Australasian Legal Business (OzLB) Issue 8.10

ISSUE 8.10

Class actions Ending the opportunism

Rise of the boutiques Clients lean towards specialist firms

Corporate social responsibility Finding an industry benchmark

HOURLY BILLING Much ado about nothing?

MARKET-LEADING ANALYSIS

COMPREHENSIVE DEALS COVERAGE

DEBT & EQUITY MARKET INTELLIGENCE

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ISSUE 8.10

EDITORIAL >>

Class actions Ending the opportunism

Rise of the boutiques Clients lean towards specialist firms

Corporate social responsibility Finding an industry benchmark

HOURLY BILLING

Casting the first stone Much ado about nothing?

MARKET-LEADING ANALYSIS

COMPREHENSIVE DEALS COVERAGE

DEBT & EQUITY MARKET INTELLIGENCE

www.legalbusinessonline.com

IN THE FIRST PERSON

B

usiness ethics, like all questions of morality, has always been a matter of degree. That is the peculiar challenge facing law firms which attempt, presumably with the purest of intentions, to implement practices consistent with the principles of corporate social responsibility (CSR).

The difficulty is the extent to which a firm’s CSR activities should be quarantined from the firm’s core business activities. For example, a firm may encourage the use of recycled paper in its own offices but not hesitate to represent the interests of a company involved in the logging of native forests.

Many lawyers would argue that it is for the government to make determinations on environmental policy and other elements of CSR and it is inappropriate for law firms to cast judgment on the activities of their clients – particularly given that the definition of CSR may often be in dispute. However, this position can produce some incongruous results.

Over the past year, there has been considerable progress towards developing a set of industry-wide benchmarks for pro bono activity. A firm’s impact on the community, however, goes well beyond the voluntary activities of lawyers and staff, no matter how commendable these may be. To understand a firm’s commitment to CSR principles is to understand how the firm approaches the question of CSR in all of its business activities – including those which generate revenue.

There is a case, therefore, for developing a set of voluntary guidelines on how law firms should approach the thorny issue of reconciling CSR principles with their business activities. This will not be an easy task. These may be questions which are not capable of resolution to the unanimous satisfaction of the profession. Many may feel that such an approach is unduly intrusive. However, in the same spirit that many firms have voluntarily disclosed the extent of their commitment to pro bono causes, there is surely an equal imperative to have an open dialogue about how firms can improve their transparency on other equally important aspects of socially responsible practice.

“The corporate structure is the most appropriate for the present day in terms of the entrance and exit of partners. It provides the opportunity for shares to be allocated in the business rather than the cumbersome procedure of buying equity” Paul Tully, McInnes Wilson (p30)

“Over the past two years there has been an increase in the amount of government regulation. This is a big issue for corporations, and hence inhouse legal departments” David Cohen, Commonwealth Bank (p12)

“When you seek quotes from other providers, you can get a quote and they stick to it, but not with lawyers. I always test quotes I’m given by firms and then try and lock them into a fixed rate, but it’s hard to do” Mark Buckland, Dymocks Group (p10)

The difficulty is the extent to which a firm’s CSR activities should be quarantined from its day-today business activities

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Australasian Legal Business ISSUE 8.10

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contents >>

contents

ALB ISSUE 8.10 50

34

COVER STORY 10 Hourly billing

Reports of the demise of hourly billing may be greatly exaggerated,

according to some key in-house lawyers that spoke to ALB

ANALYSIS 12 Specialist firms Are specialist firms winning market share at the expense of national full-service firms?

44 Corporate social responsibility ALB examines the business case for greater law firm involvement in CSR

PROFILES

14 Restrictive covenants With the battle for talent hotting up, it may be time for a closer look at how restrictive covenant clauses impede the movement of lawyers and clients

30 ALB-LexisNexis Managing Partner series: Paul Tully, McInnes Wilson Queensland firm McInnes Wilson recently adopted a corporate structure. Chairman Paul Tully speaks with ALB about the process

OPINION

50 ALB-Kensington Swan In-house Perspective: Stephanie Vass, Resimac Resimac group general counsel Stephanie Vass speaks with ALB about the intersection of human resources and law

16 Class actions The objectionable element in class actions, writes Air New Zealand GC John Blair, is the greed

FEATURES 34 Job market: Asia Lucrative options for lawyers looking to gain overseas experience in an Asian jurisdiction are back and some are hard to ignore 38 In-house support services A look at how the range of support services available to in-house counsel has broadened and gained in sophistication

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44

REGULARS 6

DEALS

18 NEWS • DLA Phillips Fox cuts ties with Adelaide • Commonwealth Bank to revamp panel • M&A work rallies • Canadian corporates maintain M&A activity • Law societies refute claims about false billing

• Large law firms maintain pro bono work throughout GFC • Maurice Blackburn expands with two new offices • Sparke Helmore leads mentoring program • Christchurch law firms still shaken by earthquake 11 UK Report 15 US Report 19 In-house Q&A 26 Appointments 54 M&A deals data 55 Capital markets deals data

COMMENTARY 20

22

23

Banking & finance Mayne Wetherell Employment law Sparke Helmore New Zealand Buddle Findlay

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 8.10

NEWS | deals >>

| EQUITY |

deals in brief

►► ASTON RESOURCES IPO A$400m

Firm: Freehills Lead lawyers: Philippa Stone, Tony Sparks, Matthew Fitzgerald Client: Aston Resources Firm: Mallesons Lead lawyer: Shannon Finch Client: underwriters • Aston IPO is the largest listing on the ASX for 2010

►► PRIMARY HEALTH CARE RETAIL BOND OFFER A$125m

►► COCKATOO COAL CAPITAL RAISING

Firm: Mallesons Lead lawyers: David Eliakim, David Friedlander, Phil Harvey Client: Primary Health Care

Firm: Gilbert + Tobin Lead lawyer: Peter Cook Client: Credit Suisse

Firm: Freehills Lead lawyer: Philippa Stone Client: Deutsche Bank and Ord Minnett • Deal represents David Eliakim the first retail Mallesons bond offer to be made under ASIC’s new class order • Primary Health Care is seeking to raise approximately A$125m to repay part of its existing debt to lengthen its overall debt maturity profile and diversify its funding sources • Mallesons has advised existing client Primary Health Care on a number of projects since 2008, including transformation of its acquisition Symbion • Freehills advised Deutsche Bank and Ord Minnett as joint lead managers on the deal

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| EQUITY | A$151m

Firm: Blake Dawson Lead lawyers: Bill Koeck, Anton Harris, Elizabeth Hourigan.

Client: Cockatoo Coal Limited • This accelerated renounceable prorata entitlement offer/ institutional share placement will fund the acquisition of development and exploration assets from Anglo American plc • Proceeds from the equity raising will fund the acquisition of five coal development and exploration assets located in New South Wales and Queensland • Gilbert+Tobin also recently advised Credit Suisse in relation to the A$100m underwritten placement by Eastern Star Gas

Shannon FInch Mallesons

• Freehills’ equity capital markets team has acted on a number of significant Australian IPOs, including the Miclyn Express Offshore, Myer and Kathmandu IPOs

Firm: Mallesons Lead lawyer: Nick Pappas Client: Xstrata

• Xstrata has entered into an Offer Implementation Agreement with Sphere Minerals to acquire all of the issued and outstanding shares of Sphere by way of an all-cash, offmarket takeover offer • Mallesons M&A partner Nick Pappas has advised Xstrata on all of its major Australian acquisitions over the last 10 years

• Aston IPO represents the largest IPO by both amount raised and listed Freehills has acted on since the Myer IPO in 2009

• Mallesons has previously advised Xstrata on a A$15bn joint venture on a proposed coal mine at Wandoan, its A$960m unconditional cash bid for Resource Pacific and its A$3.1bn takeover of Australian resource company, Jubilee Mines

| M&A |

| EQUITY |

►► PRIME INFRASTRUCTURE– BROOKFIELD INFRASTRUCTURE MERGER

►► ASPEN ACQUISITION OF SIGMA PHARMACEUTICALS DIVISION

A$1.6bn Firm: Freehills Lead lawyers: Philippa Stone, Tim McEwen Client: Prime Infrastructure Firm: Mallesons Lead lawyers: David Eliakim, Barry McWilliams Client: Brookfield Infrastructure • Transaction values Prime at A$1.6bn and the merger would establish a global infrastructure company valued at more than $US2.5bn • Freehills previously worked Prime Infrastructure’s A$1.8bn recapitalisation (known as BBI at the time)

Peter Cook Gilbert+Tobin

►► XSTRATA BID FOR SPHERE MINERALS A$428m

Firm: Gilbert + Tobin Lead lawyer: Peter Cook Client: Sphere Minerals

• IPO will raise approximately A$400m. Market capitalisation is expected to be approximately A$1.2bn following the listing

| DEBT |

| M&A |

• Mallesons also led the successful action for Brookfield Multiplex on Wembley Stadium class action

A$900m Firm: Minter Ellison Lead lawyer: Jeremy Blackshaw Client: Sigma Pharmaceuticals Firm: Freehills Lead lawyer: Philippa Stone Client: Aspen Pharmacare • Transaction is the biggest purchase of overseas assets by an African company in the past three years Philippa Stone • Aspen Freehills Pharmacare will acquire the pharmaceuticals division from Sigma, which will retain its healthcare division including the wholesale and retail businesses

Australasian Legal Business ISSUE 8.10

NEWS | deals >>

• Minter Ellison has previously advised Sigma on the finalisation of the company’s accounts for the financial year ended January 2010 and on its asset sale program following Aspen’s acquisition offer • Freehills advised new corporate market entrant Aspen

| M&A | ►► DAVIS LANGDON SALES TO AECOM A$357m Firm: Allens Arthur Robinson Lead lawyer: Mark Cerché Client: AECOM Technology Corporation (Australia and New Zealand)

►► YOUR MONTH AT A GLANCE Firm

Jurisdiction

Deal name

Allens Arthur Robinson

Aus, Canada, US

Mirabela Nickel global offering

176

equity

Aus, NZ

Davis Langdon sales to AECOM

57

M&A

Arnold Bloch Leibler

Aus

Fleetwood Corporation acquisition of BRB Modular

56.5

M&A

Baker & McKenzie

Aus, NZ

Davis Langdon sales to AECOM

357

M&A

Aus, Japan

Fuji Xerox acquisition of Upstream Print Solutions

n/a

M&A

Aus

Centrepoint – PIH merger

n/a

M&A

Blake Dawson

Aus

Cockatoo Coal capital raising

151

equity

Corrs Chambers Westgarth

Aus

Macarthur Coal – MCG Coal Holdings finance facility

360

finance

Aus

Macarthur Coal institutional placement

439

equity

Aus

Fleetwood Corporation acquisition of BRB Modular

57

M&A

Aus, Japan

Fuji Xerox acquisition of Upstream Print Solutions

n/a

M&A

Aus

QCIRG bid for QR assets

3,750

M&A

Aus, US

Prime Infrastructure – Brookfield Infrastructure merger

1600

M&A

Aus, South Africa

Aspen acquires Sigma’s pharmaceuticals division

900

equity

Aus

Aston Resources IPO

400

equity

Aus

Primary Health Care retail bond offer

125

debt

Aus

QCIRG bid for QR assets

Aus

Transfield Services Infrastructure debt refinancing

500

debt

Aus, multiple West Africa

Xstrata bid for Sphere Minerals

428

M&A

Aus

Photon recapitalisation

103

equity

Aus

Eastern Star Gas capital raising

100

equity

Aus

Cockatoo Coal capital raising

151

equity

Aus

Twynam sale of land and water rights to Paraway Pastoral

n/a

equity

Aus

Lane Cove Tunnel sale to Transurban

n/a

M&A

Aus

Stella Travel Services/ Jetset merger

n/a

M&A

Aus

Alinta Energy deleveraging

n/a

debt

Aus

Crescent Capital divestment of National Hearing Care

n/a

M&A

Hall & Wilcox

Aus, Chile

Admirality sale of VIC to Icarus

n/a

equity

Hardy Bowen

Aus, Canada, US

Mirabela Nickel global offering

176

equity

Holding Redlich

Aus

Home Appliances acquisition of Integrated Appliance Group (IAG)

n/a

M&A

HopgoodGanim

Aus

Norton Gold Fields- Lehman Bros gold hedge buyout/ litigation settlement

107

finance

Maddocks

Aus, US

Wright Express acquisition of Retail Decisions

353

M&A

Mallesons

Aus, Argentina, Canada

Goldcorp - Andean Resources share acquisition

3,600

equity

Aus, US

Prime Infrastructure – Brookfield Infrastructure merger

1,600

M&A

Aus

Transfield Services Infrastructure debt refinancing

500

debt

Aus, multiple West Africa

Xstrata bid for Sphere Minerals

428

M&A

Aus

Aston Resources IPO

400

equity

Aus, US

Wright Express acquisition of Retail Decisions

353

M&A

Aus, US

LCW Private Equity sale of Dun & Bradstreet Australia

233

private equity

Aus

Primary Health Care retail bond offer

125

debt

Photon recapitalisation

103

equity

Aus

Alinta Energy deleveraging

n/a

debt

Aus, South Africa

Aspen acquires Sigma’s pharmaceuticals division

900

equity

Aus, US

LCW Private Equity acquisition of Dun & Bradstreet Australia

233

private equity

McCullough Robertson

Aus

Centrepoint – PIH merger

n/a

M&A

Piper Alderman

Aus

Eastern Star Gas capital raising

100

equity

Freehills

Gilbert + Tobin

Firm: Baker & McKenzie Lead lawyer: Brendan Wykes Client: Davis Langdon (Australia and New Zealand) • Transaction involves the parallel sales of Davis Langdon operations in Australia and New Zealand, Europe and the Middle East, North America and Africa to AECOM Technology Corporation • Takeover does not include Davis Langdon’s Asia counterpart, Davis Langdon & Seah • AECOM is an established client of Allen Arthur Robinson • First time Baker & McKenzie (Australia or Asia Pacific) has advised Davis Langdon

| EQUITY | ►► EASTERN STAR GAS CAPITAL RAISING A$100m

A$m

3,750

Practice

M&A

Firm: Gilbert + Tobin Lead lawyers: Peter Cook, Rachael Bassil, Alastair Corrigall Client: Credit Suisse

Minter Ellison

Sidley Austin

Aus, Canada, US

Mirabela Nickel global offering

176

equity

Firm: Piper Alderman Client: Eastern Star Gas

Thomsons Lawyers

Aus

Home Appliances acquisition of Integrated Appliance Group (IAG)

n/a

M&A

Aus

Twynam sale of land and water rights to Paraway Pastoral

n/a

equity

• Eastern Star Gas has issued an underwritten institutional placement at $0.84 per share and is expected to raise A$100m

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NEWS | deals >>

• Capital raising will be used to strengthen ESG’s balance sheet following the acquisition of a parcel of land at Newcastle • Another recent deal by Gilbert+Tobin for client Credit Suisse is A$150m Cockatoo Coal capital raising

| M&A | ►► WRIGHT EXPRESS ACQUISITION OF RETAIL DECISIONS A$353m Firm: Maddocks Lead lawyer: Jonathan Ambler Client: Retail Decisions Firm advising: Mallesons Lead lawyers: Rob Hanley, Joshua Cole, Hal Bolitho Client: Wright Express Corporation • Wright Express will acquire Retail Decisions’ Australian arm from Palamon Capital Partners for A$353m • Other recent Mallesons M&A deals include Stockland Development’s A$266m takeover bid for Aevum and Genesee and Wyoming’s A$334m railway acquisition from KordaMentha

| M&A |

Group’s A$128m acquisition of CSR assets

| PRIVATE EQUITY | ►► LCW PRIVATE EQUITY SALE OF DUN & BRADSTREET AUSTRALIA A$233m Firm: Minter Ellison Lead lawyer: Nick Broome Client: LCW Private Equity Firm: Mallesons Lead lawyers: Adrian Perkins, David Friedlander, Sarah Turner and Michelle Bennett Client: Dun & Bradstreet Australia • Transaction is Dun & Bradstreet Australia’s largest acquisition since its divesture of Moody’s Rating Services in 2000; places Australia as a cornerstone of its Asian growth strategy • Consideration had been given to an IPO but Nick Broome Minter Ellison the vendors eventually decided on a trade sale • LCW is longstanding client of Minter Ellison

►► HOME APPLIANCES ACQUISITION OF INTEGRATED APPLIANCE GROUP (IAG) Undisc.

Firm: Holding Redlich Lead lawyer: Jon Cane Client: Kestrel Capital Firm: Thomsons Lawyers Lead lawyers: Dan Kramer, Lucinda Girdlestone, Bryan Shaw Client: Integrated Appliance Group (IAG)

Undisc.

Firm: Corrs Chambers Westgarth Lead lawyer: Richard Lewis Client: Fuji Xerox Firm: Baker & McKenzie Lead lawyers: Ashley Poke Client: Upstream Print Solutions • Merger will see Fuji Xerox Australia broaden its Managed Print Service offerings in the Australian market.

Upstream will operate as an autonomous subsidiary of Fuji Xerox.

• Recent deals Corrs has advised on include the A$3.4bn ESI Super and SPEC Super merger • Recent acquisitions Baker & Mckenzie has advised on include Staples’ A$1bn acquisition of Corporate Express, Rockwool

8

| EQUITY | ►► PHOTON RECAPITALISATION A$102.5m

• Holding Redlich previously advised Kestrel Capital on the sale of Australian Helicopters to Archer Capital and the acquisitions, fundraisings and restructuring for Kestrel Capital’s portfolio companies SigNav and Sigtech • Thomsons Lawyers previously advised Anacacia Capita, who supported the original investment into Home Appliances

| EQUITY | ►► TWYNAM SALE OF LAND AND WATER RIGHTS TO PARAWAY PASTORAL Undisc.

Firm: Gilbert + Tobin Lead lawyers: Janine Ryan, Philip Breden, Marko Komadina, James Lewis Client: Photon Group

Firm: Gilbert + Tobin Lead lawyer: Amanda Hempel Client: Twynam Agricultural Group

Firm: Mallesons Lead lawyer: Dave Friedlander Client: UBS and Macquarie

Firm: Thomsons Lawyers Lead lawyer: Tom Boyce Client: Paraway Pastoral Fund

• Photon will issue approximately 1.52bn shares to existing and new shareholders at 10 cents per share, valuing raising at A$102.5m • Mallesons advised underwriters, UBS and Macquarie, on the recapitalisation undertaken by marketing services group, Photon, following its strategic review

• Thomsons Lawyers has an established relationship with Paraway Pastorol having previously advised on the acquisition of Steam Plains, Burindi and Euroka

| M&A | ►► CENTREPOINT – PIH MERGER Undisc.

• Home Appliances has acquired Sydney-based Integrated Appliance Group IAG) from Kestrel Capital.

The company will merge IAG with Euromaid but will keep the brand names along with the ARC Appliances brand which IAG owns

| M&A | ►► FUJI XEROX ACQUISITION OF UPSTREAM PRINT SOLUTIONS

of Gilbert + Tobin; recently advised on the sale of river water entitlements to the Commonwealth Government for A$303m – single largest purchase of water for the environment in Australia’s history

Amanda Hempel Gilbert + Tobin

• Sale involves purchase of three of Twynam’s NSW farms and associated water rights, land, livestock, and all plant and machinery • Twynam is a longstanding client

Firm: Baker & McKenzie Lead lawyer: Richard Lustig Client: Centrepoint Alliance Firm: McCullough Robertson Client: PIH Richard Lustig Baker & McKenzie

• Transaction involves four inter-dependent schemes of arrangement; first time Baker & McKenzie has worked with ASX-listed Centrepoint

| M&A | ►► FLEETWOOD CORPORATION ACQUISITION OF BRB MODULAR A$56.5m Firm: Arnold Bloch Leibler Lead lawyer: Jonathan Wenig Client: BRB Modular Firm: Corrs Chambers Westgarth Lead lawyer: Christian Owen Client: Fleetwood Corporation • Total purchase price comprises A$31.5m in cash; funded using Fleetwood’s facility with Westpac and 2.5m Fleetwood Corporation shares • Acquisition will provide WA-based Fleetwood Corporation entry to the public sector market and also strengthen its existing presence on the East coast • First time Arnold Bloch Leibler has acted for the McNamara family, who own BRB Modular Australasian Legal Business ISSUE 8.10

NEWS | deals >>

www.legalbusinessonline.com

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NEWS | analysis >>

ANALYSIS >>

BEHIND THE TIMES Reports of the death of the billable hour may be premature

M

uch has been written in recent times about the predicted demise of hourly billing – how in-house lawyers have stridently demanded a fresh approach to measuring value and how large commercial firms have allegedly ignored these calls and left themselves open to attack from smaller firms espousing innovative new fee structures. These are themes which have been presented as evidence of an irresistible shift in the way the profession views the question of billing.

But the latest survey of opinion in the in-house profession presents a problem for this theory. According to the 2010 Legal Department Benchmarking Report, a joint production of CLANZ, ►► HOW APPROPRIATE IS HOURLY BILLING FOR LEGAL WORK? 7% entirely inappropriate

4% entirely appropriate

ACLA and consultancy firm Team Factors, 53% of Australian in-house lawyers were either satisfied with hourly billing or were “unconcerned” on this issue. Remarkably, the equivalent figure for New Zealand in-house lawyers was 70%.

In-house lawyers may not be entirely enamoured with hourly billing, but nor does there appear to be a clear consensus that the industry should move away from it. Admittedly, support for hourly billing in Australia has dropped since the last equivalent industry survey was completed in 2008, but support has risen in New Zealand in that period.

The difficulties and client frustrations relating to hourly billing

the estimates. We have not had any particularly nasty surprises as yet using hourly billing.”

However, there are in-house lawyers who are keen to seek out alternative arrangements. Dymocks Group general manager for legal and compliance, Mark Buckland, is unimpressed with what he sees as the uncertainty associated with hourly billing. “When you seek quotes from other providers, you can get a quote and they stick to it, but not with lawyers,” he said. “I always test quotes I’m given by firms and then try and lock them into a fixed rate, but it’s hard to do.” Buckland gives priority to firms that offer fixed rates.

“I don’t care if it ends up being a little bit more expensive [than the hourly

“I’m curious about the focus on alternative billing arrangements. It’s not a big issue for us. I don’t think we are struggling to keep on top of the estimates. We have not had any particularly nasty surprises as yet using hourly billing" ANNETTE SPENCER, UBS

39% generally inappropriate

42% generally appropriate

7% not concerned

Source: ACLA/CLANZ Legal Department Benchmaking Report 2010

10

have been well documented. However, it may be the case that the level of client angst about hourly billing has been somewhat exaggerated. One general counsel who has been bemused by the attention the issue has received is UBS GC Annette Spencer. “I’m curious about the focus on alternative billing arrangements,” she said. “It’s not a big issue for us. I don’t think we are struggling to keep on top of

rate], because there will be times in the future when it is likely to be the other way around,” he said.

Commonwealth Bank general counsel David Cohen describes the billable hour as “doomed” and said that it was counter-intuitive to pay for time, as opposed to a result. However, he said that the billable hour was unlikely to disappear in the near future due to a high degree of acceptance in the Australasian Legal Business ISSUE 8.10

NEWS | analysis >>

►► COST ESTIMATES: HOW OFTEN ARE THEY SOUGHT BY CLIENTS AND HOW OFTEN DO FIRMS MEET THEM? 40

Budgets sought

uk report

35

Transactions on or under budget

30 25

% of clients 20 15 10 5 0

100% of the time

50% of the time

0% of the time

Source: ACLA/ CLANZ Legal Department Benchmarking Report 2010

market. George Weston Foods group general counsel Asia Pacific Tim Wong said that his perception was that law firms were not in a hurry to move too rapidly to new models of billing. That is an observation borne out by the study – lack of enthusiasm for or experience in managing alternative fee arrangements on the part of law firms were, according to most respondents, the main barriers to eliminating hourly billing.

The study noted that despite the extensive discussion of alternative fee arrangements, their “actual use remains relatively low.” The authors suggest that the in-house profession itself will need to be an active part of any change in billing practices.

“Time and attendance is the default position for many firms,” observed CLANZ president Jeremy Valentine.

“Organisations need to push the use of alternative billing arrangements.”

There is no doubt that clients and firms will continue to work towards innovative new fee arrangements.

Whether we are at the cusp of a crucial turning point, though, remains to be seen.

The art of estimates

There is an intimate link between hourly billing and the capacity of firms to adhere to a cost estimate for a particular matter, and law firms were found wanting on this front. In-house lawyers reported that firms rarely met or came in below estimate. When asked to indicate whether their law firm adhered to budget “more often than not” only a third of respondents www.legalbusinessonline.com

UK firms compete for panel roles Rio Tinto, Nomura and Ireland’s National Asset Management Agency (NAMA) have reached the advanced stages of advisor reviews aimed at reducing costs and streamlining the number of law firms the three companies instruct.

UK firms Allen & Overy, Denton Wilde Sapte, DLA Piper, Eversheds, Macfarlanes, Nabarro, Simmons & Simmons, Taylor Wessing and Wragge & Co will sit on the NAMA’s advisory panel under a three-year term. The panel, which is divided into enforcement and refinancing, also consists of 64 Irish firms including Arthur Cox, Matheson Ormsby Prentice and William Fry. All firms were appointed to the panel by the Irish Government.

Rio Tinto’s current panel includes Linklaters, Herbert Smith, Baker & McKenzie, Sullivan & Cromwell and O’Melveny & Myers; and Australian firms Allens Arthur Robinson and Blake Dawson. Rio’s global review will be overseen by group executive of legal and external affairs Debra Valentine.

A&O continues to cut costs Allen & Overy will sublet its premises at 40 Bank Street in Canary Wharf following the relocation of 200 staff to its City base. The firm has decided to

vacate the 64,500 sq ft space it has occupied since 2003 for cost-cutting reasons.

The firm maintained two banking groups at the Wharf – leveraged finance and structured and asset finance – and half of its global loans practice. A&O will sublet two out of the three floors at the wharf, while the top floor will remain in use by the firm for meeting rooms.

Last year the firm laid off 9% of its lawyers and support staff, including partners, which freed up space in the London headquarters for the relocation.

Ropes & Gray launch graduate program in London US firm Ropes & Gray will expand its UK presence with the launch of a graduate training program in its London office. The move will see the firm shift away from its existing growth strategy of lateral hires in its London practice, with the introduction of a formal graduate recruitment process.

Set to commence in 2011, the program planning will be headed by client director Catherine McGonagle, in consultation with joint office heads Maurice Allen and Mike Goetz. However, Ropes & Gray says that it will take some time before the program becomes a primary recruitment source for the firm.

ROUNDUP

• Clifford Chance senior partner elections will commence in October. Current CC senior partner Stuart Popham is expected to step down in December, retiring in 2011 • Norton Rose will launch its anti-trust, regulatory and competition practice in Italy with the partner hire of Linklaters’ Andrea Zulli • McGuireWoods’ London based corporate associate Josefin Lonnborg was one of five lawyers advising Elin Nordegren in her divorce from Tiger Woods. Lonnborg is Nordegren’s twin sister • Slaughter and May, Jones Day and Cleary Gottlieb have secured lead roles on BHP Billiton’s US$40bn hostile bid for Canadian-based company Potash Corporation • Cuatrecasas has appointed Inigo Rubio and Miguel Angel as managing partners to its London and New York offices, respectively • Freshfields has hired former Brussels managing partner John Davies and Düsseldorf-based partner Martin Klusmann as co-heads of its global anti-trust, competition and trade (ACT) practice • Simmons & Simmons has expanded its IP practice with the hire of Howrey City patent and regulatory partner Marjan Noor to its London office

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NEWS | analysis >>

said that firms met this criterion. Inhouse lawyers are more likely to seek estimates prior to briefing law firms than they were two years ago. “We always ask for the firm to give us an estimate as part of our arrangement,” said David Cohen. He has implemented his own system for comparing estimates against the final bill and says that law firms miss the mark about 40% of the time.

Yet this is an improvement on the corresponding figure for 12 months ago, where there were accuracy issues with 55% of the estimates. “Law firms have a wealth of data on how much certain types of work will cost. I encourage firms to use that data and become analytical, so that they can give better estimates or even fixed-fee quotes,” Cohen said.

Some firms are already beginning to heed this message. Corrs Chambers Westgarth partner Andrew Lumsden, for example, has developed a database of matters which provides a basis for the quotation of future work. “I use [the database] to cross-check a job against three similar matters we have been involved in, to make an accurate assessment of how much it will cost,” he said.

However, as legal matters can evolve in complexity, he added, there needs to be a certain degree of tolerance with estimates. “The legal costs are significant, but timing or efficiency and the value of the work are also important,” Lumsden said. “From my perspective, a conversation only on fees is overly one-dimensional.” ALB ►► 2010-2012: PERCENTAGE OF RESPONDENTS EXPECTING WORK ON NON-HOURLY FEE BASIS Percentage of respondents

81-100%

61-80% % of work based on 41-60% nonhourly fees 21-40%

0-20% 01 0

2002

03 40

04 60

05 80

Source: ACLA/CLANZ Legal Department Benchmarking Report – 2010

12

06 0 100

ANALYSIS >>

Revenge of the client In-house lawyers are under-resourced, under pressure to cut external spending and looking for better value from law firms. And it may well be specialist firms that stand to benefit most from this state of affairs

I

f the halcyon days of the pre-creditcrunch era were the glory days for the commercial law firm, perhaps we are now witnessing the era of the corporate lawyer. The shifting of power in the law firm-client relationship and the increased capacity of the client to set the terms of the relationship have certainly become an accepted part of the industry landscape. The extent to which clients wield decisive control over the relationship and are prepared to use that power, however, remains the subject of some conjecture.

If the more extreme predictions are to be believed, the in-house profession in Australia and New Zealand is making preparations to desert the large national law firms en masse, in favour of specialist firms and increased internal resourcing. Some exaggeration is inevitable, particularly from those who have a vested interest to do so. The 2010 Legal Department Benchmarking Report therefore provides a timely – and more moderate – perspective on the industry and the likely beneficiaries of this emerging state of affairs.

Which firm?

In the belt-tightening post-GFC environment, specialist firms have been claiming ascendancy in the continuing quest to win more work from full-service firms. The usual argument advanced on behalf of specialist firms is that they are better placed to offer value, because they are not encumbered with the traditional overheads of national full-service firms.

While this is a familiar argument in areas such as insurance and IP, the recent “cherry picking” of talent in the banking & finance area by Allen & Overy suggests that the concept has potential in other practice areas.

The 2010 Legal Department Benchmarking Report does provide a certain level of support for the theory that the tide is beginning to turn in favour of boutique and specialist firms.

While a clear majority of general counsels surveyed did not predict any changes to the type of law firm they used, 32% of respondents did say that they intended to increase their use of boutique or specialist firms, while only 5% indicated that they intended to use those firms less. By contrast, only 9% of respondents said that they would increase their use of national full-service firms while 30% said they intended to reduce their use of those firms. These results certainly give credence to frequently-made claims by specialist firms that they are winning work at the expense of national firms.

Ron Pol of Team Factors, which assisted with research into the report, says changes in which firms will receive work is a reflection of cost sensitivity.

“Anecdotal evidence often indicated a perception that the big national fullservice firms can sometimes be more expensive than specialist firms and local and regional firms,” he explained.

The study does not cover another familiar battle ground, namely the continuing rivalry between mid-tier and top-tier firms. Pol said that it would be difficult to conduct a survey on this topic because of the lack of a consistent definition of what constitutes the “top tier” or the “mid tier” for law firms.

However, if cost pressures are causing clients to gravitate towards specialist firms it would not be unreasonable to infer, by the same logic, that clients would also gravitate towards mid-sized firms for the same reasons.

Those GCs interviewed by ALB were divided on this point. Qantas general counsel Brett Johnson said he has found both top-tier and mid-tier firms willing to negotiate on rates. In contrast, George Weston Foods group general counsel Asia Pacific Tim Wong said that he has found more flexibility with mid-tier firms “as they are keen to take work off the top-tier firms and their management structures allow a bit more flexibility to Australasian Legal Business ISSUE 8.10

NEWS | analysis >>

negotiate.” Heinz Asia Pacific general counsel Carolyn Fox agrees that midtier firms will sometimes be more cost effective with certain types of work, but warns that it is a “mistake” to think mid-tier firms will always be cheaper.

Echoing a theme raised by many GCs, Fox said that it is individual lawyers and their experience which mostly determines where work will go. If that is the case, the fortunes of all firms may well be intimately connected with their capacity to retain top talent.

While the study has provided some encouraging evidence for specialist firms, it does not purport to describe the use of mid-size firms. Nonetheless, the argument raised by many midsized firms is that they see themselves as evolving into de facto specialists, covering more than one practice area but offering a greater level of specialisation than full-service firms.

Maddocks (planning and environment) and Hall & Wilcox (employment/ workplace) are prominent examples of firms which offer a broad range of services but are well-known for certain practice areas. Possibly it is these firms which clients had in mind when they indicated an intention to increase their use of specialists.

Whatever the definition of “specialist”, the study results appear to reinforce the view that it is the larger national firms which have the most to lose in the postGFC market.

Team size

According to the study, most GCs are not expecting to reduce the size of their legal teams in the next two years. A significant proportion – 50% for Australian respondents, 43% for New Zealand respondents – expect their teams to grow. These growth predictions are not as robust as those which were made for the 2008 survey, but nonetheless remain strong.

“I think this is part of an ongoing trend,” said CLANZ president Jeremy Valentine. “I think there are efficiencies you can create through having someone who actively understands the organisation’s objectives, because they are part of the team.”

However, only a minority of respondents (less than 10% ) were planning a significant increase in the size of teams, which suggests that the push to increase team size may have www.legalbusinessonline.com

►► DO YOU INTEND TO INCREASE OR DECREASE YOUR USE OF SPECIALIST/ BOUTIQUE FIRMS? 1% 4% Significant Moderate decrease decrease

28% Moderate increase

63% No change 4% Significant increase

►► DO YOU INTEND TO INCREASE OR DECREASE YOUR USE OF NATIONAL FULL-SERVICE FIRMS? 5% Significant decrease

9% Moderate increase

0% Significant increase

25% Moderate decrease 61% No change

Source: ACLA/CLANZ Legal Department Benchmarking Report 2010

already peaked. Simpson Grierson chairman Kevin Jaffe says he has not seen a noticeable increase in the size of in-house teams. “If anything, they have stabilised or diminished a little because of the increased use of secondments.”

Nonetheless, the study does demonstrate that in-house teams are more likely to continue growing than not.

Commonwealth Bank GC David Cohen is not looking to increase his team – in fact he’s decreased headcount over the past two years – but he can understand why other GCs would require more resources. “Over the past two years there has been an increase in the amount of government regulation. This is a big issue for corporations, and hence inhouse legal departments,” he observed.

The increasingly complicated nature of the work is also another factor – Qantas general counsel Brett Johnson said he intended to increase the size of his legal and competition team “to reflect the increased workload and complexity”. ALB

news in brief >> HDY APPOINTS NEW CHAIRMAN OF PARTNERS Henry Davis York has appointed leading insolvency, commercial and banking lawyer Philip Crawford as chairman of partners.Crawford has worked with Henry Davis York for more than 30 years, during which time he has acted for major financial institutions and insolvency professionals.

The appointment comes as on the back of record growth in revenue for the firm – up 13% to A$96m between 2009 and 2010. The firm has also bolstered staff numbers, and now has 155 lawyers and 48 partners. In June the firm announced 28 new senior appointments – including five new partners – plus the appointment of two banking & finance partners from with Corrs Chambers Westgarth.

BELL GULLY CHAIRMAN ELECTED TO LEAD BUSINESS THINK-TANK Bell Gully chairman Roger Partridge has been elected as the new chair of the New Zealand Business Roundtable.

Partridge has been chairman of Bell Gully since 2007 and prior to that headed the firm’s litigation department for three years. He has been a member of the Business Roundtable since 2008 and was also a director of the Legal Research Foundation, a private law reform body, from 2001 to 2010.

MINTER ELLISON OPENS NEW OFFICE IN BEIJING As foreshadowed by ALB last year, Minter Ellison has officially opened an office in Beijing. International managing partner Mark Green said the Beijing office was a natural extension of the firm's footprint in China. "As China's administrative, policy and regulatory hub, Beijing is an important centre," he said. "Having a Minter Ellison office here is both a strategic move and the next logical step for us in China.”

Minter Ellison has had offices in Hong Kong since the early 1980s and in Shanghai since 1999. Its other overseas offices are in London and New Zealand through Minter Ellison Rudd Watts. The firm’s practice model in Greater China has been to focus on niche areas where the firm's expertise allows it to provide a specialised service. "Our key focus in Beijing is to work with clients on outbound M&A and inbound and outbound investment opportunities," Green added.

The team in Beijing will include partner Sam Farrands as initial chief representative, as well as lawyers Tim Knowles, Andrew Thomson and Kevin Zhou.

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NEWS | analysis >>

ANALYSIS >>

Restricted practice Lawyers must be allowed to switch firms and advance their careers however they see fit. But they had better tread carefully, lest their former employer chases them down the road brandishing a restrictive covenant clause

E

ight years ago, two high-profile partners from Hong Kong-based firm Deacons quit and joined US giant White & Case. The move sparked a bruising legal battle that lasted more than two years, including public hearings and confidential arbitration.

The parties eventually settled the case privately, but not before Judge David Gill had declared White & Case’s behaviour “below the belt,” and noted that the firm had shown a “cynical disregard for the rights of Deacons, putting profit before honour”. The partners, with encouragement from White & Case, had tried to persuade Deacons clients to switch firms and had passed confidential information to the new firm while still working at Deacons.

With millions of dollars at stake, it is no wonder that firms choose to protect themselves with carefully drafted noncompete and non-solicitation clauses.

But how effective are these in halting the kind of behaviour uncovered in Deacons v White & Case?

“They will be enforceable to the extent that they are reasonable and they seek to protect a partnership’s legitimate business interests,” says Shana Schreier-Joffe, partner and team leader at Harmers Workplace Shana SchreierLawyers.

Joffe, Harmers “You can’t indefinitely restrain [departing employees or partners]. It’s a question of how long it would take for the firm to retain the clients themselves. Is that two months, three months or 12 months? The circumstances of a particular case are what drive the decisions in these matters. But more and more, the courts are willing to enforce restraints.”

14

Non-solicitation is often much more likely than non-compete to be regarded as reasonable by the courts. “Nonsolicitation [clauses] are … much easier to enforce,” says Fiona Loughrey, partner and employment law expert at Simmons & Simmons in Hong Kong.

“Even [the judgment in] White & Case/ Deacons acknowledged that members of the workforce should be allowed to advance their careers by moving, without due restraint, from one firm to another. Blanket non-compete, if it is included, should only be included for a very limited time.”

Purely legal considerations aside, strategy is often employed by the disgruntled party. Internationally renowned law firm strategist Patrick McKenna recalls a number of lawsuits brought against departing partners

that should be paramount. “The bottom line is that the client always has the final say,” says McKenna, reporting that courts have shown that they are willing to rule against an injunction on the grounds that the injunction could harm the client’s business.

This does not mean that lawyers who have moved on should approach their old firm’s clients, simply by framing it as being ‘in the client’s best interest’.

However, what if the lawyer in question just happens to be Google-ed by the client, who then tracks down the lawyer their own accord? Schreier-Joffe is suspicious of such claims. “Usually clients don’t just approach without an invitation,” she says. “How does the client know a partner’s moved on? They usually have to tell them. What [the partner] says might be the breach that you can action,” she says.

In any lawsuit it would be up to the plaintiff to Fiona Loughrey, prove that there had been Simmons & Simmons a breach of an express or implied covenant, and in doing that there might be debate over reasonableness.

“There were a lot of things in the move from Deacons to White & Case

“You can't indefinitely restrain [departing employees or partners].

It's a question of how long it would take for the firm to retain the clients themselves. Is that two months, three months or 12 months?"

SHANA SCHREIER-JOFFE, HARMERS WORKPLACE LAWYERS

by North American firms. “I don't know that any of these suits have been particularly successful, but I think they are commenced simply to disrupt the lawyer who is leaving,” he says. “After all, if you can question that lawyer's reputation or require them to take time away from their practice, that might disrupt their relationship with some important clients.”

Client’s choice

In the midst of arguing about what was breached and who was solicited, spare a thought for the clients. Like children stuck in the middle of divorces, ultimately it is perhaps their interests

which were clearly done without it occurring to them that anyone would find out,” Loughrey says. “The discovery process uncovered a lot of relevant evidence. If there has been a breach of a covenant not to solicit clients or colleagues, the relevant parties are going to have to come clean and give evidence in the witness box.”

Most firms try to avoid taking these matters to court. Airing the partnership’s dirty laundry in public is not good for anyone’s business. “Often these things are resolved behind closed doors, because both sides want the client, and you don’t want the client involved,” says Schreier-Joffe.

Australasian Legal Business ISSUE 8.10

NEWS | analysis >>

“It’s perfectly possible for a good lawyer with a following to get a new position with a new firm. In moving, though, they should conduct themselves in a particular way" FIONA LOUGHREY, SIMMONS & SIMMONS

Unwritten rules

As the legal services industry becomes increasingly competitive, ethical boundaries are constantly shifting, or at least being tested. Some believe it’s a matter of every firm for itself, with no expectation or guarantee of loyalty beyond what is absolutely required by law. “I guess I've seen it all,” says McKenna. “I've seen firms interview potential laterals only to really get at uncovering competitive intelligence.

I've seen firms recruit one individual only to really get a handle on bringing in an entire group. I've seen firms propose a merger only to recruit the handful of true business originators.”

The problem as McKenna sees it is that leading modern law firms are made up mostly of laterally hired partners. “Only around 30% of the partnership is truly homegrown,” he says. “The culture is now built upon a foundation of nothing more than money, and that makes it difficult to build any sense of traditional partnership camaraderie.”

According to Loughrey, Deacons v White & Case was important in that it reinforced acceptable standards of behaviour in an age of increased headhunting and firm-hopping. “It was an example of what can happen, and the risks involved if a new employer and a team of people talk to each other,” she says. “It’s perfectly possible for a good lawyer with a following to get a new position with a new firm. In moving, though, they should conduct themselves in a particular way.”

Provided departing lawyers have open communication with their former employers, uphold their fiduciary duties, and refrain from divulging confidential information or using the resources of their old firms, they should be free to take advantage of all the opportunities of the open marketplace – with impunity. ALB www.legalbusinessonline.com

us report US associate salaries flat-line The latest survey has revealed associate salaries were largely flat between 2009 and 2010.

US$160,000 remained the median starting salary for associates at large law firms in Chicago, Los Angeles, New York, and Washington DC, but in Boston and San Francisco the median salary dropped to US$145,000. In the south, the median salary at big firms also fell below US$160,000 to US$135,000.

Overall, more law firms offered first-year starting salaries of US$130,000 to US$145,000 than last year – even in markets where US$160,000 was the median starting salary. The results confirm legal starting salary is now much higher compared to those seen at the depth of the financial crisis.

Hammonds-Squire Sanders talks advance The much-publicised merger between Hammonds and Squire Sanders, which is expected to be confirmed on 1 January 2011, could create a firm comparable in size to that other recent transAtlantic teaming - SNR Denton. Hammonds has a PEP figure of GBP364,000 (US$569,000) and revenues of GBP118m (US$184m), while Squire Sanders has PEP of US$795,000 and revenues of US$545m.

The trans-Atlantic merger nears completion after

long-term consideration on the part of both law firms to enter each other’s market base. Hammonds currently holds an existing relationship with US firm Holland & Knight for referral work, and in 2008 set up a committee which looked into opportunities for the firm in the US market. Squire Sanders’ interest in the UK and European markets saw the firm enter into a number of unsuccessful merger talks – with Denton Wilde Sapte in 2009 and the now-defunct Coudert Brothers in 2004.

Hammonds managing partner Peter Crossley, non-executive chairman David Hearn, and Squire Sanders chairman James Maiwurm are leading the merger talks between the two firms.

Kirkland adds nine lawyers to partnership Reflecting continued growth seen in London, Kirkland & Ellis has added nine lawyers as partners in its London office, effective 1 October. The partnership boost is spread across several practice areas, including corporate, tax, funds, restructuring and arbitration. The additions will mean Kirkland’s partner promotions this year are higher compared with 2009, when only three City partners were promoted out of a firm-wide total of 51.

Kirkland & Ellis currently has 90 lawyers in its London office, which account for approximately 6% of the firm’s global headcount.

ROUNDUP

• Skadden, Holland & Knight, Kirkland & Ellis and Weil Gotshal will advise on the US$4bn sale of Burger King to 3G Capital. The sale will see the fast-food chain return to the private sector, after it went public with an IPO in May 2006 • Reed Smith has opened a shipping practice in New York with the hire of Holland & Knight partner Lars Forsberg. Forsberg’s background is in admiralty law, litigation and dispute resolution • Freshfields has signed a new lease for East 53rd Street at 601 Lexington. At110,000 square feet, the new New York office is 50% larger than the current space • Jenner & Block and Davis Polk have won lead roles on General Motors’ IPO. The listing comes a year after the company emerged from bankruptcy • MoFo has added Mayer Brown structured finance and capital markets partner Elana Hahn to its London finance department • Nixon Peabody has promoted four lawyers to its partnership , including finance counsel Roland Diniz to its US arm, and restructuring lawyer Daniel Sklar to its UK arm • Chadbourne & Parke has expanded its capital markets practice in Russia and the Central and Eastern Europe (CEE) with the hire of White & Case’s CEE capital markets head Simon Morgan in Moscow

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NEWS | opinion >>

OPINION >>

TOO MUCH CLASS?

by John Blair – General Counsel, Air New Zealand Ltd

As if the growing greed inspired by class actions wasn’t bad enough already, recent developments are about to make it worse

I

f you’ve ever suffered a burglary and the sense of rage at your own space having been violated by an intruder stealing your hard earned possessions, you will begin to understand the sense of being on the wrong end of a class action.

The particularly egregious USAstyle of legalised extortion (1) appears to be taking root now in the Australian psyche, fed of course by law firms who typically stand to gain far more than any of their clients. The tactics are well established; find an “angle”, get as much media coverage as possible, sign up all the clients you can, close off the class to “tail-coaters” who won’t agree to your 40% cut of the loot – let the defendants work out the costs of defending the action and wait for the settlement offers. If your angle can capture a number of defendants, all the better.

Erin Brockovich gave us all a warm fuzzy feeling about what clever and tireless crusaders these charitable minded lawyers are on behalf of the downtrodden classes, but did you notice the size of the cheques they won for themselves at the end of this Hollywood fantasy? More to the point – did you wonder about the fact that those large sums were paid out of the compensation due to the real sufferers?

at $5m with a preferred starter of at least $25m.

An Australian litigation funder assures its prospects that it “provides access to justice for the victims of corporate misconduct, advocates changes to law and procedure ... so that victims of anti-trust behaviour can seek redress through the courts, ensuring better corporate governance for all”.

Interestingly their three page invitation implies massive damages recoveries but nowhere does it mention anything other than underwriting the “costs of recovery proceedings”. Handing over 30–40% of your share of the damages is no doubt well understood to be a “cost”, but you have to delve into their website for that information.

The real “cost” of course is to the wider population of consumers in the economy as the hapless corporate victims of this perversion of “justice” line the pockets and support the executive jets of the lawyers while having to cut their own costs or increase their profit margins to settle claims. These rarely involve small sums. In the USA, settlements of class actions including legal defence costs and management time run to billions of dollars every year – all ultimately what I believe economists refer to as a “deadweight loss” to society.

“Two of my greatest regrets are having to settle two class actions" JOHN BLAIR, AIR NEW ZEALAND LTD Class action lawyers will tell you they are “the keys to the courtroom for the common man” – a quote I heard directly from one of the “best” of them.

Strange how the common man has to have a potentially rather lucrative claim to share with the lawyers before those keys will be handed over. Of course they will try to pick winners; fair enough. But the stakes generally start 16

But wait! To be fair, there is a place for class actions. Despite my cynicism there is a grain of truth in providing affordable access to litigation for many to whom justice and compensation would otherwise be denied. Class actions per se are undeniably an efficient way for the courts to manage multiple claims based on broadly the same facts and legal issues.

From both a professional legal and a corporate perspective, the objectionable element is the greed. The thin veil of altruism fools few. If such actions were about justice there would not be the “ambulance chaser” strategy taking advantage of naive or otherwise vulnerable clients and extracting large percentages of the proceeds. Likewise the claims which lawyers know have no real merit but which they shrewdly assess as being impossibly costly to disprove, or claims where the plaintiffs have no real concern to claim but are encouraged to pursue “money for nothing”.

Australia (until recently), New Zealand and the UK have managed to sustain legal systems without the need to resort to this type of litigation. This article is not the opportunity to explore Australasian Legal Business ISSUE 8.10

NEWS | opinion >>

the pros and cons of representative versus class actions, but it is concerning to note the current challenge in the UK where a claim by US lawyers against British Airways is attempting to interpret Court Rules as allowing USA style class action (2). The High Court would have none of it, but the matter is on appeal.

Of greater concern and closer to home, the New Zealand Government is reported to be considering introduction of class actions based on the same model as Australia has adopted. This is seemingly being done under a carefully considered CER approach of “let’s not think about why we are doing this, we should just follow Australia’s lead”.

Happily, more in-depth thinking is applied here in sporting endeavours than in politics. Matters such as undermining the attractiveness of New Zealand to foreign investors and the regard for our legal system or the lack of any identified need for class actions are mere irrelevancies in the world of politics. A platform that looks like “free justice for the common man” wins more votes than economic common sense. The fact that outside the USA, Australia is the jurisdiction in which a company is most likely to be sued, is unlikely to figure in the equation.

So, back to the start of this article – how can it get worse?

Australian class actions operate on an “opt in” basis where any party can join at any time. This is considered to deter some actions due to the dislike that litigation funders have for parties to free ride on actions without signing up to share the spoils and because of a potential exposure of parties opting in, to an adverse costs award – something that, to the surprise of many lawyers, is not a consideration in USA. ALB recently reported (3) that NSW is proposing law changes to make class actions more attractive. A “closed class” approach would secure the position of litigation funders, enabling them to have sharing agreements with all plaintiffs. The fact that the changes are being welcomed by a known class action firm should be warning enough to NSW business that this is not going to be good for them and they should actively participate in the current consultation process.

An even more sinister development has gone largely un-noticed in this www.legalbusinessonline.com

corner of the world. The Financial Accounting Standards Board is currently proposing that public companies be required to report potential losses from any class action lawsuits. In other words, not even a reasonable assessment of what you might expect to settle for (the current requirement if such an assessment can be made with sufficient reliability to make a provision), but a worst case estimate. What a dream for class action lawyers! Don’t overlook the fact that if such an estimate proves to be materially overstated or understated, there will be another class action waiting in the wings on behalf of misled shareholders.

This is idiocy even by Californian standards and not surprisingly the Association of Corporate Counsel is rounding up some heavyweight opposition. But if it happens in the USA accounting standards, watch this space in Australasia.

But wait … there’s more! Corporate counsel and all non EEA(4) qualified lawyers will (or should) all be reading articles of rightly outraged analyses of the Akzo decision from the Court of Justice of the European Union (5) denying again the right of professional privilege to in house counsel and non EEA qualified lawyers. There are already a number of reported cases in the EC where companies have been fined for breaches of competition laws based on written legal advice from in house counsel to senior management or board members. The same advice from EEA external counsel would undoubtedly have attracted legal privilege.

The Akzo decision, although affirming the prevailing position of recent years, now declares open season for class action lawyers to try their luck on European companies where one of the first items demanded in discovery will be “All correspondence on the matter between management and in house counsel and any advisor not a lawyer qualified to practise in the EU”. What better evidence of a legal liability than your own lawyer advising you that you have sinned? Sadly in-house

“External counsel face the dichotomy of sympathising with the difficulties of their clients while delighting at this growing stream of work" JOHN BLAIR, AIR NEW ZEALAND LTD counsel will be inevitably constrained from putting their best and strongest advice in writing, ironically exposing companies to even greater risk of inadvertent breaches of the law which counsel might have helped to avoid. The decision reflects perverse, if any logic.

Corporate counsel need to be on their toes to watch some of these trends and understand the implications.

External counsel face the dichotomy of sympathising with the difficulties of their clients while delighting at this growing stream of work. And grow it will.

Just as the recommended strategy of defeating terrorists, kidnappers and blackmailers is never to negotiate, so it is with class action opportunists. That is not to say that if there is a legitimate and provable claim it should be fought on principle just because it is a class action. Common sense and commercial reality dictate settling valid claims as cheaply as you can. However in the absence of any legitimate, substantiated claim, simply folding to the pressure of litigation cost, litigation risk and management time – the trump cards always played – is a short-term win and a long-term cost. The perceived soft touch will be a target again and again. Remember too, particularly in this era of litigation funding, that class action plaintiffs also make calculated commercial decisions assessing ongoing costs against the potential recoveries and litigation risks. They don’t have exclusivity over the strategy of running up costs and putting up hurdles to raise the odds. In most cases they have no intention of ever seeing the alleged issues go to trial. It is a poker game – you have to put money on the table to call the bluff.

1. “extort – get by force or threats or intimidation etc” The New Little Oxford Dictionary 2. Emerald Supplies Ltd v British Airways plc 3. “New laws to make class actions more attractive in NSW” – ALB Legal News, 9 August 2010 4. European Economic Area 5. Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission (C550/07 P)

17

NEWS >>

news in brief >> SLATER & GORDON STRIKES AGAIN IN SOUTH WEST SYDNEY Slater & Gordon has opened a new office in Liverpool, Sydney. The new office will be headed by local lawyer Michael Lawandi who has worked in the region for more than 10 years and will offer a range of legal services covering specialised areas of motor vehicle accidents, workers compensation and personal injury.

With a population of more than 1.85 million people, Greater Western Sydney is growing faster than both Sydney and the rest of NSW. Slater & Gordon, general manager NSW Hayden Stephens said the Liverpool office was an important investment in the firm’s growth and future in NSW. The Liverpool office takes the firm’s national total to 37 and follows the opening of seven Slater & Gordon offices since the start of the year. The most recent opening was also in NSW, in the Hunter Valley, north of Sydney.

ADELAIDE >>

DLA Phillips Fox cuts ties with Adelaide

D

LA Phillips Fox has parted company with its Adelaide office.

The former Adelaide partners of DLA have in turn joined forces with local firm Rankine Tucker Lawyers to create a new firm, Fox Tucker Lawyers. The new firm brings together legal expertise in insurance, corporate-commercial and taxation, and the Rankine Tucker team will move into the DLA offices.

Former DLA Phillips Fox Adelaide managing partner Joe DeRuvo has become managing partner of the newly-formed firm. The Adelaide office financially separated from DLA Phillips Fox in September last year, moving itself to affiliate status.

Rankine Tucker partner Jeremy Rees said the decision by the Adelaide DLA

Phillips Fox office to become financially separate from the DLA group was not a trigger for the two firms joining forces. “We have had a longstanding relationship with DLA Phillips Fox. I used to be a partner there, they know me, we know them… we thought it would be a good cultural fit for the two firms to join,” Rees said.

He added that Fox Tucker hoped to bring a more “comprehensive skill” offering to the Adelaide market, and will maintain strong relations with the DLA Phillips Fox national network. The new firm will have more than 70 staff when it opens, and Rees said they did not anticipate making any retrenchments as a result of the amalgamation. ALB

PRO BONO >>

Large law firms maintain pro bono BOND OFFERING: MALLESONS PUT NEW RULES TO THE TEST Mallesons Stephen Jaques has acted for Primary Health Care in the first retail bond offer to be made under new class orders. The Australian Securities and Investments Commission (ASIC) launched the new One of the main differences under the new rules is that there is a two-part prospectus for issuers, comprising of a base prospectus (which may be used for a number of different offers) and a second part prospectus (which will relate to a particular offer). M&A partner David Eliakim told ALB the base prospectus can be used for a period of two years, which will in the long run decrease the costs for issuers which undertake multiple offers.

The second major change is that there is now more detail on what needs to be included in the prospectus.

“There is now a list of prescribed information that has to go into the prospectus. Previously you and the client would include all the information that you thought could be required,” said Eliakim. “The new rules are designed to make the bond issuance process simpler and quicker and our experience on this transaction was that the new rules work well.”

While there will be less work involved in some original offers and following offers, Eliakim said he does not expect this to decrease the amount of work for his profession in the long run. “We expect that a number of other corporates will consider retail bond issuance in light of this deal," said Eliakim.

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any large firms continued to undertake substantial levels of pro bono work last year despite the economic downturn, a new study has found. Twenty-four firms provided data to the ‘Interim Report of the National Law Firm Pro Bono Survey’, and within these 24 firms 10,410 FTE lawyers undertook more than 322,000 hours of pro bono legal work in the 2009/10 financial year – an average of 29 hours

per lawyer. “That’s equivalent to more than 178 lawyers working pro bono fulltime for a year,” said executive director of the National Pro Bono Resource Centre, John Corker.

Corker said that despite the financial pressures and retrenchments last year, pro bono work continued because lawyers considered it part of their professional obligation. “Part of being a lawyer is believing in justice and access

►► NATIONAL LAW FIRM PRO BONO SURVEY - KEY FINDINGS

29 35 59% 58 7 37.8 18.6

Average pro bono hours worked per lawyer Pro bono hours worked per lawyer per year set by Pro Bono Target Average participation rate of lawyers in firms surveyed Firms who have signed the Pro Bono Voluntary Target Signatory firms that met the Target Average pro bono hours worked per lawyer in signatory firms Average pro bono hours worked per lawyer in non-signatory firms Australasian Legal Business ISSUE 8.10

NEWS >>

>>

IN-HOUSE Q&A integrity legal

KATRINA JOHNSON Director of Legal Affairs

eBay Australia & New Zealand

your opinion, why have in-house lawyers become an 1Inincreasingly indispensable part of an organisation?

In my experience, in-house legal teams tend to be directly involved in all aspects of an organisation’s operations, initiatives and general strategy, because they’re providing advice and support across all of the different business units. By virtue of working within the organisation, in-house lawyers are uniquely positioned to obtain an holistic view of their business, which is something that can’t truly be matched by external lawyers. This means that they’re better able to form a view that balances legal risk against the organisation’s various commercial imperatives, for which external lawyers may have very limited visibility. In-house lawyers are also better-placed than external lawyers to devise strategies and solutions that are realistic and achievable for the business, within that business’ existing framework and parameters.

work throughout GFC to legal resources. From an individual lawyer perspective, there is a desire to assist people in need. It’s an ethical obligation. During the GFC there was increased legal need, more people in distress,” he said.

Many firms also used pro bono work as a way of keeping their lawyers engaged and stimulated at a time when billable work was less readily available, as reported here.

The National Pro Bono Resource Centre has 58 signatory firms to its voluntary target of 35 hours pro bono work per year per lawyer. Although the number of signatory firms has dropped from 66 in the previous financial year, the number of legal professionals covered by the target increased from 4,600 in 2009 to almost 5,700 this year. Of the 13 signatory firms included in the survey, seven met the target in the 2009/2010 financial year. “The target is used to lift the visibility of pro bono work in the legal profession,” said Corker. “I think it’s great 53% reached or exceeded the target.”

The report found that signatories to the target were more likely to report higher hours of pro bono work than nonsignatories, suggesting signatories have a stronger pro bono culture. On average signatories completed 37.8 hours of pro bono work per lawyer per year, compared to 18.6 hours per lawyer pre year in non signatories. The target was set in 2007 and was based on similar targets set by the US Pro Bono Institute. Corker said the US and Australia were the world leaders for pro bono legal work. The UK does not have an official pro bono target for legal practitioners and “New Zealand and Canada are still in their early days of establishing one,” Corker added. ALB www.legalbusinessonline.com

Ultimately, in-house lawyers are required to be problem solvers, rather than just problem identifiers. As an in-house lawyer, you can’t simply give the business units a range of options and expect them to decide upon a course of action – which is usually the nature of the advice provided by private practice lawyers.

You’re expected to undertake an overall risk assessment and decide upon the best approach for the business to take. I believe that this better serves the needs of business, and is the reason why more and more organisations are building inhouse capabilities rather than looking externally for legal support.

recent times, the role of the General Counsel has 2Indiversified into a multi faceted role, (where the General

Counsel can wear the ‘hat’ of Lawyer, Legal Manager, Compliance Manager, and Company Secretary). In your opinion, do you believe this has increased your risk profile?

I believe this is true; particularly where the General Counsel has a distinct business role in addition to his or her legal role. For example, like many General Counsel, I’m on the leadership team at my company and also sit on the boards of some of our group entities. In wearing these multiple hats, you’re regularly required to provide both legal and business advice. While being a business enabler is a critical (and rewarding) component of every General Counsel’s role, the blurring of the lines between legal and business roles is not without risk. For example, you need to avoid conflating legal and business/strategic advice, in order to ensure that your legal advice is not compromised in any way and that communications are privileged.

On the other hand, wearing multiple hats can actually help to significantly reduce the risk profile of your organisation. The more integrated you are within the business, and the greater the degree of your input to or oversight of its operations and strategy, the better placed you are to identify risks at an early stage and prevent them from becoming major problems.

your opinion, what do you consider to be the main 3Inchallenges you and your team will face in 2010?

One of the key challenges for my team will be maintaining our ability to scale the provision of our legal services to meet the demands of a rapidly expanding business, while maintaining little to no headcount growth in my team. Achieving optimal operational efficiency is one of our chief goals for 2010, and we’re continually focused on finding faster, smarter, better ways of doing things. To this end, we’ll need to focus on expanding the use of self-service delivery models, which will need to be partnered with intensive legal training for the business, given the potentially increased risk for the organisation.

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NEWS >>

UPDATE >>

INDUSTRY >>

Banking & Finance

Voluntary Administration: New Zealand Courts consider scope of “Casting Vote”

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n the recent High Court case Commissioner of Inland Revenue v Grant HC Auckland CIV-2009-404-7388, 25/5/2010, (Grant) the voting provisions of the voluntary administration regime under the Companies Act 1993 (Act) came under judicial scrutiny for the first time in New Zealand. In particular, the Court examined the scope of an administrator’s casting vote and, contrary to leading commentary, the Court diverged from the approach taken in Australia rejecting the broad definition of the term “casting vote”.

Section 239AK of the Act states that a resolution at a meeting of creditors is adopted if a “majority in number representing 75% in value of the creditors… vote in favour of the resolution”.

That section also provides an administrator with a “casting vote”, however does not set out when such a vote may be used.

In Grant the administrator used his casting vote to ‘pass’ a deed of company arrangement (DOCA) after 10 out of 11 creditors in number, holding 70 per cent in value, voted in favour of the DOCA. The Inland Revenue (holding 30 per cent in value) alone voted against the DOCA and sought a declaration from the Court that the DOCA was void for non-compliance with s 239AK(3).

Justice Hugh Williams concluded, after examining various definitions of the term “casting vote”, that a casting vote can only be utilised where the votes for and against a resolution are equal in number (with those voting for the resolution collectively holding 75 per cent or more of the value of the company’s debts). It cannot be used to break a deadlock between number and value as is specifically provided for in the respective Australian regulations. The DOCA in Grant was thus declared void as the administrator was not entitled to use his casting vote.

The Court’s decision, while undoubtedly an acceptable interpretation of the section as it reads, will result in a single creditor (or group of creditors) who holds 25% or more of a company’s debt having an effective veto on whether or not a DOCA is approved. This will have significant negative implications on the feasibility of voluntary administration in New Zealand.

Will Tipping Partner Mayne Wetherell For more information please contact will.tipping@maynewetherell.com Will Tipping

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Law societies refute claims about false billing scam T

he President of the Law Society of NSW has dismissed claims that the Australian legal industry is overcharging clients through the use of support staff for billable legal work.

The controversy began when Brian Bartley, chairman of the Queensland Law Society’s ethics committee, called for lawyers to take action against the practice of charging clients premium lawyer rates for work carried out by support staff.

Bartley told The Australian some law firms, particularly those involved in personal injury litigation, make profits from the work carried out by legal support staff, by charging up to A$300 an hour for work completed by them.

“This is not something that we have seen in New South Wales,” said Mary Macken, the Law Society of NSW’s president. “It seems to be an isolated costs claim and only in Queensland where different costs regulations are in force.”

Chief executive officer of the Queensland Law Society, Noela L’Estrange also said that the practice was not a major issue for the industry. “Unethical and inappropriate time costing is infrequent,” she said.

“This is not something we have seen in New South Wales. It seems to be an isolated costs claim and only in Queensland where different costs regulations are in force” MARY MACKEN, PRESIDENT LAW SOCIETY OF NSW

Bartley claimed it was a matter of great concern that support staff were viewed as lucrative “profit centres” whose actual value to law firms was many times greater than their annual salaries, which normally equated to around A$20 an hour. He added that some law firms charge a “blended rate”, which adds a layer of fees, to make it less obvious that secretaries are being charged as lawyers. Bartley also proposed a wage increase for secretaries and support staff undertaking billable legal work.

Both Macken and L’Estrange said clients have the power to deal with lawyers and their bills already. “The regulation of solicitors’ costs in NSW gives clients rights above and beyond that of any other consumer,” said Macken. “Aside from the additional remedies entitling clients to have their practitioner’s costs assessed – even, sometimes, up to 12 months after the bill has been paid – a legal practitioner can be found to have committed professional misconduct in circumstances of it being established that there has been deliberate gross overcharging,” she added.

Glenn Ferguson, president of the Law Council of Australia, said the few practitioners that do engage in unethical charging practices cause significant damage not only to the profession but also to the clients that they represent. ALB Australasian Legal Business ISSUE 8.10

NEWS >>

PRO BONO >>

Sparke Helmore leads mentoring program

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ore than 30 senior staff from Sparke Helmore have participated in this year’s Lucy Mentoring Program.

The program, which involves 70 female students from seven universities and the NSW Office for Women’s Policy, encourages women to become future leaders, with a focus on graduates in business and law. The 70 students and their mentors attended a graduation ceremony at the Sparke Helmore offices as part of the program.

Sparke Helmore senior associate, Victoria Huntington, said the mentoring program was as valuable to the students as it was to them. “It actually makes you think about what you do on a daily basis, because you get so caught up in doing your job for so long, you don’t get to see your job with fresh eyes.” She added: “You don’t

www.legalbusinessonline.com

Sparke Helmore managing partner Susan Bennett, Minister for Women Jodi McKay and Sex Discrimination Commissioner Elizabeth Broderick

realise when you are doing the Lucy Program the valuable experience you are giving the students, but you get a real kick out of giving the students a good experience,” she said.

NSW Treasury deputy secretary for human social services, Carelee McLiesh, said the program also makes good business sense, “if you want insight into who will be the future female leaders; and possibly recruit them into your organisation.”

Managing partner at Sparke Helmore

and Lucy Steering Committee member Susan Bennett, said the program could have many positive impacts on the students and the mentors. “Mentoring is an important concept to the firm and we have an official mentoring program within Sparke Helmore, this program is another example of how important mentoring is to the firm.”

Other mentors in the program included staff from Clayton Utz, Coleman and Greig, UBS and Westpac.

ALB

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NEWS >>

UPDATE >>

M&A >>

Employment Law Behind the scenes – The evolution of sexual harassment claims

W

hilst sexual harassment has been in the media spotlight recently, behind the scenes we are seeing this area of law evolve with claimants bringing a variety of new and innovative claims, under a range of different Acts.

Traditional legislative route for claimants By way of example, Victoria has two main laws which regulate sexual harassment; the Equal Opportunity Act 1995 (Vic) (the EO Act) and the Sex Discrimination Act 1984 (Cth) (the SD Act).

Both Acts contain provisions which deem employers liable for the acts of their employees. An employer however, can avoid liability if they can show that they took reasonable steps or precautions to prevent the employee from engaging in the prohibited conduct.

The concept of reasonable steps or precautions has been extended recently by changes to the EO Act which, from 1 August 2011, will impose a positive obligation on employers to eliminate sexual harassment in the workplace. In determining what is reasonable and proportionate a court will consider the size of the employer’s business, the nature and circumstances of the business, the employer’s resources and priorities, the practicability and the costs of such measures.

M&A work rallies A

ugust was the busiest month for M&A deals in more than a decade, according to the latest Thomson Reuters data. According to Reuters, there was a global increase in value of nearly 10% for M&A deals from January to June 2010, as compared to the first six months in 2009. Announced deals and offers during the typically slow month surged to US$262bn worldwide, on the back of low interest rates, record cash piles and low stock-market values.

The rush of deals in the US, Canada and Australia in the past month has renewed confidence in the market. Involved in the deals – for example, both GrainCorp and fertilizer giant Agrium made offers to purchase the Australian agribusiness AWB. Although Australia-based M&A activity decreased in the first six months of the year by more than 30% compared to 2009 (from A$107.7bn to A$71.3bn) the past two months of activity have been in stark contrast to the first six months of this year. ALB

New legislative avenues for claimants Beyond the traditional acts mentioned above, we are now seeing claims based on a range of different statutes, such as: • the Fair Work Act 2009 (Cth) (FW Act), claiming an employer has taken adverse action against an employee or prospective employee on the basis of sex or sexual preference; • the Occupational Health and Safety Act 2004 (Vic) (OHS Act) for breach of the employers duty to provide a working environment that is safe and without risks to health; • the Trade Practices Act 1974 (Cth) (the TPA) on the basis of false and misleading representations made to employees at the commencement of their employment about the workplace environment; and • breach of contract claims on the basis that policies and procedures which relate to bullying and harassment and the workplace environment form part of an employees’ contract of employment.

Employers should be aware that compensation under the FW Act for a breach of the general protections provisions is uncapped, creating the potential for claimants to be awarded extensive damages in harassment cases. Further, claimants can also seek damages under the TPA if they have suffered loss as a result of misleading and deceptive conduct. In some cases, individuals have been awarded damages under the TPA for mental stress. Further, employers should be aware that they can face penalties and more seriously criminal prosecution for breaches of the OHS Act. For further information, please contact adam.saunders@sparke.com.au

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Adam Saunders

M&A >>

Canada maintains M&A T

he Canadian corporate spending spree in Australia continues with the announcement that Brookfield Infrastructure will buy the remaining 60% of Australian Prime Infrastructure, and Canada Pension Plan Investment Board (CPPIB) is proposing to acquire the Intoll Group, valued at A$3.4bn.

Mallesons and Freehills are acting for Brookfield Infrastructure and Australian Prime Infrastructure respectively, on their A$1.6bn merger. The merger, expected to be approved by the end of the year, will form a global infrastructure company with a market cap of more than A$2.8bn. ALB Australasian Legal Business ISSUE 8.10

Firm Profile

NEWS >>

Buddle Findlay

NZ COMMENTARY

Regulatory changes in the New Zealand financial sector

A

t a time when the global regulators are meeting to agree on new capital adequacy rules for banks, the New Zealand government has been busy enacting new rules in the financial sector.

Trustees, statutory supervisors and auditors

The Financial Service Providers (Registration and Dispute Resolution) Act 2008 has been passed but is not yet fully in force. For the first time in New Zealand the law will require all financial service providers to be registered. It will also require them to be members of a dispute resolution scheme if they provide financial services to retail clients.

The Act applies to people who are in the business of providing a financial service. This includes a number of financial activities including the provision of financial advice and broking services, banking and lending activities, acting as an investment manager, being an issuer or trustee of securities offered to the public, entering into derivative or foreign exchange transactions and insurance.

Certain people such as lawyers, executors of estates and employers providing employee superannuation benefits are exempted.

The financial service providers register has opened and applications are now being accepted. Registration becomes compulsory on 1 December 2010 although financial advisers have until 31 March 2011.

Under New Zealand’s securities laws all issues of securities to the public, other than equity securities, require the appointment of either a trustee or a statutory supervisor.

There has been some criticism of the performance of the trustee corporations in the wake of the problems in the finance company and managed funds sectors.

There have been concerns about weak trust deeds, the lack of clarity of the trustee role, and their lack of independence and accountability.

The Securities Trustees and Statutory Supervisors Bill presently before Parliament will seek to protect the interests of security holders and enhance investor confidence in the financial markets. The Act will introduce a licensing system for trustees to enhance their capability and accountability.

The Act will require trustees to report on a regular basis on their own performance as well as the performance of the issuers under their supervision. Where there are problems, the trustee will be required to report on the action it proposes to take to have the situation remedied. It will also give the Securities Commission extensive powers to intervene and make directions.

The regulation of auditors of public issuers is also to be strengthened, with a new Auditor Regulation and External Reporting Bill being introduced in midSeptember 2010.

Financial advisers

Securities Act reform

Financial service providers

One of the criticisms of the financial services industry in the wake of the finance company collapses has been that financial advisers have been guilty of providing poor financial advice, often more for their own benefit than for their clients’.

The Financial Advisers Act 2008 is being amended in an attempt to improve public confidence in the professionalism and integrity of financial advisers and brokers. The Act seeks to impose particular standards on advisers and brokers. It requires certain disclosures to their clients, imposes certain competency requirements and seeks to ensure that advisers are held accountable for the services they provide.

www.legalbusinessonline.com www.legalbusinessonline.com

In July 2010 the government issued a discussion paper which proposes sweeping reforms which would affect the way most financial products are offered to the public.

The reform would involve a rewriting and consolidation of the Securities Act 1978 and Securities Regulations 1983, the Securities Markets Act 1988 and numerous exemption notices.

It is likely that the existing prospectus and investment statement regime will be replaced by a single product disclosure statement and that exemptions in some cases will be expanded to alleviate the current awkward definition of “member of the public”.

This is clearly a very wide ranging review.

Submissions on the discussion paper closed in late August 2010 and the government’s next step is awaited.

Financial Markets Authority In April 2010 the government announced plans to establish a new financial sector regulator, the Financial Markets Authority.

The FMA will take over the functions of the Securities Commission and some of the functions of the Registrar of Companies, the Government Actuary and the New Zealand Stock Exchange. It will have greater powers of supervision and enforcement than have previously been available and will result in the FMA being effectively the sole regulator of the securities industry.

A new Bill establishing the FMA was introduced in mid-September and is expected to be passed in 2011.

Comment Clearly the government believes urgent reform of the financial services sector is necessary to ensure investors can have greater confidence in the markets. If these measures are effective, maybe New Zealand can shed its reputation as a nation of poor savers and increase the availability of domestic capital to a more heavily regulated business sector.

Michael is a partner in the Auckland office of Buddle Findlay, one of New Zealand’s leading law firms.

Michael specialises in banking and finance, insolvency, securities, funds management and insurance.

He can be contacted by phone: +64-9-358 7009 or email: michael.dineen@buddlefindlay.com

Michael Dineen, Buddle Findlay

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NEWS >>

NEW ZEALAND >>

Christchurch law firms shaken by NZ earthquake A number of law firms in Christchurch were operating from temporary locations following an earthquake on the South Island of New Zealand. Residents and business owners in Christchurch were woken by a 7.1 magnitude earthquake early Saturday morning September 4, causing damage and injuries across the Canterbury region.

Chapman Tripp’s Christchurch team were not permitted to return to their office due to safety reasons for several days following the earthquake and instead worked out of the All Seasons Hotel. Also without premises were Buddle Findlay and Duncan Cotterill, both situated in Clarendon Tower, which was off-limits while engineers assessed damage to the building.

Harmans Lawyers’ city offices were also closed until the Thursday after the earthquake.

Chapman Tripp chief executive Alastair Carruthers said that since the earthquake the firm has received a range of questions from businesses in the region, and said there are quite a lot of insurance issues to be resolved. “One of the emerging issues we have seen is that people trying to get finance for a property are having trouble accessing new insurance policies, which are essential in order to get finance for the purchase of a property,” he said.

While some commentators in the New Zealand media have said the earthquake could “kick start” the region’s economy, Carruthers said it was wise to start with the proposition that natural disasters “don’t add to economic growth”.

Buddle Findlay chairman of partners Christchurch, John Buchan, is of a similar point of view to Carruthers. “I think there will be the potential for a

downturn because it will freeze activity in the short term, but then there will be a lot of dollars pouring into the city and this will unlock some economic activity as the re-construction begins,” he said.

Buddle Findlay’s office suffered some structural damage with a number of large cracks in the walls and the building still remains closed to the general public. “There is a fair bit of property damage around the area,” said Buchan. “We have so far been asked to give quite a bit of advice on the rights of parties with regards to lease agreements and also buyers and sellers of properties. I can’t recall anything as serious as this happening in Christchurch before.”

Chapman Tripp has donated NZ$50,000 to the joint mayoral relief fund to assist residents affected by the earthquake. ALB

INDUSTRY >>

Maurice Blackburn expands with two new offices

F

lawyer Bryn Hannan competed in the Ford Ironman World Championship in ►►DibbsBarker SSS

Kailua-Kona, Hawaii on October 9. Hannan secured one of the coveted 1,800 spots on the race by training 20 to 30 hours every week in preparation for the event.

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ollowing hot on the heels of competitor Slater & Gordon, Maurice Blackburn has announced the opening of two new offices: one in Northern Queensland and the other in rural Victoria.

Maurice Blackburn Wangaratta, Victoria, will be headed up by Danny Frigerio, an accredited personal injury specialist. Frigerio grew up in regional Victoria and is keen to build the firm’s presence in the Wangaratta region. “We’ll offer a broad suite of legal services including workcover and TAC as well as legal representation for people who have suffered medical and common law negligence,” said Frigerio. The new office will also service Shepparton and Wodonga clients.

Maurice Blackburn has also opened a new office in Townsville recently.

The firm has been servicing northern Queensland for about 10 years. ALB Australasian Legal Business ISSUE 8.10

NEWS >>

www.legalbusinessonline.com

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NEWS >>

APPOINTMENTS ►► LATERAL HIRES

Blake Dawson

Name

Practice areas

Organisation coming from

Organisation going to

John Baxter

Pro bono Projects and international construction Trade and transport

Makinson d’Apice Pinsent Masons HK

Mills Oakley Norton Rose Australia

Blake Dawson

Norton Rose Australia

Natasha Crampton

IP and technology

Simpson Grierson

Hudson Gavin Martin

Brian Healey Christopher Lane Lesley Minns Jeremy Prentice Penny Stevens Dennis Tomaras Vera Visevic

Property and projects Commercial and property

MacDonnells Law Slade Manwaring

Holding Redlich Hunt & Hunt

Construction Major projects and infrastructure Workplace/ OH&S Taxation and revenue

Bovis lend Lease Freehills

Advent Lawyers Holding Redlich

Hall & Willcox Deloitte

Middletons Madgwicks

Pro bono

Makinson d’Apice

Mills Oakley

Peter Borg Ernest van Buuren

►► PROMOTIONS Firm

Name

Area

Harmers

Shana Schreier-Joffe

Workplace law

Harmers Lawyers

New MP at Harmers Harmers Lawyers has appointed Shana Schreier-Joffe as its new managing partner. Schreier-Joffe has been a partner at the firm and acted as lead partner in a number of high-profile discrimination cases, including the Allco employee entitlements case.

Shana SchreierMichael Harmer, who Joffe established the firm 14 years ago with Margaret Diamond and Sandra Marks, continues in his role as chairman.

Emma Pritchard, another longstanding partner, continues in her role as chief operations officer, as announced in June.

Various

Holding Redlich

Holding Redlich adds to partnership Holding Redlich has added two senior partners to its Brisbane office. Brian Healey has been appointed as a partner in the property and projects group, where he will specialise in commercial property advice and transactions, agribusiness law and retirement village work.

Healey was previously a partner Brian Healey and practice group leader at

26

MacDonnells Law in Brisbane and prior to this he was a senior associate with McCullough Robertson.

Also joining Holding Redlich is senior partner Jeremy Prentice who was previously special counsel at Freehills. With more than 17 years experience in major projects and infrastructure, Prentice will be positioned in the corporate and commercial practice group. Prior to Freehills he was a partner at Jeremy Prentice TressCox Lawyers.

Pinsent Masons

Norton Rose Australia

Norton Rose lures partner to QLD Peter Borg has joined Norton Rose Australia from Pinsent Masons Hong Kong, where he was a partner in the projects and international construction division.

Borg began his career at BHP Billiton where he worked for seven years, firstly as a legal officer and then project engineer. He will be Peter Borg based in the Brisbane construction and engineering group. Borg’s appointment is the eight lateral partner hire for Norton Rose Australia since the merger announcement. He will be based in the Brisbane construction and engineering group.

Norton Rose Australia

Blake Dawson’s master mariner jumps ship Blake Dawson partner and head of trade and transport, Ernest van Buuren, will be departing the firm in the coming months to join Norton Rose.

Van Buuren will be joining Norton Rose’s Brisbane office as a partner in the commercial litigation team.

It is understood that van Buuren was attracted to Norton Rose’s transport and shipping capabilities. Van Buuren specialises in trade, maritime and aviation law and has been with Blake Dawson since 1998. Before joining Blake Dawson he spent over 12 years as a deck officer and qualified as a master mariner.

Hall & Wilcox

Middletons

A Penny for Middletons leaves Hall & Wilcox short Ex-Freehills recruit Penny Stevens has left Hall & Wilcox after just one year. Stevens, who is wellknown in the OH&S advisory space, said that the decision to leave the firm so soon was driven by client conflicts between her clients and Hall & Wilcox’s Penny Stevens longstanding client WorkSafe Victoria.

Stevens and her team, which includes special counsel Nicole Fauvrelle, senior associate Kim Grady and lawyer Sam Jackson, have now joined the Middletons workplace relations and safety group.

Makinson d’Apice

Mills Oakley

Mills Oakley adds pro bono partners Mills Oakley has bolstered its not-for-profit credentials with the appointment of two leading not-for-profit senior partners, Vera Visevic and John Baxter.

Formerly partners at Makinson d’Apice, Visevic and Baxter have significant experience representing churches, charities and philanthropic foundations.

Visevic and Baxter were with Makinson d’Apice for 16 and 19 years respectively and have in that time developed a reputation for their pro bono work.

Bovis Lend Lease

Advent Lawyers

Advent hires construction specialist Former general counsel for Lend Lease Development and Bovis Lend Lease, Lesley Minns, has joined Advent Lawyers.

Prior to Lend Lease, Minns was a construction partner at Allens Arthur Robinson. Her appointment comes only six weeks after the Lesley Minns firm hired former Ashurst LLP London human resources manager Anita Bennett as head of people and development.

Australasian Legal Business ISSUE 8.10

NEWS >>

www.legalbusinessonline.com

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NEWS >>

Slade Manwaring

Hunt & Hunt

Hunt & Hunt appoints new partner Christopher Lane has joined Hunt & Hunt as a partner in the firm’s commercial and property practice in their Sydney office. Lane joins Hunt & Hunt from Slade Manwaring, where he was a partner in their business and property law team.

Lane is an accredited specialist in business law and has an extensive property and general commercial practice undertaking work in all areas related to real and intellectual property, commercial leasing, business transactions and trusts.

Madgwicks

Deloitte

Madgwicks’ new tax man Taxation specialist Dennis Tomaras has joined Madgwicks as a partner in the taxation and revenue team. Previously a partner with Deloitte, Tomaras has over 20 years experience advising on taxation issues associated with mergers and acquisitions, international tax planning, federal and state taxation authorities disputes and general business structuring.

His career also includes stints with WHK Horworth and Village Roadshow.

and aged care practice. Wolf was formerly a solicitor at the, while Rallis has moved from DLA Phillips Fox where he worked as a senior associate in the health law team.

Senior associate Julie Louie joins the firm’s migration law team from Queensland-based MacDonnells Law where she was also senior associate.

Simpson Grierson

Russell Kennedy

Health specialist appointments Russell Kennedy has announced a string of special counsel and senior associate appointments.

Senior associate Dr Gabrielle Wolf and special counsel Dr Arthur Rallis have joined the firm’s health

Arthur Rallis

Gaby Wolf

Hudson Gavin Martin

Hudson Gavin Martin appointment Specialist technology and intellectual property law firm, Hudson Gavin Martin, has appointed Natasha Crampton as senior solicitor.

Camton joins from New Zealand firm Simpson Grierson where she was an associate; and has more than five years’ experience working in New Zealand and Australia. Prior to Simpson Grierson she worked at Mallesons David Foran Stephen Jaques in Sydney.

Oxford University

Various

member of the University’s Joint Resource Allocation Advisory Board. His speciality is constitutional law and he has written widely on the role of the Crown, judicial independence, proportional representation, and eighteenth century political and diplomatic history.

Auckland University

New Dean for Auckland Law School Dr Andrew Stockley, a New Zealander currently based at Oxford University, has been appointed as Dean of law at The University of Auckland. He will take up the post next February, succeeding Professor Paul Rishworth who has been Dean since 2005.

Since 2006 Stockley has been the senior tutor of Brasenose College at Oxford. He is also deputy chairman of the graduate committee and as a

Law Council

Law Council committee appointment Blake Dawson competition partner Stephen Ridgeway has been appointed as the new chairman of the Law Council of Australia Trade Practices Committee.

The Trade Practices Committee is the peak representative body for competition and consumer lawyers in Australia. In his role Stephen Ridgeway as chairman, Ridgeway has responsibility for coordinating the committee’s interaction with the Australian Competition and Consumer Commission and the Federal Government.

Deloitte

Madgwicks

Clayton Utz adds to Darwin The Clayton Utz Darwin energy and resources team has a new senior associate.

David Foran joins the Northern Territory office from Barclays Capital in London, having previously worked at Clifford Chance during his five year stint in the UK. He specialises in real estate and structured finance as well as providing coverage in global loans and infrastructure and utilities.

BANKING & FINANCE >>

Commonwealth Bank to revamp panel

T

he Commonwealth Bank of Australia (CBA) is about to start a review of its law firm panel, a process which will also include the consolidation of the Commonwealth Bank and Bankwest panels. CBA bought Bankwest from British-based HBOS in late 2009 and has been merging its various departments with CBA during the past six months.

David Cohen, group general counsel for CBA, said that the CBA currently has a panel of about 14 firms, while Bankwest had a larger number of firms on its panel. He predicted that the new panel would be substantially smaller than the aggregate of these two panels and will include between 12 and 15 firms. “Because of the range of work and volume of work, we need to have a number of providers, otherwise you will 28

have too much concentration within a couple of firms,” he said.

He added that he did not want too many firms on the panel either, as he liked to be in the position where CBA is considered a “top-five client” amongst all the firms on the panel. “Our philosophy is that we want to be very important to every firm on the panel,” he said.

The previous panel has been in place for two years and the new panel will be in place for around three years, according to Cohen. “Provided we have regular ongoing evaluation, I think it will be for three years. But it’s important to test how the relationship is working – giving the firms feedback and also getting feedback.” Cohen said that firms would have the option to review their fees at around the half-way mark

David Cohen, CBA

of the term. “I think it’s important to have ongoing management of the relationship,” he said. ALB Australasian Legal Business ISSUE 8.10

NEWS >>

www.legalbusinessonline.com

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PROFILE | managing partner >>

ALB 2010 MANAGING PARTNER SERIES

Paul Tully, McInnes Wilson:

A perfect union McInnes Wilson chairman Paul Tully speaks with ALB about corporatisation, consolidation and the ever-parochial Queensland legal services market

S

omehow rugby and law firms just seem to go together. For many years, the peak body for the code in NZ was run by Simpson Grierson chair Rob Fisher and now the tradition continues with Paul Tully, the chairman of Queensland firm McInnes Wilson. Tully also wears the hat of judicial officer with the rugby union, responsible for determining the various alleged misdeeds of Tri-Nations and Super 14 players. It’s experience which must come in handy when he’s presiding over the 19 directors and 240 staff at McInnes Wilson.

Tully first joined the firm in 1985, attaining his partnership only four years later. “I don’t think I necessarily had any outstanding ability,” he says, not without humour. “In those days firms were much smaller, in Queensland at least, so opportunities arose much quicker. It’s a function of size, to be fair.”

Corporatisation

A recent milestone for the firm was the move from partnership to a corporate structure which occurred in July last year. Partners acquired the new title of “principal” and Tully swapped his managing partner title for that 30

►► FIVE TIPS FOR LAW FIRMS LOOKING TOWARDS INCORPORATION Having successfully led his firm through the transition to a corporate structure last year, Paul Tully says he would offer the following advice to other firms treading the same path:

1 2 3 4 5

Create a good support team that is briefed and up to date with the latest developments Have an understanding and appreciation of the issues that are of most importance to the key players Maintain transparency with key players and staff in respect of the proposal and the implementation of the proposal Plan ahead and be prepared for delays Be prepared for some bumps in the road on the way to – and past – incorporation

of chairman of the board. “We made this change for a number of reasons, principally administrative,” he says.

“The corporate structure is the most appropriate for the present day in terms of the entrance and exit of partners. It provides the opportunity for shares to be allocated in the business rather than the cumbersome procedure of buying equity. We’ve been able to bring on new partners purely by issuing them shares and that makes the whole process much more streamlined – rather than the copious sets of documents which we traditionally had to go through.”

Tully said that accounting considerations were also more easily dealt with in a company, and that the structure also obviated the need for a separate entity to manage the administration of the firm.

Much has been written about the tax complications of such a move, but Tully says that the firm managed to implement the corporatisation without incurring any significant tax liability. “There were a number of tax considerations that we had to very closely consider before we incorporated,” he says “Things like capital gains tax and also duty were Australasian Legal Business ISSUE 8.10

PROFILE | managing partner >>

www.legalbusinessonline.com

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PROFILE | managing partner >>

“The corporate structure is the most appropriate for the present day in terms of the entrance and exit of partners ” Paul Tully

McInnes Wilson

the biggest concerns to our firm. We have a strong tax division here who, together with our advisors, managed to structure the arrangement to make it fall within the rules without incurring any substantial tax liability.”

Clearly one needs to take into account the different tax provisions which may apply in various jurisdictions before applying the lesson to other firms: “Obviously every firm’s circumstances are different than the next so it’s hard to say whether other firms would encounter these issues and how they should deal with them, but overall there weren’t any notable complications,” says Tully.

Competition

Revenues for large national firms are generally in decline and Tully has noticed that, despite public statements to the contrary, the large law firms are increasingly competing in the traditional mid-tier space. He says that top-tier firms have not been immune from this trend.

“In this present environment the large national firms are looking at any area they can get their hands on to get some fees, I expect,” he says.

“What I’m finding is the national firms coming down into space that we have traditionally occupied, such as leasing and perhaps lower charging work – they’re now drilling down into that sort of work. That’s where I see the true competition coming from. The national firms are now tendering for work which they traditionally would not have tendered for and they’re being very competitive on price. I think the GFC has made clients more price-sensitive.

National firms have picked up on that in order to compete.”

Still, this has not prevented McInnes Wilson from having a record year for revenue and profit in FY2010, a result perhaps assisted by a strong countercyclical practice where litigation looms large. “It’s about the essentials – quality of service, partner contact and ability to be flexible – we reinforce that with clients without necessarily being involved in cost cutting,” says Tully.

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Consolidation

Tully says no good business person should ever say “never” to a proposal without seeing it, but he admits that he cannot see McInnes Wilson going down the path of mergers and consolidation which has been a regular feature of the mid-tier in recent years. “Consolidation is a constant in the legal industry, as much as it is in business,” he observes. ”I believe this will continue, but I’m not convinced this will ultimately mean a stronger financial model [for the firm]. I suspect if this were to happen, we would lose some work because of our size and lack of brand name nationally.”

More importantly, he sees strategic advantage in maintaining the status quo: “There are significant financial, managerial and service aspects that go with being a mid-size firm and these may be seen as significant advantages,” he says. “For the foreseeable future, taking into account the peculiar aspects of the Queensland market and our desire to obtain work from those clients who may be disaffected with national/international law firms, I believe that our costing and service model will ensure we will remain independent.”

And McInnes Wilson will be in good company – the Queensland market in particular is home to some of Australia’s best-known independent firms and seems to lend itself to that business model. “We’re reasonably parochial in Queensland and there is a sense of independence which comes with that,” says Tully.

Outside of work, Tully says that he lives by the three Rs: racing, rugby and running. He is the owner of several race horses and enjoys getting out to the country races, although he admits that some of them might be on the slow side.

He has a judicial officer’s role with the SANZAR, the body responsible for the Tri-Nations and Super 14 competitions and can sometimes be found tending the barbeque at the QRU Brothers Rugby Club. He jogs regularly and joins in the group fitness sessions the firm runs for staff during lunch breaks. ALB

Australasian Legal Business ISSUE 8.10

FEATURE | opportunities in Asia >>

Employment

hots up in Asia As the number of Australian law firms with offices in Asia continues to swell, those Australians looking to head north are also increasing, and there are plenty of opportunities to tempt them

“There are certain areas where there is a shortage of lawyers, areas such as employment law, derivatives and funds, where firms will consider overseas lawyers – although the preference is always for ones with Hong Kong experience” Emily Lewis

Lewis Sanders

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L

aw firms across Asia have come out of the GFC relatively unscathed compared to their North American and European counterparts. There were far fewer redundancies across the market and wages have continued to rise, albeit at a slower pace. Some recruiters report that the Asia-Pacific region, including Hong Kong and Singapore, saw positivity return to the market in the second half of 2009, with recruitment activity increasing both among international law firms and the banking and finance sector.

However, other recruiters such as Lindsey Sanders, managing director of Hong Kong-based recruiter Lewis Sanders, say the market is only slightly better than last year. David Talalla, of David Talalla & Associates, says the market is still very slow, “but nowhere

near as bad as it was 12 months ago”.

In contrast, managing director of Hughes-Castell Hong Kong, Doreen Jaeger-Soong, says the market is “buoyant” with capital market activity picking up in Hong Kong and banking & finance work picking up in Singapore. Jane Dwyer of GR Law is also more optimistic, stating that the market is much better than it was 12 months ago. “Law firms are actively hiring again, it’s a significant improvement,” she says.

Do you speak Chinese?

While China’s economy continues to power on – helping Australia along the way –according to Mahlab Recruitment, economic growth in China does not translate to an abundance of roles for foreign lawyers in the mainland. This is because Australasian Legal Business ISSUE 8.10

FEATURE | opportunities in Asia >>

international firms still have relatively small offices in China, and there is a preference for lawyers who have strong written and spoken Chinese language skills. Lewis Sanders’ managing director Emily Lewis agrees that while the Asian market appears to be more buoyant and active than the UK, US and Middle East, Australian and New Zealand candidates can find it more difficult to find employment in Hong Kong, mainland China and Tokyo because of the language requirement.

Tommy Tong, Herbert Smith’s recruitment and corporate partner in Hong Kong, says that while the firm tries to attract lawyers with skills, “we are not exclusively looking for candidates with Chinese language skills”. He adds that the ability to

read Chinese is more important than the ability to speak either Mandarin or Cantonese. “If you can read it, it doesn’t matter which one you speak,” he says. “In law, you are required to read large amounts of information, so not having to translate it into English saves time and money. “ While the need for local language skills is predominantly in Hong Kong and the mainland, Tong says the Tokyo office also has an increasing number of practitioners who are fluent in Japanese. This suggests that there may be heightened expectations that applicants will have some grasp of the Japanese language. For example, Japanese firms are showing a renewed interest in banking and finance lawyers – but Jane Dwyer says that

►► TAYLOR ROOT HONG KONG PRIVATE PRACTICE SALARY SURVEY 2010 Level

Annual income range (A$)*

Typical annual income (A$)*

1 year PQE

100,800-132,720

120,960

2 year PQE

105,840-142,800

129,360

3 year PQE

112,560-154,656

141,120

4 year PQE

122,640-168,000

156,240

5 year PQE

139,440-184,800

171,360

*Based on an exchange rate of $HK1=A$0.14

►► TAYLOR ROOT SINGAPORE PRIVATE PRACTICE SALARY SURVEY 2010 Level

Annual income range (A$)*

Typical annual income (A$)*

1 year PQE

80,000-148,000

120,000

2 year PQE

88,000-168,000

136,000

3 year PQE

104,000-192,000

152,000

4 year PQE

128,000-208,000

168,000

5 year PQE

144,000-220,000

176,000

*Based on an exchange rate of S$1=A$0.80

►► HAYS SALARY SURVEY: HONG KONG AND SINGAPORE 2010 Level

Annual income range Hong Kong (A$)

Annual income range Singapore (A$)

1 year PQE

100,800-134,400

56,000-96,000

2 year PQE

109,200-138,600

64,000-120,000

3 year PQE

117,600-147,000

72,000-128,000

4 year PQE

132,720-176,400

80,000-136,000

5 year PQE

143,080-193,200

88,000-176,000

Based on: S$ =A$0.80 and RMB1=A$0.16

►► HUDSON INTERNATIONAL LAW FIRM SALARY SURVEY: SINGAPORE AND SHANGHAI 2009 Level

Annual income range Singapore (A$)

Annual income range Shanghai (A$)

1 year PQE

128,000-164,000

80,000-176,000

2 year PQE

140,000-180,000

96,000-192,000

3 year PQE

152,000-224,000

120,000-208,000

4 year PQE

164,000-252,000

128,000-224,000

5 year PQE

176,000-276,000

144,000-240,000

Based on: S$1=A$0.80 and RMB1=A$0.16 www.legalbusinessonline.com

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FEATURE | opportunities in Asia >>

“My experience with the Singapore and Hong Kong market is that they are already top-heavy enough, and will not be looking to appoint more senior people” David Talalla

David Talalla & Associates

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these firms would prefer lawyers with Japanese language skills.

Language skills may be in demand, but in particularly “hot” practice areas there are still opportunities for lawyers who are not conversant in the local language. For example, Doreen JaegerSoong says that lawyers experienced in areas such as derivatives (both debt and equity), IP (particularly broadband protection) and compliance law would be in demand, even without local language skills. Recruiters also feel that energy & resources falls into this category: GR Law’s Dwyer says she has seen a number of roles in this area across Singapore, Hong Kong, Shanghai and Tokyo at the senior associate level.

Talalla has also noticed the resource and energy practice area “ramping up” in recent months and Australian lawyers are at the top of the candidate list. This view is confirmed by Tommy Tong, who says that Herbert Smith has openings across its Asia offices, but particularly in energy and resources.

“The energy and resources group is also a rapidly growing area for us in Asia, because of Chinese companies’ continual appetite for resources.

We are increasing our headcount to effectively service the growth in these areas.” Tong also noted that the corporate area was also busy. “There has been an upturn in activity postGFC in the corporate area,” he says.

Other hurdles

In addition to the language criterion, law firms may give preference to candidates who are locally admitted.

For example, Dwyer says there is also demand for litigators across Asia, particularly ones with strong arbitration experience. However, again it is an advantage if practitioners have local language skills and are admitted in Hong Kong. (Overseas lawyers are able to be admitted by sitting the Overseas Lawyers Qualification Examination.)

Local experience is another criterion which weighs against foreign

Australasian Legal Business ISSUE 8.10

FEATURE | opportunities in Asia >>

applicants, but again this may not be a problem for lawyers with particularly sought-after skills. Lewis Sanders’ Lewis says that while a majority of roles in Hong Kong and the mainland require local experience, law firms will consider overseas lawyers in areas such as employment law, derivatives and funds. “However, the preference is always for ones with HK experience,” she notes.

Recruiters say that lawyers with more than two years experience and less than eight years experience have the most chance of success in the Asia market. And it is more difficult to secure partner-level appointments in markets such as Hong Kong or Singapore from overseas. Tallala says that this is because overseas partners often would not have the client contacts law firms are looking for when appointing a new partner.

“My experience with the Singapore and Hong Kong market is that they are already top-heavy enough, and will not be looking to appoint more senior people,” he says, noting that firms are more likely to appoint a partner already within the firm, or a secondment.

For junior lawyers, there are some opportunities. Tong says his firm travels to Melbourne once a year to recruit graduates from the universities there for trainee positions in Hong Kong. However, he says that not all students are keen to work overseas so early in their career. “The feeling I get is that there is a dilemma for graduates as to whether they should complete their two years of training in Hong Kong or in Australia,” he says. The regulatory environment can also be a factor – for example, in Hong Kong practitioners are required to have at least two years’ experience in an overseas jurisdiction, in order to sit the Overseas Lawyers Qualification Examination.

What’s the attraction?

Reasons for choosing to work in Singapore, Hong Kong, Shanghai or Tokyo vary from candidate to candidate, but one of the main drawcards for the region is the quality and variety of work lawyers can expect, says Talalla. “Law firms there offer international high-quality work with www.legalbusinessonline.com

high-quality clientele, especially in Hong Kong and Singapore,” he says. In addition to this, wages in Hong Kong and Singapore are slightly higher than in Australia and New Zealand while tax rates are substantially lower.

“Accommodation in those cities is fairly expensive, but the overall cost of living is lower,” adds Talalla.

Dwyer agrees that the wages and lower tax rates are a “motivating” factor for local legal practitioners.

Singapore has a maximum limit of 20% income tax while Hong Kong has a maximum tax rate of 17%. However, Japan and mainland China are slightly different: the cost of living in Japan – particularly Tokyo – is higher than other cities in the region. Tokyo is ranked as the second-most expensive city in the world (Mercer Cost of Living Survey 2010) while Osaka in Japan is sixth, and Hong Kong and Singapore rank eighth and 11th respectively.

While tax rates in mainland China can be high for expatriates, the cost of living is substantially lower. And Australian and NZ lawyers who work in Hong Kong and Singapore tend to work at UK or US firms, says Talalla, where they can expect to be given more responsibility compared to local firms.

“The UK firms in Asia, in particular, tend to give junior to mid-level lawyers more responsibility,” he says. Dwyer says lawyers in those firms normally find they can progress in their careers more quickly than they can in Australian and New Zealand.

Australian and NZ lawyers are also highly regarded in Asia because of the training provided by the universities and law firms. “We see a lot of talent in the Australian market,” Tong says.

Talalla says a common law background is also highly regarded by firms in Hong Kong, and adds that Australian and NZ practitioners are also perceived as being “less demanding” than their British and US counterparts.

Compared to the UK and Middle East, Asia is also substantially closer to Australia, which is another drawcard for local practitioners wanting overseas experience and an expat lifestyle, but close to home. “Singapore is only a four-hour flight from Perth and Hong Kong is only eight hours from Sydney, so it’s a lot easier if they want to come home for a visit,” says Tallala. ALB 37

FEATURE | in-house support services >>

Searching for

Recruitment, software, document management – these are all common services that are marketed to law firms. But is there a corresponding need for the same services in the in-house market?

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Australasian Legal Business ISSUE 8.10

FEATURE | in-house support services >>

O

ver the years, privatepractice lawyers have become familiar – and perhaps all too familiar – with the wide array of companies which provide services to the legal profession.

Whether it’s recruitment, software or any other number of support functions, receiving “the pitch” from a hopeful service provider is part of everyday life in a law firm. But are in-house lawyers receiving the information they need to make decisions on which service providers offer the best value?

Undoubtedly in-house lawyers have more pressing priorities to deal with at work, but on the subject of service providers there does appear to be a notable communication gap. “The market is much clearer for privatepractice lawyers because in-house lawyers are hidden to a certain extent,” says Dymocks Group general manager for legal and compliance, Mark Buckland. This is a sentiment echoed by the CEO of legal publisher TimeBase, Leonie Muldoon, who says law firms make it easier to find the right person to talk to when trying to offer a product or service. “It’s much more difficult with in-house,” she says.

It appears that at least some in-house lawyers would prefer to keep things that way, with some GCs privately admitting to ALB that they would

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welcome less – rather than more – contact with service providers. Still, there is ready acceptance that this interaction is part of the job. “They’re doing what they have to do,” shrugged one GC who did not wish to be named.

The truth is also that lack of communication between in-house service providers and lawyers means that valuable information about service providers is often unavailable.

The quality of systems used in-house may have suffered as a result. “The sharing of information between inhouse lawyers is still very basic.

IT information is not shared,” says Buckland.

“We are not big enough in terms of legal spend to justify a secondment from a law firm...

Advent Lawyers provide us with a lawyer with 25 years experience for the same rate as some of the larger firms charge for a first-year lawyer” Mark Buckland

Dymocks

The IT issue

There are a number of reasons why software solutions tailored for private practice may not be suitable for inhouse users. For example, law firms may use a case management system to create invoices and facilitate billing, whereas in-house might be more interested in tracking the use of resources and reporting to internal clients where money is being spent.

In-house lawyers may even use research tools such as legislation and caselaw services in a different manner from their private-practice colleagues. According to Muldoon, inhouse lawyers are more likely to use a

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FEATURE | in-house support services >>

“You need an understanding that an in-house legal department is a business division, it’s not just financial pressure on them... they are also focused on making a contribution to the business, beyond legal advice. Therefore anything they use needs to assist them assist the business” Leonie Muldoon

CEO TimeBase

research service to ascertain whether a problem exists and to frame the issue, if one exists, for outside counsel.

Private-practice lawyers in turn are more likely to use a research service to “drill down” into the details of the law.

Services targeting in-house lawyers need to take into account the price pressures in this market – service providers are aware that in-house lawyers will usually be unwilling to pay the same kind of prices as private practice. It’s a critical point which businesses such as software provider LEX, an in-house service specialist, has built into its business model. Sales and customer support manager Richard Hansen said that cost pressures were a fact of life for his target market. “In-house lawyers are under constant pressure to prove their worth and are generally underresourced because they are viewed as a cost centre, not a revenue stream,” he observes.

The market to provide Richard Hansen LEX services to Australian in-house lawyers may be competitive, but it is interesting to note that some lawyers have identified gaps. Dymock’s Buckland says finding suitable IT and software solutions is a major hurdle for in-house lawyers. “The way we work is very different to the way private practice works in terms of IT and document management,” he observes. Buckland says it’s important for a company’s files and contracts in particular to be active the entire time the contract is valid, with multiple users able to access this at any time.

He adds that in a corporation there needs to be a trail of authorisation – something which is not needed in private practice. Having done extensive research into integrated contract life cycle systems in the Australian market, he is now looking to the US for a suitable alternative. “There is nothing in Australia that meets our needs; we don’t yet have a system for the life cycle of a contract,” he says.

Outsourced counsel

A recent trend has been the replacement of the traditional law firm external advisor (or secondee) with specialist outsourcing agencies which provide lawyers “on call”. Buckland, 40

for example, uses a specialist provider.

“We use Advent Lawyers, because their business model is targeted at in-house legal departments,” he says.

The Advent model involves lawyers working on a project-by-project basis for an in-house legal team. Buckland says he uses the service when he needs additional legal resources for a short period. “We are not big enough in terms of legal spend to justify a secondment from a law firm. Advent Lawyers provide us with a lawyer with 25 years experience for the same rate as some of the larger firms charge for a first-year lawyer,” he says.

Advent Lawyers is not a law firm in the conventional sense, but the more traditionally structured law firms are also getting involved in this model.

Truman Hoyle provides a similar offering to Advent through its General Counsel Service, which was launched in 2004. “We found that many of our clients required general counsel services, but they did not have the headcount to have an in-house role,” says managing partner Shane Barber.

“Our service puts senior staff in our clients’ offices for a set period of time to work on a project or set number of projects. That lawyer becomes their in-house lawyer for the duration. If the project runs over time, the lawyer will complete the remainder of the work in our own offices,” explains Barber.

A similar offering is available from Mark Davidson & Associates; which has over the past 11 years been offering outsourced in-house general counsel services to corporations and in-house legal departments across Australia. Davidson says his model differs from Advent and Truman Hoyle because his work is not project-based, but role-based. “At the end of a project my relationship with the client should not end. Outsourced lawyers treat their clients as if they were employed fulltime, so that when a problem arises you have the historical knowledge to work on that issue without additional education or briefings,” he says.

George Weston Foods’ general counsel Asia Pacific, Tim Wong, says he is familiar with the outsourced services available from firms such as Advent and Truman Hoyle, but has not yet has the need for them. “Once they get more people on board, then I think they will become more of a threat to traditional Australasian Legal Business ISSUE 8.10

FEATURE | in-house support services >>

law firm secondments,” he observes.

When in need of additional resources Wong prefers to use secondments from one of the firms he uses regularly or law students.

In recent years a number of companies have also started to offer Legal Process Outsourcing (LPO) and Legal Services Outsourcing (LSO) to in-house legal departments. As previously reported, Rio Tinto has started outsourcing UK legal work to providers in offshore locations, while an increasing number of toptier law firms utilise the services of LPO providers such as CPA Global, Pangea 3 and Exigent. The use of these services tends to be more prevalent in the UK market than the Australian market, however.

Buckland is looking into working with one such provider, but hasn’t utilised their services yet. “I could have used them in a number of transactions during the past year, but I don’t have the need at the moment. Despite the obvious advantages, I’m trying to work out if there is a place for them in our

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work. I’m not sure we have the scale to efficiently utilise them.” Wong is also aware of LPO and LSO providers, but says he has not yet needed their services.

Recruiting for in-house

Recruiting legal talent for an in-house role requires a different approach to recruiting for private practice, says Wong. “Law firms hire people all the time; with in-house teams appointing someone new is hopefully a relatively rare occurrence, and making sure they fit in with the team and the wider organisation is critical,” he says.

A majority of legal recruiters like Randstad Legal and Integrity Legal provide both in-house and private practice recruitment services, however recruiters are well aware the two markets are different. “As an inhouse recruiter you are dealing with a variety of clients from a range of industries, which you don’t have as a recruiter for private practice,” says state manager at Randstad Legal, Paul Cowling. In order to meet the

“In-house lawyers are under constant pressure to prove their worth and are generally underresourced because they are viewed as a cost centre, not a revenue stream ” Richard Hansen

LEX

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FEATURE | in-house support services >>

needs of this diverse range of clients, Cowling says recruiters need to have a good understanding of each company, developed through comprehensive groundwork and research. “You have to get your head around your clients’ needs very quickly,” he adds.

Cowling, however, is not a specialist recruiter for the in-house market.

Indeed, he believes that such a confinement to this segment of the market would not be desirable.

“Working across in-house and private practice gives you a greater depth of knowledge of the candidates in the market. And market knowledge is key in this industry,” he says.

Integrity Legal senior consultant Anna Wech agrees that a good understanding of the client’s needs and a background in law are required when recruiting for in-house roles. “It is also important to have a commercial and pragmatic focus,” she says.

CPD

Like lawyers in law firms, inhouse lawyers are also required to

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undertake units of study as part of their Continuing Professional Development (CPD) or Continuing Legal Education (CLE) obligations. A number of organisations offer seminars and programs in this area that are specially designed for inhouse legal practitioners.

Leo Cussens Institute in Victoria offers a range of programs, seminars and intensives for in-house legal; CPD director, Linda Baxter, Linda Baxter Leo Cussens says when developing training programs for lawyers, one size does not fit all. “There are certain generic issues that cross over every practice area of law, but beyond that there are differences in the day-to-day demands of in-house lawyers. It’s the content of the training rather than the training methods that differ,” she says. ”For this reason all of the presenters used by Leo Cussens for in-house training are required to have specific knowledge and experience relevant

to in-house lawyers. There is nothing more irritating to an in-house lawyer than for a trainer to turn up and know nothing about the types of challenges that in-house lawyers face.”

Education and training that is designed and tailored to meet the needs of in-house lawyers is also available from the Institute of Knowledge Development (IKD), which was previously a division of law firm Freehills. Wong uses a variety of IKD services, including its consulting service and benchmarking metrics surveys, LegalScores, which he says help him to assess his legal costs and value to the company. “It’s an innovative way to look at the value of the work you do as a legal team, and the additional contribution of the legal team to the business,” he says.

Wong has also participated in one of IKD’s professional development courses. Similar to Leo Cussens, IKD does not exclusively provide services to in-house lawyers, but does cater specific programs and seminars towards the in-house market. ALB

Australasian Legal Business ISSUE 8.10

FEATURE | in-house support services >>

www.legalbusinessonline.com

43

FEATURE | corporate social responsibility >>

Mutual benefit Law firms are engaging in corporate social responsibility initiatives in greater numbers than ever, writes Olivia Collings

W

hile there is no set definition for what exactly constitutes corporate social responsibility (CSR), many Australian and New Zealand companies have adopted the official definition from the World Business Council for Sustainable Development (WBCSD). The global association of companies describes CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and the local community and society at large.�

Pro bono legal advice is the most obvious way law firms perform CSR activities, but others would typically involve the adoption of environmentally sustainable business practices, 44

Australasian Legal Business ISSUE 8.10

FEATURE | corporate social responsibility >>

cultivating a diverse and equal opportunity workplace and involvement in community causes. It’s little wonder that law firms are anxious to demonstrate their commitment to this wholesome mix – but as always, there’s a business element too.

its legal panel, meaning any law firm undertaking legal work for the Victorian Government must now complete pro bono work equal to 15% of the total legal fees billed by that firm to the government. Similarly, the Commonwealth Government now requests firms to submit a pro bono report to The Office of Legal Services Anne Cregan coordination, as part of Blake Dawson the procurement process.

When procuring legal services each Commonwealth agency must take into account the amount and type of pro bono work the law firm has carried out or will carry out, and whether the firm is a signatory to the National Pro Bono Aspirational Target, which sets out a voluntary target of 35 hours of pro bono legal work per lawyer per year.

Earlier this year the AttorneyGeneral of New Zealand, Christopher Finlayson, announced that the NZ Government was considering making pro bono work a requirement for those laws firms interested in working on government contracts. A spokesperson for the Attorney-General said the idea of incorporating a pro bono requirement into government legal contracts was still under consideration, “as the government works through significant reforms in the legal aid and criminal justice area”.

Business imperative

Unlike commercial law firms which rarely need to market themselves to the general public, the typical corporate and government client frequently feels the spotlight of public scrutiny and has an extra motivation to shore up its CSR credentials. This means applying not only those CSR principles internally, but ensuring that external service providers such as law firms are following them too. “We are increasingly being asked about our CSR policies and achievements in requests for tenders,” says pro bono partner at Blake Dawson, Anne Cregan. Firms may be required to answer sustainability questionnaires and compile environmental management reports by prospective clients, while at Allens Arthur Robinson clients have even visited the firm’s offices to verify their CSR activities.

Government clients in particular are keen for their external legal advisors to be good corporate citizens. The Victorian Government has a pro bono quota for firms on ►► THE VALUE OF PRO BONO In search of an industry benchmark

While the National Pro Bono Resource Centre has undertaken two major studies of industry pro bono activity in 2008 and 2010, these did not identify law firms individually. ALB asked firms to supply some key statistics on their pro bono activity. As demonstrated by the table below, however, not all law firms have a policy of disclosing this information.

Firm

National Pro Bono Aspirational Target signatory

Percentage of billable hours pro bono / CSR in FY2010

Number of hours offered pro bono for FY2010

Total pro bono contribution (A$)

Allens Arthur Robinson

Yes

n/a

40,800 hours in total

n/a

Blake Dawson

Yes

3.5%

n/a

n/a

Clayton Utz

Yes

3.5%

40,000 hours in total

n/a

Corrs Chambers Westgarth

Yes

n/a

50.5 hours per lawyer

A$8m

DLA Phillips Fox

Yes

n/a

25,000 hours in total

n/a

Freehills

Yes

n/a

n/a

n/a

Henry Davis York

Yes

n/a

35 hours per lawyer

A$2.65m

Mallesons

No

n/a

n/a

n/a

Minter Ellison

Yes

n/a

n/a

n/a

www.legalbusinessonline.com

45

FEATURE | corporate social responsibility >>

“I think every firm – not just ours – needs to consider the ethics of accepting instructions, on a case-by-case basis. We have rejected work on ethical grounds and every firm should”

New Zealand firm Russell McVeagh, which recently won an award for its support of a community legal centre, is one law firm not averse to the proposal.

“If compulsion puts more focus on pro bono work and results in more lawyers getting involved, this could have merit,” says the firm’s CEO Gary McDiarmid. “Anything innovative to increase contributions to charitable groups and community law centres is well worth considering.”

Indirect benefits Kelvin O’Connor

Henry Davis York

46

CSR offers other less direct commercial benefits for law firms, such as providing a means to keep lawyers busy and stimulated during quiet periods. Many firms faced this challenge during the GFC and opted to send their lawyers on CSR initiatives, rather than risk losing valuable talent. It appears that many trod this path – according to the 2010 National Law Firm Pro Bono Survey, many of the top Australian firms maintained or increased their level of pro bono activity last year, with the number of participating lawyers increasing too.

This is activity which is also likely to create an attractive environment for lawyers to work in. “CSR can benefit recruitment and retention,” observes Annette Bain, executive director of the Freehills Foundation. Other business benefits of CSR work include an opportunity for law firms to establish brand differentiation, build morale and improve relationships with clients when pursuing joint initiatives. The implementation of environmentally sustainable practices can often result in operating costs savings for firms.

Still, law firms maintain that CSR is about more than business acumen.

“The motivation for our involvement [in CSR] was not to seek publicity or try to look good to our clients. Members of the firm genuinely want to ‘give back’ and take a wider responsibility for the community in which we work and live,” says McDiarmid. As part of their own CSR objectives, many law firms are also requiring suppliers to show a commitment to the policy. For example, Clayton Utz requires suppliers to submit their CSR initiatives during the tender process, as a way of differentiating between suppliers and ensuring that those selected adopt

a responsible approach to business.

Minter Ellison is another firm that also screens potential providers for CSR commitment.

A particularly difficult question to face is to what extent should law firms refuse billable work if they consider it to be in conflict with their CSR or ethical obligations. “I think every firm, not just ours, needs to consider the ethics of accepting instructions, on a case-by-case basis. We have rejected work on ethical grounds and every firm should,” says Henry Davis York’s Kelvin O’Connor. Aside from taking on work that contradicts a firm’s CSR activities, O’Connor says firms need to think about the impact on their reputation if they complete work for questionable organisations.

Measuring up

While most major law firms participate in industry benchmarking surveys which assess their performance on criteria such as revenue growth and profitability, benchmarking surveys relating to CSR are less well established. The St James Ethics Centre has run a CSR benchmarking index known as the Corporate Responsibility Index (CRI) for many years now, but Henry Davis York was the only law firm to be included in the 2009 index.

Minter Ellison was a founding participant in the 2003 index, but after two consecutive gold rankings, the firm decided to take a “leave of absence” from the index last year. Minter Ellison’s national director for pro bono and community investment, Anton Hermann, says the firm originally participated in the CRI to establish an internal management tool for CSR. By contrast, HDY chose to participate as a way of “formalising” its commitment to a sustainability program.

A number of Australian law firms including Henry Davis York have aligned to form the Australian Legal Sector Alliance, a voluntary industryled organisation which aims to improve the sustainability performance of law firms across the country. HDY’s O’Connor said in 2011 the alliance would launch principles and protocols for firms interested in participating and achieving the benchmarks set out by the organisation. And more Australasian Legal Business ISSUE 8.10

FEATURE | corporate social responsibility >>

than 50 firms across Australia have so far signed the voluntary Pro Bono Resource Centre’s aspirational target for pro bono work. While many law firms meet – Gary McDiarmid and sometimes exceed Russell McVeagh – the target, individual lawyers are not required to undertake pro bono work as part of their employment. “I don’t think in any firm it is a mandated target for every lawyer to undertake pro bono, I think such a requirement would contradict the philosophy behind pro bono work.

It has to be something they want to do,” says John Corker, director of the Pro Bono Resource Centre. “Pro bono work comes more from a professional/ ethical need rather than a corporate responsibility need.”

A number of law firms are interested in the idea of an industry-wide benchmark, as a tool for firms to use when establishing new pro bono and community programs. However, not all firms see the usefulness of such a study. “An industry-wide benchmark for CSR may be useful if the benchmarks were appropriately tailored to legal practice. Many of the current CSR indices were developed to address CSR in industry and are inappropriate for professional service firms,” says Blake Dawson’s Cregan.

“Black and white targets for the quality and value of CSR work miss

www.legalbusinessonline.com

the point,” she adds. Minter Ellison’s Hermann agrees that while industrywide benchmarks can be useful, “every law firm needs to find its own focus and the particular mix of CSR measure that fit within its individual business model”.

Dedicated pro bono lawyers

A number of law firms including Blake Dawson, Clayton Utz and Corrs Chambers Westgarth have pro bono partners, while Allens and Minter Ellison have heads of pro bono. “Just as we have practice leaders in our areas of commercial practice, we have a full-time pro bono partner to ensure we provide high-quality, responsive, well-targeted pro bono assistance to our clients,” says Cregan.

At Blake Dawson, the pro bono partner is not required to bring in fee-generating work to the firm, while at other firms the amount of fee-generating work required of the partner is lowered to assist their pro bono activities. At Minter Ellison, each office has a partner who commits a portion of their time to guiding the local pro bono program, while at Corrs there is a national team of partners who oversee the pro bono work and fundraising activities being carried out in each of the offices, in addition to national pro bono manager.

However, pro bono partners at Corrs are not exempt from doing feegenerating work. ALB

“Just as we have practice leaders in our areas of commercial practice, we have a full-time pro bono partner to ensure we provide high-quality, responsive, well-targeted pro bono assistance to our clients” Anne Cregan

Blake Dawson

47

FEATURE | corporate social responsibility >>

48

Australasian Legal Business ISSUE 8.10

FEATURE | corporate social responsibility >>

www.legalbusinessonline.com

49

Photography by Thilo Pulch

FEATURE | interview >>

50

Australasian Legal Business ISSUE 8.10

FEATURE | interview >>

IN-HOUSE PERSPECTIVE

When law meets human resources Stephanie Vass is both group general counsel and head of people and development at Resimac.

She speaks with ALB about the unique challenges of this double-barrelled role

Y

ou never know when the next career challenge will arise.

Earlier this year, Stephanie Vass was a partner at law firm Piper Alderman and was not looking for a change. “I really wasn’t looking to move, I was very happy at Piper Alderman,” she says. “I enjoyed what I did, it was a great working environment – and it was a great team of people.”

But a conversation over a client lunch with the CEO from specialist securitisation and finance company Resimac turned into a job offer which was too appealing to turn down. “One of the reasons why I moved was that Resimac was my client for a long time,” explains Vass. “I knew the business, I had worked with very senior people in the organisation, I knew the CEO very well and respected him immensely.”

It’s a story which affirms the old adage that business relationships, not an active job search in the market, is the best way to find a new role. Still, Vass admits there is a challenge in meeting the high expectations and important duties with which she has been entrusted in a commercial environment. It’s a common experience for any lawyer who has left the security of private practice to go in-house – or indeed, on anyone who has made a career shift.

www.legalbusinessonline.com

Many facets

Vass wears multiple hats at Resimac.

As group general counsel she is responsible for the management of the company’s legal affairs, while as head of people and development she is responsible for the company’s human resources function. It is an unusual combination – but also one which clearly makes sense, given Vass’ previous experience as an employment lawyer in private practice. As Vass points out, there are certain analogies between law and human resources.

“There is a need to manage people’s expectations. Business units are your clients from an HR perspective and you have to be able to service them in the same way that you are expected to service a client in day-to-day [legal] practice and make sure their needs are met. If they’ve got a question or an issue which needs to be resolved it has to be resolved then and there.”

Vass may be part of the executive team but she is very much involved with frontline HR duties, such as reviewing policies and procedures, conducting seminars on topics such as workplace diversity and acting as a single point of contact and negotiation for recruitment. Having a single point of contact means that Resimac is able to ensure consistency in its approach to employment conditions.

The common thread through all of this, of course, is the importance of understanding the legal obligations which underpin the employment relationship. This is something which Vass is uniquely placed to appreciate.

“I think I can bring a different approach to HR because I am a lawyer,” she says. “It’s an advantage – I can look at issues from a legal perspective and ascertain what the risks are and what the exposure is to the company. Having that background is an edge because I’ve had all sorts of cases and I can anticipate what the likely outcome is going to be.”

Over the years, there has been a shift in the role of the in-house legal profession across Australian and New Zealand businesses. In-house lawyers have waged a steady campaign to be recognised as part of the core senior management group, rather than simply a company appendage with only peripheral involvement in key business decisions. This campaign has largely been successful, but the question arises as to whether HR professionals may be confronted with a similar challenge – to be seen as part of the senior management group. The capacity to provide solutions from a legal perspective, rather than simply an HR one, may be a key part of this evolution.

Certainly Vass’ legal background has 51

FEATURE | interview >>

seen her become involved in matters at an earlier stage than perhaps might otherwise have been the case.

“If you have someone with a legal background in HR, I think [senior management] will come to you right at the outset to ask for assistance,” she says. “They know you’ll be able to give them the proper direction and also advise them of the consequences if they take different approaches to things.”

Will we see more general counsels take on HR responsibilities as part of their role, and in the longer term might in-house legal and compliance teams even displace HR teams in some companies? Lawyers who have taken up general counsel roles in the past have often had corporate or litigation practice backgrounds. This may be part of the reason why a fusion of legal and HR functions is relatively uncommon at present.

What prompted Vass to take up the HR function was her background in employment law and she warns against the tempting assumption that any lawyer is capable of navigating

52

workplace laws even without a background in this particular area.

“Most lawyers think that they know how to navigate through an employment contract – but it can be quite complicated and we’ve had two pieces of significant legislation in the last four years,” she observes.

“The number of mistakes we’ve seen in employment contracts that have come from lawyers without exposure to workplace relations legislation is just phenomenal. I think people underrate [employment law] because they consider it soft and it isn’t – you need to be aware of all sorts of legislation, and aware of the type of workplace conduct which may be in breach of the legislation such as the Trade Practices Act, the Fair Work Act, or the OHS Act. It can be complicated.”

Vass takes an interest in the issue of company morale and this was, in fact, one of the things she investigated before joining Resimac. “I wanted to meet and talk to the executive team at length and find out what keeps them here,” she says. Vass discovered that

Resimac has a very low staff turnover, something which she attributed in part to the quality of the leadership. “The executive team is respected internally and in the industry. In terms of the employees, people know what they have to do and know what’s expected of them. At the senior level in particular that’s very important,” she says.

She was also impressed with the level of energy within the company. “We’ve also gone through quite a growth spurt, there have been quite a few [new] people employed at various levels in the operations area, the organisation is changing its profile – people sense that,” she says.

External advisors

Like many other general counsels who have made the move from private practice, Vass is aware of the difficult question of whether one should brief a law firm where one has previously practised. She says that the matter always comes down to looking after the company’s interests first. “You really need to pick the right firm

Australasian Legal Business ISSUE 8.10

FEATURE | interview >>

www.legalbusinessonline.com

to communicate with the referring partner.”

Renaissance lawyer?

The concept of a “renaissance lawyer” may be something of a hyperbole, but it is certainly intriguing to encounter professionals who have interests which could have led them down an entirely different career path.

ALB has previously profiled Herbert Geer managing partner Bill Fazio, who dabbled in nuclear physics and investment banking before becoming a lawyer. Vass is another example of a lawyer with a very wide range of professional interests, spanning languages (she speaks five) and engineering. Having finished her secondary studies, she toyed with the idea of becoming an engineer before eventually settling on law. Structured financial products might be as close as Vass gets to her own engineering project in this role, but there is little doubt that there will be no shortage of stimulating work in this next phase of her career. ALB

Photography by Thilo Pulch

and the right lawyers for particular transactions,” she says. “Although from a sentimental perspective you have a sense of loyalty, that needs to be very carefully balanced against the interests of the company. The important thing as far as we’re concerned is that some firms are better able to resource a matter and to offer the right expertise. For example, we require a particular expertise in securitisation and a lot of firms aren’t able to provide that.”

The key to good service, says Vass, is honest communication, especially when a matter is not running to the agreed timeframe. “It’s not all about partner accessibility – that’s a pitch that all firms give,” she observes. “It’s about honest and open communication and just picking up the phone and keeping people informed. It’s a common oversight by a lot of lawyers, especially when they’ve referred work internally.

If a partner refers a matter to another partner, often the mistake that is made is that the partner receiving the instruction doesn’t feel the need

53

MARKETDATA DATE | M&A | M&A MARKET >>>> In association with

M&A TRANSACTIONS AND STATISTICAL ANALYSIS Top 10 Announced Deals - Australasia (28 August, 2010 - 24 September, 2010) Announcement Date

Target Company

Target/Seller Legal Advisor

Bidder Company

Bidder Legal Advisor

Seller Company

03-Sept-10

Andean Resources Limited

Corrs Chambers Westgarth; Fraser Milner Casgrain; Johnson Winter & Slattery

Goldcorp Inc

Cassels Brock & Blackwell; Mallesons Stephen Jaques

3,610

03-Sept-10*

Andean Resources Limited

Corrs Chambers Westgarth; Fraser Milner Casgrain; Johnson Winter & Slattery

Eldorado Gold Corporation

Dorsey & Whitney; Fasken Martineau; Freehills

3,547

08-Sept-10

Avoca Resources Limited

Akol; Borden Ladner Gervais; Cochrane Lishman Carson Luscombe

Anatolia Minerals Development Ltd.

Clayton Utz; Stikeman Elliott

1,015

07-Sept-10

Choiseul Investments Limited (88.1% Stake)

Norton Rose

Milton Corporation Limited

Church & Grace Solicitors and Attorneys

31-Aug-10

Dun & Bradstreet Australia Holdings Limited

Minter Ellison

D&B Corporation

Mallesons Stephen Jaques

20-Sept-10

Wridgways Australia Limited

Clayton Utz

Santa Fe Holdings Limited

82

23-Sept-10

Unitpool AG

Brambles Limited

38

16-Sept-10

Pajingo Gold Mine (40% Stake)

Advising seller: TressCox Lawyers

Conquest Mining Limited

Allens Arthur Robinson

08-Sept-10

Innamincka Petroleum Limited

Norton Rose

Drillsearch Energy Limited

Blake Dawson

09-Sept-10

Keycorp Limited

Middletons

Archer Capital

Deal Value (AUDm)

400

LCW Private Equity Pty Limited

230

Heemskirk Consolidated Limited

37

25

23

*deal lapsed on 08/09/2010 Notes:

Based on announced deals, including lapsed and withdrawn bids, from 28 August 2010 to 24 September 2010•Based on geography of either target, bidder or seller company being Australasia•Includes all deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m•Activities excluded from table include property transactions and restructurings where the ultimate shareholders' interests are not changed•League tables are ranked by volume•Q3 10 * = 1 July 2010 to 24 September 2010

League Table of Legal Advisors to Australasian M&A (Jan 01, 2010 - Sept 24, 2010) Rank

House

League Table of Financial Advisors to Australasian M&A (Jan 01, 2010 - Sept 24, 2010)

Value (AUDm)

Deal Count

Rank

House

Value (AUDm)

Deal Count

19,944

24

7,077

16

18,017

15

1,742

14

12,901

13

Deutsche Bank

9,792

11

7

Ernst & Young

6,442

10

23

8

Credit Suisse

15,058

9

4,732

17

9

Grant Samuel

14,732

9

10,743

15

10

JPMorgan

8,463

9

1

Freehills

35,316

45

1

Goldman Sachs

2

Mallesons Stephen Jaques

38,810

40

2

Deloitte

3

Minter Ellison

12,160

37

3

UBS Investment Bank

4

Allens Arthur Robinson

31,210

27

4

KPMG

5

Blake Dawson

13,105

24

5

Macquarie Group

6

Clayton Utz

8,538

24

6

7

Norton Rose

6,377

23

8

DLA Piper

1,071

9

Corrs Chambers Westgarth

10

Gilbert + Tobin

Australasian M&A Activity - Quarterly Trends 200

80,000

180

70,000

140

50,000

120

40,000

100 80

30,000

60 20,000

40

10,000 0

54

Number of deals

Value (AUDm)

160

Value (AUDm) Volume

60,000

20

Q1 03

Q2 03

Q3 03

Q4 03

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10*

0

Australasian Legal Business ISSUE 8.10 Australasian Legal Business ISSUE 8.10

MARKET DATA | capital markets >>

EQUITY CAPITAL MARKETS TRANSACTIONS LIST Australia, New Zealand Sep 5-Oct 2 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 CFS Retail Property Trust

517.752

09/24/10

AUD

Goldman Sachs & Partners AU; Macquarie Capital Advisors

Real Estate

Spark Infrastructure Group

282.269

09/22/10

AUD

Deutsche Bank (Australia); UBS Australia Ltd

Financials

Karoon Gas Australia Ltd

174.586

09/16/10

AUD

Merrill Lynch (Australia) Ltd

Materials

Cockatoo Coal Ltd

111.919

09/15/10

AUD

Credit Suisse Australia Ltd

Materials

Mirabela Nickel Ltd

81.313

09/09/10

AUD

Macquarie Equity Capital Mkts; UBS Australia Ltd

Materials

Gryphon Minerals Ltd

46.187

09/24/10

AUD

Euroz Securities Ltd; Paradigm Capital Inc

Materials

Coalspur Mines Ltd

42.750

10/01/10

AUD

BMO Capital Markets; JP Morgan Australia Ltd

Materials

Ampella Minning Ltd

36.130

09/10/10

AUD

CIBC World Markets Inc

Materials

Coalspur Mines Ltd

34.978

10/01/10

AUD

BMO Capital Markets; JP Morgan Australia Ltd

Materials

Adamus Resources Ltd

28.317

09/13/10

AUD

Helmsec Global Capital Ltd; Patersons Securities Ltd

Materials

CuDeco Ltd

19.176

09/24/10

AUD

Azure Capital

Materials

ThinkSmart Ltd

15.498

09/30/10

AUD

JP Morgan Australia Ltd

Financials

Altius Mining Ltd

14.304

09/21/10

AUD

ASANDAS Ltd

Materials

Resolute Mining Ltd

13.851

09/20/10

AUD

Morgan Stanley Australia Ltd

Materials

Somerton Energy Ltd

12.946

09/15/10

AUD

Euroz Securities Ltd

Energy and Power

Chalice Gold Mines Ltd

11.849

09/13/10

AUD

Southern Cross Equities Ltd

Materials

Bookrunner(s)

Sector

Source: Thomson Reuters

DEBT CAPITAL MARKETS TRANSACTIONS LIST Australia, New Zealand Sep 5-Oct 2 Issuer

Proceeds (USDm)

Issue date

Currency

AUSTRALIA Woolworths Ltd National Australia Bank Ltd

1,248.493

09/14/10

USD

Bank of America Merrill Lynch; JP Morgan; Citi

Retail

998.700

09/20/10

USD

Bank of America Merrill Lynch; HSBC Securities Inc; NAB - Capital; RBC Capital Markets

Financials

Asciano Finance Ltd

998.012

09/16/10

USD

JP Morgan; Morgan Stanley; RBS; BNP Paribas SA

Financials

SMHL 2010-3

948.300

09/23/10

AUD

Westpac Institutional Bank; National Australia Bank; Deutsche Bank AG (Australia)

Financials

Optus Finance Pty Ltd

886.747

09/08/10

EUR

BNP Paribas SA; Citi; HSBC Holdings PLC; JP Morgan

Telecommunications

Santos Finance

850.229

09/16/10

EUR

Deutsche Bank AG; UBS Investment Bank

Energy and Power

Macquarie Bank Ltd

777.723

09/14/10

EUR

Barclays Capital Group; HSBC Holdings PLC; RBS

Financials

DBNGP Finance Co Pty Ltd

524.480

09/22/10

AUD

Commonwealth Bank of Australia; Macquarie Capital Advisors

Energy and Power

Sydney Airport Fin Co Pty Ltd

499.510

09/30/10

USD

JP Morgan; Bank of America Merrill Lynch; RBS

Industrials

Treasury Corp of Victoria

298.085

09/10/10

AUD

Deutsche Bank AG (Australia); UBS Investment Bank

Government and Agencies

Regency Centers LP

249.650

09/30/10

USD

JP Morgan; Wells Fargo Bank NA

Real Estate

Mirvac Group Finance Ltd

191.465

09/22/10

AUD

ANZ Banking Group; Westpac Banking

Real Estate

FP Turbo Series 2010-1 Trust

169.252

09/21/10

AUD

ANZ Banking Group; Westpac Banking

Financials

Primary Health Care Ltd

147.279

09/28/10

AUD

National Australia Bank; Evans and Partners

Healthcare

ANZ Banking Group Ltd

75.000

10/01/10

USD

JP Morgan

Financials

Commonwealth Bank of Australia

75.000

10/01/10

USD

JP Morgan

Financials

Commonwealth Bank of Australia

50.000

09/10/10

USD

JP Morgan

Financials

ANZ Banking Group Ltd

49.841

09/16/10

USD

Morgan Stanley

Financials

National Australia Bank Ltd

49.038

09/21/10

CAD

TD Securities Inc

Financials

Export Fin and Ins Govt Gtd

30.000

09/09/10

USD

HSBC Bank PLC

Financials

ANZ Banking Group Ltd

19.464

09/30/10

HKD

BNP Paribas SA

Financials

Commonwealth Bank of Australia

19.329

09/21/10

HKD

BNP Paribas SA

Financials

Westpac Banking Corp

13.751

09/09/10

AUD

Deutsche Bank AG

Financials

Commonwealth Bank of Australia

12.876

09/13/10

HKD

HSBC Holdings PLC

Financials

ANZ Banking Group Ltd

12.873

09/08/10

HKD

HSBC Holdings PLC

Financials

257.670

09/27/10

NZD

ANZ Banking Group; Craigs Investment Partners Ltd

Government and Agencies

18.143

09/17/10

NZD

Morgan Stanley; Credit Suisse

Financials

NEW ZEALAND Manukau City Council BNZIF-London Br Source: Thomson Reuters

www.legalbusinessonline.com

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MARKET DATA | M&A >>

56

Australasian Legal Business ISSUE 8.10

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