 2008

| Australia | ►► National Australia Bank capital raising John Field, Blake Dawson

Firm: Slaughter & May Lead lawyers: Steven Cook, David Whitman Client: British Airways

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Firm: SJ Berwin Lead lawyer: Rob Day Client: Qantas Airways

A$3bn Firm: Mallesons Stephen Jaques Lead lawyers: Craig Semple, Diana Nicholson Client: National Australia Bank (NAB) • NAB’s A$3bn capital raising was reportedly one of the largest and

most successful in recent times • NAB initially intended to raise A$2bn, but due to significant oversubscription this was increased to A$3bn

►► Goodman Group equity raising A$955m

Diana Nicholson, Mallesons

• conducted through fully underwritten placement, followed by a share purchase plan

| Australia | ►► Challenger Financial – AXA annuity acquisition A$1.25bn Firm: Freehills Lead lawyer: Michael Vrisakis Client: Challenger Financial Services Group Firm: Minter Ellison Lead lawyers: Mark Standen, Ken Watson Client: AXA Australia

Firm: Allens Arthur Robinson Lead lawyer: Stuart McCulloch Client: Goodman Group • difficult conditions Stuart McCulloch, AAR in the commercial property sector required parties to move quickly • second major capital raising in property sector since GPT’s A$1.6bn capital raising in October 2008 • Stockland, CFS Retail and FKP tapped into the real estate investment trust market to raise a combined A$525m • Allens acted on five of the top equity raisings, including GPT’s A$1.6bn accelerated non-renounceable entitlement offer; Wesfarmers’ A$2.5bn entitlement offer and CSL’s A$1.6bn institutional placement, among others

“[The Goodman Group’s] capital raising is the largest non-traditional rights issue that has proceeded in accordance with the disclosure exemptions introduced earlier this year to facilitate such equity raisings without the preparation of a prospectus or product disclosure statement” Stuart McCulloch, Allens Arthur Robinson Australasian Legal Business ISSUE 7.1

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NEWS | deals >>

| Australia | ►► Stemcor Pellets – Savage River mine stake disposal A$72m Firm: DLA Phillips Fox Lead lawyer: Robert Tobias Client: Stemcor Pellets Firm: Freehills Lead lawyer: Simon Reed Client: Consortium led by Jiangsu Shagang, Pacific Minerals, RGL Group • Stemcor Pellets sold its 10% stake in Savage River mine, operated by Australian Bulk Minerals (ABM)

►► Your month at a glance Firm

Jurisdiction

Deal name

Addleshaw Goddard

Australia, UK

Employment Services – Pertemps People Development Group acquisition

110

M&A

AGL Legal

Australia

BO – Auscom stake acquisition

221

M&A

Allens Arthur Robinson

New Zealand, Australia

Babcock & Brown Communities price discovery

370

Securitisation, M&A

Australia, UK

British Airways – Qantas merger proposal

Baker & McKenzie Blake Dawson

• deal involved exchange for shares in Grange Resources, which agreed to merge with ABM • Grange will acquire holding companies of ABM from Shagang International Holdings, RGL Holdings, Pacific International and Stemcor Pellets by issuing them about 380m shares • DLA Phillips Fox previously acted for Stemcor on its acquisition of Savage River mine in 2005 and its 90% stake sale to the Shangang interests in 2007 • Savage River mine has an implied value of A$720m and the merger will create a listed entity worth approximately A$1bn • transaction subject to government and shareholder approval

| Australia, UK | ►► QBE Insurance – ZC Sterling acquisition

Firm: Edwards Angell Palmer & Dodge Lead lawyer: Charles Welsh, Bruce Raphael Client: QBE Insurance Group Firm: QBE Insurance Legal Lead lawyers: Duncan Ramsay, Peter Maloney Client: QBE Insurance Group • QBE Insurance’s US$575m acquisition of ZC Sterling was announced at the same time that QBE said it would buy two US underwriting agencies and one in Europe • ZC Sterling is owned by private equity firm Stone Point Capital, which invests in financial services and insurance companies www.legalbusinessonline.com

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Practice

10,000

M&A

Australia

Goodman Group equity raising

955

Equity

Australia

New Hope – Resource Pacific takeover bid

591

Energy & resources

Australia

New Hope – Resource Pacific takeover bid

591

Energy & resources

Australia, South Africa

Aflease Gold – BMA Gold merger

100

Resources, M&A

New Zealand, Australia

Babcock & Brown Communities price discovery

370

Securitisation, M&A

Australia, UK

British Airways – Qantas merger proposal

Australia, UK

Employment Services – Pertemps People Development Group acquisition

Challenger Legal

Australia

Challenger Financial – AXA annuity acquisition

Debevoise & Plimpton

Australia, US

QBE Insurance – ZC Sterling acquisition

Deneys Reitz

Australia, South Africa

Dibbs Abbott Stillman

Australia

DLA Phillips Fox

Australia

10,000

M&A

110

M&A

1250

Finance, M&A

825

M&A

Aflease Gold – BMA Gold merger

100

Resources, M&A

Marubeni – Resource Pacific stake acquisition

230

Equity

BOC – Auscom stake acquisition

221

Equity, M&A

New Zealand

Foodstuffs – Liquorland acquisition

N/A

M&A

Australia

Stemcor Pellets’ Savage River mine stake disposal

72

Equity

Edwards Angell Palmer & Dodge

Australia, US

QBE Insurance – ZC Sterling acquisition

825

M&A

Freehills

Australia

Challenger Financial – AXA annuity acquisition

Australia

Stemcor Pellets’ Savage River mine stake disposal

72

Equity

Australia

Transfield capital raising

204

Equity

Gateley Wareing

Australia, UK

Employment Services-Pertemps People Development Group acquisition

110

M&A

Gilbert + Tobin

Australia

BOC – Auscom stake acquisition

221

Equity, M&A

Mallesons Stephen Jaques

Australia, UK

British Airways – Qantas merger proposal

10,000

M&A

Australia

CSR capital raising

482

Equity

Australia

Marubeni – Resource Pacific stake acquisition

230

Equity

Australia

Minara Resources rights issue

210

Equity

Australia

National Australia Bank capital raising

3,000

Equity

1,250

Finance, M&A

A$825.3m Firm: Debevoise & Plimpton Lead lawyer: Robert Quaintance Client: Stone Point Capital

A$m

Minter Ellison

1,250

Finance, M&A

Australia

Challenger Financial – AXA annuity acquisition

Australia, UK

Employment Services – Pertemps People Development Group acquisition

110

M&A

179

Equity, property

Australia

FKP Property Group placement

Moody Rossi & Co.

Australia, Singapore

Independent Pub Group hotel acquisitions

92

M&A

Mullins Lawyers

Australia, Singapore

Independent Pub Group hotel acquisitions

92

M&A

QBE Legal

Australia, US

QBE Insurance – ZC Sterling acquisition

825

M&A

Simpson Grierson

New Zealand, Australia

Babcock & Brown Communities price discovery

370

Securitisation, M&A

New Zealand

Foodstuffs – Liquorland acquisition

N/A

M&A

SJ Berwin

Australia, UK

British Airways – Qantas merger proposal

10,000

M&A

Slaughter & May

Australia, UK

British Airways – Qantas merger proposal

10,000

M&A

Sullivan & Cromwell

Australia, UK

British Airways – Qantas merger proposal

10,000

M&A

Does your firm’s deal information appear in this table? Please contact

alb@keymedia.com.au

61 2 8437 4700

7

28/01/2009 2:28:59 PM


NEWS | deals >>

• other companies in Stone Point Capital’s portfolio include Atlantic Capital Bank of Atlanta and insurance agency Lane McVicker

| New Zealand, Australia | ►► Babcock & Brown Communities price discovery A$370.5m Firm: Blake Dawson Lead lawyers: Sarah Dulhunty, Stephen Menzies, Peter Stirling Client: Babcock & Brown Communities Group Firm: Allens Arthur Robinson Lead lawyer: Tom Story, Stuart McCulloch Client: Lend Lease Corporation Firm: Simpson Grierson Lead lawyer: Michael Pollard Client: Babcock & Brown Communities • ASX-listed retirement village operator Babcock & Brown Communities (BBC) undertook a strategic review and price discovery process • included cash injection of A$195m in the form of subscription for new stapled securities in BBC and the issue of convertible notes by BBC • Lend Lease acquired management rights of BBC from Babcock & Brown (B&B) for A$17.5m and acquired B&B’s stake in BBC for A$24.6m

• BBC acquired Retirement by Design business comprising seven retirement villages and one aged care facility from Lend Lease for A$133.4m

| Australia | ►► CSR capital raising A$482m

Firm: Mallesons Stephen Jaques Lead lawyer: Jason Watts Client: CSR Group • CSR Group is raising A$482m of capital

Jason Watts, Mallesons

• raising includes A$125m in institutional placements, A$179m in a one-for-four rights issue to institutions and retail offer also pitched at a one-to-four ratio to raise A$179m • dividend reinvestment plan will not be underwritten • UBS, ABN Amro and Mallesons are expected to share in A$9.1m of fees, depending on how well retail offer is received

| Australia | ►► BOC ACQUISITION OF STAKE IN Auscom A$221m Firm: DLA Phillips Fox Lead lawyers: David Morris, Adrian Smith Client: BOC Firm: Gilbert + Tobin Lead lawyer: Philip Breden Client: AGL Energy Firm: AGL Legal Lead lawyer: Monique Gilbertson Client: AGL Energy

“[Advising on the sale to Marubeni] demonstrates the strength of our relationship with Xstrata and our ongoing commitment to the resources sector, regardless of the phase in the economic cycle” Nicholas Pappas, Mallesons Stephen Jaques 8

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• BOC, part of Linde Group, acquired the remaining 50% stake of Auscom, owned by Elgas, from its joint venture partner AGL Energy. • deal involved due diligence review, obtaining regulatory consents, preparing and negotiating share purchase agreement • transaction faced environmental, property, competition and workplace issues • G+T previously advised AGL on asset disposals in 2007 including sale of Chilean gas distribution business GasValpo to Australian superannuation fund consortium (US$90m) and a 33% stake in AlintaAGL to Babcock & Brown and Singapore Power (A$500m)

| Australia | ►► Minara Resources rights issue A$210m Firm: Mallesons Stephen Jaques Lead lawyer: Nick Pappas Client: Glencore International • despite volatile Nick Pappas, commodity Mallesons markets Minara Resources’ rights issue hoped to raise approx A$210m by selling 700m ordinary shares at 30c each • raising underwritten by Minara’s major shareholder Glencore, which will increase its stake from 56.1% to more than 70% due to shortfall • A$73m will be used to repay short-term funding arrangement by Glencore, A$23m for capital expenditure, A$106m for working capital and A$8m for issue costs • Glencore expected to receive an underwriting fee of A$7.3m

| Australia | ►► Marubeni – Resource Pacific stake acquisition A$203.3m Firm: Mallesons Stephen Jaques Lead lawyer: Nick Pappas, Robert Gibson Client: Xstrata Firm: Dibbs Abbott Stillman Lead lawyer: Peter Burden Client: Marubeni Corporation

• Marubeni acquired a 22.22% stake (US$130m) in Resource Pacific’s Ravensworth coal mine from Xstrata • Marubeni’s stake will double from 10.24% • Deal completed on 21 October 2008

| Australia | ►► Transfield capital raising A$204m

Firm: Freehills Lead lawyer: Philippa Stone, Tony Sparks Client: Transfield Holdings • equity raising includes A$204m institutional component through a A$58.9m placement and 1-1 rights issue at A$1.25 per share – 60% less than its last trading price • raising includes a A$102.2m rights issue for retail investors • Macquarie Capital and ABN Amro to share fee of A$5.61m and may also receive an incentive fee of A$1m • Freehills expected to receive A$350,000 and PricewaterhouseCoopers A$850,000 in fees

| Australia | ►► FKP Property Group placement A$179m Firm: Minter Ellison Lead lawyer: Bruce Cowley, Gary Goldman Client: FKP Property Group • FKP Property Group announced partially underwritten nonrenounceable entitlement offer of stapled securities to raise A$151m • funds being raised to provide funding capacity for FKP’s development and land pipelines • Stockland Corporation will acquire a 5% stake in FKP for a total consideration of about A$28m

| Australia, uk | ►► Employment Services – Pertemps People Development acquisition A$110m Firm: Blake Dawson Lead lawyer: Arthur Apos, Julia Hammon, Sarah Galloway Client: Network Group Holdings Australasian Legal Business ISSUE 7.1

28/01/2009 2:29:01 PM


NEWS | deals >>

Firm: Minter Ellison Lead lawyer: Callen O’Brien, Ricky Casali Client: Employment Services Holdings Firm: Addleshaw Goddard Lead lawyer: Clare Thomas Client: Employment Services Holdings Firm: Gateley Wareing Lead lawyer: Paul Cliff, Katie Silvester, Andrew Cowan Client: Pertemps People Development Group • £43m consideration to be paid by Employment Services Holdings (ESH) to Pertemps People Development Group’s shareholders comprises £18.16m in cash and £24.84m in shares • ESH required Minter Ellison to conduct due diligence, advise on drafting and negotiation of the transaction documentation, and obtain FIRB approval

| Australia, South Africa | ►► Aflease Gold – BMA Gold merger A$100m Firm: Blake Dawson Lead lawyers: Roger Davies, Antonella Pacitti, Lisa Le Faucheur Client: BMA Gold Firm: Deneys Reitz Lead lawyer: Theuns Steyn Client: Aflease Gold • BMA Gold’s merger with Aflease Gold will create dual-listed (ASX and JSE) entity called Gold One International • involves inward listing of BMA on JSE and subsequent acquisition of Aflease via scheme of arrangement • transaction approved by shareholders on 21 January 2009 • also subject to regulatory approval www.legalbusinessonline.com

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| Australia, Singapore | ►► Independent Pub Group hotel acquisitions A$92m Firm: Mullins Lawyers Lead lawyer: Curt Schatz Client: Independent Pub Group Firm: Moody Rossi & Co. Lead lawyer: Bill Moody Client: Lasseters International Holdings • despite economic downturn Independent Pub Group (IPG) acquired 12 hotels Singapore-listed Lasseters International Holdings • hotels in Queensland, NSW and South Australia were acquired via freehold and share purchase • largest transaction of Australian hotels sold in a row for past year

| New Zealand | ►► Foodstuffs – Liquorland acquisition Firm: Simpson Grierson Lead lawyer: Mike Sage Client: DB Breweries

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Firm: DLA Phillips Fox Lead lawyers: Martin Wiseman, Sarah Smith Client: Foodstuffs • grocery co-op Foodstuffs acquired Liquorland from DB Breweries • after a competitive bidding process Foodstuffs was selected as preferred bidder due to it being most suitable to support and grow national chain • change of ownership took effect on 31 October 2008 • DLA Phillips Fox acted for all three of Foodstuffs’ co-operatives on significant strategic matters

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www.dtassociates.com.au 9

28/01/2009 2:29:15 PM


NEWS | analysis >>

ANALYSIS

Infrastructure work: A winner for 2009 Although some large firms were not turned on by the first round of the federal government’s infrastructure spending spree, major infrastructure projects on the way for 2009 may lift their spirits. Richard Szabo finds out what type of work will be in demand ►► Show me the money • Infrastructure Australia will allocate A$20bn in funds for major projects starting from February 2009, with some capital projects lasting 18–24 months • Federal government recently agreed to provide public hospitals with A$6.5bn in funding over the next five years • Proposed projects announced include Sydney’s West Metro (A$8bn), M5 motorway widening (A$3bn) and North Strathfield to Hornsby railway quadruplication (A$1.8bn) • Firms specialising in construction, financing, planning, corporate commercial, property and government likely to observe increased work flows

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I

nfrastructure and projects appear to be high on the Rudd government’s agenda and law firms can soon expect a major increase in work. Government body Infrastructure Australia has allocated A$20bn in funds for major projects starting from February 2009. Submissions are still being considered, but Mallesons Stephen Jaques partner Geoff Wood believes upcoming projects are likely to include social infrastructure and a freight railway line to transport coal from the Hunter region. Blake Dawson partner Chris Mitchell agrees that rail links between natural resources and the sea are likely to be upcoming projects. He says they could also occur in Western Australia and Queensland, particularly the Gladstone region. “There is likely to be uranium mining work, since there is acquisition

interest from China and India. It is something often pursued, although most mineral reserves have many types of ore. The deciding factor will be the projected price Geoff Wood, of that ore for the next Mallesons 10–15 years. If it drops, production of that commodity could be unfeasible,” Mitchell says. Due to the ongoing drought in most parts of the country, there could also be water projects, including grey water and desalination plants, and dams.

Cash injection boosts hospital work

Wood believes there could very well be hospital and other health infrastructure work, pointing to his recent work on the Royal North Shore Hospital. “There is no doubt that this could go ahead. However, a difficulty remains that road and PPP projects are required to gain 100% Australasian Legal Business ISSUE 7.1

28/01/2009 11:49:10 AM


NEWS | analysis >>

financial commitment from institutions – this is quite difficult at the moment and the government will need to look into it,” he added. He was spot-on. The federal government recently agreed to provide public hospitals with A$6.5bn in funding over the next five years, including A$1.7bn in payments for meeting performance standards. Another A$800m will be allocated for indigenous health. Thomson Playford Cutlers partner Tom Boyce says indigenous health projects would possibly involve setting up structures in the countryside. ►► Possible projects • Social infrastructure and freight railway lines to transport coal from the Hunter region, Western Australia and Queensland • Uranium mining work due to acquisition interest from China and India • Water projects due to the ongoing drought, including dams, grey water and desalination plants • Hospital projects with special focus on indigenous health centres www.legalbusinessonline.com

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“Some indigenous projects are likely to be longer jobs, involving construction of health facilities and clinics for Aboriginal communities, and also longer-running Emma Warren, programs,” he says. AAR The government has budgeted for a A$1bn increase in funding for a range of agreements, including hospitals, housing and disabilities. The increase would boost confidence in the health sector, according to Boyce, and this could see reconsideration of Bill Napier, major projects that had Freehills previously not proceeded due to a lack of funding. “There could also be an increase in privately financed infrastructure,” he says, “and, some public infrastructure projects may need additional private capital, so we will probably see public and private partnerships forming.” Law firms that specialise in construction, corporate commercial, property and government are likely to observe increased work flows. Projects could begin in early 2009 and some capital projects might last up to two years, he states.

Dwindling funds bring mixed reaction

Although the global financial crisis has shrunk the federal government’s Building Australia fund from the A$20bn expected initially to just A$12.6bn, firms still believe it will bring more work. Allens Arthur Robinson’s Emma Warren is one partner who feels the outlook is positive for infrastructure work. “Even though the dollars have decreased, they are big projects. It certainly shows an incredible commitment,” she says. Some of the projects announced include the completion of Sydney’s West Metro (A$8bn), the widening of the M5 motorway (A$3bn) and the quadruplication of the North Strathfield to Hornsby railway line (A$1.8bn). Freehills partner Bill Napier believes each of these projects would provide lawyers with work for about six to 18 months. However, although these proposals could offer good work for

two recent infrastructure highlights ►► BRISBANE AIRPORT LINK PPP PROJECT Value: A$4.8bn

Firm: Corrs Chambers Westgarth Lead lawyer: David Warren Client: BrisConnections Consortium Firm: Clayton Utz Lead lawyers: Doug Jones, Alan Macguire, David Lester Client: BrisConnections Consortium Firm: Freehills Lead lawyer: David Templeman Client: Northconnect Motorway Consortium Firm: Mallesons Stephen Jaques Lead lawyer: David Storr Client: Northern Motorway Consortium • Reportedly largest PPP project undertaken to date in Australia • Project includes seven kilometre toll road linking Brisbane’s northern suburbs to airport, with fly-over road and section for Northern Busway • Financial close was expected in August 2008, construction due to complete mid-2012

►► NEWCASTLE COAL INFRASTRUCTURE FINANCE Value: A$1.55bn Firm: Allens Arthur Robinson Lead lawyers: Rob Watt, Phillip Cornwell, Thomas Miller Client: SMBC, Suncorp-Metway, OCBC Capital Investment Private, KBC, DZ Bank, Dexia, ANZ Firm: Blake Dawson Lead lawyers: David Mason, Matthew Stott Client: Newcastle Coal Infrastructure Firm: Clayton Utz Lead lawyer: Sergio Capelli Client: Newcastle Coal Infrastructure • Financing involved A$1.3bn senior debt and A$250m junior debt, senior funding was provided by ANZ Bank, Dexia, KBC, SuncorpMetway, DZ Bank, OCBC and SMBC • Debt funded through a variety of instruments, including a construction facility converting to term facility, cost overrun facility, liquidity facility, working capital facility, letter of credit facility and junior notes • Sponsors of project were coal companies in the Hunter Valley forming the Newcastle Coal Infrastructure Group • Sought government approval and reached financial completion in a relatively short time, by April 2007 • Transaction required innovative structure and complexity since were multiple layers of debt and equity as well as off-take involvement

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“There could also be an increase in privately financed infrastructure, and some public infrastructure projects may need additional private capital, so we will probably see public and private partnerships forming” Tom Boyce, Thomson Playford Cutlers construction lawyers, banking lawyers would not have much involvement as little bank or private equity debt funding is anticipated. “It isn’t much relief for banking lawyers in light of the credit crunch,” he says. “We always expected the fund to bring in some work, but were modest in our expectation of its volume.” Napier said that because the West Metro might be financed only by public funding, external law firms may miss out on a significant amount of PPP work. “Now that the government has taken it from becoming a PPP and made it a public project, it will involve some external legal advice. But it’s a smaller slice of the pie and likely to go to government-side legal advisers,” he says. To this end, Allens, a member of various government panels, believes the outlook is positive. Warren says construction, project and finance lawyers alike will benefit from a mix of publicly and privately funded projects.

Full speed ahead

Since the government has shown interest in fast-tracking projects, it is likely that lawyers will need to work more productively. “If the government wants projects done quickly, it’s good as long as lawyers can handle them. It usually sets realistic and achievable timeframes,” says Mitchell. He believes areas of legal expertise such as construction, financing, planning and environment will be in greatest demand. ALB 12

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ANALYSIS

How lawyers can turn Kiwi climate change ‘freeze’ into a positive Most lawyers are pleased with the outcome of New Zealand’s general election; however, some climate change practices are concerned that the National government’s move to postpone and review the Climate Change Response (Emissions Trading) Amendment Act 2008 could hit work flows

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he Kiwi legal community has been in lengthy discussions over the new John Key government’s decision to postpone the emissions trading scheme. But what exactly would this mean for lawyers and their work flows? Kensington Swan partner Bryan Gundersen says the review – lasting until September 2009 – will be a setback for environment and commercial lawyers, if clients delay external legal expenditure. “While it’s a setback, it’s not a disaster,” he said. “I remain very positive for work flow in the area as there are risks to be managed and opportunities to pursue. We’ll still end up with an emission trading scheme, perhaps modified with agriculture carved out and a carbon tax.”

Forestry work provides shelter

While there is a slowdown in climate change work, areas of forestry are still in demand. Craig Nelson of Simpson Grierson says the pause in climate change work Craig Nelson, should not prevent Simpson Grierson clients participating in emissions trading. “It’s only natural that there will be a pause. Whether they are an emitter or a forester, NZ is still party to the Kyoto Protocol and needs to meet its obligations,” he says. Nelson points to a niche area of forestry involving the Permanent Forests Sink Initiative (PFSI) that is increasing in popularity. He says there

is no suggestion that the New Zealand government would postpone it. Historically PFSI has not received a large following due to commercial interests of timber production; however, the firm has begun to see some interest. “We began working on PFSI deals even before the initiative was passed by parliament,” he says. “There is the first-mover advantage, when clients take opportunities and secure deals while other players wait for the ‘i’s to be dotted and ‘t’s to be crossed. Namely, the best land and forests will be snapped up by those who move first.”

Emissions lobbying brings more work

Bell Gully partner Simon Watt says some of the firm’s clients have shown increasing interest in shaping the Climate Change Response Simon Watt, (Emissions Trading) Bell Gully Amendment Act 2008. “Some clients could ask for the policy to be dropped, some might want a carbon tax and others want it tweaked,” he says. “The scheme is going to keep the same framework, more likely than not, but it will be made more business-friendly.” Watt believes carbon and emissions trading work flows will remain steady. “It’s business as usual and our carbon trading work is certainly most likely to continue next year,” he states. Chris Bougen of Chapman Tripp agrees that the policy development and submission process for the scheme would create work for firms. He expects Australasian Legal Business ISSUE 7.1

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to work closely with clients to engage with the government on the scheme. “There is a sense that policy debate has been opened for a principle review of the scheme and carbon tax. At the end of the process there will be some form of policy response – and that means work for firms,” he says.

Voluntary emissions bring paid work

There has also been a “substantial” increase in voluntary emissions scheme work for firms. Bougen says they have Chris Bougen, realised that clients are Chapman Tripp increasingly interested in green credentials, carbon neutrality and sustainability. This has led to an increase in work flow over the past few years. “Work in the voluntary carbon markets is likely to continue, although the focus may shift away from emission-reduction projects to mechanisms that businesses can use to demonstrate their green credentials voluntarily,” he says. However, compliance required by the emissions trading scheme may ultimately lead to a drop in voluntary emissions work, once the scheme is enacted. Nevertheless, Bougen is “relaxed” about work flows. “There is still going to be trading activity going on in the voluntary markets. There will still be international organisations measuring client emissions and issuing some with carbon credits – there is a market for them. We are also seeing trading of existing credits,” he explains. www.legalbusinessonline.com

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Keeping in touch

Gunderson believes Kiwi firms could play a more active role in encouraging clients to give more careful consideration to the scheme. “We Bryan Gundersen, Kensington Swan tell clients not to use this as an excuse to slack off, but instead to be even better informed about how it’s going to affect their business. It is still possible to do transactions, because there are always means of allocating risk to protect both parties given the current regulatory uncertainty,” he said. To this end, climate change seminars have helped the firm. “We held a client update on where things are at on a weekly basis,” he said. “We also went to see them to find out how their business would be affected by emissions trading and other climate change issues.” He added that lawyers can also provide

broader legal advice, including both technical and strategic expertise for submissions, legal technical changes required for the scheme, opportunities for brand enhancement and work on procurement or supply contracts, to ensure carbon costs are recovered and passed through. Bougen says his firm has sent regular alerts to clients and this has been effective in helping them recognise the impact of the legislation. They are also keen to know how the Select Committee process will unfold and how to participate. Watt suggests firms could encourage clients to participate in the review by communicating with them regularly about how it would affect them. Nelson, on the other hand, says law firms could increase their work flow by publishing articles and running workshops about how clients would need to adapt to the emissions scheme. ALB 13

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ANALYSIS

Now the honeymoon’s over…. Three firms that merged recently provide some perspective on how to make a law firm merger work in the long term

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ack in July 2008, the mid-tier was on a roll. Four major firm mergers in the space of a month seemed to herald a new era of consolidation – and they all went into them with optimism, aiming for that elusive point of critical mass. So, how are they faring six months down the track? And what lessons can they offer to other merger-aspirants?

Business model

Unlike listed companies, the traditional law firm partnership is a rather private affair and it is precisely this lack of transparency that can put a merger in dangerous territory. Margaret Fitzsimons, general manager of Thynne & Macartney, says that her firm would not have been in a position to even consider it, had it operated according to a traditional legal business model. She attributes the success of the merger to the firm’s strong corporate approach, which means the business is run by a team of specialist managers. The firm’s equity partner remuneration system has also stood the test of the process. “We are prepared to make challenging business decisions if we need to because we 14

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have comprehensive management information at hand to assist us,” said Fitzsimons. “Our business is based on meritocracy. There are no free rides at Thynne & Macartney – conversely, everything is fair here and that Bill Fazio, culture encourages us Herbert Geer all to achieve to the highest level we can in accordance with our lifestyle decisions.”

Same firm, different name?

Some mergers start with a bang, with new lawyers and their support staff arriving on the doorstep of their adoptive firm and a flurry of activity as they settle in. The disruption sends a useful signal to all involved that a new world order is here, and that an adjustment needs to be made. But the challenge was different when Herbert Geer merged with NRH in Brisbane. The original Herbert Geer lawyers left to form their own boutique insurance firm – and the NRH team became Herbert Geer’s Brisbane presence. The NRH team had a new name, but hardly any other physical

evidence of the merger. Managing partner Bill Fazio’s task was to foster a sense that the merger was more than just a change of name and logo. “You can’t ram change Tony Morgan, down people’s throats,” Cridlands said Fazio. “You need to help it along and encourage it to happen naturally. That means giving people the chance to get to know each other – and that’s a process that doesn’t happen overnight.” There are two keys to facilitating it, however – technology and travel. “In the current climate, people are more cautious about spending money on travel,” said Fazio. “That’s why we’ve allocated partners a travel budget so that they can meet their colleagues in other cities. And we want them to use that budget – not save it.” Herbert Geer has also invested in new technology to afford easier communication between offices. At Cridlands MB, technology was also a key part of fostering a united firm culture. With Morgan Buckley lawyers predominant in the Alice Springs office and Cridlands lawyers likewise in the Darwin premises, there Australasian Legal Business ISSUE 7.1

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►► Recent mid-tier mergers Firms: Cridlands, Morgan Buckley New name: Cridlands MB Territory: Northern Territory Date: August 2008 Firms: Herbert Geer , Nicol Robinson Halletts New name: Herbert Geer State: Queensland Date: July 2008 Firms: Middletons, Salter Power, Franklyn Legal New name: Middletons State: Western Australia Date: December 2008 Firms: Thomson Playford, Cutler Hughes & Harris New name: Thomson Playford Cutlers State: NSW Date: August 2008 Firm: Thynne & Macartney and Biggs & Biggs New name: Thynne & Macartney State: Brisbane Date: August 2008 Note: Location denotes state where merger took place, not firm headquarters.

was a danger of them both operating at a metaphorical distance from each other. The unifying point turned out to be technology. “Morgan Buckley had superior systems to Cridlands, so we ended up adopting the Morgan Buckley ones,” says partner Tony Morgan. He says that integrating those systems – technology, software and quality assurance – proved to be the most challenging part of the merger.

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Economic downturn

No-one could have predicted September’s dramatic events in the world economy – least of all the firms that had merged only months earlier. High-targeted growth strategies are particularly vulnerable, as the right time to enter a market often dictates the venture’s success or failure. But a broad growth strategy is a different matter – far from making a firm more vulnerable, a merger can strengthen it. Herbert Geer is a case in point. “It gave us that extra depth and talent that helped attract clients and retain them,” says Fazio. His ambitions extend beyond simply weathering the storm, however – he sees the current climate as an opportunity to grow. “We’re still looking at adding partners in Sydney and Brisbane and it will be easier to recruit,” he adds. Tony Morgan says that he’s noticed a higher calibre of lawyer applying to join his firm since the merger – a change that he attributes to its increased attractiveness. The other possible explanation could be a loosening of the employment market, but Morgan points out that his observation preceded the present economic turmoil. He says the effects of the downturn are yet to be felt in the Northern Territory and they certainly have not led to any lawyer dislocation. “We haven’t had any projects put on hold and the NT market is still strong,” he states. “In any event, the merger puts it in a good position to handle any potential hits better.” ALB

news in brief >> Three-quarters of US law firms to change billing practices Most large US firms believe they will change their billing practices over the next decade, a recent survey revealed. The annual Am Law 200 survey received about 140 responses, 84 of which were from firms with revenues of US$1bn or more. When asked whether firms would change their billing practices, about 75% of them said they would over the next 10 years, and 66% of them agreed that fixed-fee deals are likely. A similar survey prepared by social networking website Legal OnRamp revealed that 84% of lawyers, working for firms with revenues of at least US$1bn, thought there would be more “value billing”. When quizzed, respondents were divided about whether fees would represent more than 10% of total transaction costs; however, they agreed collectively that billable hours would be diminished. Clients dissatisfied with firms, survey reveals More than 60% of Australian clients are dissatisfied with their legal adviser, a recent sample survey revealed. Consulting firm Julian Midwinter & Associates conducted a series of focus groups and one-onone interviews with in-house lawyers and business executives. It revealed that 65% of clients felt that at least some of their legal work should be serviced at lower cost, while only 25% believed their lawyer actively tried to reduce legal expenses. Consultant Linda Julian suggested that firms should make better use of technology and document creation systems to reduce costs. She pointed out that partners in some firms have created templates and automatic information exchanges that paralegals can use to minimise senior-level involvement and fees in some work.

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news in brief >> Three-quarters of US law firms to change billing practices Most large US firms believe they will change their billing practices over the next 10 years, a recent survey revealed. The annual Am Law 200 survey received about 140 responses, 84 of which were from firms with revenues of US$1bn or more. When asked whether firms would change their billing practices, about 75% of them said they would over the next 10 years, and 66% of them agreed that fixed-fee deals are likely. A similar survey prepared by social networking web site Legal OnRamp revealed that 84% of lawyers, working for firms with revenues of at least US$1bn, thought there would be more “value billing.” Respondents were divided when quizzed about whether fees would represent more than 10% of total transaction costs. However, they collectively agreed that billable hours would diminish. Clients dissatisfied with firms, survey reveals More than 60% of Australian clients are dissatisfied with their legal advisor, a recent sample survey revealed. Consulting firm Julian Midwinter & Associates conducted a series of focus groups and one-onone interviews with in-house lawyers and business executives. It revealed that 65% of clients felt that at least some of their legal work should be serviced at lower cost, while only 25% believed their lawyer actively tried to reduce legal expenses. Consultant Linda Julian suggested that firms should make better use of technology and document creation systems to reduce costs. She pointed out that partners in some firms have created templates and automatic information exchanges that paralegals can use to minimise senior-level involvement and fees in some work. MacDonnells Law goes global with Meritas Queensland firm MacDonnells Law has joined global business law firm alliance Meritas. The alliance aims to provide clients with a simple, localised and comprehensive search service for firms. It has a membership of Terry Karydas, about 170 law firms and 5,700 Macdonnels Law lawyers located in 60 countries. In Australia member firms are including Madgwicks, Snedden Hall & Gallop, Downings Legal and Rudkin Hitchcock. The alliance is expected to allow the Queensland firm to expand its client base, legal talent pool and scope. MacDonnells Law partner Terry Karydas said the opportunities created in such an alliance include sharing information and expertise with other lawyers within the group.

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Australia

South Australia: the new frontier

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he epicentre of Australia’s resources boom might have been Western Australia but, according to Blake Dawson partner Simon Fraser, South Australia is the new frontier. “We are firm believers in the future of the South Australian economy. We think there will be a mining boom. Although it’s been in the doldrums for a while and the current economic crisis has slowed the pace of it a little bit, we believe it will happen,” Fraser said. Fraser, who specialises in energy & resources, has led Blake Dawson’s expansion into South Australia. He said commitment by the state government to infrastructure development combined with a streamlining of the approvals process has helped to make South Australia an attractive destination for junior miners, even more so than WA. “The government and bureaucracy in WA have become tired and they are not that interested in new projects because they have so much going on,” he said. “However, in SA the government have their ears pulled back. There is quite a lot of focus on junior miners, and the sentiment is that junior miners are currently getting more bang for their buck in SA then they are in WA. “The state is very keen to realise the wealth that it has in the ground. So from

a lawyer’s perspective that means more work,” he added. Although Fraser noted the lack of available funds necessary for drilling may stall Simon Fraser, some mining projects, Buddle Findlay the current slump in commodity prices will not be a longterm deterrent. “Most exploration work in SA is in its early stages – it takes years to develop a project. They need to find the ore, develop the resources, get all the approvals then build the project … most projects are at least five to 10 years away from production … that’s outside the current commodity cycle. I would expect commodities to resume their more normal trajectory within the next two to three years. So, current commodities are not impacting people’s views about how they should spend money on developing projects,” Fraser explained. “There is a strong feeling that a number of those exploration tenements will yield world-class resources of some description, so the prevailing feeling is that in the next 10 years or so there is going to be number of large projects developed in SA,” he continued. ALB Australasian Legal Business ISSUE 7.1

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US, Australia, Middle East, Asia

Australia

Pro bono popularity holds steady

Melbourne: law firm space race settles down

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mid global economic turmoil and dwindling workflows, US lawyers are showing good spirit and using their spare time to do more pro bono work. According to Dechert chairman Barton Winokur, at least seven of that firm’s associates are expected do full-time pro bono work for about three to six months. The associates have extra capacity due to a slowdown in structured finance work. Cadwalader, Wickersham and Taft has similarly increased pro bono hours, while Akin Gump partner Steven Schulman said his firm’s annual pro bono hours rose from 69 to 85 hours per attorney in 2007–08. In most parts of Asia, international firms chose to leave their pro bono work to their US headquarters. One of the few exceptions was Tokyo-based Paul Hastings partner Alexander Jampel, who said that there had been a steady

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flow of pro bono work. “It has been consistent with previous years. We don’t plan to make staff work solely on pro bono; we just want all attorneys to work on some matters. About half of our lawyers work on pro bono and most of the partners do it, too,” he said. The move has been welcomed by the Pro Bono Institute in Washington, DC, whose president, Esther Lardent, said the increase is a change from how some firms tended to discourage pro bono before the 2001 recession. Apparently, some firms stopped giving equal credit for pro bono time and increased billable hour quotas. The Association of the Bar of the City of New York observed increased attendance for a pro bono training session in October. Instead of an expected attendance of 80, there were 245 guests. ALB

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here may be a light at the end of the tunnel for AAR’s deal to secure office space at the 567 Collins St Melbourne development, which was subject to speculation earlier this year that it would be shelved owing to low levels of precommitment from tenants. Unconfirmed reports now indicate that BP is set to sign up as a tenant in the development, finally putting to rest doubts as to the future of the project. Other firms have also been making plans for their Melbourne offices. Last month Mills Oakley signed on for premium space at 530 Collins St, to be occupied late next year, while Minter Ellison has renewed its lease at the Rialto office building. ALB

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NEWS >>

news in brief >> Geothermal investment rocks, says DLA Phillips Fox Australian geothermal power developer Geodynamics completed three successful capital raisings in 2008 – A$37.5m (May), A$33.5m (June) and A$44.1m (September). This came after a successful joint venture with Origin Energy in late 2007 that raised A$115m for Geodynamics’ flagship Cooper Basin hot dry rock project. DLA Phillips Fox partner Eugene Fung advised on the joint venture and capital raisings. He said that the investment showed that despite a difficult market, there was still capital available for quality renewable energy projects. A report recently released by professional advisory firm Ernst & Young tipped investment in the sector to soar to A$2.3bn per year by 2020. UK company revamps panel, eliminates time-based billing Major UK company ITV has announced a new panel and, according to a report in Legal Week, is claiming to be the very first UK company to eliminate timebased billing by its panel firms. General counsel have always encouraged alternative billing structures. Now that work flow is starting to tighten up for firms, that gentle encouragement might begin to take a more strident note, as GCs look to gain some leverage from their improved bargaining positioning. Firms on ITV’s panel are Slaughter and May, Lovells, Addleshaw Goddard, DLA Piper, Olswang, Charles Russell and Goodman Derrick. Erstwhile advisor Freshfields, however, missed out on a seat. Blasted: Lawyer accused of using Mumbai tragedy to promote firm A partner of a European firm who was caught in the Mumbai cross-fire is still ducking for cover even after returning to the UK. The partner, who was interviewed by The Lawyer and UK mainstream media, attracted the ire of readers by reportedly “namedropping” his firm and its India practice and allegedly boasting that the siege had not prevented him from participating in a teleconference board meeting from his hotel room. The reports drew protest from readers on The Lawyer’s reader forum, who accused the partner of “shameless self-promotion” and being an “embarrassment” to the legal profession. One reader, who claimed to be a former employee working under the partner, wrote in to express amusement at the thought of the partner “cowering behind closed doors.”

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capital Markets

Allens, Freehills get slice of Westpac capital raising

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ight in the thick of the global financial crisis and after months of decline in the capital markets, Allens Arthur Robinson, Freehills and Sullivan & Cromwell have successfully pulled off a A$2.5bn capital raising for Westpac. Could this be an early sign that other banks may follow suit? Allens’ Stuart McCulloch, Freehills’ Philippa Stone and the Sullivan & Cromwell team successfully placed the A$2.5bn through an institutional book build, with a further A$500m to retail investors through a non-underwritten share purchase plan. The bank undertook the raising taking into consideration a number of factors, including the slowing economy and the expected further deterioration of the credit market. Freehills partner Philippa Stone said a number of issuers, including banks, are strengthening their balance sheets through capital raisings. “Westpac has done it. And Commonwealth Bank recently announced a A$750m raising to redeem its PERLS II securities and of course there are other non-bank issuers currently in the market for capital,” she said. At the moment it is unlikely that banks would consider undertaking a

hybrid capital raising, since Westpac has indicated its reluctance to replace St.George’s hybrids. The bank felt that the hybrid equity markets were becoming increasingly challenging and because of this success was uncertain in the present economic conditions. However, Stone is still positive about hybrid work: “Banks are very scientific in managing their capital and I am sure they will continue to look at the hybrid market,” she said. ALB

►► Correction

Please note that incorrect information regarding the Oakajee Port & Rail Project appeared on p47 of ALB issue 6.12 within the ‘ALB Guide: infrastructure 2008’ section. The correct information is as follows: During 2008 the Western Australian government ran a competitive process to select the developer of the new deep water iron ore export at Oakajee, north of Geraldton. Oakajee Port and Rail Pty Ltd (OPR) (as agent for a joint venture comprising Mitsubishi Development Pty Ltd, Crosslands Resources Pty Ltd and Murchison Ports Pty Ltd) and Yilgarn Infrastructure (Yilgarn) both lodged bids to become the developer and operator of the port. OPR (as agent for the Joint Venture) was selected as the preferred developer. Yilgarn’s bid was rejected. OPR’s bid was considered by the Western Australian Government to be superior to that of Yilgarn in every respect. The Western Australian government has declined to appoint Yilgarn as a reserve proponent and Yilgarn currently has no right to build any part of the Port Infrastructure and no right to build any Rail Infrastructure. There is no continuing competitive process for the right to build the port. It follows that the project will not be partly funded by the five Chinese companies named in the article and there is no current proposal for the Chinese EXIM bank and China Development Bank to provide debt financing for the project. OPR is currently finalising the development agreement with the Western Australian Government confirming its selection as the preferred developer of the project. That agreement is expected to be finalised shortly. The primary legal advisors involved in the project are: DLA Phillips Fox (lead lawyer: Robert Edel (client: Oakajee Port and Rail Joint Ventures); State Solicitors Office of Western Australia (lead lawyer: Geoffrey Grice) (client: State of Western Australia); Mallesons Stephen Jaques (lead lawyer: Geoff Rogers) (client: Mitsubishi Development Pty Ltd); and Freehills (lead lawyer: Rob Merrick) (client: Murchison Metals Limited) Australasian Legal Business ISSUE 7.1

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NEWS >>

Singapore Blakes’ Singapore office off to a good start The Singapore legal market became a little more crowded after Blake Dawson commenced operations in the Lion nation, a move designed to strengthen its Asia presence. The Singapore office, headed by partner Rhonda Hare and staffed by lawyers Rhiannon Barnard and Ari Fox, will focus on hotel, tourism and gaming-related issues. The move makes Blakes only the fifth Australian law firm and the 86th foreign law firm to enter the saturated Singapore legal market. In 2008, as part of its commitment to liberalising its legal market to support its financial services sectors, Singapore’s Ministry of Law announced the introduction of a Qualifying Foreign Law Firm (QFLF) licence, whereby six selected foreign law practices would be allowed to practise Singapore law in permitted areas and employ Singapore-qualified lawyers. After applications were processed, the Singapore authorities named the successful firms as Allen & Overy, Clifford Chance, Herbert Smith, Latham & Watkins, Norton Rose and White & Case. Until recently, foreign law firms were allowed to practise Singapore law only through a joint law venture (JLV) with a domestic firm. While Blakes may have missed out on a QFLF licence, watch for the firm to look to lateral hires and maybe even its own JLV to shore up its market position in 2009. ALB

uk report London lay-offs rife It has been a bad few months for lawyers in London and beyond. Firms in the UK have been hit hard by the credit crunch, triggering a number of layoffs in quick succession. Among the firms to dismiss City staff in recent months are Eversheds, Orrick, Mayer Brown, Reed Smith, DLA Piper, Taylor Wessing and Squire Sanders. Eversheds is up to its second redundancy consultation, with the latest round tipped to include 45 lawyers and related support staff. Fresh from making cuts across its US network, White & Case has now turned its focus on to its UK offices, where it is reportedly aiming to reduce its legal and non-legal headcount by about 3%. Meanwhile 40 associates across the real estate, structured finance and corporate practices of Orrick Herrington & Sutcliffe are said to be facing redundancy. Mayer Brown recently launched a redundancy consultation for 11 lawyers working in its London office, while DLA Piper has launched a redundancy consultation likely to result in up to 40 job losses across its UK offices. Partners have been told they will be out of the firing line. And the latest bombshelll? Linklaters is looking to cut no fewer than 70 partners from its worldwide operation. Crisis turns focus to strategy While many firms are taking to redundancy consultations to balance the financial fallout from the economic downturn, a few UK establishments are also initiating other tactics to stay afloat. Following a June redundancy consultation, Milton Keynes firm Kimbells recently told lawyers in three

of its departments to move to a four-day week and put the entire corporate team on two weeks’ unpaid leave in the run-up to Christmas. No new staff for Cadwalader Cadwalader Wickersham & Taft will have to break its impressive 100% trainee retention rate, which has remained steady for the last two-and-a-half years, due to worsening market conditions. The firm recently announced that it will not be offering jobs to any of its City trainees due to qualify in March 2009. The intake freeze will affect three trainee solicitors and makes Cadwalader one of the first leading firms in the City to make this move. Deloitte survey reveals slow growth for firms It may not come as a surprise, but recent research from Deloitte reveals that UK firms are struggling with growth in light of the economic crisis. The report noted that fee income across the country’s 100 largest firms had increased by only 5.8% during the second quarter of 2008–09 compared with the same period the previous year. Firms in the top 10 are faring slightly better than their smaller rivals, reporting an average rise in fee income of 11.1% for Q2, but large firms have still been affected, posting only modest increases in revenue. Hey big spender – Norton flashes the cash While most UK firms are having to cut corners in most cost centres, it seems Norton Rose is sailing along just fine – having just spent more than £8m on improvements to its offices. According to the firm’s 2007–08 annual report, £8.6m was spent on additions to its offices worldwide and a further £1.5m has been set aside for IT in the new year.

 ROUNDUP

• David Harris will start his second four-year term as Lovells managing partner in May. He was recently re-elected, despite stiff competition from European head Harald Seisler • Bryan Cave recently launched its Paris office, with former Dechert partners Kathie Claret, Jilali Maazouz and Joseph Smallhoover and five other associates on board • Austrian firm Schoenherr is set to take over Herbert Smith ally firm Gleiss Lutz in the New Year. Schoenherr will obtain Gleiss Lutz’s Prague and Warsaw branches while simultaneously launching its own office in Bratislava, Slovakia • Eversheds, Allen & Overy and Ashurst are just a few of the top-tier firms to receive gongs for their work and employees at the recent 2008 British Legal Awards. Eversheds won firm of the year and lawyers from Allen & Overy and Ashurst picked up the lifetime achievement and senior partner awards respectively

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28/01/2009 3:58:11 PM


NEWS >>

news in brief >> DLA Piper askS salaried partners to contribute capital US salaried partners of DLA Piper will contribute capital to the firm under a proposal to be voted upon by partners next month, according to the US National Law Journal. The firm said that it is aiming to reduce its credit exposure by 30%, with joint chief executive officer Frank Burch commenting that the firm thought it would be “prudent” to finance more of its operations with its own money instead of lines of credit. The proposal, which will give salaried partners a limited stake in the firm’s profits, is also intended to encourage an “ownership” culture rather than an “employee” culture for salaried partners. DLA Piper operations outside the US will not be affected by the proposal, with the status quo to be maintained. Apple to drag and delete US law firms from preferred list The in-house legal team at Apple is currently compiling a newer and leaner list of preferred legal advisors. The move follows similar moves by competing IT companies to shape up their legal departments. According to Apple’s general counsel, Daniel Cooperman, the company has historically used a large number of firms since it has been difficult for any single firm to have an adequate understanding of its technology, markets and culture to perform at “peak efficiency”. It is currently unclear which firms will end up on the shortlist. However, they are likely to include previous advisors such as Orrick, Morrison & Foerster, O’Melveny & Myers and Howrey Wilson – who helped Apple go public in 1980. The list is expected to be finalised by early 2009. DLA Phillips Fox adds another deal to the basket DLA Phillips Fox has advised NZ supermarket group Foodstuffs on its successful purchase of the Liquorland retail liquor chain. Foodstuffs outbid some stiff competition including Australian supermarket giant Woolworths to close the deal. The DLA Phillips Fox team was led by partner Martin Wiseman and included senior associate Reuben Woods and senior solicitor Julie Harper. The transaction involved the purchase of all of the shares in Liquorland from DB Breweries. Wiseman said the transaction went smoothly due to Foodstuffs’ deep understanding of the needs of owner-operators and DB’s desire to look after the long-term needs of the Liquorland franchisees.

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Australia

Lawyers optimistic in wake of aborted BHP–Rio deal

A

fter 18 months of tirelessly acting on the failed BHP Billiton and Rio Tinto merger, Allens Arthur Robinson partner Ewen Crouch is still optimistic. “It was a terrific effort … our team has been working incredibly hard for the past 12 months. We are optimistic about M&A and capital markets work in 2009 that should get underway from around February,” he said. The two mining giants decided to call off the deal most recently valued at US$66bn, after the fall in metal prices and global financial crisis was feared to have created too much risk for the deal to proceed. Crouch believes the BHP-Rio takeover bid was unique partly due to the number of jurisdictions involved and nature of the proposal. “This was a unique deal. There are few dual-listed companies and this was the first proposal to acquire a duallisted company by way of takeover,” he said.

Complexities included Rio’s repeated rejection of BHP’s offer and reportedly little interaction between parties. The European Union’s antitrust authority also demanded that BHP divest several assets, while both Japan and China were against the deal due to their reliance on both parties’ iron ore and other raw materials. On a brighter note some firms are likely to benefit from the cancelled merger, since Chinalco has recently shown interest in increasing its stake in Rio by at least 9% (US$14bn). This could mean more work for Mallesons Stephen Jaques, Simpson Thacher, Clifford Chance and Sullivan & Cromwell, which formerly acted on Chinalco’s initial 12% (US$14bn) stake acquisition in Rio. Other firms that worked on the BHP-Rio merger include Linklaters, Slaughter & May, and Skadden, Arps, Slate, Meagher & Flom. ALB

industry Dust settles over Mallesons, Clifford Chance talks

“W

hat merger talks?” we hear you ask. Rumours of a major top tier merger have been circulating since July, but for the first time Mallesons and Clifford Chance have been identified as the firms in question. Talks never reached a formal stage, and the firms mutually agreed to put the discussion on hold following September’s dramatic events in the world economy. However, it is understood that the firms remain interested in reopening the dialogue when more felicitous conditions return, although the

continuing economic uncertainty makes it difficult to predict a specific timeframe. The implications of such a merger will be food for thought for rival toptier firms: the combined strength of a Magic Circle firm with Mallesons’ large Australasia footprint would have created a formidable regional presence. But this is not the first time such as union has been mooted – merger talks between the two firms were first broached back in 1999. It’s a fair bet that it won’t be another 10 years before talks resume. ALB Australasian Legal Business ISSUE 7.1

28/01/2009 3:58:17 PM


NEWS >>

m&a

Firms quiet on BAQantas merger Law firms that previously acted on British Airways’ (BA) failed proposal to merge with Qantas Airways (A$10bn) appear to be at a loss for words. Allens Arthur Robinson, Blake Dawson, Mallesons Stephen Jaques, Slaughter & May, SJ Berwin and Sullivan & Cromwell confirmed they were acting on the merger. But none of them commented on whether talks could have developed into any concrete agreement. If the merger had been successful, it would most likely have proceeded via a dual-listed company structure and involved an additional merger. However, the deal still faced a range of complications and regulatory concerns, when Australian federal transport minister Anthony Albanese announced that Qantas would remain a majority Australianowned company. This limited BA to acquiring no more than a 49% stake in Qantas. Allens partner Andrew Finch, Blakes’ John Field, Mallesons’ David Friedlander and Sullivan & Cromwell’s Daryl Libow have at the very least received some due diligence and compliance work. BA acquired a 25% stake in Qantas during the Australian carrier’s 1993 privatisation. ALB

us report Firms slash staff to battle credit crunch UK firms aren’t the only ones turning to redundancy to counter the effects of the economic downturn. US firms across the board – including Squire Sanders & Dempsey, Proskauer Rose and Reed Smith – have also been engaging in some pruning of the payroll. Squire Sanders dismissed a total of 30 associate and support staff following its annual employment reviews, citing current and projected business conditions as the major reason. Proskauer Rose, meanwhile, made 35 associates and 25 support staff redundant in its US offices, despite major advances in developing its international network. But perhaps the most dramatic culler of staff has been Reed Smith, who made 115 redundancies across its US offices. Other firms to have cut staff include: Buchanan Ingersoll & Rooney (25 secretarial and administrative staff); Duane Morris (22 marketing and administrative staff); Ballard Spahr Andrews & Ingersoll (13 support staff); boutique IP firm Synnestvedt & Lechner (seven staff – has since disbanded); and Blank Rome (nine associates). Christmas bonuses hit by downturn Firms are increasingly having to display Scroogelike tactics in a bid to soften the blow of the credit crunch on their finances. Cravath Swaine, Simpson Thacher, Clifford Chance and Davis Polk are

among the firms whose US associates are receiving reduced bonuses at the end of the year. At Cravath, year-end bonuses for 2008 will range from $17,500 to $30,000, and the firm has canned the special bonus element of its 2008 payments. Simpson Thacher has also cancelled the additional special bonus for its associates, which last year ranged from $10,000 to $50,000, and junior lawyers will receive $17,500 – a severe drop from last year’s payout of $35,000. Clifford Chance associates will receive between $17,500 and $32,500 – a far cry from last year’s $32,000 to $65,000. The story is similarly austere at Davis Polk, and Cleary Gottlieb and Dewey & LeBoeuf are two more firms to have slashed associates bonuses. Skadden Arps, however, has decided to go against the grain and has actually matched 2007 figures – minus supplemental bonuses. Partners at DLA Piper share financial load Partners at DLA Piper have been asked to contribute capital to the firm from next year. The strategy – a bid by the firm to reduce its reliance on bank credit and simplify its compensation structure – will only affect the 275 salaried partners at the international firm’s US offices who now receive an income rather than hold an equity stake at the firm. The amount to be contributed will depend on seniority and will give the partners a stake in the firm’s profits less than that of full equity partners.

ks

ROUNDUP • Kirkland & Ellis has promoted 67 of its lawyers to partner across its US and London offices. In the US, the corporate practice alone saw 23 promotions, while litigation had 20 • Cleary Gottlieb has promoted 10 lawyers to partner recently – six in the New York office, two in Rome and one in Brussels • New York-based corporate head Tim Goodell has left troubled White & Case to join US oil company Hess Corporation as general counsel • King & Spalding is close to reaching an agreement with Thacher Proffitt regarding the acquisition of around 100 of the latter’s 195 lawyers • White & Case chairman Hugh Verrier has voiced his commitment to expanding and further developing the firm’s existing international network, in the wake of a management shake-up that saw firm power split among 14 regional groups and a 16-member global practice council set up. Verrier confirmed Latin America and Asia as prime targets for investment

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Firm Profile NEWS >>

Buddle Findlay

NZ COMMENTARY

RMA Reforms – will economic crisis lead to major reforms?

T

he National government took office in November 2008 on the back of promises to make New Zealand globally competitive, reduce taxes and improve productivity. One of its key policy planks, and to be started as part of its “first 100 days” programme, was commencing significant reforms of the Resource Management Act (RMA). Faced with a gravely wounded economy, the timely delivery of infrastructure projects to deliver fiscal life-blood and save New Zealand from recession has taken on new significance. Prior to its election National claimed its first phase of amendments to the RMA would: • Simplify the Act by reducing the number of consent categories, getting rid of vexatious and frivolous objections, making it easier for Councils to update plans, clarifying Treaty of Waitangi references, and scrapping the Ministerial veto over coastal consents • Address perceived frustrations over minor consenting issues by establishing a new complaints mechanism with the power to discount or waive fees where statutory timeframes are breached • Establish an Environmental Protection Authority (EPA) responsible for more effectively propagating National Policy Statements (NPS) and National Environmental Standards (NES) designed to increase national consistency and reduce duplication of work by local authorities. It also suggested that an EPA would be responsible for initiating a “priority consenting” process for “major consents”. National also promised a second tranche of more wide-ranging reforms further into its term to address more complicated issues, such as the interaction between the Resource Management Act and the outmoded Public Works Act, water allocation, urban design and address issues around infrastructure.

RMA advisory group In December the new government appointed a multi-disciplinary advisory group, with members from local government, legal, planning and business professions. The group has

22

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been tasked with formulating RMA amendments that largely correspond with what was promised prior to the election and has been asked to provide its advice in sufficient time to facilitate the introduction of a RMA reform bill by the end of February 2009. Unsurprisingly the establishment of an EPA has been considered to be too large a task to complete within this tight timeframe, and has been deferred. Notwithstanding the EPA’s deferral, the advisory group has still been asked to provide provisions for priority consenting for major projects. What is meant by “priority consenting” or “major projects” is unclear, but it is these changes that, at least in the short-term, are most likely to provide for reduced time required to deliver large infrastructure projects. The government has confirmed that it will continue to work towards a set of wideranging reforms to further address more complex issues, including addressing deeper issues around the delivery of infrastructure projects.

Will there be real change? While these changes may result in practical measures to speed up the decision making process for large infrastructure projects, and indeed run of the mill consents, they do not represent a radical departure from the many rounds of reforms to the RMA that have been implemented by every new government since 1991. For example, for a number of years a proliferation of NPS and NES has been promised, but little has been delivered. Implementation of policy rather than new policy is what is required. An area which is to be reformed is the issue of allocation of resources where resources are approaching or are at full allocation. This issue has been particularly pressing with space for aquaculture and fresh water allocation. The RMA’s environmental effects focus does not comfortably address the competing economic claims of different sector groups. These reforms could result, for example, in a question of allocation of water resources being assessed by a central agency better able to directly assess and

Patrick Mulligan, Buddle Findlay

balance the competing and strategic economic claims for these resources, rather than being solely assessed on environmental grounds. To deliver the radical change the new government has intimated it will deliver, will require fundamental changes to the participation focused approach of the RMA. The ability to participate in resource consent applications and to have almost complete judicial oversight of the process, is far more extensive than the equivalent processes in other jurisdictions such as Australia and the UK. Had the benign economic conditions of the last 15 years continued for the new government, one suspects it would have had little political impetus to radically recalibrate the balance between timely development and public participation. However, now that the prospect of economic collapse looms, the value of extensive public participation is more likely to be critically examined. One only has to recall “Think Big” to conclude that, in times of economic crisis, decision-making in regard to large infrastructure projects can quickly become a great deal less inclusive. This article was written by Patrick Mulligan, a partner in the Auckland office of Buddle Findlay, one of New Zealand’s leading law firms. Patrick specialises in environmental and local government law. Patrick can be contacted by phone: +64 9 357 9396 or email: patrick.mulligan@buddlefindlay.com. Australasian Legal Business ISSUE 7.1

28/01/2009 3:58:25 PM


NEWS >>

news in brief >>

Australia

Mallesons assists Babcock with Wind spin–off

B

abcock & Brown Wind (BNBW) has appointed Mallesons Stephen Jaques and UBS to review the company’s ownership and possibly become a satellite fund. In a surprise move BNBW decided to separate itself following months of financial uncertainty faced by parent company Babcock & Brown. As part of the changes BNBW will create a new management agreement, reduce fees paid back to B&B and eventually spin-off from its parent. Its staff will no longer be employed by B&B and it will seek independent financial advice on transactions.

The fund will also take control of BNBW’s technology and information systems to avoid any losses caused by a potential B&B collapse. Such fears could be attributed to an on-going dispute with German bank HypoVereinsbank over a B&B deposit. The bank withheld A$150m as a security loan and if B&B fails to access the funds, it may enter administration. On a slightly different note, B&B Power has decided to divest some of its assets and international investment funds are believed to be undertaking due diligence on the fund. AGL Energy and Origin Energy have expressed interest. ALB

Australia

Trimming the fat: firms review staffing in slow market

L

aw firms are feeling the pinch of the global financial crisis and many of them have been – or are in the process of – reviewing their staffing needs. Holding Redlich’s Brisbane managing partner Michael Byrom expects a slow New Year, which should pick up once more clients create new strategies, consider more rationalisation or even decide to merge. “In the past months it has been quietening down. January will be quiet, but come mid-February we will see more activity,” he said. Practice areas tipped to grow include government, competition, insolvency, litigation, resources, infrastructure, insurance and funds management. Firms such as Deacons and DLA Phillips Fox have responded to this

www.legalbusinessonline.com

outlook by boosting staff in those areas and reducing numbers in slowing areas such as finance, transactional documents and property. DLA Phillips Fox retrenched 12 Australian and Kiwi lawyers while Deacons laid off 15 property and finance lawyers. “Certainly, those firms that gear off the property sector may face lay-offs,” said Byrom. Prevailing market conditions have had an impact on the graduate programme at Corrs and the start date for 2009 recruits is postponed until at least April 2009. The change is to ensure graduates have a good supply of work when they do start and they were each paid A$2,300 to help with any resulting personal expenses. ALB

Deacons, Allens on hungry Monster’s JV US-based recruitment firm Monster Worldwide and media corporation News Limited have engaged Deacons and Allens Arthur Robinson as advisors on their 50/50 joint venture deal, which will see the global component of Monster combine with News’ print and online recruitment subsidiary, CareerOne. Monster was advised by Deacons corporate partner Tim Flahvin. The Allens team advising News Limited included M&A partner Kylie Brown assisted by lawyer Andrew Ailwood. “Apart from dealing with the issues which typically arise in negotiating joint ventures, this transaction provided us with an interesting insight into the online recruitment business model,” said Flahvin. The deal will combine News’ strategic marketing ventures with Monster’s technological component to tap into the competitive recruitment market and follows Monster Worldwide’s recent US$175m acquisition of ChinaHR.com, in a move that boosted its position in the Asia market.

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Cross-border asset acquisitions set to rise Lawyers have speculated about M&A opportunities arising from companies sitting on the sidelines, waiting for values to “bottom out”. Now fund managers are approaching firms to capitalise on Australian commercial property assets. Blake Dawson partner John Stawyskyj said he has spoken with international fund managers from Europe, Australia, North America and the Middle East who are keen to acquire direct commercial property assets. They appear to be highly interested in property leased by long-term tenants such as government, he said, adding that opportunistic funds from Singapore are looking to raise between US$500m and US$1bn in equity and are planning to allocate as much as 20% of their equity to Australia – twice as much as they have historically. Some managers consider Australia to be a “secure floor” to counter larger risks in other jurisdictions such as countries in Southeast Asia. Skadden partner Adrian Deltz agreed that, since the value of the Australian dollar has remained low, it is likely there will be some inbound M&A involving multinational companies buying Australian assets.

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28/01/2009 3:58:27 PM


NEWS >>

news in brief >> US law firm partner revenues down 4% A recent sample survey revealed that partners working for US law firms are currently bringing in 4% less revenue than in 2007. Financial service provider Wachovia interviewed 55 large US law firms and discovered that billable hours per attorney were down by 4.5%. The survey also found that gross firm revenues were up 7% for the same period, largely due to more lawyers billing less. By comparison Citigroup published a similar study in November, indicating that revenues for the same period were up by 5.5%. The survey reported that US firms will increase hourly fees by 5% in the new year, a slightly smaller increase than the 6.5–7% increase in 2008. CPS, Freehills take all-nighter ride on APA vehicle establishment Chang, Pistilli & Simmons, Freehills, Mallesons and Allens have been very busy for the past eight months, acting on the APA Group’s new infrastructure vehicle establishment (A$700m). CP&S partner Jason Mendens said the transaction was very challenging, partly due to the global financial crisis and various complexities involving the sale of assets such as coal steam gas processing plants, gas power generation facilities and pipelines. “The restructure and sale of a number of assets around Australia required negotiations with several firms in a condensed timeframe. The assets were in NSW, Queensland, Western Australia, South Australia, Victoria and the Northern Territory,” he said. The deal also involved investment by Marubeni Corporation and Osaka Gas Company, where APA Group retained a 19.9% interest in the vehicle. “This made for more than one all-nighter,” he added. Mallesons partner Dominic Bortoluzzi, who advised the vehicle on complex debt financing, said the deal was “intensive” due to tight credit markets. “Even in this tough market quality assets can still get finance. The quality in this deal was they were new assets and the off-takers on the assets were all strong blue-chip companies. We just had to move quickly and skilfully,” he said. Allens partner Phillip Cornwell advised financiers ANZ, Westpac and CBA, BNP Paribas, Bank of Tokyo Mitsubishi and Sumitomo Mitsui. He said the main complexity was there were a number of diverse assets leased into the fund. “It was like a series of many project financings – there were seven or eight of them,” he said. Freehills partner Robert de Boer acted for Marubeni and Osaka Gas.

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wA Middletons expands to Perth, merges with two firms

M

iddletons’ merger with Perth-based firms Franklyn Legal and Salter Power came as the Sydney- and Melbourne-based firm saw an increasing Nick Nichola, need for a Perth base Middletons to advise Western Australian clients, according to managing partner Nick Nichola. Franklyn Legal was an attractive target since it specialises in private equity and M&A work, while Salter Power was a diverse firm specialising in corporate and litigation for ASXlisted miners, said Nichola. “Originally when I came to the Perth market, I wasn’t looking to merge with two firms, but there was more than one firm that met my requirements and I thought: why not talk to both of them for a three-way merger? ” he said. Nichola said no money changed hands in the mergers. Both firms were

keen to join Middletons because it gave them the resources of a national firm and better access to other states. The firms offered high-calibre staff, he said, pointing to Franklyn partners Robert Franklyn and Russell Phillip, who used to work for Freehills, and Christian Owen, formerly of Clayton Utz. Some Salter Power partners previously worked for Jackson McDonald and UK-based firms, Nichola added. The merger took effect on 1 December 2008 and saw Middletons’ staff increase to 57 partners and 240 lawyers. The firm also plans to undertake significant recruitment at a junior and “five-year plus” level. “For now, the focus will be to get the integration right between the Melbourne, Sydney and Perth offices, by allowing lawyers to visit and get to know each other,” Nichola said. ALB For more insight on Middletons, see the Managing Partner Profile on p.50 of this issue.

Sustainability

Sustainable enterprises: a new type of lawyer

T

here was a time when a good lawyer could be described as one who provided appropriate legal solutions to problems presented by clients. Additionally, most situations called for an appreciation of the commercial context of the specific legal issue. However, according to Mallesons sustainable enterprises group partner Christopher Tung, this traditional reactive model of the provision of legal services has been superseded by a concept referred to at Mallesons as “sustainable enterprises”. While climate change departments and environmental practices have become commonplace industry wide, at Mallesons the sustainable enterprises group includes lawyers in various commercial practice areas who work through, in addition to the legal issues, the whole matrix of economic, social and environmental issues that may affect the client, hence a ‘whole business’ approach. According to Tung, such, lawyers

can provide their clients with much more effective risk proofing than if they simply react to individual legal problems as they arise. “Regardless of the industry or the legal practice area, we say to our lawyers working in the sustainable enterprises grouping: ‘You’ve got to understand climate change issues, sustainable development, carbon financing, and the business of clients and how it’s affected by these issues’,” said Tung. “Our clients in Asia are by and large extremely receptive to this new approach,” he added. ALB

Australasian Legal Business ISSUE 7.1

28/01/2009 3:58:30 PM


NEWS >>

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28/01/2009 3:58:32 PM


NEWS | appointments >>

appointments ►► LATERAL HIRES

Linklaters

Name

Area of law

Organisation coming from

Organisation going to

John Arthur

Finance, property

Various

Westpac

Sherridan Cook

Employment, litigation, government

Russell McVeagh

Buddle Findlay

Steven Dewhurst

Insurance

DLA Piper

Stephenson Harwood

Andrew Mewing

Commercial dispute resolution, sports law

International Quarterback

Holding Redlich

Veno Panicker

Construction, dispute resolution

Piper Alderman

Maddocks

James Price

Property

Gadens Lawyers

Mills Oakley

Keith Reddy

Property

Gilbert + Tobin

Maddocks

Marcus Rudkin

Various

E W Scripps

Simpson Grierson

Peter Smith

Litigation, banking, insolvency

Allens Arthur Robertson

Freehills

Trent Taylor

Corporate commercial, insolvency

Official Receiver, London

Holding Redlich

nbull

►► Promotions Name

Area of law

New role

Organisation

Ewen Crouch

M&A, capital markets

Chairman

Allens

Matthew Fitzgerald

Tax, M&A, equity

Partner

Freehills

Andrea Hutchinson, Mihai, Pascariu, Nick Jones, Rachael Johnson, Catherine Trengrove

Various

Senior solicitor

Minter Ellison Rudd Watts

Lindsay McGregor

Property, refinancing, acquisitions, sales, leasing

Transferred to Brisbane office

Holding Redlich

Justine Turnbull

Employment

Partner

Freehills

John Weber

Dispute resolution

Chief executive partner

Minter Ellison

Various

26-29 - appts.indd 26

Ex-Linklaters associate chooses Brisbane lifestyle Ex-Linklaters managing associate Justin Marschke has chosen lifestyle and weather over London life, joining Deacons’ Brisbane office as a partner. Originally from Australia, Marschke previously worked for Clayton Utz for six years and, more recently, for Linklaters in London for about four years. He is positive about workflows, since litigation is counter-cyclical to economic growth. “This is a great opportunity given the demand for strong litigation and dispute resolution skills in Brisbane right now, which will only grow in the new year,” Marschke said. He is optimistic about entering the Brisbane market and feels that it has a lot more to offer than would appear at face value. “I think people sometimes underestimate the complexity and diversity of the matters you see in Brisbane. The current economic climate is going to give rise to more complex issues and disputes than ever before and clients will need top quality strategic legal advice to help them navigate successfully through the downturn,” he said.

Allens Arthur Robinson

Freehills

Freehills makes up partners Freehills has appointed three new partners. Senior associate Matthew Fitzgerald has been promoted to the partnership. He previously worked as a senior tax consultant Matthew for PricewaterhouseCoopers’ Fitzgerald corporate tax group, was an assistant solicitor at UK firm SJ Berwin and counsel at US firm O’Melveny & Myers. Fitzgerald has acted on the Rinker Group’s defence of CEMEX Australia’s A$17bn hostile takeover bid and Santos’ sell-down of a 40% stake in the Gladstone LNG Peter Smith Project to PETRONAS (A$2bn). He said he looks forward to the “challenges” that his appointment presents.

26

Deacons

Not a stranger to Freehills is ex-Allens senior associate Peter Smith, who brings 16 years’ experience in commercial litigation, banking, corporate reconstruction and insolvency. Smith worked for Freehills in early 2000 and has acted for the liquidator of Compass Justine Turnbull II airlines and Octaviar (formerly MFS) on the implementation of a “managed workout” with creditors. Last but not least, senior associate and former Orica in-house lawyer Justine Turnbull will step up to partnership, bringing her broad experience in advising on employment law, including termination, litigation, pre-employment, alternative employment, privacy and equal opportunity issues. Freehills’ chief executive officer Gavin Bell said the decision to appoint new partners reflected the firm’s continuing optimism. “The firm has appointed 11 partners since July 2008,” he said.

Top M&A lawyer elected to chair Allens board Allens Arthur Robinson star dealmaker Ewen Crouch has been elected the firm’s new chairman. The congenial Crouch is co-head of M&A and capital markets and Ewen Crouch recently acted for Wesfarmers on its acquisition of Coles, St.George Bank on its merger with Westpac, and Rio Tinto on its response to BHP Billiton’s pre-conditional offers. He succeeded the current chairman Jim Thynne after his four-year term ended on 31 December 2008. Buddle Findlay

Cameron elected to board of New Zealand AIDS foundation Alastair Cameron has been elected to the Board of the New Zealand AIDS Foundation (NZAF). Cameron was the clear front runner having received a total of 46 of the 85 votes cast. Cameron is also a senior Alastair Cameron solicitor in the public law team at Buddle Findlay’s Wellington office. He has been involved with Wellington’s gay community, having held positions including facilitator Australasian Legal Business ISSUE 7.1

28/01/2009 12:41:05 PM


NEWS | appointments >>

of Icebreakers from 1999–2001 and member of UniQ Victoria from 1996–2001 where he served as president in 1998. More recently he has been involved in the Campaign for Civil Unions and he is currently involved with Rainbow Labour. His election makes him one of seven trustees on the NZAF Board.

Various

Westpac

Ex-Freehills partner takes top role at Westpac Ex-Freehills partner John Arthur has taken on the new role at Westpac called group executive, counsel and secretariat. Arthur has also been chairman of Gilbert + Tobin, group general counsel of Lend Lease corporate executive, and most recently chief executive of Investa Property Group.

Minter Ellison

Minter Ellison appoints new chief executive partner Following on from the departure of Guy Templeton last year, Minter Ellison has announced the appointment of John Weber as its new chief executive partner. Previously managing partner of the firm’s Canberra office and John Weber leader of the firm’s government industry group, Weber nominated industry focus, geographic spread and a diversified practice as the unique selling points of the firm. DLA Piper

Stephenson

Stephenson Harwood recruits DLA Piper insurance partner Stephenson Harwood’s Singapore office has received another major boost with the appointment

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26-29 - appts.indd 27

of former DLA Piper partner Steven Dewhurst. Dewhurst arrives at the firm as a partner from DLA Piper’s Hong Kong office, where he had been advising on insurance and reinsurance matters. He has worked in the Hong Kong market Steven Dewhurst for eight years. The appointment will further strengthen the Singapore office, which has doubled its partner numbers from four to eight over the last year. The firm now has 20% of its partners in Asia. Both Dewhurst and Martin Green, the firm’s Singapore managing partner, have said that the insurance market in Singapore has been developing rapidly.

Russell McVeagh

Buddle Findlay

Buddle Findlay Cooks up new partner role Buddle Findlay has appointed former Russell McVeagh associate Sherridan Cook to its

27

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NEWS | appointments >>

partnership. Cook will also head the firm’s employment practice. Cook previously worked for the firm as a solicitor and said the offer to rejoin was too good to pass up. He decided to move to the firm at the end of last year Sherridan Cook and continue working as a senior associate before the partner position became effective in January this year. He said both firms are of the “same quality and have a good client base; the only difference is that Buddle Findlay is more relaxed in its approach to work, while maintaining the same level of client service.” Cook acted for New Zealand’s Government Advisory Group on the Holidays Act 2003, and has a successful litigation track record in both New Zealand and the UK. Buddle Findlay has also recently appointed exVector tax adviser Emma Marr as a senior solicitor at the firm’s financial services team. Marr has worked in both in-house and private practice roles.

Gadens

Will Barnes

Andrea Hutchinson

Catherine Trengrove

Nick Jones

Mihai Pascariu

Various

Holding Redlich

Holding Redlich appoints lawyers to Sunshine State office Holding Redlich’s Brisbane office has recently been on a recruitment drive, hiring senior lawyers for its property and projects, corporate and commercial and dispute resolution practices. Former in-house lawyer for sports agency International Quarterback, Andrew Mewing, will join the firm’s commercial dispute resolution group, while Trent Taylor will join the corporate and commercial practice, after working for the Official Receiver in London. Lindsay McGregor transferred from the firm’s Sydney office and will work with the Brisbane property and projects practice. He has experience in acquisitions, sales, financing, restructuring and leasing.

Minter Ellison Rudd Watts

Minters RW lawyer lot take a step up Minter Ellison Rudd Watts appears to be in the mood for promotions, appointing five new senior solicitors at its Auckland office. Banking and finance solicitor Andrea Hutchinson acts for local and foreign lenders and corporate borrowers on asset, corporate, property and acquisition finance, while commercial property solicitor Catherine Trengrove, who is recognised for her knowledge of e-dealing and risk management solutions, has also been promoted. Mihai Pascariu advises on debt recovery, insolvency law and the Companies Act, and has appeared as junior and senior counsel before New

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Reddy has more than 30 years’ experience in property and advised developers and financiers on infrastructure and property, and in contaminated land issues. Ex-Piper Alderman lawyer Veno Panicker has also joined Maddocks as a senior associate. He acts for construction industry players such as contractors, developers, project consultants and government.

Gadens

Buddle Findlay

Two new faces for Buddle Findley Kirsten Price has joined Buddle Findlay’s Wellington office as a senior solicitor in the litigation team, specialising in resource management and environmental law. Prior to joining Buddle Findlay, Price was an assistant Crown counsel at Crown Law advising on public law and Treaty of Waitangi issues. Meanwhile, Will Barnes has joined Buddle Findlay’s Wellington office as a solicitor in the property team.

Kirsten Price

Zealand’s Court of Appeal, High Court and District Court. Infrastructure and construction solicitor Nick Jones acted on adjudications under the Construction Contracts Act 2002. Commercial and civil litigation solicitor Rachael Johnson specialises in commercial and contractual disputes, fraud, debt recovery, summary judgment proceedings and regulatory law.

Trent Taylor

Various

Andrew Mewing

Lindsay McGregor

Maddocks

Keith Reddy

Mills Oakley

Ex-Gadens property partner finds new home at Mills Oakley Former Gadens property partner James Price has moved to the Melbourne office of Mills Oakley. He decided to join the firm after having a chat with CEO John Nerurker, who convinved hin there was a good culture there. Price said the firm is rapidly James Price growing partly due to Nerurker’s active recruitment of partners such as John Mazzotta and Damian Harriss from Lander & Rogers. Some of Price’s clients have moved to Mills Oakley, including a few wind-farm operators and general property owners.

E W Scripps

Simpson Grierson

Private practice in New Zealand the better option for returning general counsel Simpson Grierson has announced the appointment of Marcus Rudkin as a senior associate in its information and communication technology group. Rudkin said the deteriorating economic circumstances in Europe have influenced his decision to Marcus Rudkin return to New Zealand. This is also the reason why he advises his peers seeking opportunities in the UK to put their plans on hold. Rudkin, who spent the last six years in Europe as general counsel/head of regulatory affairs for interactive media and telecommunications infrastructure companies such as E W Scripps, says New Zealand is better placed to withstand the looming recession than Europe. He also said he is better off in New Zealand in light of the looming global recession, because Kiwi businesses are better prepared to cope with economic downturns.

G+T, Piper Alderman lawyers move to Maddocks Ex-Gilbert + Tobin lawyer Keith Reddy has joined Maddocks’ property group as special counsel. Australasian Legal Business ISSUE 7.1

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NEWS | appointments >>

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FEATURE | job market >>

As market conditions tighten firms ask: What have you done for me lately? With the job market tightening the time has come for lawyers to raise their game, according to Signature recruitment consultant Steve Cole

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here was a time when large law firms were compelled to sell themselves to top candidates in the job market. However, as several major law firms have joined the list of professional organisations feeling the pinch of the global financial crisis, Signature recruitment specialist Steve Cole says it’s the candidates who will be the ones doing the selling. “The current economic situation has brought about a complete shift in mind-set. A year ago, large firms felt they needed to recruit as many great lawyers as they could,” he said. “So from a management standpoint, they spent all their time trying to find them. Now that activity has slowed, a great deal of emphasis is placed on performance management – and firms are now performancemanaging the under-achievers and potentially looking to replace them with great lawyers.” According to Cole, the time has come for lawyers to prove themselves – particularly if they are Generation Y. When Generation Y lawyers hit the workforce, their attitude towards employers was ‘what are you going to do for me?’ Now, however, law firms are turning the tables and saying,

‘No, wait a second! What are you going to do for us?’ Hot on the heels of a string of major US and UK firm redundancies, an annual partnership survey has revealed that almost half Australia’s leading law firms have started cutting jobs in the past six months – including Corrs, Deacons and DLA Phillips Fox. According to David Talalla & Associates’ director, David Talalla, these developments will result in a tighter, more competitive legal market in 2009. “Obviously there are going to be more lawyers in the market and some of those will be quality ones,” he states. These developments have also contributed to a dramatic shift in the attrition rate among major firms. “I have talked to several top firms this week and, at one of them, the attrition rate six months ago was 35%. Now it’s 5%. That’s quite telling of the current market conditions,” Talalla says. Lawyer Marcus Rudkin spent the last six years in Europe before returning to New Zealand to accept a senior associate role at Simpson Grierson. He advises, however, that now is the time to put any overseas plans on hold. Australasian Legal Business ISSUE 7.1

28/01/2009 12:36:34 PM


FEATURE | job market >>

“I have friends who are playing cricket in the corridors at some of the UK’s [Magic Circle] law firms,” he says. “I think, now, it’s a good idea to hunker down – the first sign of the economy picking up would be a better time to consider going abroad.” First Counsel senior recruitment agent Louise Leecy agrees. “To be quite honest, people are more concerned about a global recession than seeking greener pastures,” she states. “The uncertainty means that people are more focused on holding on to their jobs than facing the uncertainty of overseas opportunities.” Leecy says that London – the traditional destination for Australian lawyers seeking higher salaries, a stronger currency and overseas experience – has, in fact, become stagnant in recent months. “Money is always a key motivation for lawyers seeking overseas opportunities. The [Australians] already working in London must

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be rubbing their hands with glee at the moment,” she adds. “Because of the uncertainty, people are holding their breath, basically.” According to Leecy, lawyers seeking overseas opportunities would be best served to direct their attention to the Middle East, in particular the UAE, Amman, Bahrain and Saudi Arabia. However, she concedes that the global slowdown has also begun to take its toll even on these locations. “What’s happening now is lawyers on secondment are beginning to fill these roles, as opposed to [firms] taking on new hires. We are also seeing the market tighten for lawyers with less that two years’ postqualification experience, unless they are exceptional,” she says. Such moves will be a lot more risky and intense than they used to be, which is why many are recommending that those in jobs, who are doing well where they are, would be well advised to stay put until the market picks up. ALB

►► Middle East Salaries* Year Level

Range – low

Range – high

PQE 1

AED378,000

AED476,000

PQE 2

AED477,500

AED548,000

PQE 3

AED525,000

AED604,000

PQE 4

AED592,000

AED657,000

PQE 5

AED635,000

AED703,000

Source: Hayes Recruitment

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special report | Brisbane09 >>

brisbane09 A booming Queensland economy has delivered record profits for Brisbane law firms, but future growth will depend on their ability to adjust to the changing demands of current and prospective clients. ALBâ&#x20AC;&#x2122;s Cabral Douglas speaks to some of Brisbaneâ&#x20AC;&#x2122;s leading lawyers about the state of the market

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Australasian Legal Business ISSUE 7.1

28/01/2009 1:23:08 PM


special report | Brisbane09 >>

I

t was only this time last year that Queenslanders were celebrating the election of home-grown Kevin Rudd to the post of Prime Minister. The Rudd government inherited a booming economy from their coalition predecessors, and nowhere was this more evident than in the Sunshine State. Driven largely by the construction, energy & resources, and infrastructure sectors, with Perth, Brisbane has long shared joint status as Australia’s fastest-growing city. However, strong manufacturing, agriculture and an internationally recognisable tourism brand has provided the economic diversity necessary to withstand the current slump in commodities prices. This is one reason that, in spite of slowing demand for Australian resources, economists are predicting a 3% rise in economic growth in Brisbane next year. And, this figure may well exceed the national average for a 12th consecutive year, making Brisbane an excellent place for business in 2009. Cooper Grace Ward managing partner Chris Ward refers to the current mood in Queensland as one of cautious optimism. “I have spent a fair bit of time throughout the country – particularly Sydney – in the last couple of months,” he says, “and I have to say the mood in Queensland is far more positive. Notwithstanding the current economic difficulties, there is still a degree of optimism there. “From our firm’s point of view, we are at the top end of the SME market, which remains very strong. We have large practice groups in the areas of insurance, family law, litigation and industrial relations, and our client base across the board is largely continuing doing what they have been doing … and we are still extremely busy at the moment,” he adds. However, according to Carter Newell partner Patrick Meade, world financial forces have dictated that this is no time for Brisbane practice groups to become complacent. ►► Wiggins Island Coal Terminal

The completion of stage 1 of the Wiggins Island Coal terminal, set for 2010 will boost the port’s coals export capacity by 20 million tonnes/year making it the world’s largest www.legalbusinessonline.com

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“A certain area of work may start to fall away and the firms that will do well are the ones that are fleet of foot – in terms of internal management and adapting practice areas as a result of slow-downs in others,” he said.

Construction

If the rate of new construction work is any indicator of broader economic trends, 2009 could see back-end construction work and dispute resolution emerge as major drivers of growth, in addition to government, competition, infrastructure and funds management, according to firms ALB spoke to. Mills Oakley CEO John Nerurker stated that construction projects worth A$300m and over have certainly been withdrawn, and that’s where most of the firm’s John Nerurker, Brisbane construction Mills Oakley work was coming from. “The advice we have provided since March has substantially reduced in terms of new contracts,” he added. However, for Mills Oakley’s Brisbane office, which focuses on construction, commercial litigation and insolvency, the sharp reduction in large-scale new construction projects has had a counter-cyclical effect. That is, during the last 10 months, the firm has enjoyed an increase in advice on existing contracts and back-end construction work, and this has meant revenue streams have remained largely unaffected by the recent downturn. According to partner Peter Mills: “Advising on existing contracts, rights of suspending works and dealing with disputes as to payments or defects has increased … as well as the volume of smaller building contracts that has grown in relation to the recovery of payments to builders. “Building and construction skills (on the front end) are knowing what to put into a contract to protect you when times get bad. Then, on the back end, there are the skills to enforce those rights (if things go badly) – so it’s fairly recession-proof in that regard.” The diversity of legal skills in the firm’s Brisbane office is positioning Mills Oakley to continue its rapid growth rate. Its commercial litigation and insolvency practices work under 33

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special report | Brisbane09 >>

Chris Ward, Cooper Grace Ward

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the banking & finance recoveries group, all of which are traditional growth areas in tightening markets. “Normally you are either working for a bank or against a bank. Since we opened in February last year with four people, we are now at 27,” he said. “Whether you’re building something or trying to get paid for having built something, you require the same knowledge and skills set from your lawyers. Then, the other process of acting for a liquidator or creditors has tripled in the last seven months,” he adds. According to Mills, the pressure the building sector is currently under may be a good thing for more competitive pricing in the area. “We have to be honest and say that perhaps the more stress put on building companies, the better the price they quote for a job… Building costs have become extremely expensive compared to the last three years,” he says. “What we might be seeing is a rationalisation, a more competitive pricing for building tendering… so you

Australasian Legal Business ISSUE 7.1

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special report | Brisbane09 >>

might not necessarily see a decline in numbers of buildings, it’s more that lower prices are tendered – with interest rates going down. Builders are going to be eager to get as much cash as possible, so they will be more competitive.”

M&A

Another area of practice that will be of interest to Brisbane firms across the board is M&A activity. Last year, despite market conditions that made debt difficult to obtain, Queensland was the scene of large-scale M&A activity – including BG’s A$5.6bn takeover bid for Queensland Gas, among others. Notwithstanding market reports suggesting a slow-down in activity, Holding Redlich’s Brisbane managing partner Michael Byron remains optimistic. “In the past months it has been quietening down. January will be quiet, but come mid-February we will see more activity," he said. “I expect a slower than usual New Year, which should pick up once more clients create new strategies, consider more rationalisation – or even decide to merge.”

“You will see a vertical integration of people in the supply chain at different levels of control of the supply process. I am also expecting there to be more integration to create synergy ... ” Ian Wright, Herbert Geer Herbert Geer partner Ian Wright is in agreement. “In light of the economic situation, I think you will see a vertical integration of people in the supply chain at different levels of control of the supply process. I am also expecting there to be more integration to create synergy or to create economies of scale in order for companies to secure their own survival during the economic downturn,” he said.

Resources

Another development firms are keeping a close watch on is the waning confidence in the coal market. “To a large extent, the real economy in

125 and still counting

A

125th birthday is not an event that occurs very often. As MacDonnells Law stands on the threshold of celebrating 125 years of legal practice in Queensland, the firm looks back over the past year and recognises that there is much to celebrate. In May 1884, a young 24-year-old lawyer named Ernest Milford set up the first legal practice in Cairns and started a journey which led to what MacDonnells Law is today. Now MacDonnells Law has offices in Brisbane, Cairns and Townsville and over 170 staff, including 25 partners state-wide. As the Anniversary approaches, Tony Hogarth, partner at MacDonnells Law’s Brisbane office, reflects on the year just past and what lies ahead. “While 2008 was not without its challenges, we can also look back with pride and see just how far the firm has come, and how much we have to look forward to. Our 125th year is going to be an exciting one for staff, clients and alliance partners. A variety of events, activities

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and celebrations will be held in all three office locations to showcase the long and unique history of the firm, our branding message and our community spirit. It is also fitting that MacDonnells Law, as a true Queensland and regional firm, shares a significant birthday with the state of Queensland itself, which celebrates its 150th birthday this year.” Recently, MacDonnells Law celebrated several other milestones. In November 2008, the firm was invited to join Meritas, an international alliance of more than 170 independent commercial law firms located in over 60 countries and encompassing no fewer than 6,500 lawyers. One of the key features of the Meritas alliance is the means to monitor, assess and review the quality of its member firms to provide the highest quality and versatility in legal services for clients. Another cause for celebration was the firm’s 2008 Queensland Business Review Q400 ranking. The Q400 recognises Queensland’s top 400 leading private

Queensland is driven by the price of coal,” said Meade. “At Gladstone we are going have the world’s biggest coalexporting port in the world.” The completion of Stage 1 of the Wiggins Island Coal Terminal, set for 2010, will boost the port’s coal export capacity by 20 million tonnes each year, making it – indeed – the world’s largest, and creating plenty of opportunities for lawyers in the process. However, according to Meade, sliding coal prices are threatening to derail these plans. “If they continue to fall, the effects could be devastating for the Queensland economy. The main concern is that the Chinese economy is going to back off. If

Firm Profile

MacDonnells Law

companies and rated MacDonnells Law at 78, a jump of 13 places from its ranking of 91 in 2007. Other highlights included being a finalist for the 2008 ALB Tony Hogarth, Australasian Law Award MacDonnells Law for Brisbane Law Firm of the year. “It has been gratifying to see that our growth has been recognised by others”, said Tony. About MacDonnells Law MacDonnells Law has offices in Brisbane, Cairns and Townsville and is one of Queensland’s largest independent law firms. It has a long history as a respected institution and celebrates its 125th Anniversary in 2009. For more information, please visit www.macdonnells.com.au For further information: Dorlene Bradshaw, Marketing Manager - Brisbane MacDonnells Law P: (07) 3031 9700 E: dbradshaw@macdonnells.com.au

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special report | Brisbane09 >>

demand for coal were to reduce, it would have an enormous effect on the state itself,” he said. Clayton Utz energy & resources partner Darren Fooks is less concerned about the impact China’s diminishing appetite for Australian coal would have on Brisbane firms operating in this space. “Out of all the coal exported from Queensland, 38% went to Japan,” he said. “How much do you think was exported to China? Just 3%!” For law firms operating in this arena, it all comes down to who your clients are, the economics of their projects and their market position. “There are two types of projects that may fall into difficulty. There are those that have marginal economics and those dependent on debt financing,” he stated. “We are mainly involved in large projects, most of which are cashed-up. And the economics are not dependent on shortterm commodities prices, but rather they have taken a medium- to longterm view." Clayton Utz has the largest energy & resources practice in Queensland, and it has appointed another two partners and seven more lawyers in the last 18 months. “We are flat out at the moment. We have seen absolutely no change in the flow of work,” Fooks said. Ward is also taking a longer-term position. “The fall in coal prices is going to mean a drop in royalties in terms of what the government receives, so to a certain extent it is going to be vicious circle. However, I would like to think – certainly from a federal and state point of view – that everyone is looking at the bigger picture. I would also like to think that by the end of 2010/2011, things would have returned to some sort of normality, so I would not expect there to be too many short-term positions made.”

Infrastructure

Brisbane’s population growing faster than any other Australian city coupled with the requirement to increase capacity to transport natural resources intensifies the need for infrastructure development in terms of energy, water, transport, health care and other facilities to keep pace, and this must mean that firms practising in this space will continue to be busy. However, in spite of the widely anticipated cooperation between state and federal Labor governments 36

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“We have to be honest and say that perhaps the more stress put on building companies, the better the price they quote for a job…” John Nerurker, Mills Oakley to fund large-scale infrastructure projects, there is some concern about the capacity of the private sector to underwrite them. “There has always been William Fazio, a lot of infrastructure Herbert Geer interest in PPP with a wide range of infrastructure projects, but it’s going to be difficult to source the capital over the next two years, given that share prices in companies participating in Patrick Meade, that market, like Babcock Mills Oakley & Brown and Macquarie, have fallen quite substantially,” says Patrick Meade. Notwithstanding the private sector’s diminished ability to raise finance, Brisbane firms ALB spoke to are expecting activity in this area to remain steady, fuelled largely by government spending. Says Herbert Geer Brisbane’s chief executive partner William Fazio: “The recent Brisbane Airport

Link is an example of the major infrastructure investment taking place on Australia’s east coast.” He says there is clearly a huge demand for both social infrastructure, projects for clean power and better use of water resources. Other plans in the pipeline expected to go ahead include the Wiggins Island Coal Terminal, the Surat Basin Railway, the Logan Motorway, the Port of Brisbane Motorway, Gateway Duplication and also several pipeline projects – just to name a few. While managing partners are facing internal management issues in pursuit of directing resources to appropriate practice areas – and this is ongoing – the fate of the Brisbane legal market will be somewhat dependant on commodities prices, the ability to raise finance in a tightening credit market and the fate of the many infrastructure projects currently on the agenda. Outside this sphere, dispute resolution, insolvency, workplace relations and wealth management are tipped for strong growth in Brisbane in 2009. ALB Australasian Legal Business ISSUE 7.1

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special report | Brisbane09 >>

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special report | Brisbane09 >>

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Australasian Legal Business ISSUE 7.1

28/01/2009 1:23:49 PM


Firm Profile special report | Brisbane09 >>

Mills Oakley

Mills Oakley Lawyers where opportunity still knocks

O

ver the last few years a booming Brisbane economy has been good news for law firms, many of which have taken the opportunity to successfully establish themselves. Mills Oakley Lawyers is one such firm, rapidly making its mark. Now, with a declining economy, Mills Oakley is continuing to pull ahead of its competitors through its countercyclical practices. Buoyed by robust teams practising in litigation, insolvency and construction, the economy is once again on Mills Oakley’s side. Despite its rapid growth (last year Mills Oakley was named Australia’s fastest growing law firm) Mills Oakley’s CEO, John Nerurker, says that the firm is not, and never will be, the largest law firm measured by lawyers or offices. “Our goal is to be the firm of choice for all our clients.” “Our clients want a law firm large enough to be able to respond to their most complex legal needs. They also want a firm small enough to be efficient, nimble and responsive. That is exactly what we offer at Mills Oakley.” Nerurker states, “The intention is to position Mills Oakley as a genuine alternative for clients considering using a top tier firm. Mills Oakley provides equivalent legal expertise, but with more Partner contact and a significant cost advantage obtained by a lower and more realistic overhead infrastructure”. With the current levels of consolidation in the legal market, there’s a risk that a group of Goliath-like firms will be created, who will not be able to resist the temptation to continuously push up their margins. Firms at the top of the mid-

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tier, like Mills Oakley, who are well-run and have the best legal talent, are well positioned as the new “go to” firm for large corporates looking to reduce their legal spend. “We work within the same market and economic conditions that every other Australian law firm does”, says Nerurker. “What we do is add that little bit extra; like only hiring lawyers who share our passion for an unwavering client focus and making absolutely sure that all our lawyers are as well, if not better, trained than their top-tier counterparts. All these things combine to create the right kind of client experience. This is one way we will continue to differentiate ourselves.” Recent figures suggest that top-tier firms may have enjoyed their market leadership for too long, as mid-tier firms push their way up the legal food chain through innovative management and effective leadership. While Nerurker asserts that Mills Oakley is not competing for a place in the toptier, he knows he’s heading up a firm that’s going places and is likely to be of increasing interest to astute legal counsel throughout corporate Australia. “We want to capitalise on our status as a premium mid-tier firm and have ramped up our plans to continue attracting expert lawyers who share our sense of camaraderie and our commitment to delivering exceptional client value” explains Nerurker, who has managed the firm for the past four years. “It is this dedication to excellence, enshrined in the mindset of our staff which makes Mills Oakley shine a little brighter in an extremely competitive marketplace.”

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FEATURE | marketing >>

Marketing in the credit crunch: braving the unknown Many law firm marketers now find themselves in a whole new ball game – how to gain ground during a global slow-down. Richard Szabo reports

“L

awyers are not there to provide the livelihood of marketers,” Professor Richard Susskind once stated. To achieve longevity good marketers and business development managers (BDMs) need to add discernable value to their firm – even in tough times. Over the past decade business development has grown significantly, particularly among smaller firms. Accordingly BDMs need to work with partners to ensure potential or existing clients receive an appropriate level of service. More often than not it has become indispensable for firms to invest time and resources in client relationship-building activities, given the tightening of budgets Linda Julian, across the board. Linda Julian Midwinter & Associates Julian of consulting firm Julian Midwinter & Associates says that marketers can play a leading role in supporting overall fee levels. “Clients will not

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spend as much going forward, so firms need their marketing team to get into sales mode and track fee-production, output, business development and see what they can commoditise, so clients only pay for services they need,” she says. Blake Dawson director Cat Wirth, Blake Dawson of clients and marketing Cat Wirth says that when business is tougher, firms should not take their foot off the ‘businessdevelopment’ accelerator. “We just ramp it up. We might be conservative on big one-off projects that cost a lot of money, but our day-to-day marketing will continue. The economic downturn should be spent on talking to clients and understanding their business,” she said. As a case in point, more Western Australian firms are now acknowledging the importance of effective marketing, due to the downturn in cross-border resources work. Jackson McDonald is one of

them and marketing and business development director Joyce Lanigan says there’s been “a bit of a land-grab” for good quality clients. “Firms need effective marketing to defend their position out in the market,” she says. “Look at what happened in the boom period in WA…you’ll see a lot of East Coast firms moved here. But now that M&A work has dropped off the large pool of lawyers has become more competitive.”

►► Marketing trends in brief • Marketers with experience in true business development, tenders, proposals, pitching for business and new service packages for clients will be in highest demand • Marketers focusing more on softer areas may experience less work • Firms are likely to cut branding exercises since they do not have an immediate impact on revenues • Pro bono, environment and community work will be largely unaffected Australasian Legal Business ISSUE 7.1

28/01/2009 1:28:37 PM


FEATURE | marketing >>

Technological approach

Some firms have utilised technology and document creation systems to “drive” production further. Julian, for example, points to mortgage loan documents that traditionally required considerable work by lawyers. “Firms used to charge A$600–1000 per matter but now readymade templates mean that just 10% of the work is required (A$150–A$200),” she says. Technology can indeed be a “saver” in delivering more efficient service, but it takes significant cultural and “behavioural” change for more lawyers to use it more. “It needs to be done at a behavioural level. It’s tough to do and even the big Wall Street or ‘Magic Circle’ firms are not doing it brilliantly,” says Wirth, who is also president of the AsiaPacific Professional Services Marketing Association (APSMA).

Direct revenue focus

Nowadays firms not only need to understand their core areas of profitability, but also identify unprofitable areas. This is where marketing Joyce Lanigan, professionals should be Jackson McDonald constantly adding value Marketers with experience in true business development, tenders, proposals, pitching for business and new service packages for clients are likely to be most in demand, since they are likely to have an immediate impact on how much new business is done, or perhaps

–more importantly – how much existing business is retained, says marketing recruitment specialist McLoughlin Ball principal Gina McLoughlin However, marketers focusing more on softer areas who are only indirectly involved in winning clients may experience less work. For instance, branding exercises, which many firms have recently invested heavily into, are unlikely to get the go-ahead until stronger signs of revenue appear. “There are even cases where too much branding and merchandising can lead clients to view firms as being too commercial. They are here to buy legal services and not our merchandise,” adds Lanigan.

Pro bono, environment and community are winners

While some nonrevenue-generating areas are likely to receive less attention, pro bono, environment and community work is still likely to go ahead with its added benefits. Barbara Clarke, “It can support and Buddle Findlay promote their employers’ commitments to doing business in clean, green, and fair ways,” says Julian. When firms bid for tenders they are often asked what they do in the community, who its pro bono clients are and what environmental policies it has in place. The emphasis on its

►► Tips to improve profitability and client satisfaction • Understand your client’s core profitability • Invest time and resources in client relationship-building • Utilise technology and document-creation systems to drive efficiency • Carry out more effective debriefing and client satisfaction surveys to ensure clients’ feedback is heard and acted on within a reasonable timeframe • Work alongside clients to minimise legal costs and help them spend wisely • Track fee-production against business development, and commoditise services • Introduce more loyalty or volume discounts in addition to fixed fee arrangements, to allow more flexibility in pricing www.legalbusinessonline.com

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“There’s been a bit of a land-grab for good quality clients and firms need effective marketing to defend their position out in the market,” Joyce Lanigan, Jackson McDonald.

values and how it positions itself in the market place are “just as important as its fees”, according to Clarke.

Fees: how low can they go?

Firms should of course approach the subject of fee competition with caution. While smaller firms often do engage in competitive pricing, national firms should review their fee structures carefully before adjusting them. Firms may instead opt for fixed-fee arrangements and loyalty or volume discounts, to give more flexibility. “Firms need to promote cost-consciousness and value for money, so there are fewer complaints. It’s about using the right people for the most effective outcome, taking into consideration time, seniority and experience,” says Wirth. Buddle Findlay has found that organising training sessions on how in-house legal teams can reduce legal fees is handy to build client loyalty. Jackson McDonald has a similar view. “It’s about spending wisely, rather than just spending for the sake of it. It’s our responsibility to ensure that clients receive a quality service that represents value for money,” says Lanigan. This is even more important in a tough market. ALB 41

28/01/2009 1:28:38 PM


alb guide: private equity 2009

private equity state of the market INTRODUCTION ALB Guide: Private Equity Law 2009 is the latest in an exciting series of detailed insights into specific practice areas and the leading firms and lawyers operating within them. By combining specific new research (among client companies, peers and barristers) with the ALB Deals Centre and third-party market information, ALB Guides arrive at lists of ‘leading firms’ and ‘recommended firms’ as well as ‘leading lawyers’ in each practice area covered.

METHODOLOGY In the preparation of this report, ALB conducted telephone interviews with Australian and New Zealand companies and law firms. Australian and New Zealand companies were, primarily, members of AVCAL, those listed in the ALB Deals Centre, and on submissions received from firms. In addition, ALB sought opinions from high profile Australian and New Zealand partners in the PE space. Interviews were mainly conducted in the three-week period from 26 November to 10 December 2008.

CONTENTS 42.

State of the market

43.

Leading and recommended firms

44.

Leading lawyers

47.

2007/08 deals in brief 42

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Law firms have observed major changes since ALB last published its Private Equity (PE) guide in 2007. Billion-dollar deals are now in hiding and most of the sizable transactions for the last financial year occurred in 2007, including the CVC Asia PacificPBL assets acquisition (A$4.96bn), GTCR-3M acquisition (A$2.4bn), CVC Asia Pacific- DCA Group buyout (A$2.45bn) and the Newbridge Capital-Myer acquisition (A$1.3bn). Baker & McKenzie’s Mark McNamara agrees that the days of high leverage and strong economic growth rates delivering more than 25% returns are “well and truly gone”. He is, however, optimistic that the long-term outlook for PE activity is positive. “There have been decent levels of mid-range PE activity. Combine this with lower valuations, many more motivated sellers, more risk-averse buyers and general uncertainty regarding the business outlook, and the investment horizon looks prospective for private equity,” he says. Mallesons Stephen Jaques partner Peter Cook says that while private equity companies are not as active in corporate takeovers this year, they are still looking for assets. The firm acted on the CVC Asia PacificPBL Media acquisition and Chinalco’s stake acquisition in Rio Tinto. “Clearly it has been quite a difficult year in the PE space. With debt almost completely drying up and pressure on existing portfolio investments caused by the financial tsunami and the general downturn in consumer confidence, the focus has not been on new deals. However, with the significant general asset devaluation occurring I would expect to see more deal volumes in 2009,” he said.

While most firms have experienced a slow-down in the large-end private equity work for most of the year, some firms focusing on the mid-market have enjoyed a steady work flow. Deacons partner Nick Humphrey says he has enjoyed a “strong calendar year”, working on about 25 PE deals that ranged between A$20m and A$150m, including new MBOs, roll-ups and portfolio followon investments. “The mid-market has been more insulated from the credit crunch, as the relative debt required is less and acquisition multiples are smaller. While our practice does relatively smaller deal values, we have higher deal volumes,” he says. In the lead-up to Christmas some clients have delayed acquisition plans for another six months when prices and expectations are expected to be lower, according to Humphrey. Others, however, have adopted a fresh, innovative approach. “Clients are now buying targets using 100% equity or gaining a strategic foothold via the acquisition of distressed debt. We see funds, or their portfolio companies, buying businesses for their asset value and, generally speaking, dealing with distressed buyers and financiers is more challenging than simply buying businesses using leverage at higher multiples,” he says. He gives the example of the Rubicor roll-up (A$110m), in the recruitment sector and the roll-up of Total EdenMcCracken by AMP Capital and on-sale to Alesco (A$250m), pointing to how they used equity as a form of consideration instead of pure debt. “We see distressed buyouts and distressed debt, or ‘loan to own’, as key

drivers of work in the future. A number of funds such as Helmsman Capital, AMP Capital, Goldman Sachs, JBWere and Allegro Capital (which recently acquired the ABN AMRO portfolio) also see distressed transactions as part of their core strategy for the next 12 months,” says Humphrey. Most of 2007 saw a number of major deals in New Zealand, says Kensington Swan partner Peter Missingham. He points to the Ironbridge-Canwest Mediaworks acquisition (NZ$750m), CCMP Asia-Yellow Pages acquisition (NZ$2.24bn) and Pacific Equity Partners/CCMP Capital-Independent Liquor acquisition (NZ$1.4bn). “I don’t think we will see the big end of town coming back for at least a year. It would be way too hard for that … we also saw the failed attempt by the Canadian Pension Plan’s investment board to buy New Zealand Airport (NZ$1.4bn),” said Missingham. Over the past 12 months, large Kiwi LBO sale mandates were attracting a large amount of PE attention from Australia, but interest has diminished with some shifting equity from larger deals to smaller, less risky deals in Australia. Kensington Swan partner Neil Millar points to how NZVCA statistics for the first half of 2008 indicated that PE was “pretty bleak”. “NZVCA reported only NZ$64m of NZ mid-market PE investment spread across 6-8 deals. In the same period there were no reported LBO investments. Since then direct capital has done some significant investment and other existing domestic PE firms have concentrated on two things: quality smaller deals and tidying up existing portfolios,” he said. Australasian Legal Business ISSUE 7.1

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20 09 Although it has not been a smooth trip, Millar believes Kiwi mid-market assets could attract more crossborder PE activity. “There are some real opportunities for Australian PE funds to come over for that mid-market. Deals are relatively uncontested and one of the main Kiwi players (ANZ Capital) is exiting the Kiwi and Aussie markets. Fundraising for PE firms will obviously become harder in 2009 with funds of funds likely only to back PE firms with proven track records. There are only a handful of these firms in NZ – certainly not enough to cover all the opportunities – that’s where Aussie PE can come in,” he said. Mallesons partner Mike Barker says firms are currently focusing more on the quality of management teams, and having a deeper understanding of a client’s business model and strategy. “They also see the need to have discipline around when to say ‘no‘ to investment opportunities as what will distinguish the quality PE managers,” he added. Australian PE deals ranging from A$100m to A$500m have picked up and in the fourth quarter of 2008, PE deals were bouyant, owing to interest from offshore PE parties. The reported 4Q year-on-year growth was 96%, according to figures recently released by Thomson Reuters. McNamara expects PE to show structural flexibility, with smaller deals, higher equity contributions, lower leverage and increased use of mezzanine finance. Humphrey, on the other hand, says many of his clients expect the market to remain slow until 2010, so now is the time to keep portfolios alive and profit from distressed buyouts before the upswing. www.legalbusinessonline.com

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SYDNEY Sydney lawyers have captured the overwhelming majority of PE deals, which included acquisitions, take privates and venture capital funds. Clients noted that while top-tier firms were still the leaders, mid-tier firms were increasingly chosen. As usual, most clients felt that firms could lower partner hourly fees that weretypically ranged between A$580-600. Gilbert + Tobin was good for the venture capital matters and reasonable in its timing. John Williamson-Noble was very professional, commercial, quick to respond and addressed client needs. Adam Laura was enthusiastic, hardworking, strong in technical aspects and had a “clean style” in his documents. Deborah Johns was quick, responsive and intelligent, and understood her clients. Andrew Bullock was a team player and kept a good relationship with financial clients. Bill Spain was very experienced and well-tempered. Thomson Playford Cutlers was very commercial, happy to put in the hours and delivered more than expected. David Zwi handled difficult transactions, could “herd” several lawyers together and did an “incredible job”. His bright, clever and effective people skills made clients turn to him time and again. Dan Kramer was practical, personable and provided good technical knowledge. Henry Davis York was able to match its clients’ culture, provide familiar models and commercial insight, and charge fairly. Glenn Hughes was very personable, an effective communicator, technically proficient, provided knowledge without fail and was able to manage both

leading firms

f l

NB: Firms are listed alphabetically under each subheading

sydney

northern territory

• BAKER & MCKENZIE

• CRIDLANDSMB LAWYERS

• CORRS CHAMBERS WESTGARTH

NATIONAL TOP-TIER FIRMS

• DEACONS • GILBERT + TOBIN • HENRY DAVIS YORK • JOHNSON WINTER & SLATTERY • MIDDLETONS

• CLAYTON UTZ • FREEHILLS • MALLESONS STEPHEN JAQUES

• THOMSON PLAYFORD CUTLERS

• MINTER ELLISON

MELBOURNE

NEW ZEALAND

• CORRS CHAMBERS WESTGARTH

• BUDDLE FINDLAY

• HOLDING REDLICH

• BELL GULLY

BRISBANE

• CHAPMAN TRIPP

• CORRS CHAMBERS WESTGARTH

• MINTER ELLISON RUDD WATTS

• MCCULLOUGH ROBERTSON

• SIMPSON GRIERSON

• KENSINGTON SWAN

ADELAIDE • WATSONS LAWYERS

other recommended firms

NB: Firms are listed alphabetically under each subheading

SYDNEY • DIBBS ABBOTT STILLMAN

f r

NATIONAL TOP-TIER FIRMS

• HOLDING REDLICH

• ALLENS ARTHUR ROBINSON

• HWL EBSWORTH

• BLAKE DAWSON

• MADDOCKS • SWAAB ATTORNEYS

NEW ZEALAND

MELBOURNE

• ANTHONY HARPER

• MADDOCKS • MIDDLETONS

• MORRISON KENT • QUIGG PARTNERS • RUSSELL MCVEAGH

NORTHERN TERRITORY • COLLIER & DEANE 43

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alb guide: private equity 2009

leading lawyers NB: Lawyers are listed alphabetically by surname

ELSPETH ARNOLD Firm: Blake Dawson Location: Melbourne • Practice areas: private equity, M&A, capital markets, corporate • Acted for Investec and ANZ, among others • Admitted to practise in Victoria, NSW and Western Australia

MICHAEL BARKER Firm: Mallesons Stephen Jaques Location: Sydney • Practice areas: private equity, M&A, corporate, commercial • Acted on CHAMP and International Energy Services’ acquisition of Goulds Transport business, Gresham Private Equity’s acquisition of Barminco, Nestle’s global acquisition of Novartis’ medical nutrition business • Australian Private Equity and Venture Capital Association member

SHELLEY CAVE Firm: Simpson Grierson Location: Auckland • Practice areas: private capital, M&A, corporate, capital markets, commercial, competition, regulatory • Acted for clients such as Ironbridge Capital, Direct Capital Private Equity, Pencarrow Private Equity • New Zealand Venture Capital Association member

GERRY CAWSON Firm: Minter Ellison Location: Brisbane • Practice areas: private equity, M&A, finance, agribusiness, manufacturing, corporate • Acted on ANZ Capital-Ride on! Entertainment MBO, HarleyDavidson acquisition of Castalloy assets and Expansion capital investment into Opto Global

PETER COOK Firm: Mallesons Stephen Jaques Location: Sydney • Practice areas: private equity, M&A, capital raisings • Acted on CVC Asia Pacific’s acquisition of Tech Pacific, AMP on rights issue in connection with its demerger, CVC Asia Pacific and Amatek on its dual track IPO and trade sale disposal of Laminex Group • Mallesons executive board member

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cont. ►

commerciality and legality. Christina Seppelt was good for complex matters, thorough and contactable. Johnson Winter & Slattery has picked up a fair share of PE work. Damian Reichel was considered the “main PE expert” and pragmatic, sensible, responsive and “smart”. Tim Bowley paid close attention to detail, was creative in finding solutions and highly committed. Middletons also had its ‘shining stars’. Russell Lyons was competent and tenacious; Ben Burney was commercial in his approach, while Rowan McDonald was another singled out. Dibbs Abbott Stillman left clients with positive experiences. Rob Sauer, Geoff Cairns and John Reen were all pleasant and commercial but not “excessively legal”. Maddocks received positive feedback. Peter Shaw was commercial and practical in structuring PE transactions, while Sean Rush was a “financing guru” with large-firm experience. Corrs Chambers Westgarth was increasingly chosen by clients, because it understood their needs. Richard Lewis’s client service skills pleased clients. James Rosza was client-service orientated and also responsive. Holding Redlich similarly received positive feedback. Darren Pereira was “very good” and did a “nice job”. HWL Ebsworth was favoured for less complex PE-related documentation. Alex Koroknay had many years of experience and was thorough in his work. Swaab Attorneys was very proficient in the PE process. Alistair Jaque was systematised and compliance-driven to fast-track documents. Mallesons Stephen Jaques was as “good as clients would get” in the Sydney market and gave an “excellent” level of service from partner down. Michael Barker was measured in his approach, pragmatic, interacted well with team members, “did not get caught up in a ditch of irrelevancies”, had a good manner but was not overly emotive. Peter Cook was the “PE king”, professional, hardworking, assembled a good team and took control of large transactions. Yuen-Yee Cho was regarded as “one of the three best” lawyers in leveraged

acquisition project finance and her response times were “excellent”. David Storr was competent and very good at technical aspects, while Dominic Bortoluzzi was very capable, met deadlines and good at preparing documents. Baker & McKenzie had a “solid” corporate practice with a good skill set. Mark McNamara was considered to have practised since the “beginning of PE”, knew all the structuring techniques, what was “doable”, paid close attention to detail, was very responsive, “laid-back” and easy to get along with. Brendan Wykes produced concise documents, was diligent in following-up, pleasant to deal with, knew what he was doing, a good lateral thinker and coordinator, and commercial and realistic in his approach to difficult matters. Minter Ellison worked very well on a range of PE matters, was thorough, helpful and responsive, and charged reasonably. Callen O’Brien was a very “strong” practitioner, commercial, not excessively legalistic and steered clients away from trouble. Nathan Cale was very “switched on”, good at referrals, proactive and added extra value. John Mosely was a smooth operator, good at managing, practical and ensured everything was completed within a good turnaround time. Martin Bennett produced “exceptional” work, was a “specialist”, good at referrals, methodical, diligent, responsive and calm under pressure. Deacons took on a “massive” workload, but gave its clients comfort and left them with “no reason to turn to anyone else”. Nicholas Humphrey had good commercial acumen, did not get “bogged down” in the finer details, broke through deadlocks, separated commercial issues from legal-wording ones and saved clients a significant amount of time. Martin Przybylski was pleasant to talk to, direct in his approach, had a good understanding of the Asian markets and required minimal instruction. Clayton Utz was very active in the PE space and considered responsive, knew its clients well and was “very capable of driving” deals. Philip Kapp had a reputation as “one of the most experienced deal guys” and was very commercial and active. Michael Riches was “fabulous” in how he thought out commercial issues, was Australasian Legal Business ISSUE 7.1

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a proactive manager and ensured all relevant issues were properly addressed. Geoff Geha and Angela Flannery had depth of expertise and understood the “PE dynamic”, Grant Koch was a “rising star”, extremely capable and very competent and commercial, while Greg James was very experienced and “level-headed”. David Stammers and Jonathan Donald were also mentioned. Blake Dawson acted on some PE deals, particularly for borrowers for the PE houses. Steve Smith was a “young shining star” with a good ability to harness staff. He was approachable, practical and made clients feel they are “gold-star”. Freehills was considered very good in the PE space. Peter Dunne was professional, “knew what he was doing” and left clients with a good experience. Mark Crean was commercial, hardworking and “willing to be involved in all aspects, even though he was a partner”. Damien Hazard was smart, achieved a quick turnaround and was “very efficient”. David Templeman was also capable and efficient. Al Donald was very experienced in PE with sound judgement. Allens Arthur Robinson handled its own fair share of PE matters and was good on the financing side of things. Tom Highnam, Phillip Cornwell, Richard Gordon and Stuart Weir were said to excel.

was commercial and practical in structuring PE and transactions, with Shahriar Mofakhami good at crossborder and domestic tax matters. Middletons was a favoured choice. Andrew Gaffney paid good attention to detail and resolved “difficult” legal issues. John Mann was also singled out for praise. Bakers was considered for its experience and commercial approach. Ashley Poke was commended for his good combination of quality legal advice with a “good read” on commercial aspects of deals. “Rising star” Craig Andrade was favoured by clients because he was proactive, enthusiastic, capable, competent and commercial. Blakes’ Elspeth Arnold was praised for being “eight out of 10”, with “outstanding” communication and client service. Tiffany Barton was efficient, proactive, good with PE and easy to deal with. Freehills’ Nick Wormald was looked upon kindly for promptness, focusing on commercial value points and not arguing “for the sake of it”. Kon Nellos was very knowledgeable of the PE industry and the fundraising aspects involved. Corrs’ Jeremy McCarthy was commercial in his approach, without being too legalistic, while Simon Morris was a good technical lawyer, capable, competent and also “unassuming”.

MELBOURNE

BRISBANE

Melbourne firms have also received a significant volume of PE work, ranging from financing and simple asset sales to major acquisitions. Holding Redlich was “outstanding”, very responsive, competent, charged competitively and looked after its client interests. There were no incidents of the firm providing contradictory advice and partners managed to finalise deals without “getting bogged down in last-minute pick-ups”. Michael Linehan was approachable and helpful, looked after the matter at hand and also provided other parties with a good business opportunity. One client playfully described him as a “workaholic” and “incredibly astute” with good credentials. Maddocks was chosen for its ability to handle fund management aspects of PE deals. Jonathan Ambler

Traditionally following on from the other – larger –capital cities, Brisbane has received its fair share of PE. McCullough Robertson was the main firm that handled PE matters and Brett Heading was thorough, knew the PE market and what he was doing. Corrs’ Stephanie Daveson and Teresa Handicott were tenacious, good in the PE markets, had a good reputation and were good negotiators.

www.legalbusinessonline.com

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leading lawyers PETER DUNNE Firm: Freehills Location: Sydney • Practice areas: private equity, venture capital, fund formation, leveraged buy-outs, expansion, corporate • Acted on disposal of Hoyts Group by Consolidated Press Holdings to PBL and West Australian Newspaper Holdings, Catalyst’s public to private buy-out of the Just Jeans Group, Deutsche and ISS’ public to private buy-out of Tempo Services

BRETT HEADING Firm: McCullough Robertson Location: Brisbane • Practice areas: private equity, capital raising, M&A, JV • Chairman of partners • Acted on PE-related deals such as the AJ Lucas acquisition of Mitchell Drilling Contractors

GLENN HUGHES Firm: Henry Davis York Location: Sydney • Practice areas: private equity, M&A, commercial, technology, communications • Acted for clients such as ANZ Capital, Venture Capital Partners, Flat, AMP Capital, Archer Capital, Macquarie Bank • Australian Venture Capital Association member

NICK HUMPHREY Firm: Deacons Location: Sydney • Practice areas: private equity, M&A, corporate • Over 10 years’ experience • Acted for clients such as Anaccia Capital, ANZ Capital, Archer Capital, Macquarie Bank, Investec, Access Capital

ADELAIDE Although PE transactions in Adelaide would typically use legal expertise from Melbourne, there were a couple of firms that managed to pick up some work. Watsons Lawyers was professional and clients considered it more responsive than some larger firms. Peter Watson’s wealth of experience

PHILIP KAPP Firm: Clayton Utz Location: Sydney • Practice areas: private equity, M&A, corporate • Head of Clayton Utz private equity practice • Advises some of Australia’s largest public companies and has significant expertise advising on foreign investment into Australia • Australian Venture Capital Association member

cont. ►

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alb guide: private equity 2009

leading lawyers MARK MCNAMARA Firm: Baker & McKenzie Location: Sydney • Practice areas: private equity, M&A, securities • Acted for clients such as Ironbridge Capital, Pacific Equity Partners, Gresham Partners, CHAMP Private Equity • Australian Venture Capital Association member

RICHARD LEWIS Firm: Corrs Chambers Westgarth Location: Sydney • Practice areas: private equity, corporate, media • Acted for local and foreign private equity funds for over a decade • Clients include: CHAMP, Catalyst Investment Managers, Gresham Private Equity, ANZ Private Capital, AMP Private Capital and The Carlyle Group

MICHAEL LINEHAN Firm: Holding Redlich Location: Melbourne • Practice areas: private equity, venture capital, M&A, JV, restructuring, corporate governance, risk management, regulatory compliance • Acted on sale of Godfreys to Pacific Equity Partners and CCMP Asia, acquisition of The Perfume Connection and sale of the Adairs national retail chain to BB Retail Capital

CALLEN O’BRIEN

Last year’s PE boom reached even the Australian outback. CridlandsMB Lawyers’ Richard Giles was a “highly respected leading practitioner” and an all-round “great bloke”. Collier & Deane’s Michael Deane was efficient and had good contacts, and also a “no-nonsense” and “minimum-fuss” approach. Nadine Collier was efficient with solid experience. Minters was considered to have lawyers of high calibre. Clayton Utz was also mentioned.

NEW ZEALAND

Location: Sydney

Some clients commented that Kiwi firms could have charged a “wee bit” less than the typical hourly rate, which ranges between NZ$500-550. Chapman Tripp was considered a “premium law firm”, performed to a high standard and formed a “closeworking” partnership. John Strowger and Shelley Hodge understood what clients wanted to achieve, the best way to go about it and delivered to a consistent standard. Andrew Poole was direct and resilient, and had a “great radar” for spotting things and prioritising. Derek Parker was also singled out for praise.

CATHY QUINN Firm: Minter Ellison Rudd Watts Location: Auckland • Practice areas: private equity, commercial, corporate governance, securities • Acted on AMP Pencarrow Fund acquisition of BJ Ball from Archer Capital, Next Capital’s acquisition of the Nutra-Life and Most Excellent Holdings’ acquisition of Hubco Automotive • New Zealand Capital Market Development Taskforce member

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NORTHERN TERRITORY

Firm: Minter Ellison • Practice areas: private equity, M&A • Acted on proposed takeover of Consolidated Media Holdings, Anchorage Capital’s controlling stake acquisition in Golden Circle and CHAMP Ventures’ roll up of Employment Services Group • Acts for a range of private equity investment houses such as ABN Amro Capital and Colonial First State Private Equity Ventures

46

gained from working at both larger firms and his own firm won clients time and again. Lucy Gauvin was extremely committed to her clients, achieved results and was a “fine lawyer with a strong commercial sense”. Minters was professional, assisted clients throughout the PE process and left them with no reason to fault their commitment. Gerry Cawson was responsive and hardworking, and understood his clients and their timing needs. He performed well even during intense periods that required an “enormous” amount of work.

cont. ►

Minter Ellison Rudd Watts was considered excellent with few issues, thorough, committed, able to assess legal risks and provided good value for money. Cathy Quinn was multiskilled, frank, good at debating, commercial and sensible, with a good understanding of PE. Buddle Findlay left clients feeling pleased with their work. Simon Vodanavich was “impressive” in his advice, “unique” in how he handled PE, commercially savvy and “cut through the crap”. Sarah Roberts had a good understanding of PE and how to put structures in place. Kensington Swan was responsive, helpful, timely, effective, reasonable and its clients were happy to consult them, as there were no major issues. Peter Missingham performed admirably and pleased clients, while Peter Speakman was responsive. Simpson Grierson has done a considerable amount of venture capital work, among others. Shelley Cave was commercial, had a good understanding of regulations and had a hardworking ethic. Bell Gully handled “large workloads”, while tending to finer details. David Flax and David McPherson were very responsive. Clients trusted them and felt reassured they would deliver. Quigg Partners was considered to be a good boutique firm. David Quigg was very personable, “daring” and a “bit of an ‘old-school’ lawyer” with a good network of contacts. Anthony Harper’s Paul Hartland was very experienced, commercial, understood his clients and was able to deliver and pull things together. Russell McVeagh was looked upon fondly. Pip Greenwood was praised, Morrison Kent was reasonably priced and Andrew Stewart was favoured for his pragmatic approach. LeeSalmonLong’s Greg Lee was also mentioned. Australasian Legal Business ISSUE 7.1

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leading lawyers 2007/08 deals in brief

DAMIAN REICHEL Firm: Johnson Winter & Slattery

1. CVC ASIA PACIFIC PBL ACQUISITION Value: A$4.96bn Firm: Mallesons Stephen Jaques Lead lawyer: Peter Cook, Greg Golding, Jason Watts Client: CVC Asia Pacific, UBS Firm: Baker & McKenzie Lead lawyer: Mark McNamara Client: KKR Firm: Allens Arthur Robinson Lead lawyer: Robert Simkiss Client: Newbridge Capital Firm: Gilbert + Tobin Lead lawyer: Andrew Bullock Client: PBL • PBL hived off half its key media assets, including Nine Network and ACP Magazines into a new company then sold 50% to European-owned private equity group (PE) CVC • Largest PE transaction undertaken in Australia at the time • Innovatively structured deal completed in under six weeks; involved complex interplay of regulatory, media law and corporate expertise

2. IRONBRIDGE-ARCHER 3M ACQUISITION Value: A$2.4bn Firm: Cleary Gottlieb Client: 3M Firm: Clayton Utz Lead lawyer: David Stammers, Philip Kapp Client: Archer Capital, Ironbridge Capital Firm: Hogan & Hartson Client: Graceway Pharmaceuticals Firm: Kirkland & Ellis Client: GTCR www.legalbusinessonline.com

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Firm: Wiggin & Dana Client: Meda AB • Archer Capital and Ironbridge Capital acquired 3M Pharmaceuticals Business in • Asia Pacific and Africa • Deal was subject to Foreign Investment Review Board approval at the time • Business was to remain headquartered in Sydney

3. CVC ASIA PACIFIC-DCA GROUP ACQUISITION Value: A$2.7bn Firm: Blake Dawson Lead lawyer: Mark Stanbridge Client: CVC Asia Pacific Firm: Freehills Lead lawyer: Leon Pasternak Client: DCA Group • Successful acquisition of DCA was largest ‘public to private’ private equity transaction in Australia at the time • Offer was made by scheme of arrangement and funded by a mix of debt and equity provided by funds managed • DCA shares were acquired through company CAID established by CVC • Blake Dawson has done eight major schemes completed in the Australian market over the past two years

Location: Sydney • Practice areas: private equity, M&A, commercial, banking, finance, capital raisings • Acted on Airline Partners Australia consortium’s A$11.1bn takeover bid for Qantas Airways, and acted for Gresham Partners on a range of PE matters • Over 15 years’ experience in law

JOHN STROWGER Firm: Chapman Tripp Location: Auckland • Practice areas: Private equity, venture capital, energy, M&A, commercial, securities, finance, capital markets • Acted on CCMP Capital Asia and Pacific Equity Partners’ joint acquisition of Independent Liquor, Ironbridge Capital’s acquisition Elrond and Qualcare retirement village groups • ALB New Zealand Dealmaker of the Year winner 2006 and 2007

SIMON VODANOVICH Firm: Buddle Findlay Location: Auckland • Practice areas: private equity, venture capital, capital markets, commercial, IPO, JV, M&A • Acted on CCMP Capital Asia and Pacific Equity Partners’ joint acquisition of Independent Liquor, CCMP and Ontario Teachers Pension Plan’s acquisition of Yellow Pages Group (NZ$2.2bn)

JOHN WILLIAMSON-NOBLE Firm: Gilbert + Tobin Location: Sydney • Practice areas: private equity, M&A, JV, capital markets • Advised private equity fund KKR on the Brambles Australia acquisition, Cleanaway sale and the RAMS bid to domestic funds • Extensive experience in corporate and commercial law, privatisations

4. PEP-MERRILL LYNCH VEDA ADVANTAGE ACQUISITION Value: A$814m Firm: Minter Ellison Lead lawyer: John Mosely Client: Merrill Lynch, UBS Firm: Baker & McKenzie Lead lawyer: Brendan Wykes, Bryan Paisley

DAVID ZWI Firm: Thomson Playford Cutlers Location: Sydney • Practice areas: takeovers, private equity transactions, capital raisings, M&A, JV, commercial • Advised on private equity for over a decade • Clients include RMB Capital, Investec Wentworth Private Equity, CHAMP Ventures, CVC Private Equity

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alb guide: private equity 2009

Client: Lynch Global Private Equity, Pacific Equity Partners

Lead lawyer: Rob Parker Client: Foster’s

Firm: Mallesons Stephen Jaques Lead lawyer: Jason Watts Client: Veda Advantage • Credit checking company Veda Advantage approved buyout offer from private equity consortium comprising Pacific Equity Partners and Merrill Lynch Global Private Equity • Offer for all shares in Veda Advantage by way of scheme of arrangement • Implementation of scheme is intended to take place in June but remains subject to, among other things, court and shareholder approval • With rising profile on public to private deals, Bakers provided private equity specific advice and general regulatory advice, as well as advising on debt facility arrangements and acquisition structure

Firm: Quigg Partners Lead lawyer: David Quigg Client: Foster’s • Archer Capital acquired Cellarmaster Wines and Vinpac International in Australia, Cardmember Wines and Carters in New Zealand and an interest in Wine Buzz in Japan from Foster’s Group • Deal represents completion of Foster’s transformation from diversified portfolio of businesses to integrated global drinks producer • BOS International (Australia) and Royal Bank of Scotland provided A$175m of senior and subordinated acquisition facilities, ongoing working capital facilities, and acquisition and restructuring facilities • Cellarmasters is Australia’s largest merchant of home-delivered wines, and Vinpac is a contract bottling business in SA’s Barossa Valley • New Zealand acquisitions are wine club with 75,000 members (Cardmember Wines) and bottles and cork distribution business (Carters)

5. ARCHER CAPITALCELLARMASTER ACQUISITION Value: A$208m Firm: Corrs Chambers Westgarth Lead lawyer: Christine Covington Client: Carlton and United Breweries (Foster’s) Firm: Minter Ellison Lead lawyer: John Mosely, Martin Bennett, Kate Lane Client: Bank of Scotland, Royal Bank of Scotland Firm: Baker & McKenzie Lead lawyer: Brendan Wykes, Bryan Paisley Client: Archer Capital Firm: Bell Gully Lead lawyer: Bridgette Castle, Anna Buchly Client: Archer Capital

COMING UP ALB Issue 7.2 (February) Intellectual property ALB Issue 7.3 (March) Environment law

Firm: Chapman Tripp

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Australasian Legal Business ISSUE 7.1

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Firm Profile

Kemp Strang

Agribusiness and Rural Law

K

emp Strang, part of the Kennedy Strang Legal Group and based in Sydney, has been doing a lot more over the past year than just act for Pitt Street Farmers. During that time, the firm which specialises in Agribusiness and Rural Law, has been involved in the sale or purchase of over $500m worth of rural properties for such clients as PrimeAg Australia Limited, Clyde Agriculture Limited, the Macquarie Pastoral Fund, Paul Ramsay Agribusiness Pty Limited, Valad and others. Kemp Strang, through its partners Steve Williams and Daren Armstrong, handled the float of PrimeAg which was listed for trading on the ASX on 24 December 2007. At $300m, it was the largest equity raising in 2007. The firm’s practice in the agribusiness and rural area commenced in 2001 when the firm of Greaves Wannan & Williams merged with Kemp Strang. Partners Paul Frederick and Mark Procajlo, have between them over 50 years experience in this area. They as well as Rob Wannan, a consultant to the firm, are former partners of Greaves Wannan & Williams whose involvement in the rural area goes back to 1962 when Charles Wannan (who is now retired) commenced acting for James Blasdell and JG Boswell Company, the Californian farmers who started up Auscott Limited’s irrigated cotton enterprise at Wee Waa in New South Wales. Auscott went on to become Australia’s largest cotton farmer. The bulk of the transactions which they and leading property lawyer Jane Lucas have been involved in over the past year, relate to the purchase of irrigated and dryland cropping properties reflecting a broadening interest of investors in soft commodity production. www.legalbusinessonline.com www.australasianlegalbusiness.com

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Ignoring the more recent drop in wheat prices as a result of the largest world crop ever, there has been a significant upward shift in the global price of all grains in recent years as a result of a substantial growth in the use of grains for human consumption, fuel production and stock feed. This growth has generated considerable interest in farming properties. A significant part of Kemp Strang’s rural work has been in the water rights area where the firm is recognised as a leader in the field. As a result of over allocation of water resources in the Murray-Darling Basin, compounded by drought and record low flows, the irrigation industry in Australia has come under ever increasing pressure from the Federal and State Government and environmentalists. In New South Wales, for example, this has led to the introduction of the Water Management Act 2000 and the NSW Government’s Water Sharing Plans throughout the state. Similar reforms have been implemented in other Basin states. Kemp Strang has represented industry bodies such as Cotton Australia, as well as regional associations in the Murrumbidgee, Namoi and Gwydir Valleys in challenging the validity of the Government’s Water Sharing Plans in the Land and Environment Court and negotiating amendments to the Plans. As Mark Procajlo has noted: “The regulation of water rights has become unduly complicated. Each State has its own legislative and policy framework. Overriding these in the Murray-Darling Basin are the Federal Government’s Water Reform initiatives. In NSW, for example, the Water Management Act 2000 applies to surface water and underground

water if a Water Sharing Plan for a particular valley exists. If not, the Water Act 1912 applies. Nearly all valleys have their own Water Sharing Plan, but they are all very different with their own rules.” Kemp Strang regularly acts for other legal firms seeking specialist water rights advice and also advises lending institutions on security aspects of water rights to ensure that effective securities are taken over such rights and memberships of off-river irrigation schemes. Kemp Strang Level 15, 55 Hunter Street, Sydney NSW 2000 t: (02) 9225 2500 e: info@kempstrang.com.au w: www.kempstrang.com.au

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profile | managing partner >>

alb/LEXISNEXIS 2009 managing partnerS series

Nick Nichola, Middletons

A question of identity Middletons: you may know the name, but do you really know the firm? Managing partner Nick Nichola is on a mission to make sure you do

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ick Nichola remembers the moment well. “Two of our lawyers were on a charity run, wearing shirts emblazoned with the firm name,” says the genial Middletons managing partner, “when suddenly, this bloke comes up to them and begins going on about how Middletons did such a fantastic job with his kitchen! Turns out, he got us confused with a plumbing firm of the same name.” It’s a moment that demonstrates the challenge faced by Middletons. Law firms do not necessarily need to be household names, but a certain profile in the market is required. As Nichola freely admits, Middletons has flown somewhat under the radar to date and it’s something he’s keen to change. “We want our brand to be as well known as names like Clayton Utz are in the market,” he says. In one analysis, the mid-tier seems to be dominated – at least in size and revenue – by some major national or East Coast law firms which threaten to overshadow their rivals and create a de facto ‘sub mid-tier’ below them. But that’s not an analysis Nichola is buying 50

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into – and, he questions the use of the term ‘mid-tier’. “True, there are three firms that are in a class of their own – Mallesons, AAR and Freehills,” he says, “but I’m not sure that there’s any kind of hierarchy below that. The key issue is the quality of the firm and how well it is able to differentiate itself. We may not have the same quantum of deals as larger firms, but ours have the same level of sophistication and quality.”

Perth expansion

The big story for Middletons in 2008 was an entry into the Perth market by means of a three-way merger with locally based firms Salter Power and Franklyn Legal. The combined eight-partner office came into effect last December and has a full-service offering. Like many other managing partners, Nichola has had his eye on Perth for some time and is not deterred by the current economic gloom that has now settled over the resources sector which, not long ago, appeared to be virtually recession-proof. Nichola considers the value of a WA presence not just in light

of the region’s natural resources but also its proximity to Asia, and sees Perth as the gateway to the region. Both the collective Asian economy and the resources sector are looking rather wobbly at the moment, but Nichola is taking a long-term view. “When you consider China, India and other emerging economies, whatever bumps there may be on the horizon do little to alter the long-term view of Australia’s success and, in particular, of Western Australia as our resources capital,” he says. “I think there will be a slow-down, but I am not anticipating it will materially affect our expansion into the Perth market.” A great deal of planning went into the expansion, with Middletons investing over six months of research in the move. Nichola says that Middletons was not prepared to expand by acquisition. “For cultural reasons, it was always our intention to have a merger of equals. I don’t believe an acquisition would have achieved this,” he says. Five potential merger partners were canvassed and while the original plan was to select only one partner firm, Australasian Legal Business ISSUE 7.1

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profile | managing partner >>

the decision was ultimately made to proceed with a three-way merger. “The two firms complemented each other,” says Nichola, “Salter Power is broad-based with a particularly strong litigation group, while the lawyers at Franklyn Legal are acknowledged as Perth’s leaders in corporate and M&A services.”

Commercialisation

Coming to terms with the increased commercialisation of the legal sector is a theme that Nichola nominates as one of the key challenges in his role. “Commercial law firms need to be run as sophisticated commercial entities and partners, like all employers, have to embrace the challenges that come with owning and running a business,” he says. This means a focus not only on the lawyers, but also across the functional areas of information services, technology, business development, human resources and corporate services – in short, the same kind of broad perspective any business operator should have. And while this theme is enthusiastically embraced by the growing number of managing partners or CEOs drawn from outside the legal profession, Nichola is not one of them. He has been a lawyer by trade since his days in a small suburban firm called Molomby & Molomby, where he rose to partnership and came across to Middletons when the latter acquired Molomby in 1998. Prior to taking on the managing partner role in 2005, he was head of the firm’s corporate and commercial group and the chairman of partners.

Direction

Middletons as we know it today has been in the making since 2000, when the firm adopted the vision statement as ‘a quality, national law firm’ with a focus on providing clients, partners and staff with value. In pursuit of a www.legalbusinessonline.com

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“True, there are three firms that are in a class of their own – Mallesons, AAR and Freehills – but I’m not sure there’s any hierarchy below that” 51

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profile | managing partner >>

“No-one is interested in how clever we are if we can’t articulate clearly what we think” ►► The Middletons’ Australian Open? Last January, Melbourne residents were treated to the sight of motorbikes towing small promotional boards around the city displaying, inter alia, the Middletons’ logo. Tennis Australia is a client of Middletons and the firm is the official law firm to the Australian Open.

stronger nation-wide presence, the firm’s Sydney office would expand to incorporate the former firms of KPMG Legal and Acuiti Legal, and undertake lateral recruitment that would eventually see the Sydney operation swell from three partners in early 2004 to its present 23. The expansion has also been productive, with the firm recording 11% revenue growth last year. There is, however, a sense of déjà vu in this story, which reflects a process of evolution similar to a number of other ambitious mid-tier firms that have risen to prominence in recent years from more humble origins. How, then, can Middletons distinguish itself? 52

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Straight talking

There are, of course, certain qualities which any successful firm is expected to have: technical excellence, client focus, depth of expertise and commercial nous – to name but a few. Middletons, while still embracing those qualities, has added another dimension to its marketing by adopting the term ‘straight talking’ as its defining brand statement. The idea originated from Middletons’ own clients after a survey was conducted to find out what they valued most about their interaction with the firm. A consistent theme in the feedback was praise for the straightforward approach adopted by the lawyers. “We are confident that [this] truly reflects who we are as a firm. No-one is interested in how clever we are if we can’t articulate clearly what we think,” says Nichola. “Clients value our willingness to ‘get off the fence’ and advise them as to the best

commercial solution.” The idea wasn’t universally embraced within the firm at first – there were some who felt that there was a thin line between ‘straight talking’ and ‘fast talking’, and that the brand was being taken downmarket. “Lawyers often don’t see straight talking as part of the inherent value of the role,” says Nichola, “Even in a firm like ours where we already had a straighttalking culture, it wasn’t something that lawyers would consciously follow or see as a strength” Until, of course, the firm consciously brought that quality to the fore. Nichola says that keeping lawyers ‘talking straight’ was never an enforced issue as the majority of the ones at Middletons already adhered to the principle. “Rather,” he says, “it was more a case of ensuring that all our internal communications and interactions also adopted it.” ALB Australasian Legal Business ISSUE 7.1

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28/01/2009 1:30:28 PM


FEATURE | employment law >>

New IR laws: With change comes opportunity With corporations downsizing staff levels to cope with a slowing economy, ALB’s Cabral Douglas investigates how unfair dismissal provisions under the new Workplace Relations Bill is going to affect workplace relations practices

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ust one year after John Howard and the architects of the widely unpopular Work Choices legislation were relegated to political oblivion, the Labor government, true to its election promise, has released a draft bill to reform Australia’s industrial relations laws. At a time when weakening business conditions have been reported widely, some commentators have questioned the timing of the reforms and whether they will have a negative impact on a national economy that is already in contraction. According to Harmers Workplace Lawyers managing partner Joydeep Hor, whether the bill will be good or bad for business is still unclear, but he did say that it will certainly present a challenge as companies make preparations to comply with the new rules scheduled to take affect on 1 July 2009. From a legal services perspective, where there is change there is opportunity. “We are expecting to see a spike in activity arise as a result of uncertainty that our clients may have about these new changes,” Hor said.

Just a touch-up

In spite of early signs of anxiety from various corporations, the Australian Centre for Industrial Relations Research and Training director Dr John Buchanan has suggested the changes should have only a minimal affect on their bottom line – describing the bill as ‘tame’ by world standards. “What you have is, essentially, Work Choices with the raw edge cut off it – which is significant because it was the raw edge that was brutal,” he said. “Work Choices was 95% pro-employer, whereas this legislation will be about 85–90% pro-employer. There are some minor adjustments, but the underlying framework is still pro-employer,” he added. Buchanan, conceded that the opposition to the bill is more a result of employers becoming ‘spoiled’ under Work Choices, rather then the new proposals creating 54

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particularly onerous obligations on them, despite the effects of the current economic climate on the situation. “Essentially employers have been spoilt. You had easily the most proemployer set of labour laws anywhere in the western world,” he said. “We had a professor from Harvard over to look at Work Choices who said he hadn’t seen anything like that since the far-right regimes in central America in the ’70s – so that is where employers are coming from. They have had extraordinary powers given them by the state and all the Labor party is doing is diluting them. They are not even ripping it up and starting again – this is just a touch-up.” As the bill awaits legislative approval, some of Australia’s leading industrial relations practices, including Deacons, Mallesons and Harmers, have already begun consulting with clients, mostly large employers, to explain how the new bill – when it is passed – is going to affect them. According to Hor, the implications of the new bill, although radically different in content, will be similar to the introduction of Work Choices in 2006 in terms of the quantity of work flows for IR practices. “I think what we see will be quite similar to the quantity of work we saw when Work Choices was introduced,” he adds.

Tailored approach

An initial spike in compliance-related work is likely to result for all firms working in the IR area, but individual experiences may vary widely. Mallesons Workplace Relations specialist Andrew Gray is mindful of the dichotomy that exists between the type of work that will emerge for top-tier firms as compared to their mid-tier counterparts. “The ‘100 employee’ rule didn’t affect our client base much because of their size, generally. But this ‘genuine operational reasons’ change will have a big impact on our large corporate clients,” he said.

►► New workplace relations bill Key Points • The bill proposes to abolish the 100 employee rule – the right to claim unfair dismissal will be restored to all employees regardless of the size of the business in question. • The bill introduces a new qualifying period for unfair dismissal: For employers with 15 employees or fewer, the qualifying period to bring unfair dismissal proceedings is 12 months. For employers with over 15 employees, employees will need to be employed for a minimum of 6 months. • The bill introduces a new genuine operational test for redundancies to which employers will need to conform in order to avoid claims of unfair dismissal. • The bill proposes to create a new body called Fair Work Australia which will be responsible for adjudicating all unfair dismissal claims. Under the bill, lawyers will only be permitted to appear under exceptional circumstances.

One of the provisions under Work Choices that has been abolished by the new bill is that individuals working at companies with less than 100 employees were not eligible to bring unfair dismissal claims. In addition to outraging human rights and labour groups, this policy resulted in less advisory work and less litigation, but only for firms advising corporate clients with less than 100 employees – typically, small to mid-tier firms. Even large employers – those with more than 100 staff – were protected against unfair dismissal claims under Work Choices if the termination was for a ‘genuine operational reason’. Under the new rules, however, large employers need to adjust their practices to conform to the new criteria of what constitutes a ‘genuine operational reason’. Consequently, lawyers are expecting larger companies to be at a greater risk of unfair dismissal claims by employees who are made redundant. Gray said the new rules require firms to advise large employers on the fairness of the redundancy selection process, one which provided a steady Australasian Legal Business ISSUE 7.1

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FEATURE | employment law >>

flow of work for firms prior to the introduction of Work Choices. “This could again create redundancybased termination disputes which aren’t currently there. Before Work Choices, we gave a lot of advice on the redundancy selection process – which sort of disappeared under Work Choices. In addition to the greater potential for redundancy-based litigation, Deacons partner David Cross notes that a much wider group of people will have the right to claim unfair dismissal which should also, in theory, result in more conflict resolution, or prevention, work for firms. “Under Work Choices, there is a series of categories of employees identified who cannot bring unfair dismissal proceedings, including people who had their employment terminated for ‘genuine operational’ reasons. Under the new proposal, anyone will be able to sue for unfair dismissal as long as they have passed the qualifying period of employment, and they are not a casual employee.” The new bill proposes that, for employers with 15 staff members or fewer, the qualifying period for bringing unfair dismissal proceedings is 12 months. For employers with over 15 staff, employees have to be employed for a minimum of six months in order to bring proceedings. While Buchanan has embraced the changes, he points out that the new rights granted to employees are quite standard. “The unfair dismissal rights are quite mute by world standards – they are not very draconian. Large employers have 12 months to work out the problem. So, if you can’t work it out in 12 months, frankly, workers deserve the right to bring proceedings,” he says.

Lawyers excluded

In spite of proposing to provide a broader range of employees with legal right of action, Julia Gillard and her team of advisors are proposing to marginalise the use of lawyers and tribunals in the process of enforcing those rights – a move that Cross has characterised as ‘bold’ and quite out of step with people’s perception of fair and just practice. “Unfair dismissal matters will no longer be determined on the basis of a hearing,” he states. “Instead, it will be on some other basis that has no counterpart in western legal tradition. If unfair dismissal is regarded as a matter www.legalbusinessonline.com

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“What you have is, essentially, Work Choices’ with the raw edge cut off it – which is significant because it was the raw edge that was brutal” of sufficient importance that it should attract a legal remedy, you’ve got to have a procedure for adjudicating that legal remedy – and that procedure has to be consistent with people’s expectations of fair and just practice.” “The perception is that if lawyers are involved, it introduces legal formality which means things are slowed down and you won’t get the streamlined effect that they are looking for. The policy seems to be that lawyers are the source of delay and confusion – and that isn’t really the case,” Cross laments. According to Cross, the exact opposite is true. That is, by excluding lawyers from unfair dismissal proceedings, the government is actually inviting delays and confusion in the process. “If you’ve got untutored litigants running their own cases, you frequently get a situation where no refinement is brought to bear in limiting the points that are going to be raised, so you finish up with something that gets completely out of hand,” he states. Hor disagrees, however. “There are plenty of cases where lawyers’ fees in unfair dismissal cases have been significant and seen to contribute to the whole exercise of taking a lot of time and costing a lot of money for both sides. If the person bringing the claim is going up against a big organisation that has a lot of money, they can use that to drag out the process and that causes delays for the person getting their job back,” he said. Nevertheless, while this change may result in fewer fees for lawyers who would normally appear on behalf of

clients at unfair dismissal hearings, firms still stand to benefit from an increase in advisory work, including the consultation required leading up to hearings. As a result, Hor – who says 40% of his practice is litigious – is not expecting these new developments to affect work flows adversely. “I am not expecting us to be any less busy as a result. Most of our clients will want us to be involved as much as possible, so it will probably only be the actual conciliation part of the process for which we’re not there. We will still advise them actively and assist them in dealing with the matter,” he said. Additional substantial components of IR work remain unaffected by the proposed unfair dismissal provisions – discrimination, health & safety, and restraint of trade matters. Litigation in these areas, however, is not usually significant because they tend to settle. “Let’s face it; most of our time is spent preparing all the evidence, not attending the hearing. The hearing only normally goes for maybe one or two days – it’s the affidavits you spend all your time on,” says Gray. While some have questioned the timing of the bill’s introduction, its contents were not surprising. But, as the economy slows, employment practices, known for their counter-cyclical dimension, are generally going through a busy phase as retrenchment and redundancies are on the rise. Employers may seek to pursue redundancy plans before the new bill is passed. ALB 55

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FEATURE | employment law >>

at any time. It is therefore important to ensure that senior executives’ employment agreements record the expectation that, from time to time, they may need to respond to e-mails or take calls while on leave or on public holidays. Employment agreements should specify that if executives are required to take calls or answer e-mails during leave or on public holidays, this will not result in an entitlement to take alternative leave days (unless, of course, their leave actually needs to be cancelled or cut short).

Employment agreements for senior executives securing top talent and future-proofing your business

One tool that can facilitate securing and retaining New Zealand’s top senior executive staff is a properly drafted employment contract. Simpson Grierson's Katherine Burson explains.

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he written employment agreement is a key tool for employers when managing senior executives. As 2009 promises to be a challenging year for many businesses, it is timely for employers to review standard terms and conditions of employment and to tailor employment agreements for new (or existing) executives, to address those issues that particularly relate to executive staff. This article explores the issues that can arise in the relationship between a senior executive and his/her employer and the clauses that can be utilised effectively in employment agreements to protect the business in these situations.

Recruitment While getting the recruitment process right is always the goal, particularly when it comes to the recruitment of senior executives, it is nonetheless extremely Katherine Burson, important to provide Simpson Grierson for every eventuality – upfront. A simple, but effective way of achieving some protection is to include the following acknowledgements in all

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employment agreements: • All representations made by the executive when applying for the position about his/her qualifications and experience are true and correct; and • The executive has not failed to disclose any matter which may have materially influenced the decision to employ him/ her. Other acknowledgements which employers should seek from executives (and, indeed, all employees) include: • The employee has been advised of his/her right to independent advice and that he/she has had a reasonable opportunity to take that advice; • The employer has made the employee aware of his/her rights under the Holidays Act 2003. Following amendments to the Employment Relations Act which were passed under urgency in December 2008, from 1 March 2009 employers who employ fewer than 20 people are also able to make use of a ‘trial provision’ (sometimes referred to as a probationary period) for new employees.

Holidays When it comes to holidays, because of the nature of senior roles, it is often necessary to be able to contact executives

Confidentiality and protection of intellectual property Employers are clearly entitled to protect confidential information and intellectual property. While a degree of protection is implied in all employment agreements, it is important – with senior staff in particular – to ensure that the employment agreement is specific about the protection the employer seeks. Confidentiality clauses in senior executives’ employment agreements should define what the employer considers to be confidential information, rather than leaving the scope of the confidential information to be settled by the courts after a dispute has arisen. The definition of confidential information should include, at a minimum: • Trade secrets; • Confidential business and technical information; • Business methods, management systems and strategies; • Information relating to customers, suppliers and staff, and other parties with whom the employer deals commercially; and • Computer software and data. As to intellectual property, in addition to specifying that any intellectual property created by the executive in the performance of his/her duties belongs to the employer, employers should consider whether the executive will be working on any particular project which may result in the creation of intellectual property and, if so, specific mention should be made of this.

Change of control – the golden parachute Retaining a key executive during a change process can be critical to the successful management of that process, and to the stability of the business going forward. Consideration should be given to whether executive agreements should Australasian Legal Business ISSUE 7.1

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FEATURE | employment law >>

include a Change of Control provision allowing for a payment to the executive at the completion of a change process (such as a change in, say, over 40% of the shareholding of the business), if the executive remains with the employer until that process is complete.

Ending the relationship Key clauses which should be included in all senior executives’ employment agreements include:

Garden leave: A garden leave clause allows an employer to require a departing executive (or other employee) to remain at home for the balance of the employee’s notice period. This prevents the executive gathering confidential information or trade secrets for use with a competitor. Employers can also utilise garden leave to prevent further customer/supplier contact and to allow the employer the opportunity to secure relationships with customers and build them up before the executive joins the competition. Such clauses should specify that: • The executive can be required to remain at home full-time, or can be required to undertake reduced or different duties (within their skill set) during the notice period • The executive’s duties of fidelity and good faith continue while he/she is on garden leave The length of the garden leave period should be considered. If the executive has a six-month notice period, for example, it may not be appropriate to put him/ her on garden leave for the entire time – although each case needs to be assessed on its own facts.

• Whether it will be sufficient to simply restrict the executive’s contact with customer or clients (or whether restricting work for a competing business is necessary); • The time the restraint needs to be in force and the geographical area it should cover; • The particular proprietary interest the employer has developed, and the risk the departing executive could pose to the business and, from this, the information, relationships etc which need to be protected. These should be specifically referred to. Even if specific monetary consideration is not provided, restraint clauses should contain an acknowledgement by the executive that the: • restraint is reasonable and necessary to protect the business; and • remuneration and benefits provided to the executive under his/her employment agreement have been assessed in light of, and are given in consideration of, the undertakings contained in the restraint clause.

Incompatibility and ‘no fault’ termination Perhaps the most difficult issue to deal with when it comes to senior executives is the situation where there is incompatibility between that senior executive and the Chief Executive or Board. While termination for incompatibility may be a ground for justifiable dismissal, it must be serious in nature – and this is often difficult to establish and then deal with. In light of this, it is becoming more common to see ‘no fault’ termination clauses in employment agreements

employers need to protect their businesses against the possibility that a senior appointee may have misrepresented his/her qualifications or experience when they applied for the job Restraints of trade: Restraint of trade provisions can be enforceable if an employer is able to demonstrate that the restraint clause is reasonable in all the circumstances. It is particularly important to tailor the restraint clause to the particular executive and factors to consider are: www.legalbusinessonline.com

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for senior executives. Such clauses provide that the employer may elect to terminate the executive’s employment agreement with immediate effect in circumstances where it considers that there has been a breakdown in the relationship between the executive and the Board/senior management, provided

that the employer pays the executive a compensatory figure previously agreed. While these ‘no fault’ clauses have not yet been fully tested before the New Zealand courts, the advantages of including such a clause in a senior executive’s employment agreement include: • It establishes the expectations of the parties and the executive is aware that incompatibility could be a ground for dismissal • Disputes and/or litigation over the right to remove the executive can often be avoided, as it effectively quantifies upfront (similar to liquidated damages) the amount that is going to be paid by the employer in compensation for a termination

Dealing with concurrent directorships/shareholdings It is relatively common for senior executives, particularly Chief Executives, also to be appointed as a director, or to hold shares in the business (and indeed the grant of shares may make up part of the executive’s remuneration package). If so, businesses need to consider what happens to the executive’s directorship and/or shareholding in the event that his/ her employment terminates. In particular: • Directorships: The employment agreement can stipulate that, when the executive’s employment is terminated, the executive must immediately resign from any directorship • Shares: The employer can specify what happens to the executive’s shares on termination of the employment relationship

A future-proofed employment agreement While it is often difficult to set time aside to review employment agreements and consider employment-related issues, this should be a priority, particularly for businesses that are considering employing or promoting senior executives in 2009. By taking the relatively simple steps of reviewing employment agreements and ensuring that, for senior executives particularly, the agreements cover the issues outlined here, employers are wellplaced to manage their relationships with executives in a productive way, and to protect their businesses from the negative effects of employment-related disputes. ALB Katherine is a senior associate on Simpson Grierson’s Employment Law team

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FEATURE | employment law >>

H

Termination payments :

Devil in the detail

“The most important thing anyone facing a redundancy can do is get over the shock and anxiety associated with the loss – and move on,” says Steven Penning, a senior partner at Turner Freeman Lawyers. Here, he offers additional valuable advice 58

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ollywood film producer Samuel Goldwyn once quipped that “a verbal contract isn’t worth the paper it’s written on.” As a play on words about the strength of any agreement, the phrase reminds us that the truth about all contracts – written in blood or otherwise – is that they are always open to challenge and interpretation, and are never as rock-solid as they might appear. As the global economy stumbles into the worst financial crisis since the Great Depression and lay-offs become more common, the redundancy and termination provisions in the employment contracts of a great many senior executives and managers will come into question. Nobody knows to what depths the crisis will plumb, but for anyone facing redundancy, the savaging couldn’t be worse and Goldwyn’s aphorism about contracts sounds an important warning. After 20 years’ work in employment law, Steven Penning, a senior partner at Turner Freeman Lawyers, has spent a lot of time with the newly redundant. “The most important thing anyone facing a redundancy can do is get over the shock and anxiety associated with the loss and move on,” he says. “And the best way to do that is to make sure they get everything they are entitled to when they are paid out.” “When someone is signing up for a new appointment, they are naturally excited and alert to the detail in their contracts, they look for what’s expected – and what’s in it for them too. But, if you’re being made redundant, it’s a very different experience. The anxiety of losing an income and what this will mean for the future, tends to cloud anyone’s judgement and people often take what they are given and quietly slip away,” he says. In November last year, the High Court brought down a decision that has widened the grounds available for the tax deductibility of legal expenses and it couldn’t have come at a more significant time for employees protecting their incomes. Penning believes that the ruling, made in favour of Shane Day, a customs employee, will make it more likely that employees will seek legal advice if they are directly affected by the present downturn because of a potential cut in legal bills of up to 45%, for example, for those on the top tax rate. Australasian Legal Business ISSUE 7.1

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FEATURE | employment law >>

Penning has already seen a steep increase in the number of terminations and redundancies walking through his door and he describes the High Court’s decision as significant in the current climate. “A lot of senior executives who come to me are in their mid-50s and they’ve been with the one organisation for 20 years or more,” he says. “Often, this is the end of their career, so if they want to use the redundancy to set themselves up in business or retire early, the final payout is extremely important.” Penning points to share options as just one example. Employee share-ownership schemes are an important part of corporate remuneration and are used to foster loyalty executive and staff. They are rarely – if ever – part of an initial contract of employment and are usually recorded in a separate document drawn up years into an employee’s career. And he cites many other examples of detail that is missed. “Most people know that they are due for a payout that represents a certain number of weeks’ pay for every year of service, but they often miss the detail of exactly what constitutes a week’s pay and, unfortunately, leave it up to the organisation to work it out for them,” he says. One of his clients, an investment banker who worked in foreign investment, was made redundant and, according to his policy document, in case of severance he was due four weeks’ pay per year of service. To determine what makes up a week’s pay, Penning describes how he looked for entitlements such as superannuation, motor vehicles, bonuses and commissions as factors to take into account. Even the annual calendar-year bonus came into it because there may be some entitlement if an employee is laid off before the calendar year is up. According to Penning, there are many cases where there is no definite answer and the trick is to look at the documents for what is called ‘an enforceable right’. “Sometimes it’s a matter of negotiation,” he says. “With one client, we decided to let the bonuses go because we were prepared to weigh up the cost of battling for that with other concessions that were eventually granted.” There has also been another important recent judgement with wide implications for this part of employment law. This time, the NSW Supreme Court highlighted the www.legalbusinessonline.com

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existence of what are described as ‘implied terms’ within an employment contract. The decision is important for employees who have been promoted during their time with an organisation if no new contract was drawn up after they moved positions. In the Supreme Court case, a general manager was awarded nine months’ pay after he was made redundant. When he joined the company, in 1999, he was originally employed as a business development manager. He was then promoted twice before finally becoming managing director but found that a promised job description and performance indicators were not provided. When he was made redundant, in 2006, the company tried to rely on a three-month payout clause related to the contract from his former role. What they failed to understand was that, if there was no contract that stipulated a notice period, the courts would be able to imply one. And they did. Penning has seen a number of similar examples. One, a senior executive with 20 years’ experience at the same bank, had his contract rewritten as part of a promotion that occurred in 2003. In 2005, he was promoted to an overseas posting in Europe and, in 2008, he was relocated to Sydney in a new position. But there was no contract written for the new position. The 2003 contract stated that any termination of employment would require a minimum proportion of his salary package. But there was a second issue in this case, that involved coverage of the employee by an award, which meant that he was able to claim substantial benefits outside those stated in his contract. Penning also warns redundant employees to get legal advice to find out if there was any underlying issue relating to discrimination. He recalls a case involving a woman who held a senior position in an accounting firm who was made redundant while on maternity leave. This is important because it allows for a greater payout if the organisation has breached its family leave policies, which operate in contradistinction from redundancy policies in maternity leave cases. Tough times make for tougher negotiations, and sometimes employers will try to avoid their responsibilities when making redundancy payouts. Often, an organisation will simply transfer an

employee to a less exciting position, hoping the humiliation will force them to resign. Penning saw this with a major Australian energy company. After 20 years’ service, the employee took long service leave and his position was deleted after he had gone. When he returned he was told by a company representative that they believed he was going to retire. He was told that, if he wanted to come back, they would create a position for him. What was important, in this case, was the question of whether or not his contract stated that he could be moved to a new position and what terms surround the level of responsibility in that new position. Here also it was important to evaluate any implied terms in the employment contract. Employees often don’t realise that they don’t have to accept the change. In cases such as these, they usually don’t change salary, but reporting lines and conditions do change. This particular employee found that, once he moved, he was required to work on weekends. He was given three days’ notice that he was to change to this new position and that it required him to perform duties he did in a similar role seven years previously, which included the weekend work. “Employees are often not aware that the organisation is able to offer the change in position, but that they can’t compel the employee to take it,” Penning says. In the end, a redundancy payout is intended to provide a level of security for the time a person needs to look after their family commitments until they can secure another form of income. How long that period will be is anybody’s guess so there is no way of quantifying how much will be enough. The best thing to do is see a lawyer, have an appraisal done for a small fee, get what you’re entitled to and then move on. Moving on, particularly after a long period of time with one organisation, often requires a very difficult period of adjustment. If you’re going to set yourself up in a new business, an adequate payout is an important first step. “Any new business takes time and money before it brings in the returns necessary,” says Penning. “Redundant employees need to get what they are entitled to – and then move on.” Steven Penning is a senior partner at the employment law firm, Turner Freeman Lawyers

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in-house perspective

Going Full-circle Johnson & Johnson Asia Pacific in-house counsel Felicity McDowell reflects on how she went from the boutique environment to the worldâ&#x20AC;&#x2122;s biggest health care company: Johnson & Johnson (Asia Pacific)

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in-house FEATURE | interview >>

F

elicity McDowell has long had a burning passion for iconic brands, so it is hardly surprising that the acquisition of Pfizer Consumer Health Care by Johnson & Johnson in 2006, which has created the world’s biggest heath care company, has her abuzz with enthusiasm. Johnson & Johnson, a longstanding super-brand established in 1881, counts products such as Johnson’s Baby brand, Neutrogena, Clean and Clear, Stay Free and Care Free as part of its growing legacy. The acquisition of Pfizer Consumer Health Care, however, has taken the company from strength to strength by adding Listerine, Codral, Benadryl, Sudafed, Zirtec and Nicorette to its portfolio of iconic healthcare brands – creating a A$61bn international business in the process. “I had hoped to be working with iconic brands,” McDowell says. “If I had been able to dream about what I could achieve coming from a boutique ►►

Johnson & Johnson was founded more that 120 years ago by American Brother Robert Wood Johnson, James Wood Johnson and Edward Mead Johnson on a revolutionary idea: Doctors and nurses should use sterile sutures, dressings and bandages to treat people’s wounds. www.legalbusinessonline.com

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firm, and where I would like to be – I am now in that spot.”

Destiny

McDowell is also a member of the company’s leadership team and she appears to have been destined to oversee the legal affairs of Johnson & Johnson. After years of advising clients on advertising and marketing matters in the boutique environment, and after a brief stint in Paris, she accepted a role in mid-tier firm Michell Sillar’s advertising and marketing group. Her new team subsequently moved to Corrs, where Johnson & Johnson became one of her prized clients. “I didn’t directly action that [the move to Corrs] but I was delighted by it,” she admits, “because now I had the opportunity to get exposure to a different type of client. Now, the world immediately got bigger – it gave me wider scope for experience. It also gave me the chance to deal with clients across different industries – from financial to IT-related areas and so on.” McDowell reflects on her boutique experience fondly and refers to it as a ‘gateway’ to enormous commercial opportunities for young aspiring lawyers seeking an alternative to the big firms. “When you’re working with just one other lawyer, from day one, you need

to be very responsive, quick and decisive with your advice,” she says. “So, by the time I went over to Corrs, I had already understood what clients were looking for from their lawyers, and developed the ability to communicate effectively and add value. I think that put me in great shape for the big firm environment because I’d had so many years of experience,” she adds. Incidentally, one client who kept McDowell particularly busy during her tenure at Corrs was none other than her current employer, Johnson & Johnson. “Essentially it was a very hands-on relationship. It was very close – and it was daily. I was effectively in-house counsel even at that stage,” she says, “but I was sitting at Corrs.” Notwithstanding the quality of the work at Corrs and the strong relationship she developed with Johnson & Johnson, in 2005 McDowell opted for a change of pace. At Pfizer Consumer Health Care, she accepted her first in-house role and what happened next took everybody by surprise – including her. The company was acquired by Johnson & Johnson and soon after, appointed its first Asia-Pacific inhouse counsel – Felicity McDowell. “I worked with Johnson & Johnson for so many years [while at Corrs], I had insight into the company. 61

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Although I wasn’t in-house counsel, I was the next-best thing. I was in and out of Johnson & Johnson offices constantly, advising on new claims and matters such as competitive challenges, regulatory advice, reactive and/or proactive challenges, promotions, sponsorship agreements and so on. So when the new role was created after the acquisition, it was a natural fit,” she adds.

Relationship-building

McDowell considers that creating lasting relationships in the legal business and maintaining them is crucial. “It’s hugely important,” she states. “I can’t stress how important” In addition to her responsibility for the company’s legal affairs, McDowell is an integral part of the leadership team, putting her finance degree and commercial acumen to good use. “We pride ourselves on our reputation because our brands are iconic. I sit with the business in the Asia-Pacific leadership team and work with them,” she explains. “I am part of the business and I also have the opportunity to work closely with our partners, to really understand what the business needs, what’s important, strategic directions – as well as have insight into the financials, to really see how you can add value to it all, which is superb.” In spite of McDowell’s departure from Corrs, her relationship with that firm has never been stronger. “I currently rely on Corrs as outside counsel, and now we are working together as a team because of the strength of those relationships. I see them as part of my team so it’s a partnership,” she says. Indeed, the strength of the partnership between Corrs and Johnson & Johnson has strengthened over many years, and one person who seems to be central to this evolutionary process is McDowell. Asked what the company’s goals are for 2009, she responds: “To advance the health and wellbeing of over one billion people every day, and to address their health needs from the moment they are born – and throughout their lives.” This might sound like a big ask, but for Johnson & Johnson it is just business as usual. ALB 62

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“I had hoped to be working with iconic brands. If I had been able to dream about what I could achieve coming from a boutique firm, and where I would like to be – I am now in that spot” Australasian Legal Business ISSUE 7.1

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Sign off >> ►► Top Legal Advisors on global M&A by value: 2008

Leading UK lawyers grace pages of Who’s Who W

Year to date, as of 12 December 2008 Legal advisor

eil Gotshal & Manges City managing partner Mike Francies, Freshfields financial institutions co-head Will Lawes and Slaughter and May corporate heavyweight Charles Randell recently came across an extra five minutes of fame when they were named in the 2009 edition of Who’s Who – along with numerous film stars, musicians and other notable characters. The high-profile lawyers are three of the 1,000 new individuals to snag a mention in the 161st edition of Who’s Who which profiles some 33,000 individuals in its most recent issue. Pannone senior partner Joy Kingsley, Freshfields London corporate head Mark Rawlinson, Simpson Thacher & Bartlett finance partner Tony Keal and Slaughters’ corporate partner Nigel Boardman and senior partner Chris Saul are also part of the annual list of notable Britons. Constance Briscoe, one of the UK’s few black judges and author of controversial memoir Ugly, and Paul Mitchard, head of litigation at Skadden Arps, are also included in the list.

No. of Deals

Value (US$m)

1. Sullivan & Cromwell

126

371,857

2. Linklaters

209

351,242

3. Allen & Overy

224

324,721

4. Skadden

170

324,211

5. Freshfields

257

323,857

6. Latham & Watkins

248

307,975

7. Clifford Chance

225

271,559

8. Cravath, Swaine & Moore

61

266,498

116

231,259

61

216,541

34,756

2,811,335

9. Weil Gotshal & Manges 10. Simpson Thacher & Bartlett Industry total Source: Thomson Reuters

No smoking without firing R

ochester Law Firm is serious about forcing staff to be healthy. The firm made a stand on smoking when it legally fired a 56-year-old staff member for defying a new policy at work that banned smoking breaks for hourly employees. Karen Kridel took a five-minute smoke break in the morning and another in the afternoon every day in the14 months she worked for the firm as a paralegal – but was fired for continuing the practice after breaks outside of lunch were then prohibited in an October 2006 e-mail. Kridel was fired on the grounds she had engaged in misconduct by violating the no-break policy, a decision that was upheld by the Supreme Court in Albany and could now have to repay the US$3,000 in unemployment benefits she received.

Big bucks Bingham U

S law firm Bingham McCutchen recently snagged a top spot in Fortune magazine’s annual report on 100 Best Companies to Work For. The corporate firm received its ranking for being one of the highest paying employers on the market – the firm offers fresh law school graduates a base salary of US$160,000 on arrival, and the magazine reports that “even the firm’s legal secretaries average a not-too-shabby US$69,000 a year”. Bingham brought three firms into its fold in 2007, increasing staff levels to over 1,000 lawyers spread across 13 different offices, the largest of which is its headquarters in Boston. The average total pay for associates at the firm is reported to be around US$211,017. In Asia, Bingham has offices in Tokyo and Hong Kong.

Ethnicity in the City U

S firm Morrison & Foerster recently hit headlines with the news that it had appointed tax partner Trevor James to managing partner of the firm’s London office – making him the first black managing partner at the international firm. James takes over from Julian Thurston, who will continue at the firm as co-chair of the life sciences group. The announcement has brought to light a number of figures regarding firms and their race-based managing partner records. According to the Black Solicitors Network’s (BSN) 2008 diversity league table, until recently Beachcroft, Clifford Chance, DLA Piper and Linklaters were the only UK firms with any black partners. On the US firm front, 10% of City partners at Weil Gotshal & Manges are black (two partners), while fewer than 1% of Reed Smith’s partners are black.

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