Allen & Overy’s Aussie move a potential trendsetter?
By Craig Sisterson

THE RECENT expansion by Allen & Overy into Australia, where it has set up offices in Sydney and Perth after ‘poaching’ 14 partners from Clayton Utz, provides a real shake-up to the Australian legal marketplace, said several large New Zealand firms who spoke to NZLawyer about the UK magic circle firm’s move.

It’s an interesting time for the Australian legal market, said Martin Wiseman, a partner and former Australasian chairman of trans-Tasman firm DLA Phillips Fox, which is in a formal alliance with global legal provider DLA Piper, which has 3,500 lawyers located in 29 countries and 67 offices throughout Asia, Europe, the Middle East, and the US. “The new powerhouse in the world is Asia-Pacific. And the gateway to Asia-Pacific, at least as far as European and US firms are concerned, is probably Australia, because it is culturally aligned, the language is the same, and the lawyers are well trained,” said Wiseman. “I think Sydney is increasingly seen as a hub in Asia. And I think it’s undeniable that Australian mineral wealth is something that is relevant to the growing economies in Asia.”

“There’s no doubt that UK firms are looking at both the amount of referral work they send to Australia, and the fact that they see Australia, and to a lesser extent New Zealand, as a gateway to Asia,” said Mark Weenink, Managing Partner of Minter Ellison Rudd Watts, another firm with very strong trans-Tasman ties. “Most of the magic circle and other big UK firms have been down in the Australian marketplace talking about doing this sort of thing for the last 12 months. So there’s more to come. And there’s a lot going on… [They] certainly see Asia in the medium to long term as being a much more robust economy than their traditional markets.”

When announcing the creation of Allen & Overy’s newest practice, senior partner David Morley said, “Our decision to launch in Australia underlines the increasing importance of Australia in the global and Asia-Pacific economies.”

But while large northern hemisphere firms such as DLA Piper and Norton Rose have previously created a strong presence in the Australian marketplace via formal alliances with large Australian or Australasian firms, Allen & Overy has shaken up the established order by creating a smaller, high-end, niche practice. The global firm, which prior to this move already had 5000 staff, including 451 partners in 31 offices in 22 countries, has announced that its 17-partner, two-office, Australian practice will focus on work in the mining, energy, and media sectors, along with work for banks, investment funds, and private equity.

“There’s no doubt that the Allen & Overy approach could be a game-breaker, and it might signal a wave of firms joining a global network that hasn’t been possible before,” said Alastair Carruthers, Chief Executive of Chapman Tripp. “The interesting thing about this model is it looks less complex to pull off, because it only involved a relatively small amount of people, and only two cities, and to that extent, it looks like a very smart model, because it will be much easier to integrate and establish … than it would be to establish a merger between 250 partners, in 7 or 11 offices, with another global firm. That’s very difficult. This strategy takes a niche focus, and I think it looks very smart.”

But while Carruthers said that with its strong economy, Australia is very attractive, and that more “global tie-ups” are likely to occur, he cautioned that, like New Zealand, the Australian legal marketplace is already “very, very well supplied”, very mature, and very competitive – making barrier to entry therefore very high. Despite the investment monies coming into the country from the growing Asian economies, “It isn’t as though there is a surplus amount of work for greenfields lawyers to come and set up a shingle, and away they go – it isn’t going to happen that way.”

Carruthers also added that he thought Allen & Overy’s move was more to do with Australia itself, rather than establishing a “launch pad” into Asia. “Some people have speculated that they’ve done this to get into Asia, but that seems to ignore the obvious fact Australia is not Asia. It seems to me that they’ve done this to get into Australia. Allen & Overy already had a very strong presence in Asia.”

Australia is not only becoming more important for global firms, but also New Zealand ones, said Weenink. “More and more of our work tends to be sourced out of Australia, rather than out of other international regions. So I think if anything what it will do is make local firms here look for more formal tie-ups with big Australian firms.”

New Zealand firms that aspire to do full-service commercial work for large organisations, are going to find everything increasingly influenced by Australia, said Wiseman. “Australia has become more strategically relevant… I think global hook-ups will possibly be less important [for New Zealand firms] than strong hook-ups with Australian firms.”