Australasian Legal Business (OzLB) Issue 7.10

ISSUE 7.10

Chinese investment Beyond the super-sized M&A deals

Mid-tier firms Grabbing a golden opportunity

Energy & resources Market-leading firms revealed

In the

RED

The link between partnership and debt Michael Rose: Can Allens survive the storm?

DEALS ROUNDUP

LATERAL MOVES

US, UK REPORTS

CAPITAL MARKETS DATA

NEWS ANALYSIS

www.legalbusinessonline.com

NEWS | news >>

24

Australasian Legal Business ISSUE 7.10

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1

ISSUE 7.10

EDITORial >>

Chinese investment Beyond the mega-resourcs M&A

Mid-tier firms Grabbing a golden opportunity

Energy & resources Market-leading firms revealed

IN THE

RED

The link between partnership and debt Michael Rose, Allens Arthur Robinson

The sky is falling

I

t feels like Pauline Hanson hysteria all over again. Media and political paranoia about what Chinese or Indian trading partners think – or do not think – about alleged Australian xenophobia has become an unhelpful distraction to the otherwise important debate on the regulation of foreign investment.

If certain sections of the media are to be believed, Chinese investors are turning their backs on Australia because they have taken personal offence over the failure of Chinalco’s bid for Rio Tinto and the Stern Hu affair. One journalist at Brisbane’s Courier Mail even opined that Chinese tourist visa applications to Australia had “plummeted” in the past three months by 80% “because of political tensions”. Meanwhile, anti-Australia sentiment is allegedly sweeping India’s one-billion strong population in response to recent racist attacks on Indian students in Australia.

The legal profession is in the fortunate position of being able to assess the situation first-hand. Lawyers continue to be rather busy getting on with the job of facilitating the steady stream of Chinese investment still coming into Australia – landmark deals like ExxonMobil/PetroChina’s US$41bn LNG agreement and Yanzhou Coal’s acquisition of Brisbane-headquartered Felix Resources come to mind. If such investment is allowed to continue – and the indications coming out of the Commonwealth government have not been completely encouraging in this area– surely investors will continue to be motivated by business rather than any personal considerations.

Therein lies the point. Do sophisticated investors intent on pursuing billiondollar transactions for the substantial benefit and enrichment of themselves and their country walk away from the table because of a perceived diplomatic slight or concerns over the health of the Australian national psyche?

Let us have the debate. If government policy on foreign investment is thought to be unduly cautious, let the government be judged on that basis. But the handwringing over Australian national values reeks of political opportunism. It shows little respect for the business acumen of foreign investors.

Why no China office?

DEALS ROUNDUP

LATERAL MOVES

US, UK REPORTS

CAPITAL MARKETS DATA

NEWS ANALYSIS

www.legalbusinessonline.com

IN THE FIRST PERSON “The level of Chinese investment in Australia now requires us to have a stronger presence and connection in China” Leon Pasternak, partner, Freehills (p10)

“Clients don’t come to a midtier firm because of its logo. It’s because of a personal referral, or the relationship with a partner or partners” John Nerurker, chief executive officer, Mills Oakley (p35)

“Insolvency-related tax work has been busy ... structured finance and asset finance-related work has been slow, although there are signs they are slowly returning” Justin Cherrington, partner, Mallesons (p56)

Lawyers continue to be rather busy getting on with the job of facilitating the steady stream of Chinese investment still coming into Australia

2

Australasian Legal Business ISSUE 7.10

contents >>

contents

ALB issue 7.10

34

12

COVER STORY 34 Joining the partnership

Should incoming partners have to pay for the privilege of joining the partnership?

36 Elephant in the room

Ways that law firms get into debt, and how they should circumvent the whole issue

ANALYSIS 10 Chinese investment in Australia It’s interesting to explore the many facets of inbound Chinese investment now occurring 12 The Great Mid-tier Marketing

Opportunity Some law firm marketing departments are stepping up activity in the face of the downturn as clients seek to cut costs 14 Property windfall Will foreign investment in our real estate be able to turn the tide for property lawyers?

FEATURES 30 ALB-LexisNexis Managing Partner series:

Michael Rose, AAR Michael Rose shares his vision for Allens Arthur Robinson in the Asia-Pacific region 40 ALB Guide: Energy & Resources The best lawyers and firms in this practice area are revealed 46 Technology Roundtable A panel discussion from top experts on the value of law firm technology

4

40

52 In-house services Service offerings for in-house lawyers are now way beyond traditional legal advice being given and billed by the hour. ALB investigates 56 Tax law What’s been keeping our tax practices ticking over during the downturn?

60 ALB-Kensington Swan In-house

Perspective: Horacio Gutiérez, Microsoft The dynamics of Microsoft’s virtual law firm are explained by a seasoned veteran in the field

REGULARS 6

DEALS

Energy & Resources

30

26 APPOINTMENTS

COLUMNS 17 UK Report 19 US Report 68 Capital Markets Deals Data 69 M&A Deals Data

COMMENTARY/PROFILES 24 Buddle Findlay 50 Chang Pistilli & Simmons 58 Donaldson Walsh

10 NEWS ANALYSIS 16 NEWS • China continues Australian resource push • Top-tier firms help Kirin-Lion Nathan takeover • Former G + T partner sets up trans-Tasman firm • Debt collection scam targets law firms • Holman Fenwick taps Blakes for Sydney launch • Timing not right for New Zealand IPOs • Top firms hammer out carbon trading guidelines • Telstra shake-up to change legal role

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

australasian legal business ISSUE 7.10

NEWS | deals >>

deals in brief | M&A | ►► Randgold Resources– Moto Goldmines acquisition

• PE group held a 26.7% stake in the online recruitment company

US$488m Firm: Fulbright & Jaworski Client: Randgold Resources Firm: Ashurst Lead lawyers: Michael Robbins, Nick Williamson Client: Randgold Resources Firm: Norton Rose Lead lawyer: Mark Bankes Client: Moto Goldmines Firm: Lawson Lundell Lawson & McIntosh Client: Moto Goldmines Firm: Shearman & Sterling Lead lawyers: Laurence Levy, Richard Price Client: AngloGold Ashanti Firm: Fasken Martineau DuMoulin Lead lawyer: John Turner Client: AngloGold Ashanti • Randgold Resources to acquire outstanding shares of Moto Goldmines • AngloGold Ashanti and Randgold Resources in joint bid competing with Red Back Mining to acquire Moto’s interests in Democratic Republic of Congo gold deposits

| Capital Markets | ►► Seek divestment A$446m Firm: Gilbert + Tobin Lead lawyers: Garry Besson, Janine Ryan Client: Consolidated Media Holdings (CMH)

“[The Seek underwritten selldown] reflects continuing institutional willingness to take new equity stakes, either through sell-downs or new equity raisings.”

Janine Ryan, Gilbert + Tobin

| Capital Markets | ►► Tower Limited capital raising NZ$81m Firm: DLA Phillips Fox Lead lawyers: Rachel Taylor, Catherine Merity Client: Tower • The insurer and fund manager will use the capital to fund acquisitions

• Consolidated Media Holdings divested all of its shares in Seek

• Offer follows Sigma’s acquisition of a Bristol-Myers Squibb unit in Melbourne

Client: Babcock & Brown Infrastructure (BBI) • Involved extensive negotiation and settlement of outstanding management fees and associated costs in Australasia and Europe • BBI has assets worth A$15bn David Friedlander Mallesons Stephen Jaques

• Mallesons’ lawyers received their instructions on a Saturday night and had to work through the weekend to meet the Monday launch deadline for the institutional component

Catherine Merity DLA Phillips Fox

| Capital Markets | Gary Besson Gilbert + Tobin

Lead lawyer: David Friedlander Client: Deutsche Bank

• Offer consists of A$132m institutional component and A$165m retail component with the retail component set to be completed in October

• Tower sold shares at a massive 27% discount

Firm: Minter Ellison Lead lawyers: John Steven, Bart Oude-Vrielink Client: CMH

6

Janine Ryan Gilbert + Tobin

►► Sigma Pharmaceuticals capital raising A$297m Firm: Minter Ellison Lead lawyers: Bart Oude-Vrielink, Jeremy Blackshaw Client: Sigma Pharmaceuticals Firm: Mallesons Stephen Jaques

| Corporate | ►► BBI Internalisation and Separation from Babcock & Brown Undisclosed Firm: Chang, Pistilli & Simmons Lead lawyers: Kevin Lewis, Jason Mendens Client: Babcock & Brown Firm: Freehills

• Negotiations took several months with Kevin Lewis of CP&S effectively working in-house alongside Babcock & Brown team to implement the complex transaction

| M&A | ►► Huntsman Chemical’s Tronox acquisition US$415m Firm: Corrs Chambers Westgarth Lead lawyer: Byron Koster Client: Hunter Chemical Firm: Clayton Utz Lead lawyer: Peter Wilkes Client: Tronox LLC in Australia

Byron Koster Corrs Chambers Westgarth

Firm: Kirkland & Ellis (New York) Lead lawyer: Kester Spindler Client: Tronox debtors Jason Mendens Chang, Pistilli & Simmons

Firm: Vinson & Elkins (Houston & New York) Lead lawyers: Matt Strocks, Stephen Gill Australasian Legal Business ISSUE 7.10

NEWS | deals >>

Client: Huntsman Chemical

►► Your month at a glance

• Global transaction involving the acquisition of Tronox assets in Australasia, Europe and the US

Firm

Jurisdiction

Deal name

Allens Arthur Robinson

Australia

Melbourne Metropolitan Train system franchise agreement

N/A IP, M&A, Tax

Australia, Hong Kong

Cheung Kong Infrastructure finance refinancing

510 Banking & finance

Australia

Resource generation rights issue

Ashurst

Australia, DRC

Randgold Resources – Moto Goldmines acquisition

558 Resources

Baker & McKenzie

Australia

Tokyo Gas – Gorgon LNG PPA and equity stake

N/A Energy & resources

Australia

Bravura Solutions recapitalisation

33 Banking & finance 82 M&A

• Australian aspect of the transaction involves the acquisition of the Tiwest joint venture, world’s largest integrated titanium minerals production/ manufacturing venture

| IP, M&A, Tax | ►► Melbourne Metropolitan Train system franchise agreement

A$m

Practice

31 Energy & resources

Undisclosed

Blake Dawson

Australia

Atlas Iron – Warwick Resources merger

Firm: Mallesons Stephen Jaques Lead lawyers: Cheng Lim, Louis Chiam, Philip Ward, Michelle Levy Client: Metro Trains Melbourne (MTM)

Chang, Pistilli & Simmons

Australia

BBI internalisation and separation from Babcock & Brown

Australia

RCU placement

15 Banking & finance

Australia

McPherson capital raising

15 Banking & finance

Australia

Resource generation rights issue

31 Energy & resources

Clayton Utz

Australia, Europe

Huntsman Chemical – Tronox acquisition

474 M&A

Conyers Dill & Pearman

Australia, Hong Kong

Cheung Kong Infrastructure finance refinancing

510 Banking & finance

Corrs Chambers Westgarth

Australia, Europe

Huntsman Chemical – Tronox acquisition

474 M&A

Australia

ME Bank RMBS issue

276 Banking & finance

Australia

LEO Pharma – Peplin acquisition

287 M&A

DLA Phillips Fox

Australia, New Zealand

TOWER rights issue

Fasken Martineau DuMoulin

Australia, DRC

Randgold Resources – Moto Goldmines acquisition

558 Resources

Freehills

Australia,

Ramsay Healthcare capital raising

260 Capital markets

Fulbright & Jaworski

Australia, DRC

Randgold Resources – Moto Goldmines acquisition

558 Resources

Gilbert + Tobin

Australia

Seek divestment

446 M&A

Australia

Crescent Capital Partners – Bay Audiology acquisition

157 M&A

Harmos Horton Australia Lusk

Crescent Capital Partners – Bay Audiology acquisition

157 M&A

Kirkland & Ellis

Australia, Europe

Huntsman Chemical – Tronox acquisition

474 M&A

Lavan Legal

Australia

Eastern Lighterage building acquisition

►► Crescent Capital Partners acquisition of Bay Audiology A$157m

Lawson Lundell Lawson & McIntosh

Australia, DRC

Randgold Resources – Moto Goldmines acquisition

558 Resources

Firm: Gilbert + Tobin Lead lawyer: John Williamson-Noble Client: Crescent Capital Partners

Mallesons Stephen Jaques

Australia

Sigma Pharmaceuticals capital raising

297 Capital markets

Cheng Lim Mallesons Stephen Jaques

Firm: Allens Arthur Robinson Lead lawyers: Paul Kenny, David McLeish, Ted Hill Client: Victorian government

• MTM consortium comprises MTR Corporation of Hong Kong, United Group Rail and John Holland • MTM signed a franchise Agreement with the state of Victoria to operate the Melbourne Metropolitan Train system for eight years • Signing agreement is culmination of worldwide tender process

“It has been a challenging and complex transaction” Cheng Lim, Mallesons Stephen Jaques

| M&A |

N/A Corporate

80 Capital

36 Property, M&A

Firm: Harmos Horton Lusk www.legalbusinessonline.com

7

NEWS | deals >>

infrastructure company in HK

►► Your month at a glance (CONT) Firm

Jurisdiction

Deal name

Mallesons Stephen Jaques

Australia

Melbourne Metropolitan Train system franchise agreement

N/A IP, M&A, Tax

Australia, Hong Kong

Cheung Kong Infrastructure finance refinancing

510 Banking & finance

Australia

Eastern Lighterage building acquisition

36 Property, M&A

Australia

Maryborough Sugar Factory – Tully Sugar acquisition

90 M&A

Australia

Tokyo Gas – Gorgon LNG PPA and equity stake

N/A Energy & resources

Australia

Tokyo Gas – Gorgon LNG PPA and equity stake

N/A Energy & resources

Australia

Seek divestment

446 M&A

Australia

Sigma Pharmaceuticals capital raising

297 Capital markets

Norton Rose

Australia, DRC

Randgold Resources – Moto Goldmines acquisition

558 Resources

Shearman & Sterling

Australia, DRC

Randgold Resources – Moto Goldmines acquisition

558 Resources

Steinepreis Paganin

Australia

Atlas Iron – Warwick Resources merger

82 M&A

• Ramsay Health Care is Australia’s largest private hospital operator

Thomas Playford Cutlers

Australia

McPherson capital raising

15 Banking & finance

• Goldman Sachs JBWere is acting as sole lead manager, bookrunner and underwriter to the Ramsay institutional placement

Minter Ellison

Vinson & Elkins Australia, Europe

A$m

Huntsman Chemical – Tronox acquisition

Practice

474 M&A

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

Please contact

Lead lawyers: Mark Harmos Kate Helem Client: Bay Audiology • Private equity group Crescent Capital Partners bought Bay Audiology through its company National Hearing Care • Deal was turned around on a very tight deadline

| M&A | ►► Atlas Iron merger with Warwick Resouces A$82m Firm: Blake Dawson Lead lawyers: Murray Wheater, Chadwick Poletti, Ben Secrett Client: Atlas Iron Firm: Steinepreis Paganin Lead lawyer: Mark Foster Client: Warwick Resources • Deal indicates the rapid consolidation of iron ore assets occurring in Pilbara

8

• Lenders comprise Bank of China (Hong Kong), ANZ, Bank of China (Macau Branch), Nanyang Commercial Bank

alb@keymedia.com.au

61 2 8437 4700

• Defensive move giving the two small companies the increased buying power and greater marketing strength that comes from being a mid-tier player • Comes on the back of neighbouring company Polaris agreeing to merge with Mineral Resources

“The Warwick-Atlas merger is a logical step in the ongoing consolidation process of the iron ore companies in the Eastern Pilbara region” Mark Foster, Steinepreis Paganin

| Banking & Finance | ►► Cheung Kong Infrastructure Finance refinancing A$510m Firm: Mallesons Stephen Jaques Lead lawyer: Dominic Bortoluzzi Client: Cheung Kong Infrastructure Finance Firm: Conyers Dill & Pearman Client: CKI (guarantor)

• Signing Agreement is culmination of a worldwide tender process

| Capital Markets | ►► Ramsay Healthcare capital raising A$260m Firm: Freehills Lead lawyer: Tony Sparks Client: Ramsay Health Care • Deal consists of A$220m underwritten institutional placement and a non-underwritten Share Purchase Plan to raise A$40m

“This offer is yet another recent example of issuers raising capital in more positive circumstances to fund future growth opportunities” Tony Sparks, Freehills

| Banking & Finance | Dominic Bortoluzzi Mallesons

Firm: Allens Arthur Robinson Lead lawyer: Matthew Barnard Client: Banking syndicate • Loan is guaranteed by listed parent company, Cheung Kong Infrastructure Holdings Limited (CKI), will go towards refinancing existing loans of CKI Australia • CKI is largest publicly listed

►► ME Bank RMBS issue A$276m Firm: Corrs Chambers Westgarth Lead lawyers: John Munton, Craig Milner, Scott Millar Client: ME Bank • First public issue of Australian residential mortgage-backed securities (RMBS) to occur without government support since October 2008 • No external counsel used by arranger and underwriter, Westpac • Australian government so far provided A$8bn for RMBS market

Australasian Legal Business ISSUE 7.10

NEWS | deals >>

| M&A | ►►LEO Pharma acquisition of Peplin US$287m Firm: Gilbert + Tobin Lead lawyers: Rachel Launders, Vincent Dwyer Client: LEO Pharma A/S

Firm: Allens Arthur Robinson Lead lawyers: Paul Kenny, David McLeish, Ted Hill Client: Banks Firm: Bracewell & Giuliani Client: US noteholders Firm: Arnold Bloch Leibler Client: Australian noteholders Firm: Mallesons Stephen Jaques Lead lawyer: Jason Watts Client: Goldman and RBS

Vincent Dwyer Gilbert + Tobin

Firm: Corrs Chambers Westgarth Lead lawyer: James Rozsa Client: Peplin • Peplin is nearing the completion of clinical trials for its lead product which treats common pre-cancerous skin lesion actinic keratosis • LEO Pharma is a privately-held global pharmaceutical company based in Denmark • Peplin moved its headquarters from Brisbane to the US in 2007 to pursue an international growth strategy

• Deal consisted of debt refinancing, equity raising and asset sale transactions • Restructured debt package consisted of permanent term debt facilities and notes with maturities of three years and over, asset sale bridges, equity bridges and a revolving credit facility and transactional banking facilities for working capital needs • Included sale of Elders’ general insurance business to QBE and the establishment of a new joint venture for the ongoing distribution of general insurance products • Included institutional placement and novel share purchase plan • Deal required the efforts of M&A, ECM, banking and finance and restructuring practices

| M&A, ECM, Banking & Finance, Restructuring | ►►Elders corporate restructure Undisclosed Firm: Freehills Lead lawyers: Al Donald, Kristin Stammer, Damien Hazard, Hayley Neilson, Philippa Stone, Rebecca Maslen-Stannage Client: Elders

www.legalbusinessonline.com

CORRECTIONS: ALB guide: Building and Construction Law In last month’s ALB Practice Area Guide, Carter Newell should have been recognised as a leading firm in this area.

Regrettably, this did not occur owing to a production error.

The Guide also omitted commendations for Carter Newell’s Patrick Mead and David Rodighiero as leading lawyers.

ALB regrets the errors.

9

NEWS | analysis >>

Analysis >>

Fast boat from China

Diversification, public offerings, cornerstones – these are just some of the facets of inbound Chinese investment that are happening in 2009 ►► Freehills makes a new friend in China Without a great deal of fanfare, Freehills has slipped into a non-exclusive strategic alliance with PRC firm TransAsia. “Essentially, the purpose of the alliance is to work together with TransAsia on inbound investing into Australia by Chinese companies,” said partner Leon Pasternak.

Leon Pasternak, Freehills

“We have always had partners with links with China, but the level of Chinese investment in Australia now requires us to have a stronger presence and connection in China. The alliance is reflecting the significant growth of Chinese investment and interest in Australia.”

Freehills has undertaken significant work in the Chinese market, recently acting for China Investment Corporation (CIC) in its A$750m investment in Goodman Group. However, it is one of the last major Australian players to hop on the China bandwagon with an official presence or alliance. Mallesons, Minter Ellison, Allens Arthur Robinson and Blake Dawson have all hung out the shingle in China, while Clayton Utz maintains a close relationship with Jun He and King & Wood through the Lex Mundi and Pacific Rim Advisory Council global alliances. Meanwhile, the alliance between Gilbert + Tobin and King & Wood is now almost two years old.

10

T

he lapsing of the Rio Tinto – Chinalco deal and the arrest of four Rio employees by Chinese authorities earlier this year certainly provided an opportunity for the doomsayers to make dire predictions about the future of Chinese investment in Australia.

If there was ever any substance to these predictions, perhaps the recent announcement of the biggest AustraliaChina trade deal ever – ExxonMobil and PetroChina’s US$41bn liquified natural gas agreement – will put an end to the pessimism.

“The failed Rio-Chinalco deal has caused many to expect a slowdown in Chinese interest in Australia, but it has been proven otherwise,” said Andrew Hensher, co-head of Chang Pistilli & Simmons’ PRC business unit.

“The business relationship between China and Australia is strong enough to withstand one mere setback.”

Yet even before the unveiling of the ExxonMobil–PetroChina deal, there was little sign of the relationship cooling, although the political manoeuvering and media coverage hasn’t been helpful.“The number of [inbound China – Australia] deals

has remained steady,” said Mallesons international managing partner, Nicola Wakefield Evans. “There is some nervousness that the Australian government is making foreign investment more difficult, but this is not supported by the decisions coming out of FIRB, which has not changed its approach to approvals or raised the bar for investment.”

The gas sale agreement came only weeks after Yanzhou Coal’s acquisition of Brisbane-headquartered Felix Resources, which will be the largest-ever Chinese deal in the Australian coal sector once completed.

Yanzhou engaged Corrs Chambers

“Relatively straightforward ASX listing requirements makes it an attractive proposition for smaller Chinese companies” Pierre Lau, Chambers & Co Australasian Legal Business ISSUE 7.10

NEWS | analysis >>

►► PRC investments in Australian resources companies 2008/09 Chinese company

Australian company

Value US$m

Hunan Valin Iron and Steel

Fortescue Metals

Sinosteel

Midwest

China Nonferrous Metal Mining Group

Lynas Corporation

186

Jinchuan Group

Fox Resources

N/A

Sinopec Group

AED Oil

561

Zhongjin Lingnan

Perilya

Sinosteel

Murchison

Yanzhou Coal

Felix Resources

PetroChina

ExxonMobil

357 1,400

55 200 3,300 41,000

Westgarth, King & Wood and Baker & McKenzie for legal advice in different jurisdictions, while Felix was advised

by Allens Arthur Robinson.

“China is a substantial consumer of many Australian resources. There is no reason why the rising interest will not follow the same pattern as past investment influxes,” said Andrew Knox, a partner with Allens Arthur Robinson, who headed the Yanzhou and Felix deal. “The outcome will be closely scrutinised as there appears to be a significant appetite for more deals, dependent on there being substantial prospects [here] for a successful deal.”

Diversification

At Mallesons, the number of queries from prospective Chinese clients looking to invest in Australia has been on the increase over the last 18 months, says Wakefield Evans.

While there has been no single sharp spike in queries in that period, she has noticed a recent diversification in the sectors targeted by investors, from the predictable interest in resources to property, manufacturing, real estate and agriculture. While the increasing diversity of Chinese investment can be partly attributed to a growing sense of confidence, nevertheless, the resources sector is still seen as a safe harbour.

“Initially, resources was clearly the area of greatest need for the Chinese economy – investors were looking to secure long-term supply,” says Wakefield Evans. “It’s important to understand that many Chinese companies had never made an outbound investment before – and it makes sense to invest in the resources www.legalbusinessonline.com

sector, which would be more familiar to most [Chinese] investors.”

Property has been one sector to feature in the growing Chinese comfort zone. Sovereign wealth fund China Investment Corporation (CIC) recently invested A$700m in the Australian property trust Goodman Group, hiring Freehills for advice on the transaction.

“CIC is very sophisticated – its successful investment in Australia will give Chinese enterprises greater comfort,” said Leon Pasternak, a partner at Freehills who acted for CIC. “Chinese investors are seeing opportunities as the value of Australian properties falls during the GFC,” adds Andrew Hensher.

“This would be considered purely an investment to build funds and to gain foothold, as opposed to a strategic investment.

With these funds, there are no reasons why China will not invest Andrew Hensher Chang Pistilli & beyond resources.”

Simmons Earlier this year, China’s Haier Group acquired a 20% stake in the struggling New Zealand white goods manufacturer Fisher & Paykel. The strategic investment boosted Haier’s profile and expansion ambitions – not to mention the revenues of Freehills, which advised Fisher & Paykel, and Clayton Utz, which advised Haier on the transaction.

Forms of investment

Wakefield Evans identifies three broad categories of Chinese investment – acquisition of a controlling interest, an initial stake acquisition and what

she describes as a “bet each way” which are investments such as cornerstones, joint ventures and long term supply contracts. The need to take a “bet each way” is perhaps Jonathan Murray indicative of a desire to Steinpreis Paganin test the market and to build relationships with Australian companies before taking a more decisive step.

The listing of Chinese companies on the Australian Securities Exchange (ASX) is a trend worth watching. So far in 2009, three manufacturers from the mainland have launched IPOs in Australia. The ASX is considered a “fast-track” for Chinese companies who would normally have to wait for up to two years to list on their domestic stock exchange.

“The relatively straightforward ASX listing requirements makes it an attractive proposition for smaller Chinese companies,” said Pierre Lau, a senior associate at Melbourne-based firm Chambers & Co. “To smaller companies in Asia, Australia’s business environment and market track record over the last decade also makes the ASX a more viable option, without sacrificing sophistication.” Still, only a few Chinese companies thus far have opted for an ASX listing. “It is hard to say if there is a window of opportunity – everyone is probably waiting on more positive and consistent signals coming from the equities market in general,” said Jonathan Murray, partner at Steinepreis Paganin. The firm was responsible for the listing of YTC Resources on the ASX in 2007, which is backed by the Yunan Tin Group. ALB

►► PRC companies listed on the Australian Securities Exchange PRC company

Industry

Listing code

Australian representation

Time of listing

TWT Group

Outdoor furniture manufacturing

TWT

Tindall Gask Bentley

2007

Mesbon China Nylon

Nylon manufacturing

MES

Minter Ellison Adelaide/ Tindall Gask Bentley

2007

Treyo Leisure and Entertainment

Electronic mah-jong table manufacturing

TYO

Deacons Melbourne

2009

Thomas Bryson International

Textile and home decor manufacturing and distribution

TBI

Minter Ellison Adelaide

2009

Shenhua International

Textile manufacturing

SHU

Chambers & Co

2009

11

NEWS | analysis >>

Analysis >>

The Great Mid-tier Marketing Opportunity

Cat Wirth, DLA Phillips Fox

The financial crisis has created a unique opportunity for mid-tier firms to pick up top-tier clients. ALB looks at the importance of marketing to capitalise on this opportunity

W

hile the financial crisis has pushed many toptier firms towards implementing redundancy programs, mid-tier firms have been able to poach business from pricesensitive clients. This is creating what one marketing professional labels their “one shot at success” with big clients that might previously not have considered these firms.

“The mid-tier market saw an amazing opportunity to take more work from clients who were pricesensitive, who were looking at mid-tier as a way of reducing some of their legal expenditure,” said Graham Seldon, managing director of executive recruitment firm Seldon Gill.

He said that the strong growth experienced by these firms allows them to spend money on marketing to build their brand. “In the mid-tier market they’ve always been quite lean in terms of marketing, and suddenly they’re seeing some quite big growth curves in some of their practice groups. Therefore there is a willingness to spend money because they see that they have one shot at getting in front of clients that previously they might not have got in front of,” he said.

“This is their opportunity to shine in front of those clients.”

12

Increased budgets

One example of how a mid-tier firm has sought to capitalise on this opportunity comes from Swaab Attorneys, which has increased its marketing budget during the downturn and plans on increasing it further over the next year. “We believe that marketing is far too important to be given the chop at the first hint of an economic downturn, so we’ve actually increased spend in the last 12 months,” said Paula Gilmour, a business development manager at the firm.

Similar strategies are in place at DLA Phillips Fox, where director of clients and marketing, Cat Wirth, said that slower times have shown the benefit of keeping up marketing expenditure. “Previous downturns have taught us that organisations that maintain their marketing activities are more likely to increase their market share,” she said.

While marketing is often the first part of the budget to be slashed in tough economic times, most marketing professionals consider it a key ingredient to a successful firm – regardless of the business environment. “During an economic downturn, smarter companies who boost their marketing efforts can benefit by increasing market share,”

Gilmour said. “By putting in even more effort when times are tough, we can position ourselves as the first choice for clients who are seeking quality legal expertise and are looking for a smart alternative to the mega-firms.”

Many mid-tier firms are well-placed to benefit from any economic downturn as businesses look at all facets of their operations to minimise overheads – including legal costs.

“In tough times, clients become more cost-conscious. We are increasingly hearing that they are under a lot of pressure to keep costs down, and this naturally flows through to pressure on in-house counsel to reduce their legal spend,” Gilmour said.

However, mid-tier firms have more to offer than lower prices, according to national health care provider Australian Health Management inhouse lawyer, Louise Leaver. “I think the mid-tier firms can be a lot more nimble and responsive for requests for change because they’re not burdened by large heavy structures,” she said, adding that AHM has traditionally had a split between using top-tier, mid-tier and even small regional firms.

“Historically we use mid-tier firms for regulatory advice and also your general commercial contractual matters,” Leaver said. ALB Australasian Legal Business ISSUE 7.10

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Analysis >>

Real estate practices set to reap foreign windfall

L

ike a wake of vultures circling over a wounded wildebeest, foreign investors have spent the past year acquainting themselves with the Australian regulatory regime, and waiting for the right time to make a move in the property sector.

According to leading property lawyers, that time is now.

Blake Dawson’s Sydney partner Les Koltai is seeing increasing interest among foreign groups looking to move into Australia, after being shut out of the property market for the past decade. “There is a window of opportunity for foreign investors to get set in Australia so we’re seeing quite a few foreign groups looking at the Australian market … to get involved here either directly through acquisitions or through investments into funds,” Koltai said.

“They’ve used the past six-12 months to understand the legal and regulatory framework for investing in Australia, and just to run their eye over assets and opportunities as they arise.”

About to kick off

Koltai said he thinks foreign investment activity in Australian property is set to take off over the next 12 months, with plenty of work being generated both from existing and new clients. “My expectation is that investment activity will accelerate greatly over the next year,” he said.

“A lot of these groups have now done their homework, become acquainted

with the tax system and set up with their investment structures. The overwhelming view is that the next 12 months will provide the best window of opportunity for foreign investors to come in,” he added.

Mallesons’ Sydney property partner Stuart Dixon-Smith said he expects much more work for real estate practices now that investors have transitioned from positioning to transacting. “To the extent that we were doing any significant [business] before April or May, it was very much early-stage positioning that didn’t generate huge amounts of legal work,” he said. “But now that they’re actually transacting there is much more to do.”

Dixon-Smith’s colleague, Sue Kench, said foreign investors have been “tyrekicking” for the past year and are now entering into transactions, lured by high-quality assets that would not normally be available. “I can’t name them for confidentiality reasons but you’ve got some good assets that would never usually come onto the market and even some of the bigger Australian funds are looking at them,” Kench said.

“We’re hopeful that this is the start of a reset for the property market.”

Dixon-Smith highlighted Goodman’s capital raising as a prime example of large investments flowing into the Australian property sector, helping companies pay down debt and prepare to make acquisitions.“I think the key thing is activity in the market is definitely being kicked off by foreign

“I think the key thing is activity in the market is definitely being kicked off by foreign money and as that money’s come in we have seen movement” Stuart Dixon-Smith Mallesons 14

money and as that money’s begun to come in we certainly have seen movement,” he said.

Opportunity knocks

Freehills Melbourne partner David Sinn said he is working with a number of overseas clients – German investment fund Real IS, for example, which is actively looking at market acquisitions here. He said the majority of work is on the developer side.

In order to take advantage of the current market, Sinn said, it would be beneficial to look more at the equity partners in these deals. “I think the best opportunity for our group is to diversify into equity investment and to follow where the flow of equity is coming from and to work with those people,” he said. “The people who are buying these assets are the ones who some might say are taking a risk. I would say [they] are taking advantage of a great opportunity: buying property at reduced value.”

Sinn said the buyers are likely to come out of the market with some significant capital gains that would entice them to invest further in Australian property. However, he warned that foreign capital will not be able to sustain the domestic property market over the long term. “Quite frankly, the foreign money will at some point stop because when their own economies start to pick up again they’ll start looking locally to acquire assets,” he said. ALB Australasian Legal Business ISSUE 7.10

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news in brief >> Hambrett takes Bakers chair Baker & McKenzie partner Bruce Hambrett has been elected as chair of the firm’s Australian offices, taking over from Andrew Salgo who has held the position for the last four years.

Hambrett is a prominent dispute and insolvency lawyer, having Bruce Hambrett been the founding chairman Baker & McKenzie of the Law Council’s Business Law Section, Insolvency and Reconstruction Committee. He has advised key stakeholders in a number of high-profile collapses including Spedley Securities, Equiticorp, the Londish Group and Giant Resources.

“These are challenging times for our clients and I look forward to being actively involved in our firmwide strategies to ensure that we continue to deliver the expertise and support that clients expect from our truly unique global and domestic presence,” he said.

ASX rival boosts corporate law work The government decision to strip the ASX of its powers to detect market manipulation paves the way for a decision on three rival market operators that have applied to compete with the securities exchange.

Chi-X, Liquidnet and AXE have applied to ASIC to set up rival exchanges two years ago but the move to grant ASIC powers of regulation and oversight could open the door for those applications to be approved.

This could be good news for corporate and securities lawyers, according to Tim Bednall, Mallesons Stephen Jaques M&A Partner. “Rival securities exchanges will provide work for Tim Bednall the corporate and competition Mallesons practices, especially for market regulation work.”

This would be a boon for corporate and securities lawyers, who would likely see a marked increase in work as a new system was put in place.

INDUSTRY >>

Former G + T partner sets up trans-Tasman firm L

eading technology, media and communications lawyer, Angus Henderson has joined Malcolm Webb in setting up the self-proclaimed ‘next generation’ law firm Webb Henderson.

Effectively, Henderson is joining the Auckland-based law firm MGF Webb to set up the new entity, although Webb said the addition of the former Gilbert + Tobin senior partner adds so much he thinks of it as a complete change.

“I think of it more of a new firm, to be honest – it’s substantially changed with him joining us,” Webb told ALB. “The advantage of Angus joining is it gives us more breadth and depth and geographic scope to the practice – that’s the business rationale behind it.”

Webb said that they referred to the new firm as ‘next generation’ because of its Australian-New Zealand model

and the fact that it specialises in the telecommunications, media and technology sectors, as well as regulated network industries. “We’re a Angus Henderson single trans-Tasman Webb Henderson partnership so we effectively treat Australasia as a single market,” he said. “The lawyers on both sides of the Tasman get to work on projects on the other side.”

Webb also flagged the Middle East as a region where he expects to see strong growth, noting that the firm has “got a pretty good foothold there as well.” Webb believes that MGF Webb will compete with top-tier firms on knowledge and skills rather than cost, with fees “approximately equivalent”

technology >>

Telstra shake-up to change T

he Rudd Government’s proposed changes to the telecommunications sector – including a structural separation of Telstra and a reworking of access rules – will likely mean a change in the type of work for law firms, with more commercial work

available and less involvement in regulatory disputes.

According to Herbert Geer Melbourne partner Graham Phillips, firms would spend less time working on regulatory issues in this sector, and more time on corporate and transactional work.

Evershed to slash staff count again Eversheds recently launched its fourth redundancy round, putting 117 roles under threat. The top 10 UK law firm will see approximately 22 fee earners in the real estate practice laid off, along with up to 95 secretarial posts nationally.

This is the result of a negative economic climate and long-term decline of the real estate sector and a bid to save up to £2m a year through an outsourcing deal with South African-based outsourcing company Exigent.

The review will see the firm lower the level of in-house secretarial support from one secretary for every 3.4 fee earners to one to four and will also consider a number of flexible working alternatives including sabbaticals and reduced hours. Eversheds has conducted three redundancy consultations over the last 18 months with more than 80 lawyers being laid off.

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to what the biggest firms are charging. “We have very deep industry specialisation in these specific sectors, both domestically and internationally…

That’s what [clients] are looking for,” Webb said. “They’re looking for people who understand the industry as well as they do and have dealt with the issues they’re dealing with in a range of different contexts.”

The firm represents some heavyweights, including Google, Television New Zealand (TVNZ) and Fox, and Webb sees potential for growth particularly in the Asia-Pacific region. “Growth is particularly going to come from the Asia-Pacific region for us,” he said. “A very significant proportion of the work is currently done there and that is a growing and burgeoning part of the world in the sectors that we focus on.”

Previous partners in MGF Webb Auckland, Mark Toner and Corin Maberly, will also be joining the new firm, which has offices based in Auckland and Sydney. ALB

legal roles “If Telstra moves to structural separation there will be quite a number of changes that would happen at the M&A level,” he said.

“If they are divesting Graham Phillips the network there will Herbert Geer obviously be a lot of legal work that goes along with that.”

Lawyers will also have to brace themselves for a change in the regulatory environment, as government replaces the numerous arbitrations taking place in the telecommunications sector with industry-wide determinations.

“To date there’s been quite a large number of arbitrations and disputes that have gone through the competition tribunal and the Federal Court,” Phillips said. “Some of those processes are being removed so obviously the legal work that attaches directly to those will finish up.” ALB www.legalbusinessonline.com

uk report Lovells tie up with French firm Lovells recently formed a co-operation agreement with Paris-based insolvency boutique Kuntz & Associés which will allow the two firms (who have a history of working together) to form a closer bond without entering into a full-scale alliance. The arrangement will also grant Kuntz access to Lovells’ full-service French practice and will permit Lovells to utilise Kuntz’s specialist insolvency expertise.

Herbert Smith raises bar on partner performance Herbert Smith has switched its former ‘make a difference’ initiative for partner appraisals to more formal assessments on their performance, in a bid to place more emphasis on the firm’s international ambition. The new system will include formal feedback from partners in international offices for the first time and assessments on matters such as cross-selling between offices. Partners will also be assessed annually against four distinct areas: client skills, technical skills, people skills and how their performance fits with the firm’s strategy.

The move to monitor partner performance more closely follows a change in the firm’s associate appraisal process made earlier this year. It is a definite step away from the consensual approach introduced in 2007 by senior partner David Gold, clearly sending the message to partners that the expectations upon them will be rising.

Clifford Chance elections approaching Clifford Chance will soon embark on a series of senior leadership elections. David Childs is expected to stand for re-election as the firm’s managing partner. If he is successful, his second four-year term at the firm’s helm would begin in May 2010.

Other management positions soon to be up for grabs include London managing partner, general counsel and practice head roles for real estate and tax, pensions and employment.

Clifford Chance is reportedly also reviewing the position of global litigation and dispute resolution head, which became redundant after the May departure of Mark Kirsch to join global player Gibson Dunn & Crutcher.

UK firms star in big business rankings The Hemscott rankings of legal advisers to FTSE 100 companies has revealed Linklaters and Slaughter and May as the firms currently advising the highest number – 25 – of the UK’s biggest companies. The rest of the top five is rounded out

by Herbert Smith (which saw its FTSE 100 client count drop one from 19 to 18, as it is no longer listed as an adviser to Friends Provident), Allen & Overy (A&O) and Freshfields Bruckhaus Deringer.

Freshfields recently gained two top-ranked clients – the London Stock Exchange Group and Wolseley – and is now running head to head with A&O, with 17 FTSE 100 clients.

 ROUNDUP

• Kiev partner Jared Grubb has replaced Nick Fletcher as managing partner of the Clifford Chance office.

Fletcher will return to Warsaw, where he was managing partner prior to relocating to the Ukraine • Mayer Brown partner Gillian Sproul recently replaced Frances Murphy to head the competition and anti-trust group at the firm’s London office. Murphy led the City team for eight years and left for the London anti-trust practice at Jones Day • CMS Cameron McKenna recently pushed back the start dates for a handful of trainee solicitors, with the seven who were set to qualify on 1 September agreeing to defer their start dates by up to three months • Leading Spanish firm Garrigues, led by Madrid-based corporate restructuring partner Antonio Fernandez, recently launched a specialist restructuring & insolvency group, in response to data from Spain’s National Statistics Institute showing the number of formal insolvency orders has almost tripled compared to last year • Clifford Chance’s Amsterdam head Jan ter Haar has been named as the firm’s new Moscow managing partner, following the announcement that current incumbent Michael Cuthbert plans to retire at the end of the year. CC is also reportedly gearing up to overhaul its management structure in the region, with Moscow and Kiev to come under one remit and Bucharest, Prague and Warsaw under another

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NEWS | news >>

news in brief >> unprecedented power over law firms FOR OMBUDSMAN The promised regulatory overhaul of the legal profession could take the shape of a national legal ombudsman who would have unprecedented power over lawyers. Federal Attorney-General Robert McClelland has set up a taskforce to explore the possibility of establishing an ombudsman who, according to reports, would oversee the handling of complaints from clients, interact with state-based regulators and set standards for all lawyers.

The cost of the new regulator would be borne by the legal industry but the experts say that the overall cost overall benefit of regulation is expected ultimately to lead to significant cuts in the cost of compliance. An alternative proposition would see two separate regulators at the national level with one setting standards for the profession while the other sets standards and resolves disputes.

This would quell any worry of having the same organisation setting standards and enforcing them.

Blake Dawson wins NBN role Blake Dawson has been appointed as legal advisor for the Implementation Study for the Government’s proposed A$43bn National Broadband Network (NBN) project, after a competitive tender process took place.

The firm will be the primary provider of legal services to the national Department of Broadband, Communications and the Digital Economy, in connection with the study. Bill Koeck will lead the Blake Dawson team that will John Carrington also work closely with the study’s Blake Dawson lead advisors McKinsey-KPMG, as well as the NBN project company.

The firm’s managing partner, John Carrington, said Blake Dawson’s selection as legal advisor was a testament to the firm’s strong position in the areas of government, corporate M&A, infrastructure, competition law and telecommunications. The NBN project will be a key economic and policy commitment for the Australian Government for the next eight years.

Firm hopes star shines in campaign Australian law firm Shine has harnessed the pulling power of celebrity legal clerk Erin Brockovich, in an advertising campaign that hit the airwaves recently.

While Julia Roberts’ portrayal of the rags-to-riches class action lawyer on the big screen won her an academy award, Shine management will hope that Brockovich’s own performance on the small screen will win them some lucrative business.

The advertisements are scheduled to run in Queensland, Victoria and Western Australia.

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Energy & Resources >>

China continues Australian Y

anzhou Coal Mining Company’s proposed A$3.3bn takeover of ASXlisted coal player Felix Resources has emboldened Chinese companies looking to acquire a foothold in Australia, with two more deals on the cards.

Baosteel has formed a strategic alliance with iron ore, coal and manganese developer Aquila Resources, while emerging lithium producer Galaxy Resources has just secured an A$130m financing agreement with Chinese private investment company, Creat Group.

“The recent economic slowdown and bi-lateral relationship issues between Australia and China haven’t dented the enthusiasm of China investors to seek out quality energy and resources projects in Australia,” said Corrs Chambers Westgarth partner Adam Handley, who worked on the deals.

“We believe that Australian companies and the economy in general will continue to benefit from that on-going interest.” Aquila’s key assets include Isaac Plains coal mine, Eagle Downs Coal project, and Belvedere

industry >>

Debt collection scams firms L

aw firms across the country have been targeted by a scam where an overseas company asks a firm to act for them in a debt collection matter, and then uses fake cheques to defraud the firm, according to the Law Society of New South Wales.

The Law Society warned of one case in which the debtor company advised of a branch in Australia and had an email from the prospective client indicating that there had been agreement to a part-payment of the debt.

After the law firm agreed to act on the matter, an envelope arrived by express post with US bank cheques: for US$250,000 in one case and US$470,000 in another.

After these cheques were deposited to the practice’s trust account, the client pressed for payment by EFT to an account in an overseas country, less the practice’s retainer fee. This occurred prior to the cheques clearing – which takes longer for overseas cheques than for a cheque from a domestic bank.

M&A >>

Top-tier firms assist with Kirin-Lion J apanese food and beverage company Kirin Holdings will take full control of the trans-Tasman brewer Lion Nathan, after shareholders voted to approve the takeover. Mallesons Stephen Jaques and Blake Dawson

have played a hand in helping finalise the deal, which will see Kirin pick up the 54% of Lion Nathan it does not already own, for A$2.5bn.

The deal is the company’s secondlargest acquisition in Australia

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resource push Coal project (all in Qld), West Pilbara iron ore project (WA), Thabazimbi iron ore project (South Africa) and Avontuur coal project (South Africa). The Galaxy deal involves a share subscription agreement for 19.9% of Galaxy’s expanded capital and a loan facility.

The deal is worth up to A$156m, enabling the development of Galaxy Resources key Mt Cattlin spodumene project, including its Jiangsu lithium carbonate project located in China.

Mallesons partner Nigel Hunt and senior associate Daniel Kirk are advising Aquila in the strategic partnership with Baosteel. Corrs are advising Creat Group for the financing arrangement with Galaxy, and Baosteel on the strategic partnership. Galaxy are being advised

by WA boutique Allion Legal (formerly Pullinger Readhead Lucas). ALB

“In one instance, a practice received scanned PDF documents, including an invoice with an Australian debtor, certificate of incorporation, certificate of quality certification and passport,” the Law Society said in a recent warning posted on its website.

The US bank would not pay out on the cheques in question and informed the law firm that they were not genuine. “Care must always be taken to ensure that any cheque has been cleared and cleared funds are held in the trust account before it can be drawn against,” the warning said. ALB

Nathan takeover (marginally smaller than its A$2.9bn acquisition of National Foods in 2008).

It means that the Mitsubishi-owned group now owns more than A$8bn worth of assets in Australia. ALB

www.legalbusinessonline.com

us report Dewey scores big in M&A Dewey & LeBoeuf’s corporate group recently secured two high-profile M&A mandates. Dewey M&A head Mort Pierce advised Disney on its US$4bn acquisition of Marvel Entertainment; and Richard Climan and Keith Flaum led a team advising eBay on the US$1.9bn sale of Skype.

The firm won a role in both deals as the result of longstanding relationships, highlighting why Dewey has been among the more successful US firms during the downturn in deal flow. Mergermarket’s global M&A survey for the first half of 2009 recently revealed that the US firm moved up to 12th place from 25th in the global deals value table.

for its intake as a result of the dismal economic climate. It later informed successful candidates that their start dates would be deferred until 2011.

The new figures are in stark contrast to the numbers the firm recruited for its 2009 program: 225 summer associates were accepted of whom 95% were offered full-time positions.

The firm will also implement a ‘Skadden Offer Day’, where associates from its 2010 intake will receive their offers on the same day (22 September 2009). The firm will continue to give those who receive offers 45 days to evaluate them, in compliance with guidelines set down by the National Association for Law Placement.

White & Case steppes into Kazakhstan White & Case recently assisted the Kazakhstan government on the creation of new restructuring laws in the country, following the US firm winning a role advising UBS on the restructuring of Kazakhstan’s BTA Bank earlier this year.

The firm also advised Goldman Sachs on the restructuring of Kazakhstan financial institution Alliance Bank. London-based European capital markets co-head Francis Fitzherbert-Brockholes led the advice team.

Kirkland & Ellis effect layoffs in NYC Kirkland & Ellis finally followed suit and joined the list of US firms to make mass redundancies. The firm laid off more than 20 associates in New York in September, following its annual performance review period, citing the turbulent economic climate as the cause. Kirkland had roughly 335 lawyers in the New York office prior to the cuts being made.

Skadden slashes summer associate intake Skadden Arps Slate Meagher & Flom recently decided to reduce the size of its summer associate intake for 2010, following a delay in the start dates of its 2009 group. The firm advised US law schools it would only be recruiting around 100 associates

Brettle appointed to White & Case executive committee White & Case London head Oliver Brettle recently replaced New York partner Dimitrios Drivas on the firm’s executive committee.

He will join Turkish partner Asli Basgoz and New York partner Anthony Kahn on the committee that works under firmwide chairman Hugh Verrier.

ROUNDUP

• Willkie Farr & Gallagher and Paul Weiss recently scored lead roles on the US$2.6bn acquisition of US drugmaker Sepracor by Japan’s Dainippon Sumitomo Pharma (DSP) • Sonnenschein Nath & Rosenthal recently confirmed that the firm had made additional layoffs in September but declined to say exactly how many positions were eliminated • Partners Sarah Cogan and Laura Palma have become the first female partners to be elected to the executive committee at Simpson Thacher & Bartlett in the firm’s 125-year history. The election to the exclusive 12member group is drawn by secret ballot with each partner having one vote • McDermott Will & Emery recently launched a private client practice in its London office, aligning the office with its New York counterpart. The practice focuses on wealth management for private companies, charitable institutions, private individuals and families and also works with the corporate and tax teams

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NEWS | news >>

INDUSTRY >>

Holman Fenwick raids Blakes again for Sydney launch M

aritime specialist firm Holman Fenwick Willan has opened an office in Sydney, headed by former Blake Dawson partner Alex Baykitch.

This will be the firm’s second Australian office, following its 2006 launch in Melbourne, achieved by hiring lawyers from Blake Dawson and Middletons’ transport and trade practices.

Baykitch, who headed Blakes’ international arbitration practice, will be joined in the next month by three other oil & gas and litigation specialists sourced from around the world. Melbourne managing partner Gavin Vallely said the firm had originally planned to open the Sydney office following the Melbourne launch.

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“It was part of our original plan when we started in 2006; it’s just been a question of timing and having the right people to facilitate that.” The Sydney office is intended to strengthen the firm’s client relationships.

“We have a significant client base in Sydney who we’ve been serving from Melbourne,” said Vallely. “We have strong relationships there, and certainly [clients] were indicating that the relationship would be enhanced.”

Baykitch, who has experience in international arbitration and litigation matters, will also serve to develop the firm’s connections with Asia, where Holman Fenwick has offices in the regional shipping hubs of Hong Kong and Singapore.

The firm has been working on many of the major energy & resources deals flowing between Australia, Asia, and South America.

That type of work, said Alex Baykitch Vallely, will undoubtedly Holman Fenwick continue to grow. “We’re already heavily involved in the work coming out of Western Australia and a higher percentage of our business is serving the oil & gas sector there, for both domestic and international stakeholders,” he said.

“There are dozens of projects over there, and the [three lawyers] who will be joining us have significant experience in that sector.” ALB

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Capital Markets >>

Timing not right for NZ public offers D

espite rumours of a major IPO on New Zealand’s stock exchange, it is unlikely that capital markets teams will get a break from preparing rights issues until next year, at the earliest. Buddle Findlay corporate and commercial partner Grant Dunn said that he has done some preliminary work on a couple of potential IPOs but he would be surprised if any new listing took place prior to next year.

“We’ve given initial advice to a couple of companies but I’d be surprised if they went ahead this year,” he said.

“There are certainly some companies thinking about it but having the timing right is absolutely crucial.”

Dunn said the government’s extension of the Retail Deposit Guarantee

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Scheme would also make less capital available to companies considering listing on the NZX. “If that hadn’t been extended, people with deposits would have been ripping money out of the Grant Dunn Buddle Findlay finance companies and the only alternatives are to put it in a bank or the stock market,” he said. However, those people now have time to think about their investment strategy before the guarantee expires in 2011.

Dunn said he thinks companies will continue to come to market with rights issues, to pay down debt and bolster their balance sheet. He also said that

►► Recent NZ capital market deals: Deal

Value A$

Legal advisors

Fletcher Building capital raising

443m

Bell Gully

Fisher & Paykel capital raising

163m

Bell Gully, Clayton Utz, Freehills, Russell McVeagh, Simpson Grierson

Dexus Property capital raising

743m

Freehills, Mallesons Stephen Jaques

Nuplex rights offer

116m

Bell Gully, DLA Phillips Fox, Freehills

Kiwi Income Properties raising

37m

Bell Gully, Russell McVeagh, Sidley Austin, Skadden

M&A activity was starting to turn, with a number of possible deals in the works, but he doubts the timing is right for companies to brave a new listing.

“Would you really want to do it right now or hold off until next year?” ALB

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Environment >>

Top law firms hammer out carbon trading guidelines F our law firms have worked with banks and energy companies to create a set of guidelines to regulate secondary trading, under the Australian government’s Carbon Pollution Reduction Scheme.

Baker & McKenzie, Clayton Utz, Johnson Winter & Slattery, and Mallesons Stephen Jaques were all represented on the Australian Financial Markets Association committee that created the guidelines.

These guidelines also include directions for what should occur if the CPRS fails to go ahead.

However, Johnson Winter & Slattery partner Fiona Melville, who worked on drafting the standard documentation, said she expects the CPRS to pass by Christmas, accompanied by a sharp rise in legal work as businesses initiate their carbon strategies.

www.legalbusinessonline.com

“As soon as it looks like it’s going to pass people will get busy on things they’ve been putting aside,” she said.

“We’ve been talking to quite a lot of people about their carbon strategy… and if they decide to manage their own then most likely it’s going to mean they’ll need a financial services licence.” Melville said that many of her clients are waiting to find out if the legislation is definitely going to pass before applying for a licence – a process which can take up to a year.

“The financial services licence process is quite a lot of work … for clients, but it’s also quite a lot of work for lawyers,” Fiona Melville Melville said.

Johnson Winter She added that while Slattery it’s unlikely that the

government will classify permits as financial products, there is still a good chance that companies looking to operate an active trading book will require a license.

Mallesons’ banking & finance partner, Scott Farrell, who chaired the sub-group of AFMA’s carbon markets committee which developed the documentation, said that some companies are already looking to trade carbon credits to mitigate risk.

“The possibility that there could be a price for carbon in Australia is a risk that those entities have to manage now,” Farrell said.

“The compromise between allowing people to enter into transactions now, even when the legislation has not been enacted, was building in a provision to allow a trade to fall away if there ends up being nothing there to deliver.” ALB

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Firm Profile

NEWS | news >>

Buddle Findlay

NZ COMMENTARY

Supreme Court affirms limits on Commerce Commission’s section 98 powers

T

he Supreme Court recently issued a timely reminder to the Commerce Commission of the limits of its powers to issue notices requiring the provision of information and documents.

On 26 August 2009, the Supreme Court gave its judgment in AstraZeneca Limited v Commerce Commission, confirming that such a notice served on AstraZeneca Limited was ultra vires and invalid.

Limits on the Commission’s powers Section 98 of the Commerce Act provides that the Commission may require persons to supply information or documents or to give evidence, where the Commission considers it necessary or desirable for the purposes of carrying out its functions and exercising its powers under the Act. Although the AstraZeneca case is fact-specific, the Supreme Court decision provides a strong reminder of the core requirements for a section 98 notice: • the Court reiterated that the Commission can use its power to issue notices under section 98 only for the purposes authorised expressly or impliedly by the Commerce Act; • the Commission’s purpose must be the investigation of some activity which may be unlawful under the Act; • there must be a reasonable basis for the Commission to believe that there may be undiscovered facts that could give rise to a contravention; • the information sought must be related to the particular subject matter that gives the Commission jurisdiction to investigate; and • the notice must be justified on the basis of the Commission’s knowledge of the matter it is investigating at the time of the notice (i.e. the Commission cannot use the notice to embark on a “fishing expedition” to find information on which it can retrospectively base its power to issue such a notice).

The Court affirmed that if and to the extent that the Commission exceeds its section 98 powers, the notice issued will be of no legal effect and can be

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disregarded by the recipient.

It is regrettable that the Commission has had to receive yet another judicial reminder of the limits of its powers to require businesses to provide information. In 1993, its general inquiry into the telecommunications industry was successfully attacked, with the High Court and Court of Appeal clarifying when the Commission can lawfully use its section 98 powers.

Since then the Commission has required participants in the electricity industry to provide extraordinary amounts of information under section 98 notices of a “fishing expedition” nature, to allow it to conduct a largely fruitless search for contraventions of the Commerce Act. The conclusion from the Commission’s report of that investigation which received the most attention, i.e. that electricity companies had gouged $4.3 million of monopoly profits from consumers, had nothing to do with a contravention of the Commerce Act, and has now been discredited.

The AstraZeneca case In the AstraZeneca case, the Commission required AstraZeneca (a pharmaceutical supplier) to provide the Commission with documents and information in relation to an investigation into allegations that, during negotiations with Pharmac, AstraZeneca tied the proposed provision of one product to the continued supply of another product in breach of the Commerce Act. AstraZeneca applied for judicial review of the Commission’s decision to issue the notice.

AstraZeneca’s application was dismissed by the High Court and the majority of the Court of Appeal. But the Supreme Court found that there was no proper basis for the Commission to have issued the notice.

Validity of notices and difficulties for businesses The AstraZeneca case is an important reminder to the business community that the Commission’s powers to require information are limited.

Any business faced with a section 98 notice should consider the validity of the notice carefully (and, if necessary, seek advice): • Does the notice contain an adequate statement of what the Commission is investigating?

• Is the information being sought by the Commission related to that investigation?

• Is the investigation authorised under the Commerce Act? If the answer to any of the above is no, the notice may be invalid.

Businesses of course face very difficult decisions as to whether or not to comply with a notice that is suspected to be invalid. On the one hand, compliance with section 98 notices is commonly extremely burdensome and costly for businesses, and diverts a company’s resources away from its business.

On the other hand businesses will fear that a refusal to comply with a notice, even if it may be invalid, will imply guilt.

Businesses will therefore often choose the onerous task of complying with the notice to avoid such an implication and maintain a good working relationship with the Commission.

This gives the Commission a considerable opportunity to use section 98 notices when there is no justification for doing so. The AstraZeneca decision should therefore be welcomed as a timely reminder to the Commission of the limits of its powers.

This article was written by Tony Dellow, a partner in the Wellington office of Buddle Findlay, one of New Zealand’s leading law firms.

Tony is the lead partner of Buddle Findlay’s public law practice, and is one of New Zealand’s leading public lawyers.

He specialises in competition law and Tony Dellow, Buddle Findlay regulatory processes.

Tony can be contacted by phone: +64 4 498 7304 or email: tony.dellow@buddlefindlay.com

Australasian Legal Business ISSUE 7.10

NEWS | news >>

010 0 010 0111010 01101010 0101010 0101011 01010111010111010 0 01011010 0110101010 1001 0100010011101001101010010101001 IT report 0101101010111010111010 0 01011010 01101 Office Documents on your iPhone

For those of you already addicted to your Apple toys, QuickOffice, a company with a long history in bringing office documents to handholds, have released their latest application for the iPhone.

The application allows you to edit Microsoft office documents and to view a wide range of file formats including : • Images: .jpg, .jpeg, .png, .tif, .tiff, .gif, .svg • Microsoft Word: .doc, .docx • Microsoft Excel: .xls, .xlsx • Microsoft PowerPoint: .ppt, .pptx The really useful features are in the Quickword and Quicksheet applications which allow you to view and edit Word and Excel documents respectively. Both retain almost all of your native document formatting and enable the funky “pinch” feature of iPhones to zoom into your document or spreadsheet.

The only significant downside is that you need to mail documents through the QuickOffice service to view them, however for $10 it’s definitely worth the price.

Run your own mobile base station?

For all of the law firms copping huge mobile bill from lawyers who would rather call from their Blackberry than from the office phone in front of them, help may be on the way. Vodafone (in the UK at least) is now offering “Femtocells”.

Once the technology becomes more widespread (and not tied to a phone provider) you’ll be able to plug the device into your network where it will act as a minimobile base station. Your lawyers will be able to use their mobiles to their heart’s content while in the office, with all calls being parsed through your regular phone system.

On the other hand the technology may be short-lived, with many phones now featuring wifi connectivity which allows VOIP calls to be made through the office wifi network (well, for those firms who have embraced wifi anyway).

Aderant join the DMS crowd

In the world where Aderant, LexisNexis, Open Text and Thomson Elite all want to “own your legal desktop”, Aderant have taken a step forward by purchasing document management company StarLaw. On the plus side, the move provides Aderant with another tool in the “total solution” toolkit. On the downside, Starlaw have mainly focused on the legal business process management market, having almost no presence in the law firm DMS space.

Aderant may have been better off looking to purchase a Sharepoint integrator like Colligo or Macroview, with the majority of firms moving to OpenText or Worksite at the big end or Sharepoint at the small to medium end.

Queensland DPP go live with Visualfiles

The Queensland Office of the Director of Public Prosecutions has gone live with their new case management system based on LexisNexis Visualfiles.

The system will cater for 250 users spread across multiple cities and regional locations and will deal with the office’s caseload of over 12,000 files per year.

Cisco add low end video conferencing with Tandberg purchase

For those law firms that can’t afford the $300,000 plus price tag on Cisco’s high end “TelePresence” video conferencing system, their recent acquisition of Norwegian firm Tangberg may be of interest.

TelePresence is renowned for its amazing true to life clarity, but the high price tag and massive bandwidth requirements have kept it out of reach of most firms.

Cisco tried to tackle this earlier in the year with the release of lower end TelePresence units, but the $90,000 price tag failed to compete with Tandberg, Polycom, LifeSize and others.

The new acquisition will make the choice of video conferencing systems much harder for local law firms, who have traditionally standardised on Polycom systems.

Alphawest move towards the cloud

Alphawest are looking towards hosting law firm’s production applications with their demonstration of Cisco’s new servers. The Cisco product is designed for data centre hosting using virtualised servers, networking and storage.

Alphawest, together with their parent Optus are looking to gradually move firm’s local infrastructure onto their data centres using the Cisco hardware and VMWare’s vSphere virtual environment.

The decision to use VMWare’s product seems a smart one, as the majority of firms are already using VMWare in their local environments. The new vSphere platform should allow firms to seamlessly move their local servers to the data centre with almost no downtime, providing they have a large enough data connection to handle the transfer.

Chris McLean is a specialist in legal technology, having worked for numerous law firms both as a lawyer and support services director. You can find his website here: www.auslegal.com or contact him on: chris.mclean@auslegal.com

PDFDocs release update

Local IT company PDFDocs have released another update to their PDFDocs Desktop product, bringing it up to version 3.1. The new version allows for documents to be published to a document management system at the same time as uploading to a SharePoint server.

The update also provides PDF metadata cleansing and PDF/A capability, a requirement for compliance with most archiving standards.

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NEWS | appointments >>

appointments ►► Lateral hires Name

Practice areas

Organisation coming from

Organisation going to

Troy Doyle

Distressed investments

Clifford Chance

Deacons Australia

Sophie East

Commercial litigation

White & Case

Bell Gully

Geoff Farnsworth

Transport & commodities

Norton White Lawyers

Macpherson+Kelley

Nicole Fauvrelle

Occupational health & safety

Freehills

Hall & Wilcox

Kim Grady

Occupational health & safety

Freehills

Hall & Wilcox

James Hamilton

Insolvency

RBHM Commercial Lawyers

Holding Redlich

Philip Hoser

Restructuring & insolvency

Freehills

Jones Day

Grant Levy

Commercial litigation

Rigby Cooke

Lander & Rogers

Nick Lodder

Banking & finance

Kensington Swan

Minter Ellison

Josh Marchant

Construction & infrastructure

Maddocks

Herbert Geer

David Richardson

Banking & finance

Norton White Lawyers

Bartier Perry

Penny Stevens

Occupational Health & Safety

Freehills

Hall & Wilcox

Julie Talakovski

Banking & finance

Norton White Lawyers

Bartier Perry

Helen Vickers

Public sector

Railcorp

Henry Davis York

►► Promotions Name

Practice areas

Organisation

Graham Beever

Public law

Minter Ellison

Bruce Hambrett

Insolvency

Baker & McKenzie

Patricia Watt

Commercial property

Minter Ellison

Freehills

Hall & Wilcox

Hall & Wilcox land OH&S team Melbourne firm Hall & Wilcox has managed to land an entire Freehills occupational health & safety team, led by partner Penny Stevens. Comprising special counsel Nicole Fauvrelle and lawyer Kim Grady, the team is joining the firm from Freehills’ Penny Stevens Melbourne office.

The additional team now sees 16 fee-earners in the firm’s employment & workplace relations practice area. Hall & Wilcox managing partner, Tony Macvean, said the addition of a dedicated OH&S practice will improve the chances of attracting new clients, as well as the service offering to existing clients. He said the team was considered to be “one of the leading” teams in the country.

Freehills

Jones Day

Jones Day plans full-service Sydney office In a move towards building its Sydney presence into

26

a full-service offering, JOnes Day has recruited the head of Freehills restructuring & insolvency practice, Philip Hoser. Hoser told ALB he thinks this could be the first of a number of US firms ramping up their presence in Australia similar to the way they moved into London in the late 80s and early 90s.

“I don’t think it will happen to the same extent as London because the market isn’t nearly as deep but it’s absolutely clear to me that Australia, both by itself and as a regional hub, is an important place for these US firms to be,” Philip Hoser Hoser said.

Norton White

and commercial transport and commodity law.

Also joining M+K are two lawyers and a support team who will work for the transport & commodities practice group, initially to be based in Sydney.

Geoff Farnsworth

Clifford Chance

Deacons

Deacons to launch distressed investment team Deacons Australia has recruited Troy Doyle from Clifford Chance to head up a team focusing on advising clients on distressed investments.

Doyle was previously the restructuring practice leader for South-East Asia at CC but decided to join Deacons, in light of their upcoming merger with Norton Rose Group. He will work out of Deacons’ Sydney office as special counsel within the firm’s Troy Doyle insolvency & restructuring group.

“Obviously I was aware of the merger with Norton Rose and a lot of my key clients are key clients of Norton Rose as well,” Doyle told ALB. “Norton Rose has a strong relationship with financial institutions, which fits nicely into my skill base and the distressed investments and restructuring experience that I have.”

RBHM Commercial

Holding Redlich

Holding Redlich appoints insolvency partner Holding Redlich has recruited James Hamilton to be lead partner of the firm’s Sydney insolvency team within its commercial dispute resolution practice.

“The market has obviously started to get more heated for insolvency people given the James Hamilton financial crisis so Holding Redlich approached me for a discussion,” Hamilton said. “They wanted to expand insolvency and I thought if you’re going to do it, now’s the time.”

Macpherson Kelley

M+K forms transport & commodities practice Macpherson+Kelley Lawyers has formed a national transport and commodities practice after recruiting Geoff Farnsworth who joins the firm as principal – M+K’s partner equivalent. Farnsworth has joined the firm from Norton White Lawyers, in Sydney. Farnsworth’s practice focuses on litigious

Norton White

Bartier Perry

Continued growth for Bartier Perry Bartier Perry continues its growth strategy in key practice areas with the appointment of a team of banking & finance recoveries specialists from Norton Australasian Legal Business ISSUE 7.10

NEWS | appointments >>

www.legalbusinessonline.com

27

NEWS | appointments >>

White. David Richardson will join as executive lawyer, the firm’s partner equivalent, along with Julie Talakovski who comes in as a senior sssociate.

The two specialise in banking & insolvency-related litigation, having acted extensively for banks, financiers and insolvency practitioners.

Maddocks

David Richardson

Herbert Geer

Herbert Geer recruits construction partner Public–private-partnership (PPP) and PFI specialist Josh Marchant has joined the Melbourne construction & infrastructure team of Herbert Geer. Marchant will lead the team, working with recently appointed major projects partner Andrew Venables on projects such as the A$1.1bn Royal North Shore Hospital development.

Herbert Geer said the members of the C&I team have successfully transitioned their major clients across to the firm in the year since the team was formed. The transition has enabled Herbert Geer to grow the practice by more than 30% in that time, due to its increased resources.

Marchant’s appointment is a further step towards the firm’s goal of creating a fully integrated east

28

coast construction and projects team. Joining the firm from Maddocks, he has worked on a number of major projects and is currently acting for one of the tenderers (Thiess-Degrémont joint venture) for the Adelaide Desalination Project.

Marchant is also advising the design and construct JV as part of one of the bidding parties for the A$750m Peninsula Link road project being procured by the Victorian government.

Railcorp

Henry Davis York

HDY boosts infrastructure team Henry Davis York has further boosted its public sector group with the addition of Helen Vickers as a new partner to the firm.

This appointment follows others made in this area, most recently partners Steven Blanch and Michael Wright – who also have strong backgrounds in infrastructure and major projects.

Vickers joins the firm having practised as head of legal within public sector organisations for more than a decade, including five years at State Rail and Railcorp, three years at the RTA and two years at both the Transport Infrastructure Corporation and the Olympic Roads Authority.

INsurance >>

Tribunal overturns APRA ban of QC

T

he Administrative Appeals Tribunal has reversed a decision of the Australian Prudential Regulation Authority (APRA), which had disqualified Robert Stitt QC from acting as a director or senior manager of an Australian general insurance company. Stitt, a Queen’s Counsel and member of the NSW Bar, was a nonexecutive director of HIH Insurance and a member of the Audit and Human Resources sub-committees of the HIH Board. His disqualification was based on the view that Stitt had failed to act with due care and diligence, but APRA’s case did not include any adverse contention on his character.

Stitt’s application was supported by evidence attesting to his integrity, professional competence, experience and diligence in the legal profession and insurance industry. ALB

Australasian Legal Business ISSUE 7.10

NEWS | appointments >>

INDUSTRY >>

Pay up, profit down at Integrated Legal

I

ntegrated Legal Holdings reported a 62% drop in profit after tax for the 2009 financial year – as salaries for eight principals at West Australianbased Talbot Oliver, one of the member firms, almost doubled.

The group’s profit dropped to less than A$600,000 after reporting a profit of more than A$1.5m in the previous year. This figure represented just 4% of operating revenues – as opposed to 14% of operating revenues for the previous period.

Under their new wage agreements, the principals at Talbot Oliver have agreed to stay on for four years – a move that managing director Graeme Fowler is confident will pay off.

“While these new arrangements provide a significant increase in annual operation costs of the company, the directors consider the finalisation of this matter to be a critical initiative and an extremely positive development for the company,” Fowler said in the company’s report.

Integrated Legal’s total wage bill has doubled from A$5m at the end of 2008 to A$10m this year, due to an increase in compensation for other executives. The increased Graeme Fowler wage bill hampered profit growth and undermined a 59% increase in operating revenue of A$16.95m. Integrated Legal consists of Brett Davies Lawyers, Argyle Lawyers and Talbot Oliver, as well as internet-based legal document and publishing service Law Central. ALB

Construction >>

Construction group signs up ADR

U

K-based global construction professional body, The Chartered Institute of Building (CIOB), and the Australian alternative dispute resolution organisation, the Institute of Arbitrators & Mediators Australia

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(IAMA), have signed an agreement in Sydney to promote construction law, to take effect immediately.

Together the organisations will utilise arbitration, mediation, adjudication and other ADR methods.

President of IAMA, the Hon Michael Kirby, said an advantage of ADR was it can “cut through the legal niceties and go directly to the common sense or practical solution.” ALB

Michael Kirby

29

profile | managing partner >>

alb 2009 managing partnerS series

Michael Rose, Allens Arthur Robinson

Rose without thorns Mallesons, Freehills and Allens might be the cream of the local legal profession, but AAR chief executive partner Michael Rose believes his firm is the crème de la crème.

Renu Prasad finds out why

M

ichael Rose has both good and bad news. The bad news is that he isn’t predicting a recovery for the legal services sector any time soon. “It is our sense that activity across the market as a whole is down.

We would expect that things will stay relatively flat or decline further over the next 12 months,” he says.

The good news, at least as far as AAR is concerned, is that the firm’s core practice areas such as energy & resources, banking & finance and insolvency have remained strong.

The firm has chalked up a string of landmark deals over the past year, including BHP’s bid for Rio Tinto, the St George/Westpac merger and the BHP/ Rio Tinto iron ore joint venture.

“Our growth is driven by significant levels of activity among a large proportion of strategic clients and not by one or two very large transactions,” says Rose. “We’ve had a year of what we believe was above-market growth and increased market share.”

It’s an intriguing claim which calls for further elaboration, but when Rose

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is asked to put a figure on revenue, his normally amiable face becomes stern.

“We don’t talk about our numbers outside the firm, that’s our policy,” he says. “That’s the private information of the partners who own the business and we don’t think it’s something … to talk about. Our clients don’t want to read about how much money we’re making.”

Surely it must be difficult to resist the temptation to talk about figures if Allens is outperforming its rivals? “I’m resisting it now,” Rose says firmly.

Regional plans

While AAR has offices in predictable Asian locations such as Hong Kong, Singapore and Shanghai, it has also established itself in lesser-known markets – Vietnam, Papua New Guinea and Indonesia.

“Our long-term vision for the firm is built around the recognition that over the next 20 years, the region we live in will become the most important, politically and economically, in the world,” Rose says. “We believe we have the real skills which are crucial to growth and we have a footprint which

spreads right across the region. We’re in the right places at the right time with the right practice offerings.”

Rose’s focus on Asia contrasts with the expansion plans of other firms: the ambitions of Deacons, which has linked with UK-based firm Norton Rose; and Mallesons, which in the past has flirted with the likes of global giant Clifford Chance.

“Europe and the US are very mature markets which are highly competitive and already have many excellent firms,” says Rose. “The emerging markets of Asia present a real opportunity to be market leaders.”

While he acknowledges the importance of China, Rose notes that this market is starting to present the same challenges as the US and Europe. “It is a very competitive market and local firms are attaining a degree of expertise and sophistication.

Over time it will become increasingly difficult for foreign firms to compete – whereas in South-East Asia, in markets such as Indonesia and Vietnam, there is the opportunity to be dominant.”

31

profile | managing partner >>

“The Asia practice is more exposed to the downturn because we don’t have the counter-cyclical hedge – but on the other hand, the recovery has been quicker in Asia,” Rose explains.

Friendly interests

“The Asia practice is more exposed to the downturn because we don’t have the countercyclical hedge – but on the other hand, the recovery has been quicker in Asia ” 32

Whether through a lack of investment or depth – or maybe just poor timing – other Australian firms have had a patchy history in SouthEast Asia, but Rose is confident that AAR has the right approach.

The firm’s workload includes intraAsia business with no Australian component, and it has worked to offer both international and local advice where possible. In the boom years, as much as 15% of revenue was derived offshore, but Rose says that this declined last year as a result of the financial crisis.

Rose regards his firm’s presence in South-East Asia as a strong differentiating factor from other top-tier rivals. “If you compare us with Freehills and Mallesons, what we have is an Asia network – which they don’t. Mallesons has a strong presence in North Asia, we have a presence in North Asia and one of the strongest presences of any firm in South-East Asia.”

A particularly interesting aspect of AAR’s Asia operations is its nonexclusive “best-friends” relationship with Slaughter and May. “One thing that Slaughter and May has done with its best-friend mechanism is that it has brought together a group of the leading independent firms in Europe,” says Rose.

“Our relationship with Slaughter and May involves us in a network of leading firms and that relationship proves to be very beneficial for us in Asia. So you might have a leading firm in Europe which wants to do something in Indonesia or Vietnam or Singapore but doesn’t want to send work to the likes of Freshfields or Allen & Overy because they compete in their local market. So we are often chosen as the Asian network for the leading independent European firms.”

On the home front, Rose is a voracious reader and can be found cycling or kayaking when time permits.

His very first job was working as a cleaner in a swimming centre, for the princely consideration of $3.50 an hour. “It was a rip-off, even back then,” he laughs. The chief executive partner describes the management of AAR as his day job, while his “night job” involves the chairmanship of ChildFund Australia, an independent and non-religious international development organisation that works to reduce or eliminate poverty for children in the developing world.

And with three children of his own, Rose often finds himself involved in “Year Seven science projects and Saturday morning sports”. ALB Australasian Legal Business ISSUE 7.10

| practice | practice FEATURE FEATURE management management >> >>

Joining the partnership

Six common models for partnership

1 4

“No goodwill, net assets” model: The incoming partner pays a set amount to existing partners for his or her share of the “net assets” of the firm, excluding any value of goodwill.

The partner is then paid out his or her share of “net assets” of the firm, excluding goodwill, on retirement

“No buy in/ buy out” (funded) model: Same as model three, but this one involves contribution to funding of the firm by the incoming partner, which is often organised by the firm’s bankers

2 5

“Goodwill” model: The incoming partner pays a set amount to existing partners for his or her share of the goodwill and other net assets of the firm. The partner is then paid out his or her share of goodwill and other net assets of the firm on retirement

“Change in net assets” model: Partners only pay for net asset deficiencies, or are paid by the firm for net asset growth when they leave the partnership, based on changes in net assets for the time they were a partner

3 6

“No buy in/ buy out” (non-funded) model: The incoming partner does not have to pay for his or her share of the firm’s assets, but are not entitled to be paid out for his or her share of assets upon retirement

Bespoke: Can be variations of the above, some involving ‘sweat equity’ (credit for work done in the firm as a non-partner)

Source: ALB thanks Mark Pistilli for his advice on this summary and accepts responsibility for any inaccuracies

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Australasian Legal Business ISSUE 7.10

FEATURE | practice management >>

The mechanisms through which lawyers become partners in a firm are many and varied.

ALB explores some of the more common – and controversial – methods at play

B

eing invited to join the partnership might be an enduring ambition for many young lawyers, but promotion usually comes at a price. Firms have many ways of ensuring that new partners pay their due – and some are more onerous than others.

Goodwill The practice of charging an incoming partner for the “goodwill” of a firm is controversial, and not just for the new partner. Ultimately it is the firm that must bear the cost of paying out the partner upon retirement.

Consultant Duncan Hart, who was formerly the Melbourne managing partner of Dibbs Abbott Stillman, says that the need to pay out retiring partners is an increasingly common reason behind firms going into debt.

“There are some firms where the demographic profile means that you can have a whole cohort of partners approaching retirement,” he says.

This is less of an issue for top-tier firms, which have largely adopted an “easy in, easy out” system where partners are not required to pay for goodwill, although payments for other reasons may be required. But should incoming partners be required to pay for goodwill at all?

One firm which says they shouldn’t is mid-tier firm Mills Oakley, where CEO John Nerurker has strong views about the idea of paying to join a partnership. “I think that unless you are joining a branded, top-tier firm, the goodwill of a firm actually belongs to its partners,” he says. “Laterally hired partners bring their own goodwill into a firm, and they take it away with them too – as is evidenced whenever clients follow a partner.”

It goes to the heart of that old chestnut: do clients come to a firm www.legalbusinessonline.com

because of the firm brand, or because of the individual partner with whom they are dealing? Nerurker has definite views on the subject. “Clients don’t come to a mid-tier firm because of its logo. It’s because of a personal referral, or the relationship with a partner or partners. So why should a new partner have to pay the firm for goodwill that is already theirs? ” Mills Oakley has a different costing model for incoming partners. “There is a modest payment made by incoming equity partners, however it’s not a payment to existing partners for their goodwill, and is repayable in full when they retire,” says Nerurker.

“These monies are paid for the simple reason that an incoming practice results in work-in-progress and debtors that require funding. So in effect it’s a loan to the firm by the incoming partner to fund working capital, and not payments to current partners.”

Other methods Some have observed that the goodwill system is not particularly prevalent in the legal industry.

“My impression is that it is uncommon for law firms to require new partners to physically pay for goodwill, as opposed to payment through ‘sweat equity’,” says Mark Pistilli, managing partner at Chang, Pistilli & Simmons and the former managing partner at Atanaskovic Hartnell. “Most practices see partners as only stewards of the firm for a time and then handing it to the next generation.” However, there are other reasons beyond goodwill and working capital for a new partner to make a financial contribution to the firm, on joining a partnership.

“If new partners are to share in existing assets of a firm, rather than

just sharing in assets which are created after they join, then it is unlikely they will be gifted such an interest,” says Pistilli. ”For example, a national Mark Pistilli, Australian firm would Chang Pistilli & generally carry tens of Simmons millions of dollars worth of work-in-progress at any one time, and in theory a new partner would be entitled to a share. So the new partner would either have to pay for that share or not share in existing assets.”

“Many firms, however, operate on a “no buy-in” and “no buy-out” model, in which there is no right to one’s aliquot share of net assets on leaving a partnership, as the price for not paying for a share of assets on the way in,” he says.

Pistilli notes that a variation of this approach is a “change in net assets” model, which sees partners only pay for net asset deficiencies, or be paid by the firm for net asset growth when they leave a firm, based on changes in net assets for such time as they are partners. He observes that many large and international professional services firms operate in a way where new partners provide funding, generally organised through the firm’s banks, which is repaid when the partner leaves the firm. ALB

“So why should a new partner have to pay the firm for goodwill that is already theirs?”

John Nerurker, Mills Oakley 35

FEATURE | practice management >>

Elephant in the room The thorny issue of how – and why – legal practices find themselves in debt

L

awyers normally like a bit of publicity, but there’s one particular subject about which you won’t find firms issuing press releases. Law firm debt is the elephant in the room – always there, but rarely discussed in the open.

From national firms to the mid-tier and boutiques, the mechanisms for incurring and controlling debt are a key part of prudent administration.

“Firms may raise debt for specific purposes, such as to buy new premises or to buy in teams of lawyers, but

generally law firms raise debt … to fund working capital and regular partner draws,” says Mark Pistilli, who is Chang, Pistilli & Simmons’ managing partner. He notes that not all law firms need to operate a model which involves debt facilities, citing

Four common ways law firms get into debt

1

Acquiring firms with pre-existing debt: Firm acquisitions are usually announced as “mergers” and firms are notoriously secretive about the exact details of the arrangement.

However, there is no doubt that many firms are carrying debt as the result of an acquisition. The acquiring firm may well decide that the long-term investment justifies taking on this debt as part of the merger

2

Paying out more than you earn: This is a particular danger in the situation where a firm has acquired another firm, especially one with pre-existing debt.

Since acquisitions are often a longterm investment, the move may not pay dividends for years.

However, since the equity partners are accustomed to a particular level of income, the firm decides to pay partners before all the profit is safely in hand

3

making Ex-gratia payments: A partner who initially made a payment to the firm as a pre-condition to joining the partnership will expect to be repaid his or her share of the goodwill upon retiring from the partnership.

However, newer partners may not agree that they should pay off the retiring partner, particularly in a situation where the retiring partner has been underperforming and the firm has not benefited from business relative to the level of drawings. The goodwill payment made to the retiring partner then gets “parked” and accumulates, as additional partners retire and receive their payouts.

The remaining partners agree to service the interest on this particular collection of “goodwill” as part of the firm’s obligation, but they do not consider the principal debt as their problem so they do not repay it from their share of profits

4

allowing Deferred payment of fees: This is a particular issue for family law or personal injury practices, where the client cannot afford to pay fees until settlement.

The firm must carry the client’s expenses, often for an extended period, until the matter is concluded

Source: ALB thanks John Nerurker for his advice on this summary and accepts responsibility for any inaccuracies

36

Australasian Legal Business ISSUE 7.10

FEATURE | practice management >>

his own firm as an example. CP&S only distributes profits to partners when there is available cash to do so.

However, Pistilli suspects that this policy is employed by the minority firms. It requires partners who are financially self-sufficient or who individually raise debt outside of the firm structure, which is not ideal. “Some level of debt or debt facilities is needed to smooth out cash-flow in most professional service organisations, given the timing differences between revenue collection and the payment of expenses,” he says.

Musical chairs One reason firms get into debt is because they need to make payments to retiring partners under certain partnership models. Due to the controversial nature of this type of debt, it does not necessarily follow that partners will see it as their responsibility to pay it off – particularly if they dispute the circumstances which lead to the debt.

A common example would be a payment made to a retiring partner who has not, in the view of his or her colleagues, contributed satisfactorily to the partnership in the years leading up to retirement.

“Because debt is often ‘parked’ when partners can’t agree how or in what proportion to repay it, managing debt almost becomes a game of musical chairs,” says Mills Oakley CEO John www.legalbusinessonline.com

Nerurker. The game can continue as long as the firm is expanding and adding new partners who offer debt and interest guarantees.

But if the firm is contracting, no one wants to be the last man standing. “It can become a case of the last partner standing being responsible for this weight of amassed debt that he or she may have had nothing to do with accumulating,” Nerurker explains.

This was the case with international firm Heller Ehrman – the departure of key partners can cause a snowball effect which may ultimately send the firm into a downward spiral. It has been suggested by some that the demise of Heller Ehrman was due to the departure of a certain number of partners, constituting a default in Heller’s line of credit with its bank, effectively triggering liquidation.

Prosperous expansion The current consolidation environment also presents challenges for law firms’ balance sheets. Those who are looking to expand will inevitably need to outlay cash to bring on lateral hires or facilitate a merger, and it may take some time for the benefits of this growth to become apparent in the firm’s revenue figures.

“When you employ new lawyers, obviously your wages and superannuation bill goes up immediately, but it could be three to six months before they generate

any fees,” says Michael Kemp, partner-in-charge of Brisbane firm Rostron Carlyle’s personal injuries practice.

“But growing a firm is a long-term investment John Nerurker, – that’s the nature of Mills Oakley the business.” Mergers compound the problem of payments to retiring partners, as they usually result in a certain percentage deciding to leave the firm, precipitating a round of expensive payouts. “It’s almost inevitable – and desirable – that some people will leave,” says Duncan Hart, former Melbourne managing partner of Dibbs Abbott Stillman.

“Firms may raise debt for specific purposes, such as to buy new premises or to buy in teams of lawyers, but generally law firms raise debt ... to fund working capital and regular partner draws” Mark Pistilli, Chang, Pistilli & Simmons 37

FEATURE | practice management >>

“Mergers usually happen at a very high cost, when you take into account the people that leave and then the cost of rationalising premises, terminating supply contracts and so on.” In response to these challenges, some banks have sought to make tailored offerings for law firms.

Macquarie Bank, for example, has assisted firms in the funding of mergers, acquisition of practice groups, large capital purchases (such as office buildings and practice management Duncan Hart, consultant systems) and general organic growth requiring working capital.

Run a tight ship Nerurker believes robust accounting practices, combined with strong client relationships, minimise debt levels – even in an economic downturn. If Mills Oakley’s continual appearance in the ALB Fast 10, an annual listing of the fastest-growing firms in the country, is anything to go by, the strategy is working.

“First and foremost, never distribute more than the firm’s profit in any one year,” Nerurker advises. “You can’t distribute more than you are making without going into debt or relying upon additional capital from partners.

It’s also a key to our financial success 38

that pretty much all our client base consists of commercially-oriented businesses and individuals. We ensure, particularly in an economic downturn, our clients have the ability to pay before they incur any fees.”

One problem – no doubt as old as legal practice itself – is the situation where a firm is unable to secure payment of fees in the short-to-medium term. This is best demonstrated in family law and personal injury areas, where a party may have a solid prospect of winning a substantial judgment, yet have no funds to pay his or her bills while the litigation is in process.

The law firm is effectively carrying the party’s costs – not a good look if the firm needs to approach its bank for more funding. It’s what Brendan Lyle of litigation funds provider ASK Funding refers to as a “lazy balance sheet.” “A small-size firm might have half a million dollars in fees outstanding, which counts against them when they try and raise more money on the overdraft,” he says.

This familiar problem is made worse by the economic downturn. “I know of many firms that have tried to increase their overdraft but have been knocked back,” says Rostron Carlyle’s Kemp.

“It’s not because the business is bad – it’s because banks are more wary.”

Lenders seem to confirm this is the case. “Much has changed during the

last 12–18 months in terms of the business and financial environment,” says head of legal industry at Macquarie Relationship Banking, Terry Lyons. “It would Terry Lyons, be fair to say that the Macquarie lending practices of some Relationship Banking [banks] may have been tightened, as appetite for risk decreases and cost of funding increases in uncertain times.”

Value your assets Some banks have traditionally only understood law firm assets in a conventional sense – items such as furniture or technology – and have been slow to understand that files also represent a commodity in themselves.

ASK Funding’s Lyle says this is a gap in the market which organisations like his are seeking to fill by lending directly to the litigant, thereby circumventing the need for firms to carry outstanding costs on their balance sheets.

Banks themselves emphasise their previous relationship with the firm and the confidence they have in the integrity of the balance sheet. “The banks will lend to firms based on their assessment of the work-inprogress,” Lyons says. Law firms may have to jump through the hoops to gain funding, but ultimately the Australasian Legal Business ISSUE 7.10

FEATURE | practice management >>

“Because debt is often parked when partners can’t agree how or in what proportion to repay it, managing debt almost becomes a game of musical chairs” John Nerurker, Mills Oakley relationship is reciprocal. “[Macquarie Bank’s] approach to our clients is relationship-based, meaning that we work hard to be a banking partner to our clients for the long term and to really understand the nuances of their business,” says Lyons. “This way we get to know our clients, their business and both the challenges and opportunities that they may face at any point in the market cycle. Our lending guidelines have remained consistent throughout the market cycle and this provides certainty to our clients.”

Personal injury is another practice area where litigants typically cannot afford to pay before settlement, leaving the firm to cover out-of-pocket expenses such as medical reports.

“You might have a client who is potentially entitled to a very large award, but is under pressure to settle for substantially less. We provide the funding to see them through the litigation,” says Lyle.

Michael Kemp oversees Rostron www.legalbusinessonline.com

Carlyle’s personal injury practice and agrees with this approach. “On average, it would be at least 12 months before the firm sees any fees from a normal claim,” he says. “During that time, you also need to outlay perhaps A$3000 for reports and other expenses. Multiply that by the number of files and you get the picture.”

When Kemp was approached by ASK Funding with a proposal to lend money direct to clients, he jumped at the chance to free up this funding and reinvest the money in the practice.

“We’ve been able to employ additional lawyers, expand into new areas and develop the firm’s practice,” he says.

Larger firms tend not to pursue the family law and personal injury market, in part because of these balance sheet issues. “Having a family law practice in a large firm also creates issues around commercial conflicts,” says Lyle, noting the number of boutique family law firms that have split off from large firms as a result. ALB 39

ALB guide: energy & resources 2009

Energy & Resources state of the market

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

METHODOLOGY In the preparation of this report, ALB conducted telephone interviews with Australian and New Zealand companies and law firms. Australian and New Zealand companies were primarily those listed in the ALB Deals Centre and on submissions received by firms. In addition, ALB sought opinions from Australian and New Zealand partners. Please note that in the state of the market local firms are listed first followed by national firms, arranged according to feedback received. Interviews were mainly conducted in the two-week period from 7 to 16 September 2009.

CONTENTS 40.

State of the market

41.

Leading and recommended firms

42.

Leading lawyers

40

The volatile market and lack of business confidence over the past year have prompted Chinese and other overseas companies to wind back their appetite for Australian resources, particularly in iron ore and aluminium industries that have seen a significant drop in stock prices, and a fall in demand for legal services.

Mine expansion contracts have been put on hold, and some major projects have been downsized. This has brought some dispute resolution work, since contractual obligations agreed to during boom times were no longer commercially viable. However, the level of litigation has not been the same as in previous recessions due to clients opting for quick settlements, rather than lengthy disputes.

Mallesons Stephen Jaques partner Alan Murray says that despite the difficulties of the past year, there are signs of optimism and activity in the energy and resources sector. For example, BHP Billiton and Rio Tinto have announced their Pilbara iron ore joint venture, and there is considerable activity between smaller companies and international players looking to get additional iron ore to market.

“The energy and resources sector has shown real resilience in a difficult period and, given the continuing demand for Australia’s products, is very well-placed to move forward as confidence returns,” Murray adds.

Freehills partner Jason Ricketts claims that his practice has not seen any reduction in revenue; the firm has topped last year’s figures, and points to his work on Argyle Diamond Mines’ proposed underground expansion.

“There are a lot of resources project still going forward and a lot of mining companies that are cashed-up,

and the government has increased development spending,” he says.

The downturn has also not discouraged law firms from opening new Perth offices. Middletons, for example, has been very optimistic about the Perth market and even opted to expand its staff numbers.

The firm entered the WA market via a three-way merger with Perth firms Salter Power and Franklyn Legal last December. “There has certainly been some slow-down in significant large-scale M&A activity - and just the sheer volume of it - but there’s still a lot of activity at the smaller end, and there will be a lot of consolidation,” says managing partner Nick Nichola.

Nichola was right on the money.

Once the resources market had bottomed out Chinese companies began circling Australian resources assets. Chinalco bidded A$30m to raise its stake in Rio Tinto, Yanzhou Coal made an A$3.5bn bid for Felix Resources, and Fortescue Metals struck a US$6bn (A$7.3bn) iron ore deal with China Iron and Steel Association. More recently, Gorgon joint venture partner Exxon Mobil agreed to supply liquefied natural gas (LNG) to Petro China worth A$50bn for the next 20 years.

There has also been interest from other Asian countries. The Korea Gas Corporation agreed to buy LNG from Chevron for up to 20 years, which was estimated to be worth A$30bn. Rival South Korean energy company GS Caltex and Japan-based Osaka Gas and Tokyo Gas have also signed LNG contracts worth A$70bn.

“Over the last couple of months we have seen a significant increase in activity and enquiries in energy & resources. There has been a definite

upswing in work in the Perth market,” says Nichola.

Cochrane Lishman is also among the more buoyant Perth firms. Partner Michael Lishman says the secret of his firm’s success has been to stick with the original plan. This approach, combined with a lower-leveraged model has brought the firm top-tier work at decent charge-out rates, while keeping costs down. The firm expects its business model to help keep profits up during the global recession.

Meanwhile, New Zealand firms have paid close attention to their country’s Resource Management Act, which has helped protect the country’s natural resources but been criticised for obstructing important projects. Kensington Swan partner Bryan Gunderson expects the New Zealand government to amend the Act to speed up the approval process for major projects from five years to two years.

“The proposed first round of changes to the Act are modest and not expected to have any impact on projects already in the pipeline.

However, a second round expected early in 2010 is likely to be more ambitious,” adds Gunderson.

Gunderson expects more work to come during the transition from the old legislation to the new. He says lawyers are eagerly waiting for the Kiwi government to release the framework for infrastructure investment, and how it intends to utilise public private partnerships in a wide range of projects. There are also signs from the government that New Zealand’s conservation areas might be opened for resources exploration and development, particularly those involving gold.

Australasian Legal Business ISSUE 7.10

20 09 SYDNEY The team at Holding Redlich were “best guys in the game” for legal aspects of iron ore, gold, oil and gas companies. The firm provided a breadth of advice at a competitive price. David Walker did a brilliant job at advising on multiple areas of law, and was so productive, quick and “clever” that he impressed the other side by getting things right in the first draft.

Gilbert + Tobin had “fantastic” staff at all levels for regulatory, cost and capital review aspects of energy.

Nick Taylor and Luke Woodward had strong economic backgrounds and truly knew what was in their client’s best interests. Liza Carver was “formidable” and delivered the goods.

The firm’s junior lawyers did a prompt and “fantastic” job.

Some clients said they swore

by Deacons’ legal contractual and negotiation work. Ross Ramsay was often chosen by the gas industry for his savvy, specialty and broad advice that extended to the Asian markets. Mark Waddell was thorough, commercial, and was well mannered with his clients.

Henry Davis York’s practice was talented at all-round work. James Lonie knew legislation word-for-word, and was able to draft documents and action “on the fly.”

Baker & McKenzie’s David Ryan had “first rate” responsiveness and industry knowledge for corporate, M&A and resources matters.

Piper Alderman’s Robert Pritchard was a veteran with more than 40 years’ experience.

Chang, Pistilli & Simmons’ Mark Pistilli, DLA Phillips Fox’s Geoff Taperell, Middletons’ Jennifer Mee,

www.legalbusinessonline.com

Atanaskovic Hartnell and Tresscox Lawyers were also recommended.

Minter Ellison was the cream of the crop in Sydney’s national top- tier legal market. James Philips was “technically and tactically excellent” at leading cross-border resources deals. He pioneered new means of negotiation, and achieved client strategic and business objectives through efficient communication and a wide knowledge of rules and legislation. John Whitehouse and Patrick Holland had “unrivalled knowledge” of mining and electricity issues, while Toby Anderson was thorough and quick.

Mallesons Stephen Jaques acted on some of the most highly publicised deals. Peter Cook led the ambitious but failed Chinalco-Rio Tinto deal, Nicholas Pappas was chosen for resources-related M&A, Dominic Bortoluzzi was picked for energy, and Sharon Henrick was the regulatory and competition guru.

Blake Dawson was chosen for joint venture and M&A work. Ian Williams had extensive experience representing joint venture parties, Stephen Menzies was picked for resources-related M&A, and Bill Smith was an expert at projects.

Clayton Utz’s clients appreciated how the firm gave favourable discounts on its fees. Barry Irwin was a talented negotiator with extensive Asian contacts. Graeme Dennis and Graham Taylor were also recommended.

Freehills’ Bill Napier was chosen for project work, while Donald Robertson was a top pick for energy regulatory business. Allens Arthur Robinson’s Tony Wassaf was praised as the local mining expert.

leading firms NB: Firms are listed in alphabetical order under each subheading

f l

sydney

PERTH

• BAKER & MCKENZIE • DEACONS • GILBERT + TOBIN • HENRY DAVIS YORK • HOLDING REDLICH

• ALLION LEGAL • COCHRANE LISHMAN • CORRS CHAMBERS WESTGARTH • JACKSON MCDONALD • MIDDLETONS

MELBOURNE

northern territory

• DEACONS • JOHNSON WINTER & SLATTERY • MADGWICKS • NORTON GLEDHILL • TRESSCOX LAWYERS

• CRIDLANDS MB LAWYERS

BRISBANE • CARTER NEWELL • CORRS CHAMBERS WESTGARTH • HOLDING REDLICH • HOPGOODGANIM • MCCULLOUGH ROBERTSON

ADELAIDE • FINLAYSONS • JOHNSON WINTER & SLATTERY • KELLY & CO • MCDONALD STEED MCGRATH • PIPER ALDERMAN

NEW ZEALAND • BELL GULLY • BUDDLE FINDLAY • KENSINGTON SWAN • MINTER ELLISON RUDD WATTS • SIMPSON GRIERSON

NATIONAL TOP-TIER FIRMS • ALLENS ARTHUR ROBINSON • BLAKE DAWSON • CLAYTON UTZ • FREEHILLS • MALLESONS STEPHEN JAQUES • MINTER ELLISON

other recommended firms

NB: Firms are listed in alphabetical order under each subheading

f r

SYDNEY

PERTH

• ATANASKOVIC HARTNELL • CHANG, PISTILLI & SIMMONS • DLA PHILLIPS FOX • MIDDLETONS • PIPER ALDERMAN

• BLAKISTON & CRABB • DEACONS • DLA PHILLIPS FOX • JOHNSON WINTER & SLATTERY • LAVAN LEGAL • PRICE SIERAKOWSKI

MELBOURNE • CHAMBERS & COMPANY • DLA PHILLIPS FOX

BRISBANE • DEACONS • TRESSCOX lawyers

NEW ZEALAND • ANDERSON LLOYD • ANTHONY HARPER • CHAPMAN TRIPP • GREENWOOD ROCHE CHISNALL • RUSSELL MCVEAGH

41

ALB guide: energy & resources 2009 MELBOURNE

leading lawyers NB: Listed alphabetically by surname

MATTHEW BOWEN Firm: Jackson McDonald Location: Perth • Practice areas: energy & resources, competition • Advised private and public sector on energy contracting, transport and M&A with respect to gas, electricity, resource development infrastructure • Memberships: Australian Institute of Energy, Australian Mining and Petroleum Lawyers’ Association

KIERA BRENNAN Firm: Clayton Utz Location: Sydney • Practice areas: energy & resources, infrastructure, M&A • Advised on coal and gas sale agreements, acquisition of a 70% interest in a coal mine joint venture • Memberships: Queensland Law Society, Australian Mining Petroleum Law Association

IAN BRIGGS Firm: Minter Ellison Location: Brisbane • Practice areas: energy, projects, project finance, infrastructure, arbitration • Advised on projects and strategic alliances for resources infrastructure developments, involving the North Queensland Gas Pipeline, Comalco’s Alumina Refinery, Anglo’s Dawson Project • Memberships: Infrastructure Association of Queensland

BRISBANE

JON CARSON Firm: Blake Dawson Location: Melbourne • Practice areas: energy & resources, project finance, public-privatepartnerships, infrastructure • More than 20 years’ experience in the field • Advised private and public companies, financiers, borrowers and government

BRONWYN CLARKSON Firm: Carter Newell Location: Brisbane • Practice areas: resources, corporate, property • Advised on gas sales and transportation agreements, pipeline land access work joint ventures, tenement acquisitions, farm-in agreements, restructuring and due diligence • Memberships: Australian Mining and Petroleum Law Association, Queensland Petroleum Exploration Association

cont. ► 42

Deacons was at the top of the order, typically chosen for contracts. Grant Ahearn was picked for structured deals, while Ian McCubbin was the one for China-related deals.

Norton Gledhill’s Peter Nelson was used for electricity and derivates.

Madgwicks’ Rod Gillam was pursued for his energy contracts.

Johnson Winter & Slattery’s Peter Rose, DLA Phillips Fox’s Simon Uthmeyer, Chambers & Company’s Robin Chambers, and Tresscox Lawyers were also given kudos.

Freehills won high praise in Victoria, and clients appreciated the firm’s work in energy, contracts and dispute resolution. Robert Nicholson had a quick turnaround, provided reliable advice, and was calm in a crisis.

Andrew Clark was thorough and quick. Jared Muller and John Tivey were also recommended.

Blakes’ Jon Carson had a “great” knowledge of the energy sector and a “fantastic” knowledge of his clients’ businesses; Graeme Harris was efficient; Martin Kudnig was “firstclass”; and Arthur Apos was also recommended.

Minters was used for contracts.

Mitzi Gilligan had a deep understanding of the energy industry, and was commercially focused.

Mallesons’ James Fahey impressed with his oil and gas expertise, while Tim Bednall and Josh Cole were also mentioned.

Allens’ Scott Langford was a resources expert, and Clayton Utz’s Melbourne team was recommended.

HopgoodGanim’s reasonable rates and good working relationships helped the firm top the Queensland market.

It was chosen for oil and gas because it gave broad scope in advice. Martin Klapper was renowned for his knowledge of mining legislation and quick turnaround. Michele Muscillo, Brian Moller and Michael Hansel were also recommended.

Carter Newell was chosen for its independence, and its agreements for mining companies and joint ventures.

Its secondment lawyers provided a “window” of how the firm worked.

Bronwyn Clarkson was very thorough and practical. James Plumb was recommended.

McCullough Robertson was generally picked for mining lease applications, contracts and projects.

Damien Clarke was reputed for engineering and resources. Darren White was approachable, practical and thorough. Derek Pocock, Brett Heading and Tracey Moore were also recommended.

Holding Redlich was the one for resources contracts and project, and was an alternative to larger firms that had too many conflicts of interest.

Scott Lambert was sought after.

Corrs Chambers Westgarth’s John Kelly was one of Brisbane’s best because he was results-focused, and had an excellent network of partners.

Deacons’ Michael Joyce and Tresscox were also mentioned as good players.

Minters had the lion’s share of the Brisbane market, owing to its depth of knowledge. Ian Briggs did a good job of managing risk, and provided “cutting-edge” terminology; Denis Gately was practical, good at finding solutions, responsive and working to deadlines. Mark Carkeet, Allison Warburton, Andrew Rentoul, Brendan Clark and Simon Scott were also mentioned highly.

Freehills was top for energy acquisitions, resources, joint ventures and projects. Gary Maguire was responsive and had vast experience in power; Phillip Christensen was a talented negotiator and specialist in supply contracts to Asia; and Jay Leary was recommended.

Blakes’ team was chosen for its numbers and “horse-power” for due diligence, energy, and regulation.

Simon Brown was responsive and knowledgeable; Paul Newman was “pre-eminent” with a wide knowledge; and Mark White was a top electricity lawyer.

Clayton Utz’s Kiera Brennan was chosen for resources because of her strategic thinking, and practical, commercial, solutions-focused approach. Mark Geritz was also recommended.

Allens’ John Greig was a leader of electricity, oil and gas. Ken MacDonald also had a wealth of experience.

ADELAIDE AND OTHERS Finlaysons’ work on mineral, petroleum and indigenous Australians Australasian Legal Business ISSUE 7.10

leading lawyers NB: Listed alphabetically by surname

PETER COOK

MARTIN KLAPPER

Firm: Mallesons Stephen Jaques

Firm: HopgoodGanim

Location: Sydney

Location: Brisbane

• Practice areas: resources, M&A, capital markets, corporate, PE • Advised on Chinalco-Rio Tinto stake acquisition, Rinker GroupCSR demerger, BHP Billiton-BHP Steel demerger, BHP-OneSteel demerger • Memberships: Securities Institute of Australia - Mergers and Acquisitions Taskforce

• Energy & resources practice leader • Practice areas: energy & resources, M&A, construction, infrastructure, project, environment • More than 20 years’ experience in advising on coal-seam-gas, geothermal energy, environmentally-friendly power generation

DAVID COULL Firm: Bell Gully Location: Wellington • Practice areas: energy, M&A, infrastructure, project, private equity, corporate • Special focus on oil and gas industry • Advised on Contact Energy-Pohokura-Maui ROFR gas acquisitions, Origin Energy-Swift Energy New Zealand oil and gas assets acquisition, Aust. Worldwide Exploration-Tui development acquisition

TONY DELLOW

MICHAEL LISHMAN Firm: Cochrane Lishman Location: Perth • Practice areas: energy, M&A • Advised boards of Western Australian public companies on major transactions in Perth and Melbourne • Judged by peers as a top lawyer in both corporate/governance and M&A areas

Firm: Buddle Findlay

GEORGE MCKENZIE

Location: Wellington

Firm: Finlaysons

• Practice areas: energy, government, infrastructure, competition • Advised Electricity Commission on Transpower’s proposal to upgrade the transmission grid into Auckland, and Contact Energy on the NZ Commerce Commission’s inquiry into the electricity industry • Involved in design and passing of New Zealand’s business law and industry regulation statutes

• Resources & native title practice head • Practice areas: resources, native title, construction, infrastructure • Advised resources industry from exploration to production stages; acted on South Australia’s landmark resources projects

MITZI GILLIGAN Firm: Minter Ellison Location: Melbourne

Location: Adelaide

ROBERT NICHOLSON Firm: Freehills Location: Melbourne

• Practice areas: energy & resources, M&A, publ-ic-privatepartnerships, transport, competition • Advised on electricity and gas; leads due diligence teams for M&A in the energy sector; contracts for clients in the energy sector • Clients: AGL, Duke Energy (now Alinta), GasNet Australia, Pacific Hydro, Singapore Power, SPI PowerNet, Yallourn Energy

• Non-executive partnership chairman • Practice areas: energy & resources, M&A, corporate, privatisation, foreign investment, capital markets • Past clients: Sims Metal Management, Straits Resources, Orica, Pacific Hydro, AGL

BRYAN GUNDERSON

JAMES PHILIPS

Firm: Kensington Swan

Firm: Minter Ellison

Location: Wellington

Location: Sydney

• Energy and climate change work groups leader • Practice areas: energy & resources, competition, climate change, infrastructure • Advised government, multinationals and private sector companies on gas and petroleum sales, petroleum exploration and development, coal and electricity projects, gold mining, aluminium smelter projects

• Practice areas: energy & resources, projects, project finance, infrastructure, M&A • Advised on takeovers of Zinifex-Allegiance Mining, Sinosteel-Midwest Corporation, Carnegie Wylie • Acted on transactions valued at over A$100bn, including recommended and hostile takeover bids, SOAs, privatisation

www.legalbusinessonline.com

cont. ► 43

ALB guide: energy & resources 2009

leading lawyers NB: Listed in alphabetical order

ROSS RAMSAY Firm: Deacons Location: Sydney • Energy and infrastructure practice leader • Practice areas: energy & resources, infrastructure, M&A, government, corporate • More than 15 years’ experience in energy, resources, project; widely sought after in Australia and Asia-Pacific region

NICK TAYLOR Firm: Gilbert + Tobin Location: Sydney • Practice areas: energy, banking, competition • Advised on wholesale electricity pool markets, hedge contract trading, bilateral power or capacity agreements, gas exploration and production, gas and coal consumption, energy retailing • Advised energy sector on various competition and regulatory issues

CAROLYN VAN LEUVEN Firm: Minter Ellison Rudd Watts Location: Wellington • Electricity practice leader • Practice areas: energy & resources, competition, corporate, M&A, regulatory • Advised on M&A of businesses, electricity and gas supply, transmission and interconnection, metering services and the regulatory environment

DAVID WALKER Firm: Holding Redlich Location: Sydney • Practice areas: energy & resources, corporate • Considerable experience in major transactions involving complex documentation, tax-effective structuring of commercial deals and due diligence • Clients: Elemental Energy Technologies, Australian Pipeline Trust, Pan Pacific Petroleum

CLAY WOHLING Firm: Minter Ellison Location: Adelaide • Practice areas: energy & resources, projects, project finance, construction, competition, regulatory • Advised on electricity agreements, construction contracts, regulatory compliance • Memberships: Australian Corporate Lawyers Association

44

stood out in South Australia. George McKenzie was a good negotiator, produced well-structured contracts, and gave well thought-out advice.

Jeremy Schultz stood the test of time, continuing to be chosen over the years for his knowledge of South Australian law, and his “priority” service.

McDonald Steed McGrath received a considerable amount of resourcesrelated native title work. Mike McDonald and Abigail Steed were mentioned.

Piper Alderman’s Simon Venus and Ashley Watson were valued for their services.

JWS’ James Marshall was chosen for M&A, permits and negotiations.

Kelly & Co’s Andrew Corletto was preferred for petroleum.

Minters topped the national firms and was typically chosen for electricity grid work. Clay Wohling had a deep understanding of the electricity industry, was thorough and commercial in his outlook.

Kent Grey and Christopher Darby were quick, immediately responded to client requests, and produced high- quality work. Ewan Vickery was recommended.

Blakes’ new Adelaide office is off to a good start, with clients saying the firm had been proactively contacting them.

Cridlands MB Lawyers’ Tony Whitelum received top marks for energy & resources disputes in the Northern Territory.

PERTH Cochrane Lishman proved to be the top Western Australian firm for energy M&A, oil and gas acquisitions, and takeover defence. Michael Lishman’s advice was useful and offered value for money. Justin Harris and Tracey Renshaw were recommended.

Allion Legal gave commercially pragmatic resources advice around the clock, in a responsive and solutions-focused manner. Clients praised the firm for allowing them to make quick phone calls for legal advice without billing them for it. Philip Lucas and Craig Readhead were recommended.

Jackson McDonald was a longstanding choice for government, regulation and energy policy.

Matthew Bowen and Stephen Doyle were favourites.

Middletons’ Robert Franklyn was practical and knowledgeable. Simon Salter was mentioned.

JWS’ Michael Dulaney and Peter Smith were well recognised in the Perth market.

Lavan Legal tended to be chosen for gas, and Caroline Brown was mentioned.

Corrs Chambers Westgarth’s Peter Jarosek, Adam Handley and Chris Ryder were some of Australia’s leading energy & resources experts.

Deacons’ Liz Allnutt, DLA Phillips Fox’s Robert Edel, Blakiston & Crabb’s Michael Blakiston, and Price Sierakowski’s Paul Price were also recommended.

Mallesons was typically used for power procurements and resources matters. David Perks and Alan Murray were recommended.

Blakes’ was chosen for oil and gas.

Roger Davies, James Bruining and Adam Conway were mentioned.

Freehills’ Stuart Barrymore was a “top-notch” oil and gas practitioner.

Rob Merrick was also mentioned.

Clayton Utz’s Geoff Simpson stood out from the rest., while Allens Arthur Robinsons was acknowledged for its Perth presence.

new zealand Buddle Findlay was ahead of the pack with its experience in energy, regulation and public law. Tony Dellow left his competitors far behind when it came to regulatory matters; he demonstrated an ability to deliver and fit his client’s culture.

Peter Owles was great for project developments, and geothermal generation development clients highly recommend him. Alastair Hercus took the time to have “fruitful discussions” with his clients about policy direction and framework. Tony Dellow, Susie Kiltie and Nick Crang were recommended.

Simpson Grierson had a long history with its clients because the firm gave value-added service and did a “top job” for matters involving a strategic, regulatory, sales, and joint venture nature. Elizabeth Welson and Dave Trueman were responsive and easy to deal with.

Australasian Legal Business ISSUE 7.10

Philip Milne, Duncan Laing and Michelle van Kampen had a commendable attention to detail.

Bell Gully advised its clients extensively on gas, and clients liked the firm’s fixed-fee options. David Coull was knowledgeable and found “robust” commercial solutions. Garry Downs has more than 20 years’ experience and a reputation that convinced clients to choose the firm.

Clients loved Kensington Swan’s work on joint ventures, partnerships, energy, and contracts because the firm had a “deep knowledge” of the market and regulation.

Bryan Gunderson had a personal approach, was responsiveness and knowledgeable about market developments.

Minter Ellison Rudd Watts was chosen for electricity regulation and public issues. Carolyn van Leuven’s strength was in electricity pricing, due to her knowledge of new methodologies.

www.legalbusinessonline.com

Paul Foley, Tom Fail, Mark Weenink and Rachel Devine were also recommended.

Greenwood Roche Chisnall was chosen for resources, public law and projects. David Chisnall was clientfocused and outcome-focused, and had vast experience in projects.

Russell McVeagh was picked for oil and gas. Joe Windmeyer had a loyal client base. Christian Whata, Derek Nolan and Bal Matheson were recommended.

Chapman Tripp was popular for business involving petroleum and reviewing legislation. Brigid McArthur was mentioned.

Anderson Lloyd’s Mark Christensen; Anthony Harper; and ChanceryGreen’s Jason Welsh and Mark Sly were called experts in the field.

Auckland Transition Agency inhouse lawyer Rob Fisher, formerly the chairman of Simpson Grierson, was professional, hands-on, and liked for his willingness to come onsite.

45

Feature | roundtable >>

IT Roundtable Technology is ever-changing but law firms are doing well to keep up. ALB talks to some top technology experts at law firms to find out what they are spending their IT budget on

T

he ALB IT Roundtable was hosted by Howard Hutchins from Melbourne’s Speech Recognition Australia.

It involved Sparke Helmore CIO, Peter Campbell; Mallesons Stephen Jaques executive director (business integration and technology), Gerard Neiditsch; Curwoods Lawyers IT development manager, Rakesh Verma; and Mahons with Yuncken & Yuncken Lawyers practice manager, Heather Seamons.

ALB: Communication technologies facilitate conversation between both lawyers and clients and staff within the firm. What technologies do you use that either increase or ease communication between staff or with clients?

Rakesh Verma: We’re looking at messaging products between staff other than email messages. We’re looking at introducing a customer extranet for external clients.

46

Rakesh Verma, Curwoods

Peter Campbell: We have quite structured communications with our clients. I wouldn’t say technology is the driver but it certainly facilitates it. Extranets have not been popular with our volume clients because they already have their own systems or need to interact with a number of law firms on the same panel. [They] prefer us to all tailor our information feeds to their systems rather than having all their staff learn a few different portals.

We have regular automated reporting to our clients, particularly for the insurance practice where we do a large volume of matters. Our clients need a variety of reports from us which show the status of their matters, how well we are meeting their KPI’s and increasingly how their entire matter portfolio is performing. Some reports we create show the benefit versus the cost of legal spend across all the matters a client gives us, which helps with demonstrating the value we deliver.

Our systems capture the information needed for this reporting automatically, as a part of our case management systems and how we work. So it doesn’t add cost/time into the fee earner’s

day to capture this information. Though I haven’t seen it a lot in Australia yet, the same technology or process can be used to facilitate decision points and task handover between clients Peter Campbell, and the law firm.

Sparke Helmore For example, in a UK law firm we had set up an automated report to the client when we needed to get clearance to go to court on a matter. The client received the report automatically which created a task someone in their organisation had to do. When they responded the instruction was automatically relayed back to the law firm. That way we got to collaborate on the same process without letters or emails etc. I’d like to see this happen more in Australia as there are a lot of efficiencies around this sort of application of technology.

In terms of internal collaboration the most popular application is the directory and expertise search. These technologies are not special, but the ability to find someone to help with a matter is very important.

Australasian Legal Business ISSUE 7.10

Feature | roundtable >>

Gerard Neiditsch: We’ve got three different communication needs. Inside our firm we use Peoplefinder – that uses instant messaging and nine sources of information such as phone systems, whether they are active on the computer, or on leave. This shows whether the person is available to take a client call or who else might be available, giving us a better client experience.

Secondly, Talentnet is a more structured tool to interact with our recruits throughout the interview process. It is a specialised extranet that allows those who want to join us [to] access all relevant information. It gives recruits the means to interact directly with people inside Mallesons.

The third technology is Mallesons Connect which we’ve been rolling out since November last year. It allows very direct and rich interaction with our clients and is an extranet based on Web 2.0 technologies. So far, it has been rolled out to seven clients and has been very well received.

The focus here is to give clients an accurate and highly personalised snapshot of all the work they are doing with us. It also allows them to interact with us in new ways, for example by providing frequent matter-related feedback or in future by using a shared project workspace.

Heather Seamons: Our internal needs are very minimal – most of our clients are repeat or existing clients and our fee earners work with them one-on-one.

That personal interaction has become the cornerstone of the business. The other factor is the age of our fee earners who have been with us for between 1525 years each. The average age is probably 50 so they have to see the value of technology spend – in ease of use and improved work practice.

The speech recognition and digital dictation software was a huge step forward. I had been working with Howard for a couple of years before presenting it to the principal because I knew I had to have it at

the stage where we’d be able to sell it on the first viewing.

To sell it to people who are somewhat technologically challenged, it had to be really good in terms of cost savings.

We have already saved money in the 18 months we’ve had it through natural attrition.

Heather Seamons, Mahons with Yuncken & Yuncken

Gerard Neiditsch: Our user population is at the other end of the scale. Interestingly, dictation isn’t something that is being taught at any of the law schools anymore – which is a shame. I think generally, technology has affected each role in a law firm very significantly – particularly that of a secretary. A lot of technology has allowed them to get rid of repetitive tasks. Now when clients come to see a lawyer they are more informed and know what they want.

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Feature | roundtable >>

In the same way, when we go and see a doctor we are now much more knowledgeable about what ails us.

ALB: Has your firm cut back on its IT spend in the past 12 months? What plans are there for the future?

Rakesh Verma: Our IT spend has gone up. We’re in the process of giving our entire staff increased infrastructure.

We’re looking at taking our company forward into the future. There is now a lot of research-based work going on and increased internet usage. We’re trying to cut costs in the long run by investing upfront in better systems.

Peter Campbell: We’re redirecting money to where it needs to be. We’re finding we have more leverage with suppliers – especially big-ticket costs like telco spend. We’re having tough conversations with all our suppliers.

We’re upgrading our document management system, not because we want to but because we have to, it’s something we can’t defer.

48

We’re redirecting our money to where it will prove most valuable.

Gerard Neiditsch: What’s happening is people are becoming much more creative with what technologies help law firm clients. If we were to cut back on that then we’ll end up losing out – that wouldn’t make sense.

We’ve held our nerves in terms of investment.

We’re focusing on clientfacing technology and it takes a fair amount of time to build that up.

There’s not going to be a sudden reverse to boom times, no matter what the papers say.

Gerard Neiditsch, Mallesons We’re taking Stephen Jaques complexity out of the system. We’re taking things out because there is significant overlapping functionality in our vendors’ offering. Reducing complexity helps redirect funds into more productive areas.

Heather Seamons: We never know where we’re going to go and what we’ll need to develop, so I keep part of my budget separate each year for miscellaneous expenses. That usually goes on technology.

I investigate software as I find it, like the dictation software and if it’s good we’ll go with it. I replace our computers systematically on a basis [of] looking at who uses it the most. It’s not usually the fee-earners, it’s usually a secretary, and then pass on her computer down the line based on how much it is used.

Peter Campbell: I think the legal sector is maturing in its use of technology so it is taking a more rigorous approach to our architecture.

Over time the applications and how they integrate will become simpler.

We certainly adopt a careful approach – not to introduce complexity unless it adds significant value for our clients.

Simply, we don’t want to be spending a lot of time on low-value activities fixing problems.

Australasian Legal Business ISSUE 7.10

Feature | roundtable >>

Rakesh Verma: We’re doing exactly the same thing, we're taking the complexities out to make it easier for the staff. If we don’t have to spend our time helping people with minor difficulties we can spend it working on higher-value activities.

ALB: Looking into the future, where do you see areas of improvement for legal technology in the future?

What would you like to see?

Rakesh Verma: We’re looking at a lot more remote-office work, [and at] streamlining those processes a bit.

Looking forward five years I think a lot of people will be working remotely.

Peter Campbell: I am very interested in the potential for improved search functionality. Search engines like Autonomy and Recommind are starting to understand the content they are searching more deeply than just keywords. That will drastically improve the ability for all of us to get to the information we want quickly,

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and sift out the overload of other information. The other two technologies I’ll be watching will be Virtual Desktop Infrastructure and Google Wave.

VDI is where we shift the processing of day-to-day activities that our people do from their desktop PC back into the data centre. It has the potential to be far more efficient, reliable and provide a better user experience. VMWARE and Citrix are really pushing hard on these at the moment, so no doubt it will make an impact in the next couple of years.

Google Wave is interesting from a collaboration perspective. It is a system where people can collaborate on a document or topic online in a very interactive and rich way. Sound, text, images, chats etc can all be incorporated on the fly. This concept may significantly speed up the process of things such as contract drafting. It’s early days yet but is worth watching.

Gerard Neiditsch: I think from a medium-term perspective technology will offer a more tailored experience.

What I’d like is to take one step back and see what a day in the life of a lawyer might look like – and see what we can do to present information in a way that is more relevant and actionable. This will help lawyers and clients give good advice and make sound decisions in a world that is moving faster and faster.

If you look at where many of the websites are going this is it.

For example, if you’ve got voice recognition technology for unstructured information like dictation, then you end up with information that is searchable and can be reused. It’s the much more tailored approach that will cut out the noise. That may take years but everything is moving in that direction.

I think it’s very important.

Heather Seamons: My major concern as far as technological development goes is the ability to have the Mill Park office online with the Blackburn office more efficiently. I’d like to look more into remote capabilities. ALB

49

Firm Profile NEWS | news >>

Chang, Pistilli & Simmons

Chinese direct investment into Australia

2

008 and 2009 have seen a dramatic increase in the levels of Chinese investment into Australia’s energy & resource industries and recent comments by Fu Ziying, the vice-head of China’s Ministry of Commerce (MOC), suggests that this trend is likely to continue”, says Andrew Hensher, co-head of the China business unit at Chang, Pistilli & Simmons.

While the global financial crisis has left some Chinese firms nursing heavy losses in overseas acquisitions, the vice-head of MOC has indicated that the current economic climate presents Chinese companies with excellent opportunities for overseas investment.

The comments follow recent reforms in China aimed at facilitating outbound investment. In March 2009 the MOC announced it would make it easier for Chinese domestic companies to invest overseas by simplifying the approval process. Approvals of outbound investment projects under US$100m are now the responsibility of the provincial level MOC, freeing up the state MOC to focus on large or sensitive investment projects in areas like energy & resources.

These reforms follow new measures introduced in December 2008 which allow China’s largest domestic banks to facilitate Chinese companies with the financing of foreign investment activity.

Andrew Hensher notes that during the first half of 2009, a combination of strong domestic consolidation within China

50

together with active bank financing fuelled increase investment activity, most notably in Australia’s natural resources sector. “China appears to be undeterred by recent Sino-Australian tensions and is seeking further opportunities in Australia, a jurisdiction perceived

by Beijing as stable and hospitable to Chinese investment,” he says.

The increased interest from China, given the potential scale of its investments, has meant that the Australian government has had to consider what levels of foreign investment, especially from foreign governments, is consistent with Australia’s national interest.

While some argue that investment from China has helped stimulate a rapidly slowing economy, others suggest that investments by Chinese stateowned enterprises (SOEs) have been opportunistic and delivered China an increased ability to control supply – and consequently the pricing of Australia’s valuable natural resources.

The major concern is that the economic drivers which force profit and production maximisation are less prevalent in a market where customers control supply of their inputs.

Australia governs foreign investment under the Foreign Acquisitions and Takeovers Act 1975 (FATA), administered by the Foreign Investment Review Board (FIRB). In February 2008, soon after approval by FIRB of the hostile

takeover of Midwest by Sinosteel – the first by a Chinese entity in Australia – the federal government moved to improve the “transparency” of its screening process of proposed foreign government investment.

It announced six key principles which underpin that assessment. At the time, the federal government sought to clarify that these principals were not new (they reflect the existing policy applied by previous governments) and were not intended to be directed at Chinese investment into Australia.

However given the nature of Chinese companies (the majority of the major Chinese investors are state-owned companies), a significant percentage of Chinese investment proposals, regardless of size or structure, require prior approval. This perceived increased scrutiny has seen a shift in investment type from the Chinese, says Andrew Hensher.

“Our Chinese clients are increasingly looking to less politically-sensitive joint ventures and financing deals, rather than takeovers, to invest in Australia,” he says.

Hensher also notes that this approach has not gone unnoticed in the Australian government.

Earlier this year, on 12 February 2009, the Treasurer announced that the government would amend the Act to “clarify the operation of the foreign investment screening regime … to ensure that it applies equally to all foreign

Australasian Legal Business ISSUE 7.10

Firm Profile

NEWS | news >>

Chang, Pistilli & Simmons

investments irrespective of the way they are structured’.

On 20 August 2009, the first reading of the proposed new laws occurred. The new law will have the following features: • Foreign investors will be required to notify the Treasurer of any deal where there is a possibility that the type of arrangement being used will deliver influence or control over an Australian company, either currently or at some time in the future.

• Notification will extend to transactions or agreements that involve instruments which eventually convert into shares or share like interests or voting power, some of which are not caught now.

• Notification will also extend to foreign investments that have the potential, whether now or in the future, to provide some measure of influence or control over the business or assets of an Australian company.

• Any deal, even if not expressly caught, must be notified where there is a possibility that the type of arrangement being used will deliver influence or control, including transactions that involve instruments that eventually have the same effect.

The changes – when made – will be taken to have been in operation from the date of the Treasurer’s announcement (in February 2009).

Despite increased political tension, China’s desire to take advantage of the recent drop in commodities prices to

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secure its hold over natural resources has seen a series of recent high profile Chinese investments in Australia’s natural resources sector considered by FIRB. “Coal, an asset which had been an insignificant export to China until earlier this year, in particular has experienced increased interest,” says Hensher.

China is not the only country that has sought to gain increased access to Australia’s natural resources during 2009.

FIRB recently approved Indian-controlled Gujarat NRE Minerals’ hostile bid for West Australian coal junior Rey Resources, with approval for the full takeover likely to be perceived as positive in China. State-controlled Yanzhou Coal has recently agreed to buy coalminer Felix Resources for $3.5bn, pending regulatory approval. However, despite the Australian government’s willingness to consider full takeovers in the past, FIRB is likely to take a very close look at the Yanzhou deal.

It has become apparent, from the recent conditional approval of the Hunan Valin Iron & Steel Group’s acquisition of a 17.6% stake in Fortescue Metals Group and China Minmetals’ revised A$1.4bn bid for Oz Minerals, that the FIRB policy guidelines will be strictly applied. In particular, with respect to Australia’s national interest and security and the commercial operation of SOEs operating in Australia.

In the case of OZ Minerals, FIRB sought undertakings to ensure the acquired

businesses are operated in accordance with commercial objectives and that pricing of output is on arm’s-length terms. It will be interesting in future to see how Australia and China ultimately deal with these sensitive issues.

They are not easy issues, but given the goodwill between Australia and China and the fact that they need each other, one would expect that Chinese investment into Australia (particularly in the sensitive resources sector) will grow in coming years.

Andrew Hensher is the co-head of the China Practice at law firm Chang, Pistilli & Simmons, together with Diana Chang.

He was assisted by the Chinese correspondent at Chang, Pistilli & Simmons Mr Huang Jai.

Andrew Hensher, Chang, Pistilli & Simmons

51

Feature | in-house services >>

served?

Are you being

In-house lawyers face a different set of challenges to those who are working in private practice – yet fortunately there are now quite a few services out there to help.

ALB takes a look at what’s on offer

W

hat do you do if you are an in-house lawyer and you are having trouble managing stress? And where do you turn if you need the skills of a senior lawyer but only for a temporary period? The answer? Go to one of the many providers of services to in-house lawyers who can solve just about any problem an in-house legal team might have.

As companies increasingly bring work in-house, a crop of businesses are springing up to service their needs.

ALB looks at four different companies which offer a range of unique services to in-house lawyers – recruitment, general counsel hire, management training and system management.

Starting out Joseph Germano, who is the executive director of recruitment at consultancy firm Integrity Legal, says that 20 years ago it was a much rarer thing to find

52

a company that had an internal legal department. Increasingly companies are recognising the value of retaining in-house counsel as a means of saving money and building up their business on a sound footing.

“It used to be the case that hardly any lawyers worked in-house – whereas now more companies are taking on their first in-house lawyers than ever before,” he says. “They see the value of having a lawyer in-house that they can call upon and see it as a cost-cutting measure as well because it costs them ... more to outsource than to have a lawyer that is basically at their beck and call.”

Germano says that clients who are looking to create an internal team from scratch often will use a recruiting service like Integrity Legal because it focuses purely on placing in-house lawyers. He says that in-house lawyers have a different mindset from those who work in private practice.

Australasian Legal Business ISSUE 7.10

Feature | in-house services >>

“The major difference is they’ve got a much greater commercial focus,” he says. “It’s a much more strategic role – much more hands on. When you’re working in-house you’re part of the deal from the very beginning so you’re often actually sitting down at the board table with the executives making the decisions.”

“They see the value of having a lawyer in-house that they can call upon and see it as a costcutting measure as well, because it costs them ... more to outsource than to have a lawyer” Joseph Germano, Integrity Legal

Counsels for hire While some companies might be looking to set up a full-time legal team, others just need a senior lawyer to get a deal (or a number of deals) across the line.

Truman Hoyle’s Shane Barber says that if a company is looking for a more senior lawyer than they would get from a secondment, they will come to law firm Truman Hoyle for its general counsel services offering.

The program, which was started in 2005, provides very senior lawyers for a period that can last anywhere from a couple of weeks to a couple of years. Barber says his clients are looking for lawyers that Shane Barber, Truman Doyle can come in and work on a strategic level.

“What they were asking for was different to just having a secondment,” he says. “Our general counsel services

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involve more senior lawyers who are often involved in strategic decisionmaking within the organisation in conjunction with the clients.”

Truman Hoyle operates in the ‘new economy’ sector – which encompasses telecommunications, media & technology. The strong growth which can occur here often leads to teething pains and encourages the companies to seek out the general counsel service.

“Our clients will often have had a period of heady growth and are now in that transition period where they go from acquiring all their legal services from firms like ours to moving to a situation where they can justify having an in-house lawyer,” Barber says.

“As many of those clients have grown bigger, they’ve found they need to supplement their existing legal teams but they need to supplement them at a senior level rather than just [at] a junior level.”

Commercial awareness Many lawyers who have worked in private practice before moving inhouse will notice that it is a vastly different environment – and one where they need to keep improving to stay relevant. For those looking to find out how to maximise their value to their organisation, education and training specifically for in-house lawyers is available. Jil Toovey is the director of Institute of Knowledge Development, which offers training services. IKD provides training to major corporations such as BHP Billiton and is limited to non-legal content focusing on commercial awareness.

“We’re really looking at how they become effective in a business context,” Toovey says. “In the management leadership space we run residentials for lawyers from different in-house legal teams looking at how they make the transition from being a lawyer

53

Feature | in-house services >>

to being a manager.”

Topics at these three-day courses include teaching in-house lawyers how to manage a team, and how to balance the role of being a lawyer with that of being a people Jil Toovey, manager. IKD looks to IKD improve a lawyer’s CQ – their commerciality intelligence.

“We’re teaching them how to be effective as a commercial partner to the business,” Toovey says. IKD also offers an executive development program aimed at senior counsel and general counsel. “If they’re getting a place at the executive table or getting close to that – then the executive program is for them.”

The business is bringing out a new line of work in ego management for in-house lawyers. Toovey says this will teach lawyers how to manage their own egos as well as how to work with the egos of those in the business.

54

Matter management When Justin Hansen was working as an in-house lawyer at Glaxo Wellcome (now GlaxoSmithKline) he grew frustrated that there was not a simple matter management system on the market that enabled him to keep track of the things he needed to keep track of.

So Hansen created one himself and set to work selling the software to in-house legal teams across the country.

He set up LEX software group and brought his brother Richard on board to help with the business development.

LEX offers matter and contract management products as well as a product that will track intellectual property portfolios.

“Justin looked around to see what was available out there and there were only expensive foreign products that weren’t tailored to in-house legal teams so he just built one himself,” Richard Hansen says. “The focus is on keeping the software simple and easy to use with a dedicated focus on the needs of in-house lawyers.”

“This allows us to focus on what they want – whether it’s file note tracking and reminders, tracking of external spending, documents, or even time reporting,” he adds.

Hansen says LEX has a client base that boasts both local and Commonwealth governments, numerous universities, and corporate entities varying in size from sole inhouse lawyers up to groups with more than 100 users. ALB

“Our general counsel services involve more senior lawyers who are often involved in strategic decision-making within the organisation” Shane Barber, Truman Hoyle

Australasian Legal Business ISSUE 7.10

Feature | in-house services >>

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Feature | tax >>

Steady as she goes The flow of tax work into firms is strong – all thanks to a little assistance from the government

I

f it’s a transaction – and sometimes even if it’s not – some kind of tax advice will be necessary. There lies the key to the stability of tax practices, a group of lawyers who enjoy a workflow more steady than most.

“Work volumes do contract and expand, but not as dramatically as other areas of practice” says Mallesons tax partner Justin Cherrington. “There is always a base level of demand for taxation advice. Tax is always payable.”

Wide-ranging practice

Some of the areas that tax lawyers are called to advise on include employee share plans, funds management, structured finance, project finance, audit litigation, asset finance, infrastructure, insolvency, corporate advisory and M&A. Naturally, the predominance of any one area of tax 56

work is a product of the same economic pressures which are brought to bear over all areas of legal practice.

“Insolvency-related tax work has been busy,” says Cherrington. “On the other hand, structured finance and asset finance-related work has been slow, although there are signs that they are slowly returning.

Overall, there’s been a slight decline in work but no major change.”

With the much discussed economic “green shoots” emerging, Justin Cherrington, Mallesons Cherrington predicts that his team’s workflow will be steady over the next six months with an increase occurring in early 2010.

While accounting firms have often

developed industry-specific teams, Cherrington says that such a structure is uncommon in law firms, owing to the smaller size of tax teams.

“But certainly it is worthwhile to develop an interest in a particular sector – for example, the resources sector, which is an increasing source of work,” he notes.

Duncan Baxter, who leads the tax practice at Blake Dawson, says that the general trend is for the bigger commercial firms to advise listed companies on transaction-related tax matters, while mid-tier firms tend to advise on matters relating to private companies and individuals.

“Clients who come to us for tax advice usually have in-house legal teams, so what they need from us is specialist advice – for example on M&A, property and projects and so on,” Baxter says.

Australasian Legal Business ISSUE 7.10

Feature | tax >>

Sub-areas

M&A entails tax complications such as risk-sharing, the tax implications of reorganising a company for sale and structuring of the acquiring company.

Cherrington says that M&A-related tax work has not experienced any major drop-off, however, managing resources for this area of work has become more challenging.

“You have transactions suddenly stopping, then reigniting as the commercial rationale for the transaction is tested far more than it was in the past,” he says. “It makes long-term planning difficult because the timing is so unpredictable.”

Tax lawyers have noticed the same signs of economic recovery which have been welldocumented in the media. “Over the last month, we’ve seen companies starting to consider more Duncan Baxter, transactions,” Baxter Blake Dawson says. “The feeling is that this is the time to do it – before the floodgates really open.”

The capacity to offer advice on both pure M&A and tax aspects of a deal is an advantage, and the same principle applies in other areas. Blake Dawson, for example, is in a good position to advise on the tax aspects of insolvency and restructuring matters which have come before the firm’s well-known insolvency and restructuring practice.

However, the converse position can also arise – firms such as Arnold Bloch Leibler are often approached by clients to advise on tax aspects of a deal in situations where the firm was not initially involved in the deal.

Employee share plans

Employee share plans are also generating interest, owing to the Commonwealth government’s intention to reform legislation to close what it describes as “loopholes” – alleged to facilitate tax evasion for high-income earners. “There is a lot of uncertainty created by the government’s desire to legislate via press release,” says Cherrington. “The laws were to commence on 1 July, but we are yet to see a near-settled draft legislation.” www.legalbusinessonline.com

The inability of the government to provide any certainty on the subject has clients turning to their lawyers for guidance. Some observers have jokingly commented that tax lawyers are having their marketing done for them. “The EPS issue was essentially manufactured by the government,” says Baxter. “Most listed companies have an EPS or several of them. The government made an announcement during the budget which got everyone alarmed and they’ve subsequently watered down their position with a string of subsequent releases which have kept the issue bubbling away.

And of course companies want to get a handle on what all this means to them,” he adds. “We’ve certainly seen a lot of queries about this.”

It’s likely this area will not settle down until February 2010 when the Board of Taxation is due to make a final report to the government. “2010 is an election year, so you would imagine the government would want to clear up this issue,” says Baxter.

Dispute related work

Another area which has picked up is audit litigation, or ATO-taxpayer disputes over the application of tax laws which can lead to auditing and potentially litigation. “Audit and dispute related work has always been around, but the dispute related work seems to have increased over the past few years. I would suggest that it’s due to a change in the ATO approach to disputes,” says Cherrington.

The Commonwealth government has stepped up tax office funding to conduct more extensive audits into the activities of high-wealth individuals.

While this category has generally related to those controlling over A$30m, Arnold Bloch Leibler senior partner Mark Leibler says that lately, Tax Office scrutiny has also extended to the A$5m+ category.

“This has generated a great deal of work as advice to high-wealth individuals is one of our niche specialist areas,” he says.

The GFC has also had an impact.

Mark Leibler, “There is scrutiny on Arnold Bloch whether losses were Leibler properly created for tax purposes and on the re-characterising of capital losses as revenue losses,” says Leibler, who says the ATO’s investigations into abusive tax havens arrangements under Operation Wickenby has also brought further work to the firm.

“There are also an increasing number of cases where the Tax Office is receiving information on individuals, trusts and corporations from other jurisdictions leading to the conduct of audits and investigations.” Leibler says that while M&A-related tax work had declined in line with the level of deals undertaken, this has been more than compensated by ATO audits and work from high-wealth individuals. “We are as busy as we were at the same time last year, if not busier,” he says.

Trans-tasman perspective

New Zealand tax teams have also seen an increase in work relating to dispute resolution and litigation, says Bell Gully tax partner David Simcock.

He attributes this to a greater sophistication in the investigations undertaken by New Zealand Inland Revenue, particularly in relation to the financing of transactions. Simcock’s team has also been called upon to advise on the GST and income tax implications of debt restructuring and the sale of distressed assets.

“The corporate advisory area has been slower of late, but that should change as the economy starts to pick up,” he says. ALB

“There is always a base level of demand for taxation advice. Tax is always payable” Justin Cherrington, Mallesons 57

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The buzz surrounding Bamford

By Kieren Moore, senior associate, Donaldson Walsh Lawyers

B

y its decision in Bamford,1 the Full Federal Court confirmed the following for trust deeds and discretionary trust distributions: 1. The ability of a trustee to determine the “income”2 of the trust estate for sec 97(1) ITAA36 3 purposes via the terms of the trust deed, such that: • if the deed adopts sec 95(1) ITAA36 concepts, then that is the prevailing income concept; 4 • if the deed adopts Australian Accounting Standards concepts, that is the prevailing income concept; or • if the deed is silent, then ‘income according to ordinary concepts’ applies.

Moreover, the trustee may from year to year be given a discretion to determine which income concept applies, with default to such concept as is specified in the deed, in the absence of a trustee determination (or simply to ‘ordinary concepts’ where no default concept is specified) 5. This discretion extends to treating capital gains as “income”, for the purpose of determining the proportion of the “net income” of the trust assessable to the beneficiaries personally, where the trustee is provided with appropriate power to do so under the trust deed (obviating the need to rely upon Practice Statement PS LA 2005/1 (GA)).6 To complicate this, the ATO has in practice tolerated a ‘hybrid approach’ particularly in allowing maximum possible distributions to infant beneficiaries, while

1 Bamford v FCT [2009] FCAFC 66 2As distinct from the “net income” (or taxable income) of the trust estate, as defined in sec 95(1) ITAA36

3Income Tax Assessment Act 1936 (Cth) 4This has several benefits, but adopting sec 95(1) concepts (without modification) can also create problems.

5Stone and Perram JJ confirmed in Bamford that the

decision in Cajkusic v FCT [2006] FCAFC 164 was to this same effect. This was despite the Commissioner arguing, both in Bamford and his Decision Impact Statement on Cajkusic, that the conclusion on this issue in Cajkusic was merely obiter dicta

6However, where the trust deed adopts either ‘ordinary

concepts’ or ‘financial accounting’ income, the need to rely upon PS LA 2005/1 (GA) remains. See also the recent decision in Wood v Inglis [2009] NSWSC 601 per Brereton J, dated 30 June 2009, which gave effect to a power of a trustee to determine that a capital receipt (even an unrealised one) be treated as income

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still avoiding Div 6AA ITAA36 penalty tax rates.7 2. The application of the ‘proportionate approach’8 in determining a beneficiary’s “share” of the “net income” of the trust estate where the trust’s taxable income is amended, which simply provides that whatever share of “income” a beneficiary is presently entitled to (regardless of which of the above concepts applies), that beneficiary will have included in its assessable income that same proportionate share of sec 95(1) “net income” (taxable income) of the trust.

Bamford has many practical implications for taxpayers and their advisors: • Understanding which income concept applies and in turn how alternate distribution methods are to operate, in respect of any particular trust is critical; • Adoption of one standard, welldrafted discretionary trust deed for all clients (or as many as possible) not only protects the clients’ interests directly, it also streamlines and adds certainty to the process of preparing distribution minutes by the adviser; • In reality, advisers will need to deal with several different types of trust deeds, so it is vitally important to have an appropriate system in place to appropriately cater for this part, which should involve reconciling financial accounting income beneficiaries’ entitlements to “net income” of the trust via application of the applicable “income” concept and the ‘proportionate approach’; • Trustees can adopt the proportionate approach without concern; • There is no need to rely on PS LA 2005/1 (GA) if the s 95(1) “income” concept applies to the trust.

7It appears that no proportionately increased assessments

were issued to the children in Bamford, who received distributions of $643 each. However, the better view is that the fixing of an unchallengeable set quantum for children is no longer possible unless the trustee/deed adopts the s 95(1) “income” concept

8The FFC endorsed the ‘proportionate approach’ emphatically over both the competing ‘quantum approach’ and the half-way house ‘hybrid approach’ advanced on behalf of the taxpayer in Bamford

High Court appeal?

The FCT maintains the position that ‘income according to ordinary concepts’ always applies, despite the FFC clearly having considered and rejected this position in Bamford. 9 The FCT and the taxpayer have both sought special leave to appeal to the High Court.10 However, the High Court previously rejected a special leave application vis-a-vis Cajkusic based upon much of the same issues.

If special leave is denied, it won’t be for lack of effort on the FCT’s part, having encouraging professional associations to lodge public interest affidavits with the High Court and drawing considerable media attention towards trusts and distributions.11 If the High Court were to grant special leave and reverse Bamford, trustees would be required to identify which trust receipts constitute ‘ordinary income’ and which deductions can properly be expensed against them at general law. This would impose a huge burden, though it might also precipitate the legislation overhaul of Div 6 ITAA36 that many have been calling on for decades.

Pending determination of the applications, the ATO has issued Practice Statement PSLA2009/7: • The ATO will apply the Commissioner’s views Kieren Moore, regarding income, Donaldson Walsh however it will apply the proportionate approach consistent with the FFC’s decision in Bamford; • It will not impose penalties where trustees and beneficiaries have assessed their tax position in line with Bamford.

9It is worth noting that, in any case, the FCT retains a

number of anti-avoidance powers with which to attack clear cases of tax system abuse in respect of trust distributions, such as sec 100A of ITAA36 (specifically redressing ‘reimbursement agreements’) in addition to the Part IVA general anti-avoidance provisions

10The FCT having agreed to fund the taxpayer’s High Court appeal should its application be successful, two bites at the cherry being better than one from the FCT’s perspective

11One recent example appeared in the Australian

Financial Review on 17 September 2009, suggesting a broadened re-interpretation of the scope of ‘loans’ under Div 7A of ITAA36 by the ATO Australasian Legal Business ISSUE 7.10

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In-house perspective

Microsoft’s Horacio Gutiérez

A virtual reality Microsoft is leading the way dealing with their external legal advisors through the concept of the ‘virtual law firm’. As worldwide corporate vice president for IP and licensing and deputy general counsel, Gutiérez shares the story behind the initiative and his plans for its future

T

here is nothing particularly new or novel about the concept of the virtual law firm. They have been around, in one form or another, for almost two decades, with many being able to trace their origins to the dot.com boom.

More recently, virtual law firms have been a home to lawyers disillusioned with the stresses and strains of socalled ‘big law’ across the globe.

Even so, Microsoft’s approach to the concept of the virtual law firm is inherently different to the others in the marketplace. To this day the company remains among only a handful to have launched such an initiative as an alternative to working with international law firms.

The virtual firm involves more than just the simple outsourcing of legal work. It provides members with tools to assist their own practice and business development. Microsoft’s virtual law firm was initiated after a rigorous analysis of the company’s use of outside legal counsel emphasised the need for

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change. “Internally we found that there was a duplication of work – a redundancy in terms of external legal teams we were using,” says Gutiérez.

“We would use local Asian counsel for a particular matter but at the same time we’d also be paying a big US firm for doing the same work. What we did was look at mechanisms to eliminate the international firm and coordinate how we work with international law firms… this is where the virtual law firm came in.”

Wave of creation

But just what is the virtual law firm? Quite simply, it is a carefully assembled collection of lawyers from across the globe who can provide the company’s legal team with real-time and cost-effective advice.

“The virtual firm is a network of solo practitioners or small legal firms that we have organised in such a way that they are able to provide services of the same – or even higher – quality than that which we were receiving from large law firms, but at roughly

two-thirds of the cost,” Gutiérez says.

“Some of the lawyers are people with whom we are familiar and some are not… they are legal professionals that we may have not otherwise been given the opportunity to work with had it not been for the virtual firm.”

He offers the legal work associated with the filing of patents as an example of the scheme’s cost-effectiveness.

“When using the services of a large law firm the cost for filing patents in the US would be around US$10,000 but through the virtual firm we can get the same service for a little under US$7,000.”

With numbers like these and the fact that Microsoft can file anywhere from 2,000 to 2,500 patents a year in the US alone, it's not difficult to see why the virtual firm is handling an increasingly high percentage of this work. “About 60% of work related to the filing of patents is handled by the virtual law firm,” Gutiérez says.

“Since the concept was created five years ago, we have gone from 100% 61

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reliance on big law firms and domestic law firms, to this mix of 60:40 [60% is virtual firm and 40% is international and domestic law firms].

“Over the next five years we are hoping to have the same mix when it comes to patent prosecution and some other areas as well,” he says.

Diverse selection process

It should come as no surprise to learn that it is extremely difficult to land a role on the company’s virtual law firm. Competition is so fierce and the selection criteria so rigorous that Gutiérez tells ALB Microsoft “turns down close to 50% of people who apply to participate.” This is in addition to the stringent quality control measures carried out on a regular basis throughout the year.

“We do a quality review very regularly where we measure the output of the people in the virtual firm,” Gutiérez says. “In some circumstances we have had to let go of members because they were not delivering at a level that we and our clients expected.”

Yet being selected to the virtual law firm isn’t all about receiving a share of the legal work outsourced by the company. Microsoft provides its legal services vendors with access to a wide array of additional services which can help firms to grow their own businesses. “We have people working in-house here at Microsoft that provide the kind of services and collaboration and networking opportunities that the management of a law firm would provide to its own lawyers,” he says.

“We have an annual meeting where members of the virtual firm come to Microsoft to talk about the objectives for the next year; we look at quality metrics, legal developments and case law; and we use this as a means to broadcast to all of the virtual law firm members the developments that they should keep their eye on and we think are necessary. We are providing that sense of community and direction to the members of the virtual law firm,” Gutiérez says. “This is the key to our ability to achieve the high levels of quality and output that we are achieving out of the virtual law firm.”

Notwithstanding this initiative, there are still occasions when 62

“The virtual firm is a network of solo practitioners or small legal firms that we have organised in such a way that they are able to provide services of the same, or even higher, quality than large law firms”

Horacio Gutiérez, Microsoft

Gutiérez will engage the services of either international law firms or the leading domestic law firms across the region. Reasons for this include costeffectiveness, flexibility on billing, quality of service, industry knowledge and depth of talent.

Somewhat unpredictably, Gutiérez also adds diversity to list. “We have been looking at the diversity in the law firms providing services to us closely over the last 12 months, looking at the people employed at these firms in terms of gender and ethnicity and have

set benchmarks which they must try to meet,” he explains. “If a firm being used has met such a threshold then they are entitled to a bonus pool of compensation in which they can seek rate increases of up to 2% year on year that we would offer to law firms.”

The scheme, however, doesn’t only apply to outside vendors. Gutiérez and his colleagues in the legal department’s senior leadership team risk having their own bonus pool withheld if the department doesn’t meet its own benchmarks on diversity. ALB Australasian Legal Business ISSUE 7.10

Feature | interview >>

In a year where client initiatives have been on the downturn, ADERANT were once again at the forefront of investing within the legal community with their recent ASIA Pacific Client Conference.

The theme of the 2009 conference was ‘Go Live’, which was to recognise the many successful go live partnerships with firms globally, and was well supported with representatives from the Asia Pacific region.

At the launch, ADERANT anounced they had more than 160 clients globally on the most current version of the Expert product, with a ‘Go Live’ rate at better than seven per month – at the time of going to press, this has risen well above 180.

There was tremendous interest in the Technology briefings, which highlighted a clear and strategic development path aligned with Microsoft, utilising the most current technologies.

It was revealed by Mike Barry, Global Head of Product and Development at ADERANT, that the company had been invited into more Technology Adoption Partner Programs with Microsoft than any other software company in this arena, which is a resounding endorsement of the ADERANT’s technology standing within Microsoft.

Executives attending the conference all commented that due to a combination of economic and management dynamics, legal firms are seeking to leverage greater strategic and business value from their investment in technology. Responding to these market challenges, ADERANT have released major initiatives covering Workflow, Business Intelligence and Reporting, and these developments were positively received during the conference.

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ADERANT thank our Sponsors for supporting Momentum Asia PaciďŹ c 2009

Thank you also to the following for their contribution

Thilo Pulch Photography Angry Anderson Jean Kittson

www.myspace.com/bonjahband www.legalbusinessonline.com

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Best Newcomer: Slater & Gordon Presented by Jean Kittson

Best Go Live Performance: Rodyk & Davidson Presented by Stephen Cummings

Best Support Act: Freehills Presented by Angry Anderson Hall of Fame Inductee: Helen Brenchley Allens Arthur Robinson Presented by Ian Moss

Congratulations to our 2009 APA Momentum Award Winners 66

Australasian Legal Business ISSUE 7.10

More than 180 firms globally live on ADERANT Expert 7.5

market data | capital markets >>

Equity Capital Markets TRANSACTIONS List Australia, New Zealand Sep 1-Sep 28 NB: Does not include transactions valued at less than than USD10m, best efforts transactions and private placements Issuer

Proceeds (USDm)

Issue date

Currency

Bookrunner(s)

Sector

Australia Ten Network Holdings

588.7

24/09/2009

AUD

Macquarie Capital Partners

Media and Entertainment

Primary Health Care

216.2

15/09/2009

AUD

Deutsche Bank

Healthcare

AWB

186.1

24/09/2009

AUD

Deutsche Bank, Goldman Sachs, UBS

Consumer Staples

Apollo Consolidated

138.2

4/09/2009

AUD

Patersons Securities

Healthcare

Sigma Pharmaceuticals

116.2

9/09/2009

AUD

Deutsche Bank

Healthcare

Grange Resources

106.4

11/09/2009

AUD

Azure Capital, Patersons Securities

Materials

Challenger Finl Svcs Grp

103.5

15/09/2009

AUD

Morgan Stanley

Financials

ALE Property Group

94.3

3/09/2009

AUD

Macquarie Capital Partners

Real Estate

Photon Group

75.8

14/09/2009

AUD

Morgan Stanley

Media and Entertainment

Valad Property Group

35.9

24/09/2009

AUD

Goldman Sachs

Real Estate

Extract Resources

34.8

15/09/2009

AUD

BMO Capital Markets, Haywood Securities

Materials

Photon Group

21.9

17/08/2009

AUD

Morgan Stanley

Media and Entertainment

Clarius Group

10.6

25/09/2009

AUD

Patersons Securities

Consumer Products and Services

Tower

58.4

23/09/2009

NZD

Goldman Sachs

Financials

Rakon

32.3

23/09/2009

NZD

UBS

High Technology

NEW ZEALAND

Source: Thomson Reuters

DEBT CAPITAL MARKETS TRANSACTIONS LIST Australia, New Zealand Sep 1-Sep 28 Issuer

Proceeds (USDm)

Issue date

Currency

Bookrunner(s)

Sector

Australia Westpac Banking Corp Govt Gtd

3,497.40

2/09/2009

USD

Banc of America Securities, Goldman Sachs

Government and Agencies

CBA Govt Gtd

2,746.90

10/09/2009

USD

Citigroup Global Markets, Goldman Sachs

Government and Agencies

Westpac Banking Corp

2,558.70

15/09/2009

EURO

Deutsche Bank, HSBC, RBS

Financials

National Australia Bank

1,297.50

9/09/2009

AUD

National Australia Bank

Financials

Treasury Corp of Victoria

1,244.30

2/09/2009

AUD

Deutsche Bank, JP Morgan, UBS

Government and Agencies

SMHL Securitisation 2009-2

1,088.70

18/09/2009

AUD

Macquarie Bank

Financials

Suncorp-Metway Govt Gtd

860.0

8/09/2009

AUD

RBC Capital Markets, UBS

Government and Agencies

National Australia Bank

600.0

17/09/2009

USD

Bank of America Merrill Lynch, Goldman Sachs, HSBC

Financials

Westlb Ag (Sydney Branch)

545.6

3/09/2009

AUD

Royal Bank of Scotland, Westpac Banking, WestLB AG

Financials

Wesfarmers Ltd

423.4

4/09/2009

AUD

ANZ Banking Group, Commonwealth Bank of Australia, National Australia Bank, Westpac Banking

Industrials

CBA Govt Gtd

300.0

10/09/2009

USD

Goldman Sachs

Government and Agencies

DEXUS Property Group

298.8

28/09/2009

USD

Morgan Stanley, JP Morgan

Real Estate

North American Energy Alliance

200.4

22/09/2009

USD

Barclays Bank PLC, Bank of America Merrill Lynch

Energy and Power

Commonwealth Bank of Australia

14.2

17/09/2009

HKD

HSBC

Financials

Commonwealth Bank of Australia

10.3

16/09/2009

HKD

HSBC

Financials

Source: Thomson Reuters

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lifestyle >>

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lifestyle >>

The Point Villas – Lake Taupo

F

irst light glimmers on the calm surface of Lake Taupo as we slide our bodies into the cool water from the boat jetty. It’s bracing, but not as bad as we imagined, and silent.

We are alone save for a fantail performing a merry dance on a branch flirting with the lakeside. A few easy strokes take us around a rocky outcrop where the thrill of discovery awaits.

Gigantic Maori carvings, towering more than 10 metres high, are etched into the cliff that looms majestically above us.

I feel like an explorer from an Indiana Jones movie. The Mine Bay carvings, which date back to the late 1970s, are usually only accessible by boat, kayak or helicopter, but staying at luxury escape, The Point Villas, gives you easy access from the private part of Whakamoenga Point, more commonly known as The Point.

If you are mad, like us, a dawn visit guarantees missing the hoards of tourists who flock to see them daily. Even better, a hot tub, big enough for two, is waiting back at The Point Villas. It’s a tough choice between that and the shower. A bubbling waterfall burbles beside it, with only a glass wall separating inside from out.

Nestled amongst the bush, the bathroom, in particular the shower, has a magnificent view that looks out over the www.legalbusinessonline.com

lake. It’s like being at one with nature but with the added pleasure of stepping on to Italian travertine stone tiles warmed by underfloor heating.

Our lake view spot is one of two villas that can be secured for an ultimate luxury escape. Each is fully equipped – soft sensuous linen, giant fluffy towels and robes, and a wine cellar to raid, filled to the gunnels with Mt Difficulty’s Roaring Meg pinot noir – even tennis racquets for a friendly game on a court just a few metres from the front door.

The villas are self-catering with wellequipped kitchens that would impress even Gordon Ramsey. A dinner table comfortably seats eight, and the giant granite bench that overlooks the bay is a workspace paradise for cooking enthusiasts. There is an option to hire a chef to cook for you, but one of the best things about The Point Villas is the privacy so most prefer to cook for themselves.

If cooking is not your bag, a local Thai restaurant does deliver, and The Bay Bar & Brasserie, which is less than a 10 minute drive to nearby Acacia Bay, does great takeaway wood fired pizza.

Perfect for a romantic getaway, The Point Villas are also great for a fun gettogether for a group of friends – in either summer or winter.

►► The Point Villas Whakamoenga Point, Lake Taupo, North Island, New Zealand • Two luxury villas available to individuals or groups for exclusive use with private lakeside view.

• Price range $1100 a night per villa • For more information visit www.thepointvillas.co.nz Mobile: 0064 274 774 323 Ph: 0064 7 377 8002 Email: info@thepointvillas.co.nz Review supplied by Fairfax Media

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