NZ Lawyer issue 7.01

nzlawyermagazine.co.nz

Issue 7.1

LIVING IN INTERESTING TIMES

New Zealand Treasury’s Jeremy Salmond on his varied role leading a government in-house team STEPS AFTER SETTLEMENT DEVELOPMENTS IN MAORI LAW

AUCKLAND REPORT FIRMS’ PREDICTIONS FOR THE YEAR AHEAD

COURTROOM TO CLASSROOM CHOOSING A POSTGRADUATE LAW DEGREE

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12 COVER STORY

Living in interesting times

New Zealand Treasury solicitor and manager on leading a government in-house team

22

A NEW DAWN

FEATURES 16 | Steps after settlement Lawyers working in Maori law share insights and the latest developments from this diverse practice area

34

As the sun sets on DLA Phillips Fox, chairman Martin Wiseman shares his vision for DLA Piper New Zealand

26 | Auckland Special Report The city’s lawyers share their predictions for 2015

26

34 | From the courtroom to the classroom Educators reveal what lawyers considering postgraduate study should look for 40 | The treaty tamer Tax lawyer turned OECD adviser John Peterson discusses his work and life in Paris

30 | In-house insights General counsel discuss the trends and challenges shaping their work

44 | A creative cause Kensington Swan’s Alastair Carruthers talks about his work in the arts

REGULARS News analysis: Speaking my language Deals round-up Legal insight: The changing legal landscape Appointments

MARCH 2015 | 1

EDITOR’S LETTER / 7.1

SEEING THINGS FROM ANOTHER POINT OF VIEW

COPY & FEATURES EDITOR Kathryn Crossley CONTRIBUTORS Samantha Woodhill, Iain Hopkins, Mark Kelly, Ty Wiggins and Wayne Condon PRODUCTION EDITORS Roslyn Meredith, Moira Daniels, Carolin Wun

ART & PRODUCTION

Kathryn Crossley

There is nothing quite like viewing something familiar through a new lens. All of a sudden, new opportunities and new possibilities become obvious.

The first issue of NZ Lawyer for 2015 is crammed with so many perspectives on the legal system and law as a profession that it is hard to know where to begin.

Martin Wiseman, chairman of the newly launched DLA Piper New Zealand, offers a global view on the local legal market and shares insights into the firm’s international future (see ‘A new dawn’, page 22).

In ‘Steps after settlement’ (page 16), practitioners working in Maori law discuss the latest developments in this diverse legal area. They discuss bringing together two world views and finding ways for a Maori perspective to be incorporated into a range of legal issues.

For those hoping to broaden their horizons in 2015, in ‘From the courtroom to the classroom’ (page 34) legal academics explain how postgraduate study can reinvigorate a lawyer’s practice, or even help take it in an entirely new direction.

From reforming the international tax system to insights from in-house counsel, there is plenty to inspire in this issue.

The legal industry can have a reputation for being set in its ways and slow to change, but the lawyers featured in this issue certainly put that stereotype to rest.

DESIGN MANAGER Daniel Williams DESIGNER Kat Vargas, Lea Valenzuela PHOTOGRAPHY Antony Kitchener (http://antonykitchener.photoshelter.com)

SALES & MARKETING SALES MANAGER Paul Ferris MARKETING & COMMUNICATIONS MANAGER Lisa Narroway TRAFFIC COORDINATOR Lou Gonzales

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HR MANAGER Julia Bookallil Editorial enquiries Kathryn Crossley tel: +61 2 8437 4702 kathryn.crossley@keymedia.com.au Advertising enquiries Paul Ferris tel: +61 2 8437 4703 paul.ferris@keymedia.com.au Subscriptions subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Auckland, Sydney, Denver, Toronto, Manila nzlawyermagazine.co.nz 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 NZ Lawyer magazine can accept no responsibility for loss

ISSN 1175-5148 (Print) ISSN 1179-0830 (Online)

Kathryn Crossley, editor, NZ Lawyer

CONNECT

Contact the editor:

kathryn.crossley@keymedia.com.au

2 | MARCH 2015

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NEWS ANALYSIS

Speaking my language Increasing Chinese investment in New Zealand has presented significant opportunities, but language barriers have highlighted the lack of Chinese-speaking lawyers in local firms Senior lawyers with Mandarin language abilities are now in demand at New Zealand’s biggest firms, but there’s a problem: there are very few of these lawyers in the local legal market.

Faced with a significant need for Chinese language skills to help tackle Chinese corporate and property transactions, Kiwi law firms are adopting a range of approaches to fill the skills gap.

According to Chen Palmer founding partner Mai Chen, language skills are invaluable for lawyers working with Chinese clients. “It is frustrating on both sides and is dangerous,” she says of acting in situations where there is a language barrier. “You can get some way down the track and then realise that there has been a misunderstanding.”

DEALING WITH DEMAND “The traditional approach, which was ours up until five years ago, is to take the view that we’re New Zealand lawyers doing New Zealand law in New Zealand, and if clients come down to buy a New Zealand asset, then it’s New Zealand law, the New Zealand environment and the English language,” says Chapman Tripp partner Tim Tubman, who co-heads the firm’s China desk.

While this approach to working with overseas investors was fine for local firms when clients 4 | MARCH 2015

were coming from Australia, the US, the UK, and even Europe and Japan, where investors have typically been bilingual, Tubman says it has proved to be less than ideal for firms advising on the latest wave of foreign investment interest.

“We see more and more, particularly with the Chinese SOEs, they will have senior management that don’t necessarily have the English language skills, and so we think being responsive to that is now quite important,” Tubman says.

TALENT SPOTTING The big question that New Zealand’s firms are grappling with is whether the teams working with Chinese clients need Mandarin-speaking lawyers, or if using an external interpreter will suffice.

The challenge of outsourcing document translation work to interpreters is that they may not be familiar with legal words and concepts, and firms don’t have a way to assess the quality of the resultant translation.

Many firms have taken a hybrid approach, using external translators where needed but also bringing up bilingual talent through the firms by recruiting Mandarin-speaking law graduates.

“In the last five years we’ve been seeing a lot of people coming through [law school] with the Mandarin skills … there’s quite a high premium on getting them as part of the [graduate] recruitment round; they’re quite highly sought after,” says Simpson Grierson’s human resources director, Jo Copeland.

“They’re getting amazing opportunities that other lawyers wouldn’t, and other juniors certainly wouldn’t,” she says, citing the experience of a bilingual junior lawyer who accompanied several of the firm’s partners on a trip to rural China.

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Despite the opportunities on offer, big firms are facing competition for Mandarin-speaking law graduates from local boutiques with niche practices catering to Chinese clientele, and from firms overseas. “When they speak the dual languages, they want to go off to Hong Kong. Over there, if they can speak Mandarin they can earn two and a half times the salary that they earn here, and they pay 9% tax. You just can’t compete with that,” Copeland says.

Tubman agrees. “A New Zealand law degree is an international commodity … you’re fighting with the London market and the Shanghai market and the Hong Kong market.”

Yet recruiting Mandarin-speaking law graduates is not always the answer. A bilingual lawyer may have grown up speaking Mandarin at home, but there is a difference between conversational Mandarin and the language used in a business context.

Bilingual junior lawyers’ lack of seniority in a client context can also be problematic, Copeland observes. “What is difficult is that in Chinese culture the partner is really important, and it’s a hierarchical kind of relationship.”

While waiting for the bilingual graduates and junior lawyers of today to reach partner level, some firms have sought to attract more experienced Mandarin-speaking lawyers from outside New Zealand.

“Firms have tried recruiting from overseas, but it is quite difficult attracting them to come here. It’s probably easier to attract them into Australia where the salary rates are higher … attracting them to New Zealand is quite difficult, so it’s probably easier to get home-grown people,” Copeland says.

According to Tubman, Chinese-born Westerneducated senior lawyers are a rarity in the New Zealand market, and while local firms may struggle to recruit foreign talent on a remuneration basis, lifestyle factors may help to attract top foreign talent.

However, recruiting Mandarin-speaking lawyers from overseas is not without its drawbacks, Chen observes. “The lawyers may be able to speak Mandarin, but they may not be great lawyers. It is difficult to give them work for Pakeha clients when there are no Chinese-speaking clients to advise …

The lawyers appointed from overseas sometimes struggle to fit into a Pakeha law firm culture and way of practising law, and to come to grips with New Zealand law,” she says.

CULTURAL INTELLIGENCE However, language abilities are only part of the equation.

“It is not just language but an understanding of culture,” says Chen. “It helps you interpret what the client is really saying, what the real legal problem is, and what they really want.”

Copeland agrees, and says Simpson Grierson has been working on building cultural intelligence. “It’s not just the language skills; it’s the business skills, the social skills, the etiquette.”

NEW OPPORTUNITIES While Mandarin skills are at the top of firms’ wish lists, other languages such as Korean and Cantonese are gaining importance.

Tubman also flags India as a source of opportunity for firms. “We’re thinking through India at the moment, but we will follow the transactions. There’s a question mark over the degree to which India will see New Zealand as an investment destination and trade partner versus other regions, and then, taking that, seeing to what extent specialised language skills are necessary,” he says. NZL

MARCH 2015 | 5

NEWS / DEALS

Deals round-up $80m

Adviser

Client

Singapore Post acquisition of Couriers Please from New Zealand Post

A$95m

Allen & Overy

Singapore Post

Michael Reede, Connell O’Neil

AMP Capital sale of property portfolio to Public Sector Pension Investment Board (completed November 2014)

$1bn

Bell Gully

AMP Capital Investors (New Zealand) Ltd

Mark Freeman, Jane Holland

Carter Holt Harvey sale of pulp, paper and packaging business to Japanese consortium (completed December 2014)

$1.037bn

Bell Gully

Rank Group and its subsidiary Carter Holt Harvey

Gavin Macdonald, Glenn Joblin

Chapman Tripp, Mori Hamada & Matsumoto

Evolve Education IPO

$100m

Bell Gully

Joint lead managers: Goldman Sachs, Forsyth Barr

James Gibson, Chris Goddard

Minter Ellison Rudd Watts

Medibank IPO

A$5.5bn

Bell Gully

The Commonwealth of Australia

James Gibson, Anna Buchly

Herbert Smith Freehills, King & Wood Mallesons, Australian Government Solicitor, Clayton Utz, Skadden Arps, Sidley Austin

Arvida IPO and NZX listing

$80m

Chapman Tripp

Arvida Group

Roger Wallis, Tim Tubman

Hawera Food Warehouse (a Foodstuffs North Island subsidiary) of the business and assets of Hawera PAK’nSAVE, contemporaneous with the sale

by Foodstuffs North Island of the shares in Hawera Food Warehouse

Confidential

DLA Piper New Zealand

Foodstuffs North Island

Martin Wiseman

Armstrong Murray

GBHC (2014) purchase of Guthrie Bowron and Sim Wallcoverings businesses, contemporaneous with the GBHC (2014) sale of the Sim Wallcoverings Limited business

Confidential

DLA Piper New Zealand

GBHC (2014)

Martin Wiseman, Chris Liddall

Chapman Tripp, Tompkins Wake, Duncan Cotterill

Lianhua Trading Group acquisition of 75% of share capital in Prime Range Meats and the entire freehold interest in the adjoining farmland

Confidential

DLA Piper New Zealand

Lianhua Trading Group

Martin Thomson, Chris Liddall

Bell Gully, Simpson Grierson

Mark Group sale of assets in Right House (in liquidation)

Confidential

DLA Piper New Zealand

Mark Group

Brian Bray

Harmos Horton Lusk, Bell Gully

Shanghai Weiyi Investment & Management purchase of 100% of share capital of Good Health Products

Confidential

DLA Piper New Zealand

Shanghai Weiyi Investment & Management

Martin Wiseman, Chris Liddall

Harmos Horton Lusk

Wirecard Technologies acquisition of 100% of shares and other convertible securities in GFG Group

€30m plus earnout components

DLA Piper New Zealand

Wirecard Technologies GmbH

Reuben Woods

Anthony Harper, EY Law

Abano Healthcare Group sale of shares in Orthotics Centre (NZ)

Confidential

Harmos Horton Lusk

Abano Healthcare Group

Nathanael Starrenburg, Tim Mitchelson

Chapman Tripp

Arvida IPO Arvida Group Limited’s initial public offering and listing on the NZX main board marked the final IPO for the New Zealand market for 2014. The IPO, which was valued at $80m, gave Arvida a market capitalisation of $215m.

Chapman Tripp advised Arvida on the IPO and listing. The firm also advised Arvida on the aggregation of 17 retirement villages and aged care facilities, the refinancing of all existing banking arrangements and establishing a new group bank facility.

Chapman Tripp advised the issuer in seven of the 12 IPOs to list on the NZX main board in 2014.

6 | MARCH 2015

Lead lawyer(s)

Additional firms involved

Value (NZ$)

Transaction

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MAKE SURE YOUR FIRM’S WORK IS RECOGNISED To ensure your firm and its lawyers get the recognition they deserve for their fantastic work, send all your deal details to kathryn.crossley@keymedia.com.au

Transaction

Value (NZ$)

Adviser

Client

Lead lawyer(s)

Additional firms involved

Connor Healthcare’s full takeover offer for Acurity Health Group

$125.1m

Harmos Horton Lusk

Acurity Health Group

Nathanael Starrenburg, Andrew Harmos, Wook Jin Lee

Mayne Wetherell

Freshmax acquisition of the business and assets of the Crasborn Group

Confidential

Harmos Horton Lusk

Freshmax Pty

Greg Horton, Kelvin Preston

Bannister & von Dadelszen

$170m

Good Health Products sale to Shanghai Weiyi Investment & Management

Confidential

Harmos Horton Lusk

Good Health Products

Greg Horton and Kelvin Preston

DLA Piper New Zealand

Evolve Education IPO and NZX and ASX listing

Maui Capital acquisition of a 50% interest in Pedersen Group

Confidential

Harmos Horton Lusk

Maui Capital

Greg Horton, Tim Mitchelson

Brookfields

Silverlake HGH full takeover offer for Finzsoft Solutions

$25.7m

Harmos Horton Lusk

Silverlake Axis

Nathanael Starrenburg, Wook Jin Lee

Russell McVeagh, Anderson Creagh Lai

Veritas Investments purchase of the Better Bar Company Group’s business and assets

Confidential

Harmos Horton Lusk

Veritas Investments

Greg Horton, Wook Jin Lee, Georgina Toomey

Bell Gully

MFL Limited purchase of Masport Foundries business and assets

Confidential

Kensington Swan

Challenge Partners and MFL

Nick Scott, Stephanie Braddock, Gary Spalding

Hesketh Henry, Simpson Grierson

New Zealand Contractors Federation and Roading New Zealand merger

n.a.

Kensington Swan

Merger Committee of New Zealand Contractors Federation and Roading New Zealand

Chris Parke, Stephanie Braddock

Qube Ports purchase of 100% of shares in ISO

$80m

Kensington Swan

Qube Ports and subsidiary

Chris Parke, Iain Atchison

Simpson Grierson

Sale of shares in Peak Primary to Peak Healthcare

Confidential

Kensington Swan

Qualitas Medical Group Limited of Malaysia and Fertility Associates

Chris Parke, Marion Kennedy

Webb Henderson (acting for purchaser)

Evolve Education IPO and NZX and ASX listing

$132.2m

Minter Ellison Rudd Watts

Evolve Education

Neil Millar, Mark Stuart

Bell Gully

Cornerstone investment by Telstra Corporation in Orion Health

$20m

Simpson Grierson

Telstra Corporation

Michael Pollard, James Hawes

Gilbert + Tobin

FIGG Investments sale of ISO to Qube

$80m plus earnout

Simpson Grierson

FIGG Investments

Michael Pollard, Andrew Matthews

Kensington Swan

Graymont purchase of McDonalds Lime from Holcim New Zealand and New Zealand Steel, and Taylors Lime from Holcim

Confidential

Simpson Grierson

Graymont

Michael Pollard, Mark Tan

Chapman Tripp

National infrastructure platform contract for Health Benefits

Confidential

Simpson Grierson

Health Benefits

Simon Vannini, Kevin Jaffe, Marc Cropper, Victoria Anderson

Trade Me investment in Harmoney Series A preferred shares

Confidential

Simpson Grierson

Harmoney

Simon Vannini, James Hawes

Minter Ellison Rudd Watts

Evolve Education, which was incorporated in 2014, has acquired all the shares in the PORSE group of companies, all the shares in Lollipops Educare (the owner and operator of 30 early childhood education centres), and has contracted to purchase a further 55 childcare centres and related businesses.

The purchase of these businesses has been funded through Evolve Education’s IPO and listing on the NZX and ASX. It is the first early childhood education provider to list on the NZX. The acquisitions involved negotiating with 39 different vendors, and the deals had to be carefully timed – with the Lollipops Educare and PORSE transactions completing immediately prior to listing.

Given the age of Evolve Education, the company required exemptions from some of the requirements related to financial information to be included in its prospectus. Minter Ellison Rudd Watts worked with the Financial Markets Authority and NZX so that Evolve Education could provide suitable alternative financial information.

MARCH 2015 | 7

LEGAL INSIGHT

THE CHANGING LEGAL LANDSCAPE Practice management research reveals the priorities and concerns of Australasian law firms

FACTORS DRIVING CHANGE IN LAW FIRMS

FIRMS’ RESPONSES TO FACTORS DRIVING CHANGE

97% Investing in technology

78%

72%

64%

Increasing customer demands for better value

Emerging technology

Increasing demands for work-life balance

93% Investing in growth

92% 61%

61%

47%

Increasing commoditisation

Increasing competition

Declining customer loyalty/retention

Focusing on cost-cutting

92% New ways of working

85% Changing pricing strategy

83% 47%

46%

40%

Increasing number of female lawyers

Flat or shrinking demand

Ageing of those in the legal profession

8 | MARCH 2015

New business models

48% Undertaking mergers

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BARRIERS TO CHANGE AT LAW FIRMS

SATISFACTION WITH FIRM’S PROGRESS IN THE LAST 12 MONTHS

45%

12% Very

Satisfied

39%

34%

31%

Resistance/lack of support for change

Lack of partner buy-in

No sense of urgency

30%

29%

28%

Lack of staff engagement

Inadequate funding/budget

satisfied

Inadequate resourcing

22%

14%

7%

8%

Poor strategy/ plan

Poor project management

Supplier/ vendor issues

No barriers

3%

27% Neutral

Very dissatisfied

13%

Dissatisfied

CONFIDENCE IN LAW FIRM’S LEADERSHIP

27% Very confident

45% Confident

17%

11%

Ambivalent

Concerned

Source: The Impact of the Changing Legal Landscape on Australasian Law Firms – 2014 ALPMA/LexisNexis Research Results

MARCH 2015 | 9

NEWS / APPOINTMENTS

Appointments LATERAL PARTNER APPOINTMENTS NAME Gillian Service

PRACTICE AREA LEAVING Employment and litigation

Russell McVeagh

GOING TO Minter Ellison Rudd Watts

PARTNER PROMOTIONS

Catriona Grover Kensington Swan

 Kensington Swan appoints Wellington managing partner Catriona Grover has been appointed as Kensington Swan’s new Wellington managing partner. Grover, who has been a partner at the firm since 2008, said the appointment would give her the opportunity to expand upon her management skills.

“The biggest opportunity for me is learning more about the actual business side of the law firm and the management skills that will be developed from that,” she said. “With our relatively new CEO Alastair Carruthers taking the firm in quite a new strategic direction, I’m looking forward to working with the management on that,” said Grover, who advises clients in the financial services sector.

“It’s about keeping the strategy current and looking for the revenues and the growth within a city that isn’t perceived elsewhere as having the growth and opportunities that Auckland has,” Grover explained. “Unlike a lot of the other big New Zealand firms, our Wellington office is about the same size as our Auckland office.”

10 | MARCH 2015

FIRM

LAWYERS PROMOTED

Bell Gully

Dean Alderton, James Cooney

Chen Palmer

Marina Matthews

DAC Beachcroft

Mark Anderson, Mathew Francis

Duncan Cotterill

Mark Cathro

Kensington Swan

Jenni Rutter

Minter Ellison Rudd Watts

Oliver Meech

Simpson Grierson

James Hawes

SENIOR ASSOCIATE APPOINTMENTS FIRM

LAWYERS PROMOTED

Bell Gully

Karl Anderson, Fran Burley, Elena Chang, Liz Coats, Claire Harmsworth, Jenny Hills, Simon Mee, Nick Moffatt, Brigit Morrison, Rebecca Rose

Buddle Findlay

Mathew Gribben, Aaron Harlowe, Tim Lester, Andy Martin, Thaddeus Ryan, Genevieve Simmers, Benjamin Sutton, Bridgette White, Julia White, Anna Wishart

Matthews Law

Nicko Waymouth

Minter Ellison Rudd Watts

Nikki Chamberlain, Gina Fogarty, Adrianne Reid

Simpson Grierson

Sarah Lee, Ruth McLean, Nicki Montgomery

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OTHER NAME

FIRM/COMPANY

TITLE

Lee Bagshaw

Simmonds Stewart

Consultant

Kelly Bunyan

Minter Ellison Rudd Watts

Senior solicitor

Bridget Cameron

Duncan Cotterill

Associate

Stephen Caradus

Duncan Cotterill

Associate

Jonathan Falconer

Minter Ellison Rudd Watts

Senior solicitor

Daniel Fielding

Minter Ellison Rudd Watts

Senior solicitor

Krystle Gardner

Clendons North Shore

Associate

Stephanie de Groot

Minter Ellison Rudd Watts

Senior solicitor

Catriona Grover

Kensington Swan

Wellington managing partner

Rob Harris

Minter Ellison Rudd Watts

Senior solicitor

Nick Kovacevich

Wynn Williams

Consultant

Emma Kurtovich

Minter Ellison Rudd Watts

Senior solicitor

Olivia Lund

Duncan Cotterill

Associate

Nick Maday

Minter Ellison Rudd Watts

Senior solicitor

Gerald Nation

High Court

Judge

Laura Pelly

Duncan Cotterill

Associate

Brenton Rooney

Anderson Lloyd

Solicitor

Juliet Short

Duncan Cotterill

Associate

Emma Warden

Minter Ellison Rudd Watts

Special counsel

Almao Douch has a vacancy for an Crown Prosecutor.

The firm is the office of the Crown Solicitor at Hamilton and a solicitor with experience in criminal jury trials is required to conduct the prosecution of trials in both the High and District Courts together with attendances in relation to other aspects of the Crown Solicitor’s practice.

Applications from interested practitioners with 3 or more years experience are sought.

In each case the terms of employment will be negotiated to reflect the experience and ability of the successful applicant.

Gerald Nation Wynn Williams

 Wynn Williams partner joins High Court Wynn Williams litigation and dispute resolution partner Gerald Nation has been appointed a judge of the High Court.

Justice Nation retired from the partnership in January, after more than 30 years with the firm. He is the fifth Wynn Williams partner to be directly appointed to the High Court from the firm. He will sit in Christchurch.

Applications accompanied by a CV should be addressed to: Almao Douch PO Box 19173 HAMILTON 3240 Attention: R G Douch

MARCH 2015 | 11 NZL_6.4_Almao Douch_panel ad.indd 1

24/11/2014 8:56:41 AM

PROFILE / JEREMY SALMOND

Living in interesting times New Zealand Treasury solicitor and manager Jeremy Salmond talks to Kathryn Crossley about the varied role of leading a government in-house team “It’s been quite an interesting few years,” says New Zealand Treasury solicitor and manager Jeremy Salmond, who in recent times has overseen the Treasury’s legal work on the restructuring of Solid Energy; the Meridian, Mighty River and Genesis IPOs arising out of the mixed-ownership program; and the response to the Christchurch earthquakes.

“If it’s a significant government initiative and there are financial aspects, then Treasury is normally involved, and if Treasury is involved then somebody from Treasury’s legal team, particularly if it’s a commercial-type transaction or a new initiative ... there’s generally someone from our team working on those kinds of projects,” says Salmond, who manages the ministerial advisory, business services and improvement teams, in addition to overseeing the legal team.

Of all these projects, Salmond names setting up the Christchurch Earthquake Appeal Trust as one of the highlights from his time at the Treasury to date.

“We ended up doing some of the legal work purely because we were the right people in the 12 | MARCH 2015

right place at the right time,” he recalls. “To see that go just from an idea that somebody had and work with the team to turn it into something that raised nearly $100m, maybe even more than that, for the people in Christchurch, with all of the difficulties that they were having after the earthquakes ... to actually work on that was very rewarding.”

Since joining Treasury’s legal team more than a decade ago, Salmond has also advised on the Rugby World Cup joint venture and the government’s response to the GFC. It is this variety of work that drew Salmond away from private practice. He commenced his legal career at Bell Gully before spending a year in the UK, working in-house at a Japanese investment bank. Returning to his old firm, Salmond found that his work was becoming increasingly specialised. “I was building my own practice, but I suppose I was getting less and less motivated by the specialisation required,” he recalls. Then an opportunity came up to join the Treasury team as one of the lawyers here, and I jumped at it.”

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“If you’re choosing an external firm, there are a number of firms in the country that have a good reputation and goodquality lawyers, but for a particular project, what’s the value that they add to that project?”

MARCH 2015 | 13

PROFILE / JEREMY SALMOND

On projects like IPOs, the mixed-ownership program, and Solid Energy’s restructure, Salmond’s legal team seeks the input of external firms. Like many other in-house legal teams, he says Treasury considers the question of value when engaging external legal advice: “If you’re choosing an external firm, there are a number of firms in the country that have a good reputation and goodquality lawyers, but for a particular project, what’s the value that they add to that project? What have they done similar before, or who have they got in their team that has maybe worked on a similar project overseas?”

Working with all-of-government firms, Salmond says he has found the panel process to be very useful in terms of efficiency, allowing the team to quickly identify relevant external firms for a project. “We tend to, depending on the size of the project, either do a big procurement from the panel, or sometimes we’ll go to two of the three firms clearly identified in the rankings that we might want to hear from before making the selection,” he says.

Salmond’s advice to external law firms working with government clients is to keep in touch and let clients know where they think the firm may be able to add value on a matter. “I think some are a bit reticent; particularly with the all-ofgovernment panel I think they somehow think that they’ve got to channel communications through that panel. But ‘keep in touch’ is the thing I tell most firms.”

14 | MARCH 2015

TALENT MANAGEMENT

WORKING ACROSS GOVERNMENT

When it comes to his team of eight lawyers and one secondee, Salmond says his focus is on leading a high-performing team and ensuring that his lawyers are motivated, have interesting work to do, and are working well with each other. In building and managing Treasury’s legal team, he has striven to buck the trend that has seen the makeup of in-house legal teams become increasingly weighted towards senior lawyers.

“We were getting quite senior, and we still have some very senior and respected lawyers in the team, although I’ve tried to make sure that there’s a bit more balance and we’ve got the grads or the new lawyers and some intermediate lawyers as well. It tends to ensure that everyone has got a little bit of challenge in their work,” he says. “It’s good to have senior lawyers working on things, but not everything demands a senior and experienced lawyer.”

Last year Salmond spent six months on secondment to the Department of the Prime Minister and Cabinet. “One of the really good things I’ve found about working in government, and increasingly so, is yes, you work in your area, but there’s a lot more focus on people working across government,” he says.

During his time in secondment, Salmond was acting Deputy Secretary of the Cabinet, and provided constitutional advice to the Prime Minister and Cabinet about good process and good government, as well as overseeing the honours system.

“My team ran the process around the awarding of the Royal New Zealand Honours. It was not something I thought I’d be getting into when I came into government, but it was actually a very good insight into the real process of government,” Salmond recalls.

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Salmond’s secondment is an example of a growing push within the bureaucracy to encourage thinking about how the system as a whole operates and how services to the public can be improved.

As part of this drive, government lawyers have also developed a network to ensure that, where there are lawyers working in government, those lawyers work with lawyers in other departments to make sure the best advice is given to government and the best legal risk management can be applied.

THE CHALLENGES AND OPPORTUNITIES OF WORKING IN GOVERNMENT According to Salmond, the policy-into-law side of the work his team does is a unique challenge of working in-house for a government department, but he also sees it as an opportunity. “[When you work in-house for a company] you’re working with the law you’ve got, advising on what the law is and how to make sure the business performs and complies with the law,” he says.

“In government we do that, but also we’ve got a support role for the policy advisers and policy

“You’ve got that opportunity or that challenge of not just advising on what the law is but also helping the policy analysts working out what the law could be” analysts who work with ministers who can actually change the law through Parliament.

You’ve got that opportunity or that challenge of not just advising on what the law is but also helping the policy analysts working out what the law could be,” he explains.

“It’s a challenge because you’ve got to have a really good understanding of the law as it is now and the policy work that goes on around it, but it’s also an opportunity in that you can help ministers and officials shape what the law is.” NZL

MARCH 2015 | 15

FEATURE / MAORI LAW

Steps after settlement Lawyers working in Maori law share insights and the latest developments from a diverse practice area that extends well beyond Treaty settlements

16 | MARCH 2015

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MARCH 2015 | 17

FEATURE / MAORI LAW

PERSPECTIVES ON MAORI LAW Paul Beverley Buddle Findlay “The real challenge and opportunity is for both Maori and non-Maori to work to gain a really good understanding of each others’ perspectives, because often they’re much closer than people think, but there is an investment time required to try and understand a Maori perspective on issues and to find a way for both of those world views to be accommodated. That’s something that as a country we are making some real progress on, but there is still a lot of work to be done as well. In this area, building respect for each other and a solid relationship seems to be a really important precursor to being able to make any meaningful progress.”

Nick Wells Chapman Tripp “It’s the full gambit of legal services but with a subtle difference. When you act for a commercial client the money goes to the shareholders, but when you act for an iwi or a hapu group, their gains go to run health and education services … it’s legal work with a huge social conscience.

“The biggest opportunity is that as the settlements progress and finalise, that Maori side of the New Zealand economy will continue to grow.”

Deborah Edmunds, Kensington Swan “The work we do is actually one of the most demanding areas, because there probably isn’t an area of law that we don’t have to engage with.”

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Work towards settlement of historical Treaty of Waitangi claims continued in 2014, but for many practitioners working in the Maori law area, activity in the post-Treaty settlement arena is increasingly coming to the fore.

Once settlement deeds are signed, the attention of iwi, the government and their lawyers turns to structuring, upskilling for iwi clients, co-governance arrangements, and new investment opportunities.

GETTING THE STRUCTURE RIGHT Setting up structures to enable iwi to best manage assets received in the settlement to benefit their community has been a significant area of work for lawyers practising in this area.

“When you hit signing of a deed of settlement it’s actually not completed at that stage; there’s a lot of work post the signing of the deed of settlement to establish your post-settlement governance entity and to receive the settlement assets,” explains Kensington Swan solicitor David Jones, whose iwi affiliations are Rongowhakaata and Ngati Kahungunu.

Chapman Tripp partner Nick Wells agrees.

“When these groups go to settle with the Crown, there’s a big step up in the level of governance that they need. They might start off with a relatively small asset base, but following settlement they actually need to reorganise,” he says.

The adopted structure typically needs to accommodate both a commercial arm and a charitable arm that runs health and education programs. According to Wells, New Zealand has looked to the limited partnership regime often used in the Australian venture capital scene, but broadened the model for use by iwi. “They work very well in the venture capital and private equity contexts, and they also work especially well in the iwi context for those that are either charitable or Maori authorities for a variety of tax and practical reasons,” he says.

CLIENT UPSKILLING The role of lawyers working in this area typically involves some upskilling of iwi clients in commercial management to assist in dealing

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with assets received as part of settlements.

“They’re basically just normal Maori people, and then all of a sudden they’ve entered this quite massive commercial world,” says Kensington Swan solicitor Tai Ahu, whose iwi affiliations are Tainui and Te Paatu.

“When you establish these entities, what we have to understand is that generally your transition from a pre-settlement iwi to a postsettlement iwi is that you as an iwi are getting $50m–$100m, and the first thing that you have to do is ensure that you have the infrastructure and the internal capabilities to manage that resource … then once that happens one of the key areas that we support our clients in is actually developing their own skills and their own understanding of what this deed of settlement is and what their obligations are as trustees of a multimillion-dollar corporation,” says Jones, who is also a trustee for a post-settlement entity.

“When we’re providing advice to these trustees and managers, it is a very broad range of advisory services, and it’s not only legal but it’s also strategic and commercial, and sometimes business advice, but it also has to be culturally sound, commercially savvy and focused on sustainable outcomes, not only for today but for the future,” Jones says. “These trustees, when they’re making decisions they take a quadruple bottom-line approach, and this quadruple bottom-line approach takes into account cultural factors, environmental factors, social factors and

commercial factors. It’s a balancing of all these together to come to a decision on issues, and it’s not an easy thing,” he adds.

There is an element of trust that’s involved in working on these matters, Wells explains. While for a commercial client a firm may present several options to choose from, he says that in these matters it is often necessary to recommend which option to choose. “You actually have to go that little step further, which I suppose has a risk profile to the lawyer, but it is the right thing to do,” he says.

To build up the requisite commercial fluency, Chapman Tripp funds scholarships and teaches an iwi corporate governance paper at the University of Auckland. Kensington Swan has been developing workshops around some of the essential skills involved in running a commercial entity, such as governance and management structures, and making commercial deals.

“As a lawyer you have to develop strategies to meet those needs, because at the end of the day the significant decision-makers in the iwi are going to bear a significant risk if they can’t meet their trustee obligations,” Ahu says.

RELATIONSHIPS REVISITED A growing area of work for lawyers has arisen in the area of co-governance arrangements.

“There’s been an evolution of the relationship between local government in New Zealand and Maori, particularly as Maori work through their

Partnership.

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Susan Rowe, Christchurch Litigation and employment

David Allen, Wellington Resource management

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www.buddlefindlay.com

MARCH 2015 | 19

FEATURE / MAORI LAW

Treaty settlements and look to reframe their relationships with local government,” Buddle Findlay partner Paul Beverley observes.

“Councils all around the country have different types of relationships with Maori, but we see them being formalised in different ways and different councils trying to grapple with how best to build and formalise a relationship with Maori that best suits their region or district,” he says.

A number of authorities have sought to establish co-governance and co-management regimes, often over a particular resource.

According to Beverley, this has been driven in part by the movement in New Zealand towards having a stronger Maori voice in natural resource management.

“Part of that is delivered through Treaty settlements, but there are a number of local authorities who have, on their own initiative, developed and set up arrangements with iwi as well. We’re in a real period of exploring how that stronger voice for Maori can be accommodated and provided for,” he says.

In Beverley’s experience, one of the most challenging aspects of setting up a co-governance arrangement is finding a way for Maori to be properly represented in decision-making over those resources in a manner that reflects the very strong historical and cultural associations with the resource in question, but balanced against the ongoing role of central and local

governments in relation to the management of those resources. “It’s trying to bring together two world views,” Beverley says.

The Waikato River, the former Te Urewera National Park, and Auckland’s Tupuna Maunga are three areas covered by such arrangements.

“Some of the successes that those entities have had, even at an early stage, give us an indication of what might be possible in terms of these co-governance arrangements, and that’s what’s really exciting.”

INVESTING FOR THE FUTURE Immediately following settlement, the preferred investments are land-based and fisheries-based, but Wells observes that iwi are tending to diversify over time. “You’ve got some iwi going out and making essentially what’s a private equity play, and I’d expect you will see more of that over time as the groups look to diversify their portfolio,” Wells says. “You need to allow a period of time, in my view, from settlement to make that progression,” he adds.

“As they progress and develop, the speed at which they diversify will increase, and so there will be a lot more activity outside what we would call the traditional base of iwi, which is landbased activity … we will see a lot more in terms of the commercial activity as well,” he observes.

Wells predicts that there will be an increase in joint venture activity in the years to come, driven in part by the need to create scale, but also due

SNAPSHOT – THE MAORI ECONOMY Top asset bases by industry

$37bn

Estimated value of Maori economy

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$10.6bn

Agriculture, forestry, fishing

$6.9bn

Property and business services

$3.9bn

Cultural, recreational and personal services

$2.8bn

Transport and storage

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to a string of recent successes, including ICP, a fisheries joint venture involving 12 iwi; and Ngai Tahu Holdings Corporation’s and Tainui Group Holdings’ $170m Go Bus acquisition.

Although there has been discussion of the potential for joint ventures between Maori and Chinese investors, Wells does not anticipate this to be the major source of joint venture activity.

“While there’s a lot of talk about that and a lot of synergies, and there’s potential for Chinese involvement because there’s an investment in agriculture from the Chinese in particular and it will continue to grow, the first point of growth is actually iwi teaming up between themselves,” he says.

Despite this, Wells does believe that there is scope for Asian investors to team up with iwi, particularly given the shared interest in agriculture and forestry assets and the longerterm approach to investing.

In the view of Kensington Swan partner Deborah Edmunds, the changing approach to investments is also part of a generational shift.

“Instead of being passive investors where land is quite often leased to third parties, Maori landholders are wanting to take control of their land. You have a younger generation who want to introduce new, more modern business practices, and you’re getting trusts that have been passive in the past wanting to engage in joint ventures with the private sector,” she observes. NZL

WHAT TO WATCH IN 2015 Maori RMA

“There are extensive RMA planning and consenting processes going on at the moment around the country, and there’s a lot of developing thinking around that … how can Maori values be properly reflected in those RMA processes and decisions?” – Paul Beverley, Buddle Findlay

Developments in Maori land law

The current government-led review of Maori land law is considering, among other things, options for more effectively managing Maori land in the interests of Maori landowners.

Applications under the Marine and Coastal Area (Takutai Moana) Act 2011

This legislation, which governs Maori customary rights in coastal and marine areas, has been in place for some time, but applications are only just starting to come through.

Organisations building relationships with Maori

$2.6bn

Manufacturing

$2.2bn

Communication

Source: Business Economic Research Ltd (2010)

“For organisations that want to go out and undertake development activities, how can they build a stronger, more enduring relationship with Maori, as opposed to a transactional-based one? ... There’s a drive to thinking more strategically about the need to build a long-term relationship within which transactional discussions can be placed.”

– Paul Beverley, Buddle Findlay

MARCH 2015 | 21

PROFILE / MARTIN WISEMAN

“The big opportunity is to establish your competitive point of difference. If you can establish that, I think you’ll begin the virtuous cycle which goes: best people, best clients, best profitability”

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A new dawn

As the sun sets on DLA Phillips Fox, chairman Martin Wiseman tells Kathryn Crossley about his vision for DLA Piper New Zealand The integration of DLA Phillips Fox into DLA Piper is an ongoing process, but according to the firm's New Zealand chairman, the recent name change is a new chapter in a story that began many years earlier.

Due to close economic relations between the two countries, in the late 1980s the New Zealand business sought to develop an alliance with an Australian firm. That firm was Phillips Fox, and the relationship later evolved to become a federation and then a fully financially integrated firm across Australasia.

Fast-forward to the early 2000s and DLA, as the firm then was, was considering representation down under. The Australian business of Phillips Fox later integrated with the firm and became DLA Piper Australia, while the New Zealand portion of the firm, having been fully financially integrated with Australia for over a decade at that stage, developed an increasingly close relationship with the international giant.

“New Zealanders had been quite active and had a big role in the governance of the Australasian firm, and so they naturally became known to DLA Piper and trusted by them,” DLA Piper New Zealand chairman Martin Wiseman recalls.

Given the close ties between the Australian and New Zealand economies, the firm soon came to realise that there was brand confusion created by having DLA Piper in Australia and DLA Phillips Fox across the Tasman. New Zealand’s name change to bring it in line with the international firm was a move that made sense, Wiseman says.

At the time of the Australian business integrating with DLA Piper, Wiseman was chair of the Australasian board, and the experience of working with DLA Piper on the Australian integration has

stood him in good stead for the firm’s expansion into New Zealand.

“Just knowing how they operate has been invaluable, and maintaining the New Zealand relationship and evolving it to what it’s becoming now,” he says.

AN INTERNATIONAL INVESTMENT Close international ties presents a range of opportunities, but it is not without challenges.

Faced with such a significant step, Wiseman admits that maintaining confidence about the move can at times be difficult.

“I think the first challenge of being on this journey is about keeping the faith with the vision, keeping the belief that the law is globalising, that this model that DLA Piper espouses is actually the correct way for the firm to evolve,” he says.

DLA PIPER: A SNAPSHOT

33

countries where DLA Piper has offices

8,000 4,200 employees globally

lawyers globally

25

partners at DLA Piper New Zealand

67

lawyers at DLA Piper New Zealand

MARCH 2015 | 23

PROFILE / MARTIN WISEMAN

“If you think about the rise of DLA Piper … It’s driven by force of personality; people who say, ‘Why not?

Why does the world always have to be like this? Why couldn’t it change?’

And that’s the exciting bit for me”

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Martin Wiseman, DLA Piper, with Andrew Darwin (left) and John Weber

Becoming part of a global firm also represents a significant investment for the New Zealand firm, but it is one that Wiseman believes will pay dividends. “If I think back to 1987, our partners and lawyers began attending Australasian partners’ meetings and Australasian practice group meetings. That costs money. Beginning about 2004, our partners and lawyers began attending global partners’ meetings, global practice group meetings. It’s an investment, and you have to again keep the faith and believe that that investment, which is quite significant, will pay off.”

Wiseman predicts that the move will be transformational for the New Zealand firm, and expects that bringing the infrastructure of a global firm to New Zealand will add to the firm’s ability to attract high-quality legal talent and clients.

In particular, he expects that being able to tap into the expertise of international colleagues will be a value proposition for the firm’s clients. Local clients with a presence overseas or clients that aspire to have a presence overseas will benefit from being able to access the firm’s international network, and even clients that are anchored in New Zealand and will likely never undertake work outside of the country will benefit from best practice expertise from overseas in areas such as PPPs. “The big opportunity is to establish your competitive point of difference. If you can establish that, I think you’ll begin the virtuous cycle which goes: best people, best clients, best profitability,” he predicts.

With the name change in New Zealand now

complete, Wiseman also anticipates that it will help the long-standing relationship between the firm’s New Zealand and Australian colleagues to become an even closer one. “John Weber, who is managing partner Australia, will have a role in our governance structure. As we face the market, as we face clients, everything will be hand in glove,” he says. “The two markets behave as one … so the two businesses will operate as one in how they face the market.”

MAKING THE FIRST MOVE But what does the debut of DLA Piper New Zealand mean for the local legal market? Although Wiseman believes the future of New Zealand’s legal market is a more international one, he does not anticipate that every firm in the market will have an international affiliation or that all international firms will one day be represented in New Zealand.

“My view is that the clients decide how these businesses evolve; we’ve done what we’ve done because DLA Piper need representation in the New Zealand market to service their clients. At the end of the day, people need to sail their own boat. What we’ve done works for us,” he says, adding that his firm’s decision to join forces with an international player is not about shunting everything that exists in the New Zealand legal market out of the way.

“I think that DLA Piper New Zealand will be something which has a clear competitive point of difference because it will be the only representative business law firm in New Zealand. I think that it will

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continue to make us attractive to the best legal talent at all levels of seniority – graduates right through to lateral-hire partners. I think there’ll always be a place for the established local firms; they are something different to what we are,” he says.

LEADING CHANGE The New Zealand firm’s progress from a local practice to becoming part of a global legal powerhouse has run parallel to Wiseman’s career.

He became a partner in 1987 when the firm began its Australian alliance with Phillips Fox. Since that time, Wiseman has participated in the

transformation of the firm and says that working through the firm’s different iterations and having the opportunity to change and build a firm has helped to keep him engaged.

“At the end of the day I’ve just been driven by a passion to make the firm the best it can be,” Wiseman says.

“If you think about the rise of DLA Piper, you look at what people like Nigel Knowles have achieved. It’s driven by force of personality; people who say, ‘Why not? Why does the world always have to be like this? Why couldn’t it change?’ And that’s the exciting bit for me.” NZL

1987

1992

1999

2005

2006

2010

2015

Exclusive referral arrangement between NZ firm and then Phillips Fox federation in Australia commences

NZ firm changes name to Phillips Fox

Phillips Fox federation becomes fully financially integrated trans-Tasman firm

Closer cooperation between Phillips Fox and DLA. Three-way trans-Atlantic merger to create what is now DLA Piper

Phillips Fox enters exclusive alliance with DLA Piper and changes its name to DLA Phillips Fox

Australian business fully financially integrates with DLA Piper. NZ business separates to become DLA Phillips Fox. From that time there is growing alignment of the NZ business with DLA Piper, including increasing cross-border work with the DLA Piper offices around the world, especially in the US

NZ firm becomes DLA Piper

MARCH 2015 | 25

SPECIAL REPORT / AUCKLAND

Auckland Special Report The city's lawyers share their predictions for 2015 The increasingly buoyant Auckland market has law firms anticipating a good year. M&A, capital markets, banking and finance, and property and infrastructure-related work are among the bright spots, and changing regulatory requirements have also been a strong driver of work for firms.

“Last year had some very busy areas, and some areas which were down on usual activity levels. I think you’re probably looking at a little bit of a smoothing effect this year, with some of those areas that were really busy last year perhaps falling back a little bit, but on the whole the sense is that everyone is busier,” says Russell McVeagh partner Dan Jones.

While recent years have also started with a sense of optimism, there is a feeling that momentum is beginning to grow in the Auckland market.

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MARCH 2015 | 27

SPECIAL REPORT / AUCKLAND

CAPITALISING ON THE MARKET With the last of the mixed-ownership models taken public at the start of 2014, the rest of the year’s IPOs were generally focused on smaller companies coming to market.

The question now is, what will 2015 bring?

“There are a number of listings in the pipeline at the moment. Whether they all get there or not, we will have to see,” Anderson Lloyd partner Chris Bargery says.

“Getting good people is still as much a challenge to growth as acquiring new clients”

IPOs, but fewer than in 2014. He also expects to see a different mood in the IPO space: “That activity is continuing, perhaps not with the same feeling of almost-frenzy or urgency that there was late last year.”

With the Financial Markets Conduct Act taking effect in December last year, and the first issuances and licences coming through the system, businesses are beginning to come to grips with the effect the changes will have.

“It’s a very significant reform, and I think that there will be a period where – and we’ve already struck it ourselves –everyone’s working through the more detailed effect of those changes,” says Jones. “I suspect there will be continuing change and development as those changes are tweaked to make sure that the original intent is reflected.”

Mark Lowndes, Lowndes

M&A ON THE INCREASE

“I think there is a reasonable amount of confidence for the first half of this year. The question then is what does the second half of the year look like? I don’t think anyone can really predict that with any accuracy, but I think there are good reasons for optimism.”

Most firms anticipate IPO activity for 2015 will be concentrated around small to medium-sized organisations. “There’s nothing of the size of the mixed-ownership companies coming to market, but there’s absolutely good levels of continuing activity, and a number of people are to take advantage of the different offering regime under the Financial Markets Conduct Act,” says Jones.

Bargery agrees. “You’ve got the new, less onerous stock exchange market opening up, and so I think there’s an expectation that we’ll see a few smaller or slightly earlier-stage companies listing on that,” he predicts.

Jones expects the market will continue to see

Although 2014 has been a reasonable but unremarkable year overall for M&A transactions, the tide may be changing.

In Bargery’s view, while there were a few significant deals last year, such as Beijing Capital’s acquisition of Transpacific Waste Management, and Carter Holt Harvey’s sale of its pulp, paper and packaging business to Oji Holdings and Innovation Network Corporation of Japan, the majority of the activity was focused on the midmarket, with deal values at around $20m–$100m.

“I think there is an expectation – and this is not just from lawyers but also from bankers and other advisers around town – that 2015 should be a better year than 2104,” Bargery says.

“Part of that, I think, is the expectation that the capital markets might slow down slightly, or that you might have investment bankers, who have been busy doing IPOs for the last couple of years, refocusing on M&A. You’ve got a lot of wellcapitalised, cashed-up companies, and banks are

AUCKLAND'S CHANGING MARKET

In recent years, Auckland has attracted a number of new entrants, with South Island and regional firms establishing offices in the city Anderson Lloyd partner Chris Bargery says he would not be surprised if there were more regional or South Island firms looking to open up shop in Auckland, but adds that the market is equally likely to see spin-offs from large local law firms, with partners from the bigger firms starting offices for new market entrants or even setting up their own law firms. In his view, the Auckland legal market is in for a period of change and diversification. “I think it will be like it is globally ... the only trend will be that it’s going to keep changing and it’s not going to be business as usual.”

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very keen to lend, so assuming assets come onto the block and valuations can be agreed, there should be a good headwind for M&A.”

GOING BACK TO THE BANK In the banking and finance space, firms are reporting that lenders are willing and able to engage in new projects.

“There hasn’t been a huge amount of new money or big deals, but there’s plenty of capacity within the banks to fund them, both for M&A and PPP transactions,” Bargery says. “The banks are very keen to lend for the right deal. The availability of finance wouldn’t be a problem for the right borrower or the right deal.”

According to Lowndes managing partner Mark Lowndes, clients are now also more prepared to borrow.

“The banks have had money to lend for a while, but I think the borrowers are more inclined to borrow it of late,” he observes. “It seems there’s more borrowing across our client base, whether it’s general borrowing for expansion or for acquisitions. I just get the impression that the clients are now more confident to take on more debt.”

Refinancing is also likely to be a key source of work for banking and finance lawyers this year.

Given the low numbers of new deals, lawyers observed high levels of competition between banks, which has led to a number of corporates switching lenders, and creating work for firms in the process.

“The other part of banking which is pretty quiet is the whole insolvency and restructuring space,” Bargery says. “I don’t think there’s a lot of bad debt on the books now. I think that’s largely been worked through. Yes, of course, there will be a major insolvency or restructuring from time to time, but that’s not something that we see as being a big area over the next period.”

In contrast, Lowndes has observed a strong flow of insolvency and restructuring work. “The nature of private enterprise is that some businesses fail, so even in a thriving economy you still get a flow of insolvency work; it’s just part of the process,” he says.

IN BUILDING MODE For Russell McVeagh partner Allison ArthurYoung, Auckland’s Unitary Plan process kept her and her clients active throughout last year, and the

TALENT SPOTTING Lowndes managing partner Mark Lowndes says one of the biggest challenges facing Auckland’s legal market is recruitment. “Getting good people is still as much a challenge to growth as acquiring new clients,” he says. Candidates who are both rainmakers and good technical lawyers are particularly rare and highly sought after, he explains.

“You have people coming through, but if all they’re doing is servicing other people’s work, it’s less of a value proposition than someone that can build or bring a client base with them. When you think about the business of law, it makes sense that the firms need the skills to build and maintain relationships.”

work is ongoing.

“The mediations and hearings are ongoing at a fairly fast pace, and hearings are being held in front of the independent panel. They’ve just essentially wrapped up the regional policy statement process and will now be moving into the lower-level zoning provisions, and a lot of those are around the business and residential planning provisions,” she says.

“The panel has said they’re still on track to issue the recommendations on time next year.”

The need for property development in Auckland means that environment and planning lawyers are likely to remain busy in 2015.

“We’ll continue to see that real interest in housing availability, residential development, and really freeing up land and so on for development, which is a real policy driver for central government, so Auckland is a real test case for that,” Arthur-Young says.

Reforms to the Resource Management Act will also be a focus in the year ahead. “A Bill will be introduced shortly, and the Minister has said he is quite keen to see that passed into law this year, with a focus again on housing affordability and availability in particular,” Arthur-Young says, adding that firms and their clients will be closely watching developments in this area.

It is also shaping up to be a healthy year in the infrastructure space, and firms are already acting on a range of PPPs, with prisons, schools and highway projects among those in procurement.

A number of transport projects, including light rail and rail links, are being mooted by Auckland Council; however, those are not expected to come online this year. NZL

MARCH 2015 | 29

FEATURE / IN-HOUSE

In-house insights General counsel talk of the trends and challenges that are shaping their work. Samantha Woodhill reports 30 | MARCH 2015

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PLAYING IN POSITION With businesses increasingly taking advantage of a legal team’s ability to effectively assess risk, in-house legal teams are taking a more global view of a company and the advice they provide, and general counsel are having to efficiently adapt to the changing needs of their organisations.

“We’re required to be far more than a lawyer,” says Andrew Cordner, group general counsel at Fonterra. “We’re looked to as senior leaders or business advisers within our organisation, and, as a result, we are looking to take a more proactive and broader role in the business and decision-making processes.”

Fonterra’s legal team is broadening to allow senior lawyers to take on a more strategic role within the company, and, consequently, Cordner says the team is growing to incorporate more junior lawyers for the first time.

Matt Vaughan, general counsel at Xero, is also increasingly required to act in an advisory role within the business. Like Cordner, he says he is looked to for business strategy advice.

“There is a growing need for in-house counsel to also be a commercial adviser, and to have a very good understanding of the business strategy and decision-making that underpins the legal issues that land on our plates,” he says. “For larger businesses like Xero, general counsel has input across the whole range of business units within the company, and so there is also the need to spend time developing internal relationships and, if necessary, to connect those individuals to move projects forward.”

In contrast, Spark New Zealand general counsel Melissa Anastasiou says that while her team is constantly adapting to the company’s needs, they are focusing on how they can add the most value, as a legal team, to the company’s objectives. “We’ve been focused on playing in position, which I really believe in – playing in position; sticking to the role of a lawyer that enables business outcomes with a commercial and customer-inspired focus front of mind,” she says.

“If all I am doing is cutting my budget, and not being able to find creative ways to deal with the fact that in the end there is no less work to do, that’s quite challenging and not that rewarding for anyone” Melissa Anastasiou, Spark New Zealand MARCH 2015 | 31

FEATURE / IN-HOUSE

WORKING IN PARTNERSHIP WITH EXTERNAL ADVISERS It has become more and more common for in-house teams to develop closer relationships with their external firms, and legal teams are finding partnership success with firms that have a strong understanding of the team’s objectives.

“We see the role of external counsel as one of a long-term partnership. As in any partnership, there will be ups and downs, but a strong working relationship and mutual trust will benefit both parties and allow the partnership to develop and grow,” says Richard Shine, general counsel at AIG Insurance New Zealand.

Spark’s Melissa Anastasiou says that while cost will always be a factor, it is a challenge more easily solved when firms partner with legal teams. “We’re faced with a cost challenge, and by definition that becomes the firms’ challenge because we still need to secure services from them of the highest quality, and yet we have fewer resources. What we have been trying to do over the last few years is to partner with the firms more and to treat those sorts of issues as a joint problem to solve,” she says. “Come on the journey with us.”

She adds, “If all I am doing is cutting my budget, and not being able to find creative ways to deal with the fact that in the end there is no less work to do, that’s quite challenging and not that rewarding for anyone.”

With the cost of external resources inevitably a significant factor for an in-house team, Xero’s Matt Vaughan says he has had more success working with smaller teams who understand his business, in both maintaining a budget and quality of work.

“Increasingly, we are relying on smaller, specialist firms that hold deep specialist knowledge, as opposed to solely relying on the traditional full-service firm,” he says. “We’re also seeing great results in operating with some of these smaller firms on a fixed-fee, subscription basis, where time is not recorded, and ‘value’ is assessed periodically on a good-faith basis to arrive at a reasonable fixed monthly figure. This largely removes the pain point of unknown bills and questioning value for money.”

“We’re looked to as senior leaders or business advisers within our organisation, and, as a result, we are looking to take a more proactive and broader role in the business and decision-making processes” Andrew Cordner, Fonterra 32 | MARCH 2015

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“We see the role of external counsel as one of a long-term partnership. As in any partnership, there will be ups and downs, but a strong working relationship and mutual trust will benefit both parties and allow the partnership to develop and grow” Richard Shine, AIG TACKLING GLOBAL LEGAL ISSUES Companies’ overseas interests and offshore expansions are generating a wide range of international legal issues for locally based legal teams.

For Fonterra, this trend has led to hiring staff in Asia, with the appointment of a senior lawyer in China. “Our global team is growing as our presence has increased in certain key markets, including Asia,” says group general counsel Andrew Cordner.

Rather than growing a global team, the focus at AIG in New Zealand is on drawing on the resources of an existing international legal network. General counsel Richard Shine says being able to apply the legal expertise of teams internationally has been a huge advantage. “We are fortunate to be part of a much larger legal resource and, as such, we are able to call on expertise and support from throughout AIG’s global operations on discrete areas of law or case management,” he says.

“Taking advantage of technology, we work closely with AIG Australia, Singapore, New York and others across projects and issues.”

In Xero general counsel Matt Vaughan’s view, the biggest legal challenge arising from having a consumer product sold globally is trying to find an approach to user engagement in which policies are relevant to consumers in multiple countries. He says the key is to set “a good legal foundation for what is effectively a ‘one-size fits all’ user engagement across customer segments and jurisdictions”.

For example, his legal team works to ensure the company’s terms of use and privacy policies are workable and lawful for all customers around the globe.

TEAM MANAGEMENT Managing the size and mix of skills in a legal team and ensuring that the team’s capabilities match the organisation’s needs is a constant challenge for general counsel.

As companies grow and the demands on in-house legal teams change, Spark's Melissa Anastasiou says the skills required of her team remain fluid, and she observes that her team is more efficient when the balance is right. “It’s about the team staying right-sized and right-skilled and cost-competitive for the business as it is today,” she says. “We can’t be resourced to do everything, so we have to make choices, we have to allocate our time and energy to the things that are strategically important and that really matter to our business to help deliver the best business outcomes that we can.”

With an increasingly broadly skilled team spread across many geographic locations, lawyers at Xero rely heavily on tools like Skype and Google documents to manage work efficiently across offices. “In terms of composition, we have a relatively flat structure, with each lawyer in each jurisdiction generally autonomous in respect of day-to-day legal issues,” says general counsel Matt Vaughan. “However, we continue to collaborate on company-wide high-level legal issues, and I see my job as needing to connect the team and drive efficiencies by eliminating duplication of work. This emphasises how much we need to rely on technology to connect and to effectively work together.”

While a number of in-house teams are managing tight budgets and, in some cases, reduced manpower, Vaughan’s team is in growth mode.

In the last 18 months his team has increased from one person to a team of six, and is still growing. He says that traditionally he has had a team with skills transferable across issues. Now, he is looking at growing his team with specialised skills.

“We’re experiencing the transition from a small team of generalists that act globally across all areas, to being in a position where we are able to hire specialists – whether in a particular geography or by area, such as IP – to give more focused attention to certain areas,” he says. “This will in turn lead our original generalists to develop expertise in certain areas that align to some degree with their general experience.” NZL

MARCH 2015 | 33

FEATURE / POSTGRADUATE STUDY

From the

courtroom

34 | MARCH 2015

NZLAWYERMAGAZINE.CO.NZ

to the

classroom Educators explain what lawyers considering a postgraduate qualification should consider No matter the career stage, postgraduate study offers lawyers an avenue to deepen their expertise and advance their practice, or even develop a new specialisation. Obtaining a postgraduate qualification can also help provide differentiation in the job market.

As the objectives and interests of each lawyer will vary, so too will their choice of course.

Despite the varying reasons for undertaking a postgraduate qualification, there are a number of factors that all practitioners will need to take into account when selecting what and where to study.

DECISIONS, DECISIONS …

The options for postgraduate study go well beyond simply choosing a university.

One of the key decisions to be made when choosing a postgraduate degree is whether to do a coursework or research-based master’s. A research master’s allows students to undertake in-depth study into a particular area to complete a single thesis of approximately 40,000 words.

The conventional view is that a research program does not lend itself as well to professional practice as coursework-based master’s programs, which are completed by undertaking a number of subjects.

MARCH 2015 | 35

FEATURE / POSTGRADUATE STUDY

Although a research master’s is generally perceived as an option for those with more academic aspirations, it can also be a suitable choice for lawyers, particularly those with very specialised interests, or who live away from campus and whose work and other commitments prevent them from committing to weekly evening classes or subjects taught in block mode.

“In our research-based programs we have quite a lot of lawyers who are doing it in their own cities, mixing it with their own practice … most of them are doing it part-time and it works really well,” says University of Otago associate professor Jessica Palmer. Research students have regular contact with their thesis supervisors via phone and Skype, plus a few face-to-face meetings each year.

A coursework-based program allows students to complete a master’s degree by undertaking a number of taught subjects. Many law schools offer a general LLM structure in which students can pick and choose subjects to build their own course.

Some also offer focused degree options, such as a Master of Environmental Law or a Master of Commercial and Corporate Law, in which a certain number of subjects studied must be from that particular specialist area.

The University of Otago has recently approved its first coursework-based master’s program in law, and will soon begin offering a specialised Master of Emerging Technologies Law. “We’ve chosen to go down that route because we recognise that the general coursework master’s are well supplied across all of the other faculties, and what we wanted to do was look at our particular strengths and where we’re different,” says Palmer, emphasising the university’s specialist research in that area.

Palmer says the course will be taught at the Auckland campus as a week-long intensive program, rather than regular weekly classes. A start date is yet

STUDYING ON THE OTHER SIDE OF ‘THE DITCH’ For practitioners interested in studying overseas, the idea of paying international student fees can be off-putting. New Zealand citizens planning to study at an Australian university are able to do so without a student visa, and pay domestic student fees instead of international student fees. Australians are also able to study in New Zealand and pay the same fees as local students.

36 | MARCH 2015

to be set, but she expects that classes will commence later this year, or sometime in 2016, depending upon interest from practitioners.

To those considering a coursework-based degree program, University of Auckland associate dean (postgraduate) Treasa Dunworth recommends they look closely at the availability of their preferred subjects. “You want to look at the kinds of subjects that are being offered and remember that they will change from year to year. Some might be just a one-time-only special offer because a particular academic was visiting New Zealand … but others might be offered every year,” she says. “You’re paying a lot of money and investing a lot of time into it, so you want to make sure that you’re getting the best courses for you.”

Professor Tony Smith, law school dean at Victoria University of Wellington, points out that in some circumstances students can take one subject at another university and have it credited towards their degree.

For lawyers with a range of interests, the coursework versus research decision is not an all-or-nothing equation, and many law faculties allow master’s by coursework students to substitute one or two subjects with more in-depth research papers. “You can make it pretty much a bespoke degree these days by picking and mixing some short courses, some dissertations – you make it up to suit yourself and what your aspirations are,” says Smith.

In some cases, practitioners who want to test the waters can undertake a postgraduate certificate in law, which involves completing fewer coursework subjects and can often be credited towards an LLM course at a later date.

LEARNING FROM THE BEST For some, choosing a postgraduate qualification in law involves more than just questions of cost, course selection and figuring out how to balance study with work and other commitments. Picking the right degree and institution can also open up opportunities for lawyers to learn from international experts, or prominent members of the profession.

Universities release information about subject offerings and visiting professors well in advance, allowing lawyers to time their studies so that they can learn from visiting experts.

For example, LLM students at Victoria University of Wellington have the option to study under a range of prominent lecturers in 2015, including former prime minister Sir Geoffrey Palmer, who

FEATURE / POSTGRADUATE STUDY

“You want to look at the kinds of subjects that are being offered and remember that they will change from year to year” Treasa Dunworth, University of Auckland

will be teaching a course about the New Zealand judiciary; Court of Appeal judge and New Zealand Law Commission president Sir Grant Hammond, who will be running an in-depth subject on how legislation is enacted and later interpreted by the courts; and former judge of the International Court of Justice Sir Kenneth Keith, who will be teaching postgraduate students about how international law is made.

Palmer says prospective postgraduate students should carefully consider the academics they will have an opportunity to learn from.

“I think it’s really important, whether it’s a research degree or a coursework degree, to have a think about who you want to be supervised by or taught by.

“That really comes into play quite heavily by the time you get to postgrad level … quite a few of our part-time PhD students from around the country are coming back to us, or coming to us from being an undergrad somewhere else, because they’re picking particular supervisors here who are well known in their fields, and that’s the right way to do it,” she says.

“I think it’s more important than at the undergraduate level, because at the undergraduate level you can get a very good degree from all the universities in New Zealand and Australia. Yes, there are always the ones that are the cream of the crop, but the actual material that you’re getting, the content of the courses, are not that different from each other, but at the postgraduate level that one-on-one supervision and gleaning a whole lot of experience and expertise from your teacher, it becomes that much more important,” Palmer explains.

According to Dunworth, the choice of teachers or thesis supervisors should be about more than simply reputation. “Postgraduate study is taught in much smaller classes, so you want to see if you gel or if you like the approach of the teacher,” she says.

BALANCING WORK AND STUDY Juggling work, study and other commitments is never going to be simple, but the majority of law schools offer a range of subject formats to fit in with lawyers’ schedules. The delivery mode depends on the individual subjects, but daytime face-to-face classes are usually reserved for units preferred by full-time international students. To suit practitioners, subjects are often taught in weekly night classes, or intensively in five-day blocks.

38 | MARCH 2015

Block-mode subjects require students to do preparation such as course readings in advance, but total contact hours for an intensive course are the same as attending class each week for a semester.

This condensed approach, which is popular with many lawyers, helps students to better fit study time around the other commitments, and even opens up the possibility of studying at a university in a different city, with students taking a few days off work to attend face-to-face class time for their course, and spending the rest of the semester completing assignments in their own time. The intense format also enables universities to attract leading guest lecturers and opens up opportunities for students to learn from prominent practitioners and visiting academics from overseas.

Lawyers considering their course options should keep in mind that while most universities offer a range of study modes, the delivery of individual subjects varies.

Between a busy practice and other commitments, it can be difficult to find the time to study, and in many cases it is not realistic to expect that a postgraduate who is working full-time will also be able to keep up a full-time study load. While some lawyers may wish to fast-track their study in order to finish their qualification sooner, academics caution against this and observe that most domestic students with full-time work commitments study for their postgraduate qualification in law on a part-time basis, completing the degree in two years.

With postgrad subjects able to be counted towards continuing legal education requirements, a major benefit of part-time study is that it maximises the number of CPD points that can be claimed from a postgraduate degree.

Dunworth’s advice to prospective postgraduate students is to not underestimate the time it takes to prepare for classes and complete research assignments, and to designate time for study. “Blobs of time won’t just appear; you need to carve it out,” she says, adding that extensions on assignments are not as easily obtained as some students may expect them to be.

POSTGRADUATE NETWORKING An often-overlooked benefit of postgraduate study is the valuable opportunity it affords students to network. Although the specialist knowledge that a lawyer will gain from postgraduate study is a key factor in the decision to go back to university, participating in classes and interacting with other

NZLAWYERMAGAZINE.CO.NZ

students can also provide a chance to network with practitioners working in the same field.

SEEING THE INTELLECTUAL CHARM OF LAW While the career benefits are a key motivation for many practitioners considering further study, academics point out that the intellectual stimulation of postgraduate study is another key benefit for lawyers.

From Dunworth’s perspective, the broader and more analytical view that postgraduate study allows students to take offers a refreshing change of pace for many practitioners.

“One of the things that I see with people who have been in practice coming back [to study] is they appreciate how nice it is to think about the law stepped away from an immediate problem,” she says. “The practice of law is very reactive: a client comes, they’ve got a problem and you need to try and solve it for them or find a strategy for managing it, and that’s what their working lives are; whereas in academic study it’s much more thinking about how did the law get to be like this,

HOW DO NEW ZEALAND’S LAW SCHOOLS RATE INTERNATIONALLY? International ranking

University

28

University of Auckland

37

University of Otago

49

Victoria University of Wellington

51-100

University of Canterbury

101-150

University of Waikato Source: QS World University Rankings by Subject 2014 – Law

why is it like this, what are the other ways we could think about this?”

Smith agrees, and says postgraduate study can enable students to see the “intellectual charm” of the law. “It’s not until you can suit yourself about exactly what it is you want to do, and you’re able to study it in much greater depth – that’s when you see the intellectual fascination of law.” NZL

MARCH 2015 | 39

PROFILE / JOHN PETERSON

The treaty tamer John Peterson’s role is a unique one for a tax lawyer. New Zealand-trained Peterson, who previously worked in private practice, is now a technical adviser to the OECD. He talks to Samantha Woodhill about his work and life in Paris

Heading up the aggressive tax unit, John Peterson is responsible for an Organisation for Economic Co-operation and Development (OECD) project to redesign part of the international tax system. The project tackles an issue that has been a problem in international tax for years: multinational companies managing to avoid paying tax in any of the countries in which they operate. The project combats profit-shifting for tax purposes, and was agreed upon by the G20 and OECD countries in 2014.

“We have been very careful to make sure that we don’t end up taxing the same economic income twice, by coming up with a particular design for the international tax system,” he says. “In doing so we have created a situation where the money gets lost in the middle: we don’t pay tax in the markets where the products and services are made or sold, and we don’t seem to tax them in the markets where the capital is being raised for those projects.”

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“Trying to coordinate agreements between 40 countries in relation to how they are going to deal with a single tax problem was always going to be a challenge”

MARCH 2015 | 41

PROFILE / JOHN PETERSON

“I do have to try to capture the agreement of the room and produce drafts of documents that everyone can agree with. I think that’s a lot of what the practice of being a lawyer is all about”

THE ROAD TO PARIS Peterson first became involved with the OECD when he worked on the Global Standard for the Exchange of Information by Financial Institutions project in New Zealand, an exchange of customer information to tax authorities used to ensure that income is properly declared.

The project was triggered by the passage of the Foreign Account Tax Compliance Act in the US in 2010, which attempted to prevent the concealing of offshore assets.

“I got involved in that very early on in New Zealand and had some preliminary contact with the OECD at that time, and on the back of that contact, when the BEPS project kicked off they gave me a call and said, ‘We’re looking for a tax lawyer’,” he recalls.

The OECD’s BEPS (base erosion and profit shifting) project aims to fix gaps in the international tax system, and end the artificial shift of profits to international locations without taxation. As part of BEPS, Peterson now heads ups the aggressive tax planning unit, which helps countries coordinate and process information around crossborder aggressive tax planning strategies.

“I think that the opportunity to work with people from a whole bunch of different backgrounds and different sets of priorities and trying to coordinate agreements between 40 countries in relation to how they are going to deal with a single tax problem was always going to be a challenge,” he says. “I do have to try to capture the agreement of the room and produce drafts of documents that everyone can agree with. I think that’s a lot of what the practice of being a lawyer is all about.”

PRIVATE PRACTICE TO BUREAUCRACY Peterson says his role as a tax lawyer at the OECD is dramatically different to his previous work in

ABOUT THE OECD The Organisation for Economic Co-operation and Development aims to establish ways to improve the social and economic wellbeing of people worldwide. The organisation creates policies to tackle global issues and is helping governments to restore finance markets, encourage economic growth and foster environmental innovation.

42 | MARCH 2015

private practice, and that transitioning from a fluid private practice to a bureaucracy like the OECD can be an interesting proposition to get your head around.

“You don’t quite know what the next day is going to bring you, because it’s pretty much transaction and client driven,” he explains.

“Bureaucracies like the OECD have got very big long-term projects which require a considerable amount of effort to bring to completion, so you have a much clearer idea of what it is that you’re going to be doing for the next couple of years.”

Peterson says of the transition: “I think you need to be relatively well attuned to different personalities and approaches and understandings in a way that you wouldn’t need to in a commercial environment – you can take a lot more things for granted.”

G20-OECD The OECD Hybrid Mismatch Arrangements project was a project led by Peterson and his team.

The report was published in September 2014 and set out the agreed G20-OECD rules for neutralising hybrid mismatch arrangements.

The rules mean it will no longer be possible to simply locate company operations in an environment that is taxation-free. It covers interest allocation and controlling the amount of deductible interest that can be put into companies, requiring countries to provide better disclosure and determining how much a company can charge another company for goods and services, in particular for things like intellectual property.

“There are lots of small individual discrete projects inside of that, and the idea is that the sum total of those will add up to a solution to solve the problem that was a room divider, that was the Googles and the Apples and the Facebooks of this world, who don’t seem to be paying tax anywhere,” Peterson says.

Peterson says reaching an agreement between the G20 and OECD countries has been a highlight of his time at the OECD. “It has been an issue that’s plagued the system for a very long period of time, and I think that getting agreement from the G20 and the OECD countries on a single solution for dealing with that problem ... I think was a pretty exciting achievement,” he recalls.

Following the G20-OECD agreement, Peterson and his team are now working on a more detailed

NZLAWYERMAGAZINE.CO.NZ

commentary around how the agreed rules will work in practice. Made up of 15 key international tax rules, the action plan is intended to help governments protect their tax bases and offer increased certainty and predictability to taxpayers.

The plan aims to guard against double taxation, unwarranted compliance burdens, or restrictions to legitimate cross-border activity under new domestic rules.

Seven of the 15 points were presented at the 2014 Brisbane G20 Leaders’ Summit; the remaining will be presented at the 2015 summit in Turkey.

Implementation of the action plan will see modifications to more than 3,000 bilateral tax treaties worldwide.

LIFE IN FRANCE Like many lawyers from New Zealand, Peterson was no stranger to lawyering abroad when he and his family made the decision to relocate from Auckland to Paris for his role at the OECD, but he admits that the language barrier can sometimes be a challenge. “Everyone speaks in English around

“I think you need to be relatively well attuned to different personalities and approaches and understandings in a way that you wouldn’t need to in a commercial environment – you can take a lot more things for granted” the office, so that’s not really the issue. It’s more about going down to buy a loaf of bread is where it gets hard.”

With just a 25-minute commute door-to-door, Peterson says he’s found living in Paris surprisingly easy, and as convenient as living in Auckland.

“We thought it would be more challenging having kids in a place like Paris, but actually we have found it pretty good,” he says. “There’s a lot to do with kids in Paris. They’ve got museums full of dinosaur bones, which is pretty exciting if you’re a four-year-old.” NZL

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PROFILE / ALASTAIR CARRUTHERS

A creative

cause

In addition to his work in the law, Kensington Swan chief executive Alastair Carruthers has long been involved in governance of the arts in New Zealand. He talks to NZ Lawyer about his creative career “It started with my attempts to be a musician,” says Kensington Swan chief executive Alastair Carruthers of his involvement in the governance of arts organisations. “I was always interested in classical music and exposed to it at an early age by my family … We didn’t have much money, but we all learned instruments and practised and performed concerts at home very badly every Friday night,” he recalls.

FROM THE ARTS TO THE LAW While studying for a music degree at Victoria University, Carruthers spent his summers working at the ministerial services unit in the then Department of Social Welfare, where he would run messages and documents between offices. After a while, he began to read these messages and make amendments, and he discovered his skill in writing and expression. These abilities would later come to the fore, when after a few years spent working as a teacher, he travelled to North America to study writing. Then, upon returning to New Zealand, he landed a role as the education minister’s speech writer.

44 | MARCH 2015

This experience of working in a fast-moving government environment stood Carruthers in good stead for his future roles in some of New Zealand’s largest law firms. He initially made the transition to law through consulting. “I started writing a few proposals, ended up doing a bit of work on PR and marketing, and one thing led to another,” he says.

CREATIVE CONNECTIONS Over the course of Carruthers’ working life, a number of connections have led him to opportunities to contribute to New Zealand’s arts sector. “I think when we look back on careers they kind of add up, but at the time you never know how one relationship or one conversation might lead to another thing.”

One of the earliest opportunities arose when some of his musical friends went on to become the New Zealand String Quartet, and Carruthers was invited to be a trustee.

Later, as Chapman Tripp’s chief executive, he helped create the Chapman Tripp Opera Chorus, a vehicle to support emerging vocalists, which became one of the longest-running sponsorships of its kind in New Zealand’s history.

“The sheer variety of human possibility that artists express is amazing”

Then, when a former lecturer became chair of the Arts Council, Carruthers joined and later chaired the organisation’s main investment board, before spending six years as Creative New Zealand’s chairman.

In that time he restored the Arts Council’s balance sheet and tackled the difficult task of changing the dialogue around arts funding. “It was a very timehonoured tradition for arts organisations to run themselves into a point of insolvency and then come to the Arts Council for a

NZLAWYERMAGAZINE.CO.NZ

occurred the organisation was able to immediately allocate $2m in funding to help keep artists in the city.

During his time with Creative New Zealand, Carruthers also successfully argued for the passing of new Arts Council legislation. Since Creative New Zealand, he has continued his involvement in the arts sector and is currently a trustee and board member of the Royal New Zealand Ballet. “I’m very happy to roll up my sleeves behind the scenes and to help them to be sustainable,” he says.

In recognition of his arts governance work Carruthers was made a Companion of the New Zealand Order of Merit in 2014 – an honour he says he was “absolutely overwhelmed” by.

Despite the recognition, for Carruthers, working in New Zealand’s creative sector is its own reward. “The sheer variety of human possibility that artists express is amazing.”

PRODUCING FILMS

bailout. They saw us as a bank of last resort,” he recalls. “What I really wanted to do was have a sustainable sector.”

In order to ensure that it was a predictable and stable source of funding, Carruthers introduced a requirement that the organisations the Arts Council invested in be solvent. If an arts group failed, it would be bailed out once. On occasion, it would be recapitalised a second time, but the board would usually be required to step down. On the third occasion, organisations would be allowed to fail.

While controversial at the time, Carruthers says the new approach shifted behaviour straight away. “We were able to give much greater certainty of funding.

Rather than just annual granting, we were able to make investments over a three- to five-year period, because our balance sheet was strong enough to see it through, regardless of cycles,” he says.

The changes were so successful that when the GFC hit in 2007, the organisation was able to maintain all of its funding, and when the Christchurch earthquake

Carruthers’ arts management abilities have also led to opportunities in film. His first film producer role was for the 2013 film Romeo and Juliet: A Love Song, which included 42 contemporary music tracks.

He recalls the invitation to join the project as being a moment when many of the things that he loves came together: Shakespeare, great music, and a chance to help some artists make their dream a reality.

He has a couple of other film projects currently in the works, including a film called Halal Daddy, which tells the story of a UK-based Muslim man who purchases a failed abattoir in Catholic Ireland to turn it into the country’s first halal butchery.

The project will begin shooting around the middle of this year.

“These things go on outside of work, but I do love being in law firms too,” he says of his day job. When asked how he manages to balance his role at Kensington Swan with his work in film and with arts organisations, he says: “I work really hard; there’s no way around it. But everything I choose to do I just love doing.” NZL

MARCH 2015 | 45

BUSINESS STRATEGY / MAKING STRATEGIES WORK

Industry evolution forces firms to

GET STRATEGIC So your firm follows a business strategy, but how do you measure whether you’re actually on track? Very often, firms have very clear views on which direction they want to head in, but often fail to maximise the efficiency of their journey along the path to their goals, according to Ty Wiggins and Wayne Condon 46 | MARCH 2015

NZLAWYERMAGAZINE.CO.NZ

Like many industries, the legal sector has changed significantly in the last 10 years to become increasingly competitive and commoditised, with consumers demanding more from solicitors and shopping their business around aggressively.

To keep up with industry shifts, strategic planning by firms is a given. However, there are a number of areas in which the traditional business strategy model can fail in the case of law firms.

1

POOR RESOURCE ALLOCATION

The first is that a key part of strategic planning is resource and capability allocation; that is, the firm’s resources need to be deployed (in some cases redeployed) in a way that is aligned to the strategy intent and objectives. Failing to do this will result in people working hard in the wrong areas or with the wrong tools.

The traditional partner management model (management by consensus) makes this particularly hard in law firms, because as soon as they leave the strategic planning session the key resources – the partners – go straight back into personal billing mode, thus stripping the firm of the ability to implement and execute.

Failing to ‘pin numbers’ on people’s backs when it comes to strategic execution is a great way to undermine the success of any strategy. If there is no accountability for each area and step of the strategy it will simply not get executed effectively.

Worse still, in law firms is it can sometimes fall back onto the managing partner to complete these steps, as well as his/her regular fee generation.

The best scenario is for a particular person to drive the process and project manage the implementation.

We have seen partner meetings at which the strategic intent is agreed, objectives set, and then everyone retreats to their office, leaving it for

We have seen partner meetings at which the strategic intent is agreed, objectives set, and then everyone retreats to their office, leaving it for someone else to do. Or worse, they block the changes because it requires them to change their processes or behaviours someone else to do. Or worse, they block the changes because it requires them to change their processes or behaviours.

2

POOR COMMUNICATION

The second big one for law firms is that they don’t (or can’t) communicate the strategic intent to the staff.

A law firm is filled with people with aboveaverage intelligence, and this often means that they expect everyone in the firm to just ‘get it’.

While they are experts in their area of the law, they often lack the business acumen to take a strategy or strategic statement and translate it into actions and decisions.

Willing is not enough; you also need to have the ‘able’ part.

It is essential that staff of the firm understand what the strategy is, why it has been chosen (ie what is the light on the hill), and what they need to do to execute the strategy within their roles and responsibilities. A firm cannot possibly reap the rewards of a well-designed strategy without this.

So often the people charged with its execution are the least informed about the strategy itself.

This leads to a culture of underperformance and

MARCH 2015 | 47

BUSINESS STRATEGY / MAKING STRATEGIES WORK

In some cases firms will need to work with their software providers and their accountants to build the measurements required for their strategies. It is imperative for the whole organisation to be able to see how they are tracking against the strategic objectives.

one that starts to work against or independently of any set strategy, thus leading to inbuilt mediocrity.

3

Ty Wiggins and Wayne Condon are co-founders and principals at Converge Consulting. Visit www. convergeconsulting.com.au.

48 | MARCH 2015

POOR MEASUREMENT

There are four basic strategic questions that firms need to ask when they are planning, and these are: • Where are we now?

• Where do we want to be?

• How will we get there?

• How will we know we are on track?

It is the last question that many firms simply have no idea how to answer. How do they measure success against their strategic objectives? What are the critical success factors for their business under their strategy, and what KPIs will the business monitor weekly/monthly/annually to ensure they are on track?

A great example of this is the lack of firms that understand their profitability beyond billable hours and the end-of-year profit figure delivered by the accountant.

What is ‘business 101’ outside the legal profession, ie which service is more profitable, which client group or type is most profitable, which staff member is most effective, which offering is actually losing the firm money, and which should you invest your capital and marketing spend in? Chances are these are not areas and information that they have regularly tracked or measured.

4

POOR REVIEW

This is not limited to law firms; it is an issue across many firms and many industries.

At the end of the planning cycle or the beginning of the next strategic planning session, businesses need to first review how they went against the last plan (where are we now?).

Failing to give this the proper review it deserves leaves firms open to repeating the same failures or adopting the same assumptions. If the business missed a target by 10% or 50%, it should review why. There is no changing the result, but there is the ability to influence the next result. Many businesses and firms miss this valuable opportunity to use the benefit of hindsight to learn and improve.

The days of assumed expertise and localised competitive advantage seem to have eroded significantly for law firms of all sizes. Consumers see their services like any other service and as such are demanding more and more for their money.

Law firms are no longer isolated business models based around the law; instead they are service businesses like any other, in which their ‘product’ is legal services and those services are available in growing abundance from multiple competitors.

Progressive law firms seeking long-term profitability need to adopt a business mindset in their planning and their firms. Embrace traditional strategic and business planning, invest the time to communicate it to all staff, build the measures to track the progress, and complete a comprehensive review of previous performance. NZL

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BUSINESS STRATEGY / CONFLICT RESOLUTION

WAR AT If you suppress it, it will escalate. If you ignore it, it will have serious future repercussions. Conflict may be a way of life in the workplace, but there are strategies to handle it more effectively. Iain Hopkins investigates 50 | MARCH 2015

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CONSTRUCTIVE CONFLICT Catherine Gillespie, director of Workplace Conflict Resolution, gives her top tips Conflict essentially stems from a difference of perspective. This shouldn’t be avoided. Constructive conflict embraces these situations as an opportunity to discuss, enquire, learn, problem-solve and produce good outcomes.

Step 1: Acknowledge that you have to address a situation

Early intervention saves time and energy and gives the best opportunity for improved outcomes and restored relationships, yet we rarely do this. Seize the moment!.

Step 2: Take a deep breath, clear your mind and set your intent

This needs to be a calm and focused conversation, not a reactive one. Prepare using the ‘GROW’ model, and remain analytical.

Step 3: Active listening

Firstly, this is an enquiry conversation, so listen, ask questions and let the other person know you have heard and understood them. Acknowledge their perspective. Now there is more chance they will listen and acknowledge your perspective.

Step 4: Constructive conversations

Be assertive, but avoid judgmental and destructive comments. This is not about being nice; it’s about constructive outcomes. Speak from behind the ‘organisational filter’ – remember you are representing the organisation; this is not about you.

Let’s be clear up front: most managers – most humans in fact – dislike conflict. Indeed, perhaps a stronger word than ‘dislike’ needs to be used in this instance. Most managers fear conflict, due to several factors: • They have no skills in constructive conflict engagement.

• They fear that if they fail to deal with it well it will reflect badly on their career in general and current role in particular.

• They fear it will end badly for the participants, who will then have difficulty working together.

• They see conflict as ‘bad’ – they have not been able to reframe it in their mind as ‘the grit in the oyster that produces the pearl’.

This last point is particularly worth considering.

Conflict in most cases is stressful and unpleasant; however, it can be productive if the outcome leads to positive change. An oft-cited Harvard Business Review article (“Productive Friction – A Key to Accelerating Business Innovation”, by John Seely Brown and John Hagel) talks about creative abrasion and productive friction. It notes that “creative sparks fly not when interactions between companies are seamless but when the activity at the seams is challenging, stimulating and catalytic”.

Step 5: Gain mileage

Too often managers find this conversation uncomfortable and look for an early exit, not capitalising on the real gains to be made. Before closing, check understanding and clarify agreements. Document and if necessary send an email. It is vital that managers regularly follow up to keep communication open, build on that conversation and relationship, and ensure the agreement is fulfilled.

All managers should be increasing the number of ‘conversation contacts’ they have with staff, being clear on their expectations, and allowing staff to give opinions and raise issues. Having more detailed and robust conversations more often will promote a productive, effective and harmonious team.

For further conflict resolution tips or to obtain professional guidance on conflict issues, visit workplaceconflictresolution.com.au

“When people learn some conflict engagement skills and where the culture of a workplace makes room for a culture that allows robust engagement, then conflict can be an effective part of the business environment,” suggests Rosemary Howell of The Dispute Group.

For instance, conflict regarding ideas within a team can be productive if the individuals involved are willing to work through opposing solutions together to come up with a solution.

MARCH 2015 | 51

BUSINESS STRATEGY / CONFLICT RESOLUTION

IF YOU DO ONE THING…

“Sometimes, the compromise that is reached through such a process can be better for the business than the initial ideas put forward,” says Adrianna Loveday, general manager HR consulting, Randstad.

To provide another example, if two employees cannot come to a resolution within the organisation’s existing policies, these may be tweaked so that future grievances can be handled more effectively. Conflicts such as this, while initially negative, can lead to a positive outcome.

“Approaching conflicts as opportunities to improve policies, processes, procedures or plans as opposed to viewing them as ailments to be ignored will result in a more productive workforce and greater internal efficiency, improved morale and increased creativity,” Loveday says.

CONFLICT – IT’S EVERYWHERE! Workplace conflicts reflect all the conflicts of life: relationships; business operations; and culture and values. Each kind of conflict plays out differently, and as with all disputes the conflict is often not about what it seems to be about.

Loveday generally sees two forms of workplace conflict. The first is when an employee’s decisions, ideas or behaviours are in opposition to what is required as part of their role. These conflicts are generally easier to resolve, particularly when the organisation has a strong grievance resolution policy in place. Quite often the terms and conditions of the guidelines in place have not been effectively communicated to the employee, and once the employee is made aware of the issue they will quickly correct their behaviour.

The other type of conflict occurs when two people simply do not get along, ie there is a personality clash. “Personality clashes can be dangerous within organisations, largely because they can lead to reduced productivity and discontented teams,” says Loveday. “These are also not only confined to the workplace but also likely to overflow into an employee’s personal sphere and disrupt their general sense of well-being.”

However, it’s important to note that while personality clashes like this are quite prominent, employers should be careful not to use this as an 52 | MARCH 2015

Use the following simple conversation to prevent conflict from flaring. It involves three steps and can be used both at work and at home.

When you have a problem, stop and frame it in the following way: “When you do [X – put in the issue], I feel [Y – put in the emotion]. Next time could we [Z – put in the future step]?”

The language you use in those brackets is factual, emotionless language, almost like a police report.

For example: “When you email the president of our company in New York with our problem, it makes me feel like an idiot and I’m embarrassed that he sees our problems. Next time could you talk to me first before you email outside of the country?”

excuse to avoid addressing the real causes of conflict.

Conflicts about culture are far more challenging.

“Very often these touch on behaviour which is unacceptable and not negotiable,” says Howell.

“There need to be consequences for this behaviour and often a public signal that this has happened.

Failure to do this rewards bad behaviour and makes it plain that there is a gap between cultural aspiration and culture in practice. In the end this creates a cynical and demoralised workplace.”

AVOID IT – IT WON’T GO AWAY The human default is to avoid conflict, and in the workplace this can often result in temporary solutions being used to avoid dealing with the deeper issues.

Naturally, a problem untreated only grows larger.

Unresolved conflict in the workplace has been linked to miscommunication, increased stress, reduced cooperation and productivity, distrust among colleagues, and lower levels of team problem-solving and creativity. Conflict avoidance can also result in destructive office behaviours such as gossiping, venting to co-workers, or misdirected frustration.

Another major ramification of ignoring conflict is that an external or legal party may be consulted if employees feel they cannot deal with the situation internally with senior management. This can lead to financial penalty, and the organisation’s employer branding can be negatively impacted.

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MORE THAN HR Are there ground rules for handling conflict more effectively in the workplace? Who should be involved? Howell does not believe there is a single answer to this because the solution is often situation specific. However, the strategic challenge is to ensure that conflicts are not just ‘flicked to HR’, who are then expected to work some miracle.

“HR and the managers of the business are in this together. It’s a shared challenge,” Howell says.

“There is an obligation to share the responsibility for wise diagnosis and resolution. It’s only when these partnerships work effectively and are properly resourced that conflict can be truly resolved in a way that gives staff confidence and trust that the business culture is what the business leaders say it is.”

RESPECTFUL WORKPLACE PROGRAMS Conflict is a key leadership issue; it’s up to business leaders to foster a collaborative, healthy environment in which conflict is encouraged, not quashed. A leader surrounded by ‘yes men’ is doomed to failure.

One way to encourage positive conflict is to follow the lead of organisations in Canada that are developing Respectful Workplace Programs (RWPs). The grounding principle behind these programs is that conflict needs to be resolved one way or another or it will continue to fester and spill over into the team dynamics of the organisation.

The goal of an RWP is to support the shift in workplace culture from one of conflict avoidance to one of conflict resolution. RWPs aim to equip all individuals in the organisation with the skills to deal with conflict constructively. Those skills are underpinned by organisational policies and procedures, including professional development programs, coaching, peer and supervisor support, style awareness, and of course employee assistance programs allowing employees to attend confidential coaching and counselling programs.

Equipped with those skills, if individuals have an issue, they can sort it out though interaction with each other. If they cannot sort it out among themselves, they are encouraged to go to their direct supervisor or HR manager or internal trained mediator. If the conflict still cannot be resolved,

a third party – a mediator or facilitator – will be brought in.

FINAL TIPS Having a structured grievance policy in place seems almost like a box-ticking exercise in many companies. How can conflict resolution be moved beyond box-ticking towards having a culture in which it’s OK for people to voice grievances?

Howell admits this is a constant struggle for businesses. The real issue is that businesses view conflict resolution as a risk management or operational issue. It is actually a strategic issue, she notes, and is part of how a business defines itself.

“It has the potential to be a force for good or for destruction, depending on the focus it is given,” Howell says.

“A good dispute resolution process may help to avoid the costs of resolving a claim externally” Adrianna Loveday The first step should be to run a new employee through the policies relating to disciplinary and grievance procedures. Allow all staff access to these documents, through an intranet or other tool, so they can refer to the policies whenever they need to.

Secondly, ensure your workplace culture fosters open communication and collaboration. In order to establish a culture in which employees feel they can be heard, ensure established avenues of communication are available so they always have somewhere to voice concerns.

By managing disputes quickly and effectively, employers can maintain good working relationships with their employees.

“Workers will likely be more cooperative and productive if they know their grievances will be taken seriously by senior management. A good dispute resolution process may help to avoid the costs of resolving a claim externally,” Loveday concludes. NZL

MARCH 2015 | 53

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SEPTEMBER 2014 | 55

OPINION

The case for mandatory mediation of civil disputes Barrister and mediator Mark Kelly explains the benefits of a compulsory mediation model Abraham Lincoln, who did a bit of lawyering in his time, wrote: “Discourage litigation. Persuade your neighbours to compromise whenever you can. Point out to them how the nominal winner is often the real loser in fees, expenses and waste of time.”

Mark Kelly is an Auckland civil and commercial barrister and a LEADR-accredited commercial mediator.

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Mediation has become a fulcrum for this sentiment in modern dispute resolution, so much so that in New Zealand it is now close to mandatory in multiple contexts, including the Family Court and the Employment Relations Authority. It is also used to settle most cases in the Weathertight Homes Tribunal.

It should be mandatory, subject to a limited right to apply for exemption, in all civil disputes filed in New Zealand’s courts.

It is true that most cases settle anyway, but mandatory mediation should encourage that to happen more quickly, cheaply and efficiently.

There are still too many clients and/or lawyers who dig in unnecessarily, and, ultimately, at great cost. There are also too many who are unwilling to try to initiate mediation for fear of appearing weak. I have heard more than one senior counsel say, “I only mediate cases I know I’m going to lose”, which rather ignores Lincoln’s sage advice.

Various mandatory mediation regimes for civil disputes already exist in Canada and Australia.

These regimes have borne fruit. A study on Ontario’s mandatory mediation scheme led researchers to conclude that it led to significant reductions in the time taken to dispose of cases, and litigation costs.

The Italian government has also sought to introduce a mandatory mediation scheme. That scheme was examined by the Court of Justice of the European Union in Alassini v Telecom Italia SpA [2010] 3 CMLR 17 ECJ, and the Court opined

that mandatory mediation was more efficient than an optional procedure.

Some argue that making mediation mandatory is antithetical to its consensual philosophy. But that does not seem to compromise it in the fora in which it is already all but mandatory. Compulsion to mediate is already a major factor in civil disputes anyway. Many contracts require it, and the courts can push parties hard to mediate. In the UK, recent decisions have made it clear that even parties which have ultimately been successful in litigation can have their costs awards reduced for an unreasonable failure to mediate; a point most recently highlighted in Northrop Grumman v BAE [2014] EWHC 3148.

Many clients only mediate because their lawyers tell them they should. Is it such a great leap for it to be the rules which tell them they should? It is also important to note that making mediation mandatory does not involve forcing people to settle; it just involves forcing them to talk about settling in a proven format.

Others argue that mediation, with its inability to create precedent, and lack of formal controls to protect fairness, is no substitute for the courts and should not be given priority over them. That is, with respect, the elephant running in fear of the mouse.

Most mediators recognise and welcome the fact that they must mediate ‘beneath the shadow of the law’ (or ‘basking in its rays’ for a cheerier flavour).

There will always be cases that cannot and should not settle and are for the courts to decide. Parties can only settle if they both agree, and settlements which are unlawfully obtained or unlawful in their terms can still be reopened by the courts.

The vast majority of civil cases do settle. Making mediation mandatory in civil cases should encourage that to happen more quickly, efficiently, and cheaply. An objective that, no doubt, Honest Abe would applaud. NZL