G’day from Australia, where the term jurisdiction commonly refers to a state, not the entire country. Outlining common trends is therefore a challenge. Australia does not have one economy, or booming sector. In fact, whatever can be said about Australia, the opposite is also true – somewhere. Many international firms, among them Allen & Overy and Clifford Chance, therefore sandwich the country between their Sydney and Perth offices.
Western Australia is Australia’s biggest state and covers a surface larger than France, the UK, Germany, Spain, Italy, and Poland combined; its economy is predominantly mining sector-driven. Australia’s richest person Gina Rinehart, the chairman of mining exploration business Hancock Prospecting, is worth A$21.5bn. As one lawyer told me: ‘If you’re bidding for an asset, and you’re up against Gina – well, what can you do?’ Unsurprisingly, a number of law firms manage their global mining sector pursuits from Perth, but when activity slows down there’s not much wriggle room. Mining, construction, and disputes in the sector are the firms’ lifeblood.
Over east, the market is divided into the state capitals Melbourne and Sydney on one end, and Queensland on the other end. The latter is a hub for energy and resources lawyers, mostly driven by coal and coal seam gas work, and for lucrative PNG work, which is still predominantly done out of Brisbane. Australia’s two largest cities are the seat of
the majority of banking, capital markets, regulatory, technology, and M&A lawyers.
The most dramatic change over the past decade, albeit delayed compared to other (particularly European) jurisdictions, has been the influx of foreign law firms, notably from the UK and US, and the subsequent disappearance of local firms through merger: Freehills (now Herbert Smith Freehills), Middletons (now K&L Gates), Mallesons Stephen Jacques (now King & Wood Mallesons), Blake Dawson (now Ashurst), Truman Hoyle (now Bird & Bird), parts of Gadens (now Dentons), Phillips Fox (now DLA Piper), and Chang, Pistilli & Simmons and Cochrane Lishman Carson Luscombe (now Clifford Chance) are all no longer part of the legal landscape.
And the trend continues. Just in the past twelve months, additional domestic firms have been absorbed: DibbsBarker (by – again – Dentons), TressCox (by HWL Ebsworth), and Henry Davis York (by Norton Rose Fulbright). Baker McKenzie remains the outlier; it opened its Sydney office back in 1964 and stands out for its remarkably steady performance (good on ya!).
Australia’s main drawcard is its potential as a Southeast Asia hub and its proximity to economic giant China: not only infrastructure lawyers whose work partly stems from the ‘One Belt, One Road’ initiative rejoice; other sectors benefit from outbound China work as well. It is far from Australia’s largest foreign investor, which remains the US, but China and Hong Kong have seen the most growth in terms of investment over the past five years. This is in spite of increased scrutiny of foreign investment by the Foreign Investment Review Board, which prompts some corporate lawyers to consider carefully who they act for.
Looking at The Legal 500’s coverage, King & Wood Mallesons is ideally placed to leverage its Asian, and particularly Chinese, network, and has added top tier rankings in eight practice areas over the past six years.
Herbert Smith Freehills falls behind when it comes to the overall number of recommendations in the guide, but leads the pack in terms of top tier recommendations between 2014 and 2019, while Ashurst’s brilliant feat was to more than double its top tier rankings over the same period, from seven to 16. Interestingly, even though not outperforming its rivals in terms of top tier rankings, Norton Rose Fulbright remains the only firm currently ranked in all 24 practice areas; it is followed by both Clayton Utz and King & Wood Mallesons in 23 areas (maritime and shipping makes all the difference).
Many firms want a piece of the cake: undeterred by political turmoil and – yet another – new prime minister (Australia’s seventh, in ten years), the country has just entered its 28th year of continued economic growth. But setting up shop here has not always been easy. There are a number of ‘fiercely independent’ – and firmly entrenched – incumbents, among them Corrs Chambers Westgarth and Clayton Utz; in spite of increased competition both have shown steady performance over the past six years and have managed to, albeit moderately, increase their top tier recommendations.
New entrants have also grappled with fee structures dictated by US or UK headquarters that proved to be unsustainable in the Australian market (‘No one here is charging the equivalent of £600 per hour,’ I am repeatedly told), and have had to come to terms with an economy driven by a few key sectors and dominated by a few key corporate players. ‘It’s a country of monopolies and oligopolies,’ lawyers never fail to point out, deploring the fact that competition for roles acting for the four major banks, the two major supermarkets, and the two dominant resources sector companies, for example, remains fierce.
Still, the legal market is growing, and The Legal 500’s coverage of Australia has significantly expanded in recent years. We have introduced tables covering project finance, and separated debt from equity capital markets work due to more and more complex and structured products coming to market; there is now a significant debt capital market to complement the country’s longstanding profusion of equity capital markets work.
At The Legal 500, we are not losing sight of emerging sources of legal work either. For the first time this year, we have reviewed the performance of firms in the cryptocurrency and blockchain space as part of our banking, corporate, and IT coverage. We now also provide a substantial review of regulatory compliance and investigations work, partly in response to the increasing assertiveness of Australia’s regulatory bodies and the uptick in workflow stemming from the Banking Royal Commission, among others.
Infrastructure work is equally booming, and the pipeline remains strong for at least another ten years. White & Case, the most recent arrival to Australia in 2016, has quickly made its mark here with a clear focus on the sector.
There is certainly no shortage of work, and teams are stretched. Legal technology tools, machine learning, and artificial intelligence platforms allow lawyers to focus on more complex and lucrative work and are therefore recurring themes in our interviews with managing partners. Read on to find out how the country’s leading firms rise to the challenge (but after all, there are problems much worse than having too much work).
Integrated legal services
Paul Jenkins, global managing partner of Ashurst
How are client demands in Australia changing?
The demand for increased efficiency and genuine innovation in the delivery of legal services is accelerating.
Clients are under significant internal pressure to deliver operational efficiencies and greater value to their businesses, and are increasingly looking for us to provide new and innovative ways of accessing legal service delivery options.
The rapidly increasing availability of a range of legal technology tools and these evolving client requirements are further challenges to the traditional legal services model for firms in Australia. This increased adoption of legal technology in the delivery of legal services, aligned with client requirements for greater rigour in process and project management means we are also seeing a growing demand from clients for lawyers working alongside professionals with deep skills in these areas.
There has also been a clear shift towards collaboration, with clients wanting to work with law firms to co-create solutions – learning from the experience of each other to develop new solutions and new ways of working together in this ever evolving legal market.
How are you adapting to these changes?
We are committed to continuing to develop a broader and more diverse integrated legal services delivery model for clients.
We created Ashurst Advance, our integrated legal service efficiency platform, to deliver time and cost efficiencies in many areas of our work, while still maintaining a high-quality service experience. It comprises a legal analyst team, legal technology team, and legal project management team, each working on a global basis focused on providing innovative resourcing, process and technology solutions to deliver high-quality, cost effective legal services to our clients.
Expanding our alternative legal services coverage, we recently launched a second global delivery centre in Brisbane. By introducing an Australian team of legal analysts focusing on a structured approach to document intensive projects or work of a more recurring nature, we can build on our existing significant capability in Glasgow to reduce timescales and enable other parts of Ashurst to focus on the more complex aspects of our client matters.
The Ashurst quality will be retained throughout, so overall, we are ensuring we have the right people, with the right skills, doing the right work from the right location. The firm has also formulated a collaboration programme to encourage lawyers, clients, project managers, and process experts to work together in solving business problems. This broad-based team participation in solution development and testing enables us to deliver innovations that best serve the needs of Ashurst and our clients.
How do you set yourself apart from the competition in Australia?
To me, what sets us apart is our culture – working and collaborating as one firm globally, with a commitment to creating a more diverse and inclusive working environment, and a desire to constantly innovate and adapt.
Innovation continues to play an integral role in shaping the future of the legal industry, not just in Australia, but globally. Innovation is at the heart of our culture at Ashurst and we ensure it is embedded in everything we do. It’s about creating a progressive mindset, working together, and encouraging people to think differently and look for new ways of doing things. As such the firm maintains a portfolio of innovation projects directed at all aspects of the matter lifecycle, client journey, and firm business model, which ensures we continue to operate at the forefront of the market in terms of innovation.
We were delighted to receive market recognition for our commitment to innovation at this year’s Financial Times Innovative Lawyers Awards Asia Pacific 2018, where we were named the Most Innovative Law Firm (Internationally Headquartered Law Firms). The firm also won the award for Innovation in Legal Expertise: Driving Value, while a number of our initiatives were also acknowledged. This is a testament to our focus on delivering innovative solutions to our clients, and a reflection of the fantastic people we have at Ashurst who contribute to and drive these innovative and transformative projects.
In order to deliver better outcomes for our people and clients, the firm is also dedicated to further developing our strategic focus on diversity and inclusion. The firm has introduced a number of initiatives to address equality including flexible working, unconscious bias workshops, as well as our reverse mentoring programme. This diversity of thought and input is an absolutely critical ingredient to our wider innovation strategy.
This year we also reconfirmed our commitment to financial resilience for our staff and clients, as the first global law firm to join the Financial Inclusion Action Plan (FIAP) programme. FIAP provides an opportunity for organisations to take real action to realise financial inclusion in Australia. Our FIAP strategy focuses on specific priorities for our pro bono clients, training for our staff, and providing legal support on the FIAP programme to other participating organisations.
Where are you seeing growth from domestic clients and also those outside who are looking to invest in Australia?
There continues to be a strong flow of direct foreign investment into Australia coming from the historically important economies such as Japan, the UK, and the US, and North America in particular. China is also still a significant source, despite changes to Australia’s foreign investment regulations for strategic infrastructure assets leading to a drop in Chinese investment.
As a firm, we are seeing this foreign investment focused across three key sectors: energy and resources (with a renewed interest in mining and substantial growth in renewable energy), banks and funds (with a surge in investment into financial and insurance activities, including divestments by some established institutions), and real estate (which continues to be seem as an attractive investment).
Client collaboration
Melinda Upton, co-managing partner, Australia at DLA Piper
How are client demands in Australia changing?
Like areas outside the law, legal clients are wanting more for less; innovation that provides a client return – not just an increase in the profitability of law firms; and legal support from teams to work effectively and with consistency across borders in order to service global businesses, execute multi-national transactions, and also to have access to, and be able to leverage, international best practice.
With increasing regulation and government intervention across many sectors, clients are also increasingly looking for law firms who are able to identify and provide guidance on these trends and changes, given the extent to which governments and regulators are sharing and borrowing approaches.
In-house teams have been getting larger and this is having an impact on the type of work for which many clients are using firms. The best firms are working as true partners with their clients and aligning their service to reflect what they need.
How are you adapting to these changes?
First, we make a concerted effort to listen to our clients and truly understand their business. Our client and sectors strategy is very focused around this.
We have a dedicated legal project management team and this year in Australia we ran an innovation road show for our people and clients in which we bought ideas from across our international offices. These range from client opportunities such as our Legal Delivery Centre in Leeds servicing high-volume work worldwide, through to AI technology used in due diligence, real estate, and projects work.
We are collaborating and sharing knowledge with our clients about how we are transforming our legal practice through implementation of technology and project management techniques so that our clients can also transform their internal legal functions can focus on strategic issues and being trusted business advisers to their own stakeholders.
We are also seeing clients wanting advice in areas beyond strictly legal matters. In part to meet this we recently opened the first Australian office of our associated government communications business, The Cohen Group. This is one of the largest and most connected such consultancies in the world with headquarters in Washington, DC.
We also recognise that some of our clients are keen to explore alternative pricing models and we work with them to offer a range of different pricing options that focus on value and transparency.
How do you set yourself apart from the competition in Australia?
DLA Piper is arguably the most international law firm in the world and it puts us in a unique position to service clients in Australia as their markets change. In particular, our footprint in the US gives us access to a range of VC funds that are looking for start-ups to invest in, as well as detailed knowledge of best practice for investing in sophisticated, tier one start-ups.
This expertise and experience has enabled us to both make introductions between start-ups and investors, as well as advise a number of Australian corporates on their venture capital strategies and investments in a range of both domestic and international start-ups.
Our market-leading global data protection practice is also a key differentiator, and our expertise in GDPR has seen us advise a range of clients on their GDPR compliance programmes.
We have worked on many high-profile and complex deals and matters in the market, including the Link Group acquisition of Capita Asset Services for A$1.49bn; advising on the Timor-Leste historic maritime treaty with the Australian government; advising Pfizer on a number of product liability and patent-related matters; and advising Reliance Rail on its A$2.2bn refinancing.
Where are you seeing growth from domestic clients and also those outside who are looking to invest in Australia?
We see a lot of cross-border activity and last year we saw a 72% increase in work between the US and Australia alone.
International arbitration remains a big growth area, but we are also seeing a lot of growth in technology-related business, and real estate funds and development.
Emerging clients, such as technology start-ups requiring venture capital is another area of strong growth. Again we have seen cross border work here, including with our teams in Israel and the US, which have a strong technology sector and innovation culture.
The financial services sector remains a busy area for instructions across a range of work types notwithstanding the heavy focus on Royal Commission.
Data protection and privacy are strong growth areas too, with our IPT, corporate, and litigation teams working together to advise a range of clients on both the front-end (policy and compliance) and back-end (regulatory notification, directors and officers duties, contentious matters) ramifications of the mandatory data breach notification regime under the Privacy Act.
Embracing disruption
Richard Gordon, managing partner, Australia at Clifford Chance
How are client demands in Australia changing?
Our clients are increasingly sophisticated users of legal services. Considering also the emergence of disruptive technologies, the profession in Australia is at a point of axis that will shape the way lawyers develop and serve clients into the future.
All lawyers need to be more digitally and economically literate. In addition to technical legal knowledge, our clients now expect problem-solving skills, project management, risk management, change management, and a high level of business acumen.
As lawyers we are truly entering the realm of consultant, or trusted adviser. It is critical that lawyers become more adept at configuring the most appropriate mix of legal, process, and technology resources to solve problems.
Across the firm, not just in Australia we are seeing increasing demand for legal project managers, but also for our senior lawyers to take the lead on project management.
We are observing that businesses are now facing pressure to control external legal spending. I believe the figures are something like 10% growth in in-house team size over the past year, which is ahead of most law firms.
This growing pressure will likely impact the mid-tier and large domestic firms where large sections of work can be increasingly subject to intense price competition and commoditisation.
A couple of law firms in the market have launched non-legal services. This is not the model we look to pursue – our clients use Clifford Chance as we bring knowledge to the more complex, top-of-the-market matters, with the backing of one of the strongest global networks in the world, which is where we deliver the best value.
How are you adapting to these changes?
All industries, the legal sector included, are facing disruption. Embracing this change is critical and firms need to be committed to evolve to provide the best service to clients. It is also important to collaborate with the public sector and the wider industry to drive innovation where possible.
We expect legal tech solutions to impact the more commoditised areas of services and will thus free up lawyers to focus on the higher value, strategic advice for clients that I previously mentioned.
This means ensuring our lawyers receive the support and training required for the lawyer of the future, and building the infrastructure so they can more efficiently deliver advice to clients.
Earlier this year we launched an Innovation and Best Delivery Hub for Asia Pacific. The hub establishes teams of cross-functional professionals including legal project managers, legal tech experts, resource managers, pricing specialist,s and continuous improvement practitioners and an opportunity for lawyers and technologists to collaborate. We also have best delivery hubs in London, New York, and Continental Europe.
We are already seeing success: the firm’s investment in innovation and legal technology has resulted in a number of advancements in client service delivery. This includes the launches of CC Dr@ft, a contract automation tool for clients; an online MiFID2 client regulation toolkit, powered through Neota Logic; SMCR Manager tool, which will be launched this month, which helps managers of companies regulated by the Financial Conduct Authority comply with the new Senior Managers and Certification Regime (SMRC) and a cloud-based transaction management solution, delivered through Workshare. We are also adopting AI tools to improve the speed and efficiency of large-scale due diligence exercises.
How do you set yourself apart from the competition in Australia?
Our Australia partners are leaders in their fields. They bring decades of experience, expertise and specialist knowledge to the firm’s core practice areas of corporate, banking and finance and disputes.
Unlike many in the market, our Australia practice has direct, integrated access to the latest global thinking and developments. Our global network ensures that each of us is abreast of the very latest international trends and practices.
We offer a seamless and cost-effective service as we operate as a fully financially integrated global firm. This ensures consistency of quality and service levels across the world, with access to market-leading expertise in each jurisdiction in which we operate.
Feedback from our clients is that they appreciate a flexible and scalable service – allowing them to complete large-scale, complex and cross-border transactions from Australia.
One final point that deviates slightly from the client side, but delivers value back accordingly, is that we acknowledge Australia is one of the best sources of lawyers globally. We provide exciting opportunities for lawyers to build a genuinely global career in law in a diverse range of practice areas. Very few other firms in the market offer that prospect and we find that, accordingly, our junior lawyers are far more global and commercial in their thinking, and as a result build much stronger relationships with our international clients.
Where are you seeing growth from domestic clients and also those outside who are looking to invest in Australia?
I think over the past 12 to 18 months we have seen rapid growth in demand for legal services, in particular in the disputes space, which stems from increased regulation across multiple sectors. This of course includes recent high-profile Royal Commissions.
I’d expect more demand will follow the results of the Hayne Royal Commission, which must present its final report in February 2019. There will likely be a wave of class actions and further litigation. Regulatory pressures are also shaping demand from clients, as there is pressure on financial institutions for example from the UK financial services environment. Some regulatory changes that have made their way from the UK to Australia are driving demand for compliance and risk lawyers.
Our sweet spot in the market is financial services, including private equity work and advice around credit regulation – this has been a buoyant space with ongoing interest from Asia and beyond, investing into the country.
Australia continues to be impacted by the wider challenges of rising protectionism and geopolitical uncertainty. Most recently we have seen the blocking of Hong Kong’s CK Group’s planned $13bn bid for gas pipeline operator APA Group by the Australian government due to national security concerns. There is also the ongoing debate around Huawei and Australia’s 5G mobile network upgrade.
That said, there is much to be positive about. We are seeing strong growth in the corporate sector as organisations mature in their approach in M&A – there is a strong pipeline of infrastructure projects across the energy sector and in real estate. We can’t ignore the huge tech influence either, with technology now straddling all sectors including with the firm’s heritage clients, and also a number of new entrants to the market.
Reshaping the workforce
Michelle Dixon, CEO of Maddocks
How are client demands in Australia changing?
Clients’ needs have been evolving for some time. One of the more interesting changes that we are seeing is the opportunity to collaborate with clients on new service delivery models and project management of their workflows.
We have seen in-house legal teams focusing on internal efficiency improvements, with a greater emphasis on moving to a self-service model for parts of the businesses that they support. We now have a far greater opportunity to work collaboratively with our clients on these types of projects.
Of course, clients also expect us to be using technology tools that increase efficiency in the delivery of our services.
How are you adapting to these changes?
There are myriad different ways we have been adapting to these changes. Like all businesses, we have been investing more heavily in technology and developing software tools to assist our clients and the management of their information. We have reshaped our workforce, and particularly our IT team, quite significantly. Our IT team is now largely comprised of business analysts and project managers who work within our business and directly with clients. For example, we will sometimes place BAs in a clients’ business so that we can collaborate on software and other solutions.
We have also invested in technology to perform certain types of work, such as Luminance’s artificial intelligence platform to do due diligence work in M&A matters. We are also developing online products and services as an alternative to traditional methods of delivering these services. This includes Maddocks eContracts, which is an electronic contract exchange developed specifically for the property development sector, and Fair Deal, an online portal to help local government with enterprise bargaining.
We have done a lot of work around pricing models and offering pricing choices to our clients based on the work to be done. This has included training with leading pricing experts for our senior lawyers and finance and business development managers.
We are also increasingly offering secondments – and reverse secondments – as a way of getting to know our clients better and to provide them with a resource during busy periods.
How do you set yourself apart from the competition in Australia?
In an era of mergers and takeovers in the Australian legal sector, Maddocks has taken the decision to remain an independent Australian law firm. What this means at a practical level is dedicating ourselves to building expertise in sector and practice areas that are of most relevance to Australian organisations in the private and public sector, and to overseas organisations looking to invest into Australia. This manifests itself in our sector strategy, where we have built depth and experience in the built environment, education, government, healthcare, and technology sectors, which are key areas of the Australian economy.
While many firms will talk about being close to their clients, building strong personal relationships with our clients is at the heart of everything we do. Our clients tell us through our client feedback channels that the way we go about building trust with them sets us apart from our competitors.
Where are you seeing growth from domestic clients and also those outside who are looking to invest in Australia?
There are numerous areas where we are seeing growth amongst our clients both within and out of Australia.
Australia is renewing its infrastructure, led by ambitious programmes set out by the federal government and various state governments. We have seen several significant road and rail projects over the past five years and an increased focus on renewing social infrastructure such as schools and hospitals. Maddocks has also been involved in many large local government projects that have rebuilt key local infrastructure, such as water treatment plants.
We are also seeing an increased scrutiny of regulated industries that has led to Royal Commissions and government inquiries. In Australia, there is a Royal Commission into the banking industry underway and one about to begin on the aged care industry. The federal government has also flagged a possible Royal Commission into energy and the current Victorian state government, if re-elected, into mental health.
Australia’s ageing population is creating opportunities in the healthcare sector. In the private healthcare sector, the federal government is continuing to tweak policy settings to address questions of affordability and access. The public healthcare sector is in the middle of a building boom with significant investment in public hospital infrastructure underway or pending.
The pace of change in technology is also creating opportunities for players in that sector. Data and privacy are huge issues that our clients are grappling with, while the need to keep up with changes in technology has seen numerous opportunities to work with government on IT procurement projects. We are also starting to see the first opportunities in the cryptocurrency space in Australia come online.
‘First-of-its kind’ assignments
Anthony Foley, national managing partner, Australia at Baker McKenzie
How are client demands in Australia changing?
The demands made by clients reflect, and change with, the needs and imperatives of their own businesses and markets. The need for our clients to ‘do more with less’ has become a regular feature of our discussions with our clients. As a result, our clients value a firm which can both provide the specific expertise needed for a specific assignment (because clients engage people, not firms) and a long-term and flexible approach to pricing and resourcing. In other words, clients are seeking both a transactional and institutional relationship.
Our clients also increasingly need legal support, which extends beyond legal and regulatory compliance. It’s well understood that this requires more commercial, pragmatic, and solutions-based advice, but as illustrated by the Banking Royal Commission, it also extends to providing boards and in-house lawyers with independent and balanced advice about social licence and corporate responsibility issues.
How are you adapting to these changes?
At our firm, we are reimagining the way in which we can help our clients simplify and navigate a complex world. Without losing sight of enduring needs such as quality, independence, and value, we are focused on optimising the delivery of our services (with the deployment, for example, of legal project management skills) redesigning our service model (with the introduction of machine learning and increased automation), and planning for the law firm of the future (which will require a broader range of skills and resources).
How do you set yourself apart from the competition in Australia?
We are set apart by our unique culture and our demonstrated record for doing things differently. The global dimensions of our firm are well recognised, and the scale and depth of our firm provide us with unique opportunities to share world’s best practice and know-how with our clients (such as through our exclusive association with the Centre for the Fourth Industrial Revolution based in San Francisco – part of The World Economic Forum).
Our long-term success, and the quality of our services, ultimately depends upon the talent of our people and we are able to attract and develop some of the best young legal talent in Australia because of the unrivalled learning opportunities we can provide to our people with corporates, universities, think tanks, and policy makers across the globe.
Where are you seeing growth from domestic clients and also those outside who are looking to invest in Australia?
We don’t dwell too much on the distinction between domestic and global clients because, in reality, we are helping all of our clients succeed in local markets and, where appropriate, to capitalise on global opportunities. We enjoy a strong reputation and work flow in our energy, technology, healthcare, media, and restructuring and insolvency practices. We see growth in our work with funds and other sponsors in projects involving infrastructure and renewables.
Our cross-border work is a core strength and advantage, as illustrated by our recent work for Mitsubishi UFJ Trust and Banking Corporation on its $4.1bn acquisition of Colonial First State Global Asset Management from the Commonwealth Bank of Australia.
We are fortunate to win a key role in many ‘first-of-its-kind’ assignments – such as the first-ever scheme of arrangement for Tokyo Stock Exchange-listed LIFULL on its acquisition of ASX-listed Mitula Group; advising on the first ever Basel III true perpetual hybrid transaction in the Australian market; advising Pyrolyx in becoming the first German company to list on the ASX; working with BHP Billiton in co-developing a first-of-its-kind bond to boost climate finance and prevent deforestation; and acting for volt bank on the first-ever restricted banking licence under the Australian government’s innovation agenda.