ALB 11 06 by Thomson Reuters ALB

INSIDE: ASHURST’S MERGER DILEMMA Australasian legal business

AUSTRALASIAN

LEGAL BUSINESS

www.legalbusinessonline.com

ISSUE 11.06 JULY 2013

july 2013

Celebrating 10 years of the ALB Awards: winners revealed

INSIDE: ASHURST’S MERGER DILEMMA ISSUE 11.06

perth REPORT: Life goes on... boom or no boom

Congratulations to the Fonterra Legal Team – New Zealand In-House Team of the Year! ...and Russell McVeagh has also scooped up three major awards at the 2013 ALB Australasian Law Awards: New Zealand Deal of the Year award for Fonterra’s Capital Restructure, Trading Among Farmers Australasian Equity Deal of the Year award for the Fonterra Shareholder’s Fund IPO New Zealand Dealmaker of the Year awarded to Graeme Quigley Congratulations to all.

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W E L L I N G TO N VO DA FO N E O N T H E Q UAY 15 7 L A M B TO N Q UAY P O B OX 1 0 -2 1 4 W E L L I N G TO N N E W Z E A L A N D DX S X 1 1 1 8 9 P H O N E 6 4 4 4 9 9 9 555 FA X 6 4 4 4 9 9 9 55 6

CONTENTS

Australasian Legal Business ISSUE 11.06

ANALYSIS Dispelling some of the myths behind the Ashurst – Blake Dawson merger.

cover story ALB Law Awards 2013

Full coverage of the legal industry’s night of nights.

features employment law

Full coverage of Seyfarth Shaw’s dramatic Australian arrival.

M&A

M&A volumes have suffered a shocking drop – but experts say that there are still pockets of activity.

perth report

Firms come to terms with life after the resources boom.

22 24

why mental health matters

The practical reasons why mental health is an issue no firm can afford to ignore.

Employer of Choice: criteria explained

The key indicators that your firm is on the right road to employee engagement.

“People have forgotten what normal is because of what has been happening, and normality is returning.” Phil Lucas, Allion Legal

regulars Deals

In case you missed it…..

Q&A with

The month’s top headlines from www.legalbusinessonline.com

Damian Huon is a Legal Technology Strategist and CEO of Huon IT. With over 24 years supporting Australian law firms, Huon IT deliver business-wide outcomes with ‘everything technology’.

EXTERNAL APPOINTMENT

Damian Huon

WHY YOUR FIRM SHOULDN’T RUN ANY IT PROJECTS THIS FINANCIAL YEAR. Seasoned strategist, Damian Huon, shares his insights into how a small change in mindset can make a big difference to your firm’s innovation success.

Q1 Why not? This may sound like a strange claim , but it’s not. In reality, firms should only be running ‘Business Projects’ that are enabled by I.T. Think about it. These days, every part of your firm has an IT component, and every IT project can have a dramatic influence – for good or bad – over your business. So how can you separate them? Certainly there should be a division of tasks (I’m not suggesting Managing Partners get to work in the server room), but not a detachment of responsibility. At the end of the day, there’s no use upgrading systems for the sake of it, or installing the latest gadgets just out of personal preference. Behind any IT innovation there must be a solid business case. So when it comes to ownership and responsibility of these projects, don’t bother drawing this line of distinction and view the project for what it truly is; a business tool, not just another technical task. how can we better manage these projects Q2 Sotogether?

The biggest risk of any project I’ve been involved with is a lack of involvement from the business. As IT’s role in your business increases, likewise does its influence. IT – whether in-house, outsourced, or both – needs a voice at your executive level. So for your next big innovation, try setting up a “Project Steering Committee”. This should not only include IT, but also key stakeholders from relevant departments and, perhaps most importantly, top tier management. This not only gives the project top-down support, but likewise gives your executive team powerful insights across the business.

business innovation projects are firms Q3 What implementing this financial year? This financial year, there will be a big push for mobility under a new name - ‘continuity’. The ability to work on any device, from anywhere, is old news for many firms. But instead, this idea has developed into one of continuity between these devices. Staff want to be able to jump from one device to another, and pick back up exactly where they left off. This of course amps up the pressure to get your systems up to scratch, such as Citrix, but also puts mobile security under the microscope. Email your questions to alb@huonit.com.au

CBA chairman joins Ashurst board

David Turner, chairman of the Commonwealth Bank of Australia, has joined the Ashurst Australia board. Meanwhile, UK-based Ashurst LLP has also made an external appointment: Robert Gillespie, former Director General of the UK Panel on Takeovers and Mergers. The firms said in a statement that the two new appointees would join the firm’s global board after the full merger of Ashurst Australia and Ashurst LLP. Ashurst Australia’s board comprises chairman Mary Padbury, managing partner John Carrington, senior partner of Ashurst LLP Charlie Geffen and partners Elspeth Arnold, Tony Denholder, Sarah Dulhunty, Paul Jenkins and Ian Williams.

INDUSTRY

Norton Rose U.S. merger goes live Norton Rose’s latest expansion has gone live, with U.S.-based firm Fulbright & Jaworski LLP joining the Norton Rose fold. Norton Rose will now trade under the name Norton Rose Fulbright (NRF). The firm continues to operate its Swiss Verein structure which comprises of five members: the original UKbased LLP, NRF Australia, NRF South Africa, NRF Canada and the new U.S.-based division. The addition of Fulbright & Jaworski to the fold means that NRF has added 750 U.S.-based lawyers to its ranks. NRF has close to 3,800 lawyers overall. There are 1,225 partners and combined revenues are estimated at US$1.9 billion.

PERTH

Corrs to move to new premises Corrs Chambers Westgarth has signed up as a major tenant of a new office tower planned for Perth’s Brookfield Place precinct. The firm has signed an agreement with Brookfield to lease two floors in the new 123 St Georges Terrace development, also known as Brookfield Place Tower 2. The development is due for completion in late 2015.

VICTORIA

Sydney: DLA Piper to move to 1 Martin Place DLA Piper will relocate its Sydney headquarters to Charter Hall’s No.1 Martin Place tower after negotiating a circa 6,000 square metre lease agreement. DLA Piper will occupy five floors in the high rise building on a 10 year lease term.

news

Australasian Legal Business ISSUE 11.06

In-house Q&A Adrian Goss General Counsel, Bauer Media

melbourne

National Vice President, Australian Corporate Lawyers Association

Harwood Andrews unveils new structure; SME focus Harwood Andrews Lawyers has announced a new operating structure which will see a focus on the private business space in Melbourne. The firm’s Melbourne office will now trade under the name Sladen Legal and will focus on the SME space. “The market is becoming fragmented and there is the real opportunity to position ourselves for private businesses and their owners,” Sladen Legal managing principal Dan Simmonds told ALB. However, the Harwood Andrews name will be retained in the firm’s Geelong and Ballarat offices, which will be broader in focus and continue their significant public law and family law offerings. Sladen Legal and Harwood Andrews remain financially integrated and the name change is intended only to distinguish the different emphases at each practice.

WESTERN AUSTRALIA

HWL Ebsworth enters Perth with local merger HWL Ebsworth Lawyers launched a new Perth office on 1 July, when local firm Downings Legal and its staff joined the fold. Downings Legal is a full service WA practice which dates back over 100 years. With the new Perth operation on board, HWL Ebsworth consists of 766 staff, including 154 partners and 357 other lawyers. The firm now has offices in Brisbane, Canberra, Melbourne, Sydney CBD, Western Sydney and Perth. Downings Legal partners who will be moving to HWL as part of this move are Mitch Artus, Andrew Davidson, Joyce Chin, Keith Thomas, Lynnette Goh and Veronica Jumeaux.

M&A M&A litigation on the rise, says Corrs partner New cartel rules are encouraging more companies to pursue ‘bid rigging’ and misleading conduct claims for M&A deals, Corrs Chambers Westgarth partner Jonathan Farrer has said. Farrer’s comments were made in light of a recent Federal Court decision which found that Australian mining consumables company Bradken had engaged in bid rigging and misleading and deceptive conduct in relation to an acqusiton. Farrer noted that companies across a wide range of industries are considering anti-trust legal action in the context of M&A transactions and observed that there were two other billion dollar M&A deals currently subject to such claims in the Federal Court. “With only the Bradken case decided so far, this was the first test of new cartel and bid rigging rules and the judge applied a very broad interpretation of these rules. This will now have implications for other M&A deals,” Farrer said.

Presented by

your opinion, why have in-house lawyers become an 1 Inincreasingly indispensable part of an organisation? Inhouse lawyers have a deep understanding of the organisation in which they work. That understanding includes the nuts and bolts of the relevant industry but extends to the organisation’s commercial imperatives, strategic objectives, processes and systems, internal politics and the preferences of the organisation’s senior management. Such a deep understanding enables inhouse counsel to provide the most pragmatic and relevant advice to the organisation. It also enables inhouse counsel to add value to an organisation through its approach to legal issues and align that approach with the organisation’s broader goals in a way that an advisor outside the organisation cannot do. Increasing regulatory burdens mean that legal issues arise across all of an organisation’s activities. They also mean that, more than ever before, organisations need to be proactive about managing legal risk. Accordingly, a model of legal resourcing that is limited to seeking ad hoc external advice in relation to issues as they arise is no longer adequate for most organisations. Inhouse counsel provide the broad, ongoing involvement in legal issues that organisations currently require. Finally, all organisations, particularly those in challenged industry sectors, are focussed on managing costs. Inhouse counsel play a valuable role in ensuring that an organisation’s legal spend is properly managed and that internal and external legal resources are appropriately allocated.

recent times, the role of the General Counsel has 2 Indiversified 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?

The risk profile for inhouse counsel has clearly increased as the role has expanded and diversified. However, at the same time, inhouse counsel have become more aware of those risks and better equipped to handle them. In part, that awareness has been driven by a series of high profile cases. However, the Australian Corporate Lawyers Association has been instrumental in analysing those risks, communicating them to its members and ensuring its members have the tools and knowledge to appropriately deal with them.

your opinion, what do you consider to be the main 3 Inchallenges for inhouse counsel in your particular industry sector?

Changes in consumer behaviour are driving changes in the way the print media sector engages with its audience. In particular, online content and digital publications have become an increasingly important part of the business. In response, inhouse teams have had to get on top of technology issues such as those arising from digital delivery of content, digital collection of data, website and software development, online content restrictions and social media. That represents a big learning curve in areas of law that are constantly developing. As with many sectors, media is facing increasing regulation. Inhouse counsel need to address compliance within the expanding regulatory environment, including through training and implementation of appropriate systems. Many inhouse counsel in the media sector are also involved, on behalf of their organisations, in shaping that environment through engagement with the ongoing media regulatory reform process. With limited resources, dealing with regulatory compliance and reform is a significant challenge for inhouse counsel in the media sector. JLegal is a global specialist legal recruitment consultancy focused solely on providing recruitment solutions to the legal profession. For a confidential discussion about your career, contact one of our senior consultants today.

www.jlegal.com Melbourne t | +61 3 8102 1900 Sydney t | +61 2 8228 7680

news

Australasian Legal Business ISSUE 11.06

mobile dictation

with Sarah Dart Sales Manager, Asia Pacific Mobile dictation drives business continuity. Every second counts, don’t get left behind.

Lawyers are experiencing increasing pressure to deliver more value to their clients in a timely fashion, whilst maintaining profitability to the firm. With competition high, lawyers are often out of the office visiting clients and working longer hours. Mobile dictation enables lawyers to work efficiently and easily on the go, from home or abroad and instantly submit dictations in just a click. This coupled with the ability to prioritise and track work progress live allows more tasks to be completed and more services delivered to clients resulting in increased billable hours and business continuity. Corrs Chambers Westgarth invested in digital dictation and speech recognition with BigHand Voice Productivity because, according to Jon Kenton, COO at Corrs, operating across a global landscape with varied time zones requires a greater level of sophisticated and flexible technology solutions. “Digital dictation is an essential tool for a flexible, mobile, and collaborative workforce. It improves efficiencies, increases staff productivity and helps us serve our clients better”. The most advanced voice productivity platforms are built with security and reliability at the forefront of their design; encrypting files, and allowing for secure remote login and workflow changes in the face of disruptions or emergencies. When Hurricane Sandy hit USA east coast in October 2012, Kent/ McBride’s Cherry Hill, NJ’s office staff couldn’t to get to the office. They overcame this disaster by utilising BigHand’s work sharing capabilities allowing timesheets to be transferred to their Philadelphia office to meet the end-of-month invoicing deadline to clients. Working in a time-pressured environment, every second counts; it is imperative that firms provide their staff with the technology that bests allows them to utilise their time well and ensure business continuity - whether they’re working across multiple time zones, experiencing a power outage or caught in natural disaster - ultimately exceeding client expectations. BigHand delivers digital dictation and speech recognition workflow software, hardware and services that enable busy, mobile professionals become more efficient. A multi-award winning voice technology company, with both desktop and mobile app versions of its software, BigHand supports 170,000 users and over 1600 client organisations globally across the professional services and healthcare sectors. Phone: +61 2 9231 8900 Email: Sarah.Dart@bighand.com

Web: http://www.bighand.com.au

special focus: salvos legal Justice, together: a revolutionary idea for a legal practice Salvos Legal is a world first commercial and property law firm run by The Salvation Army. The profits we make from our work with commercial clients allows us to provide pro bono legal services to people most in need through our sister law firm, Salvos Legal Humanitarian. In this issue we share with you the story of Jackie, a client of Salvos Legal Humanitarian. Luke Geary, Managing Our first contact with Jackie was at Partner, Salvos Legal Balmain Local Court in July 2012, when and Salvos Legal Josh, a Senior Associate was appearing Humanitarian on behalf of another client. Josh, noticing Jackie standing outside the courtroom in obvious distress, approached her to see if he could help. Jackie told Josh she had just attended her initial court appearance for a mid-range drink driving offence. Josh gave Jackie his card in case she wanted further assistance. A few weeks later Jackie called. She couldn’t face court again on her own. Josh’s card had given her the hope she needed. This driving charge had made Jackie realise she had to turn her life around. She had used illicit drugs and alcohol for much of her adult life. Her lapse in judgment that night following a few drinks with work friends at the end of her shift caused her to be in need of our help. At around 2.30am, when Jackie finished drinking with her workmates, she took the risk of driving herself home. It seemed much safer than to walk alone at that time of night. When she was pulled over by Police for a random breath test her alcohol reading was .09 percent. Jackie was at breaking point. She was struggling to deal with her drug dependence and now she had lost her licence. Her life was falling apart. What happened next? Read Jackie’s story in full at salvoslegal.com.au Thanks to all of our commercial clients including Transport for NSW and CBRE for making our humanitarian work possible. Over the next 12 months, thanks to all of them, we’ll provide more than $8 million in free legal services to people in need. Now that’s justice, together. Luke Geary is the Managing Partner of Salvos Legal and Salvos Legal Humanitarian, and has been since the firms commenced in 2010. He is also General Counsel to The Salvation Army Australia Eastern Territory. Prior to founding Salvos Legal Luke was a Partner at Mills Oakley Lawyers. He specialised in building, insurance and construction law, and also had a substantial practice in commercial litigation and commercial transactions. Luke is the Salvos Legal client relationship manager for the Commonwealth Bank of Australia, Community Sector Banking, Community 21, Anglicare, The Salvation Army and Aged Care Plus.

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aPPOINTMENTS Lateral partner appointments

lawyers joining seyfarth shaw

Name

Practice area

Coming from

Going to

Name

Departing

Bill Napier

Projects

Herbert Smith Freehills

Jones Day

Darren Perry

Herbert Smith Freehills

Chris Ketsakidis

Financial services

Maurice Blackburn

Mills Oakley

Craig Semple

M&A

King & Wood Mallesons

Gilbert + Tobin

Chris Gardner

Herbert Smith Freehills

Dale Cliff

Disputes

Moore Stephens

Mills Oakley

Justine Turnbull

Herbert Smith Freehills

Ian Hughes

Disputes

ClarkeKann

HopgoodGanim

Ben Dudley

Herbert Smith Freehills

Matt Couper

Corporate

Minter Ellison

Carter Newell

Nathan Abbott

Construction

K&L Gates

Colin Biggers & Paisley

Luke Edwards

Herbert Smith Freehills

Peter Dwyer

Transport

Cooper Grace Ward

Piper Alderman

Rachel Bernasconi

Ashurst

Peter Meades

Construction

Maddocks

Mills Oakley

Ashurst

Ralph Praeger

Property

Praeger Ellem

M+K Lawyers

Michael Tamvakologos

Richard Mann

Banking/finance

Minter Ellison

Hall & Wilcox

Henry Skene

Arnold Bloch Leibler

Robert Clarke

M&A

Allens

Corrs Chambers Westgarth

Robert Neely

Corporate

Henry Davis York

Lander & Rogers

Vicki Grey

Financial services

Gadens

Kemp Strang

Warren Jiear

Insolvency

Hynes Lawyers

Piper Alderman

The lawyers listed above will join new employment practice Seyfarth Shaw upon the conclusion of their obligations to their existing firms.

internal partner promotions ALLENS Alister Fitzgerald

Brisbane

Real Estate

Chris Prestwich

Sydney

Litigation

Geoff Sanders

Melbourne

Corporate

Mark McAleer Michael Morris Michael Ryan Rachel Nicolson

Perth Brisbane Melbourne Melbourne

Energy, Resources & Infrastructure TMT Banking & Finance Litigation

Sydney

Insurance/litigation

HENRY DAVIS YORK Louise Cantrill

HOLDING REDLICH Tony Britt

Sydney

Construction/infrastructure

Stephen Burton

Brisbane

Construction/infrastructure

Nathan Collins

Perth

Banking & Finance

Katherine Vines

Perth

Real Estate, Construction & Environment

Claire Rogers

Sydney

Banking & Finance

Paul Schroder

Sydney

M&A

KING & WOOD MALLESONS

LANDER & ROGERS Rebecca Mulae

Sydney

Insurance

Lee Wolveridge

Melbourne

Property & projects

Melbourne

Insolvency/disputes

MILLS OAKLEY Ariel Borland John Storey

Melbourne

Tax

Ziv Ben-Arie

Sydney

Construction

aPPOINTMENTS Management shuffle at Fox Tucker

Fox Tucker general manager Janet Miller has been promoted to the newly created position of CEO. Miller assumes full responsibility for the management of the firm. Meanwhile, founding managing partner Joe DeRuvo will step down from that role in order to concentrate on leading the firm’s commercial dispute resolution team. DeRuvo said he welcomed the new structure. “It’s been a real privilege to lead this firm over the past few years,” he said. “But we’re in capable hands with Janet taking the wheel. So I’m really looking forward to once again being completely immersed in my practice and forging new client relationships.”

Mallesons adds Bednall as managing partner

King & Wood Mallesons has announced that corporate partner Tim Bednall has been appointed as managing partner responsible for the corporate, M&A and tax practices. KWM now has five Australian managing partners reporting to head Australia managing partner Sue Kench. They are Tim Bednall (corporate, M&A and tax); Caroline Coops (M&A advisory team – a group which includes competition, IP/IT and workplace/employment); Berkeley Cox (banking and finance; financial services); Beau Deleuil (disputes) and Scott Gardiner (energy, resources and projects and the China practice). The revamp will also see Gardiner add real estate, construction, environment and infrastructure to his existing portfolio. The firm’s chairman is Stephen Minns, who took on the role earlier this year from Bednall.

Mallesons’ Semple moves to G+T

King & Wood Mallesons M&A specialist Craig Semple will be making the move to Gilbert + Tobin. The firm announced that Semple will be joining the Melbourne office alongside partners Neil Pathak and Ben Macdonald, with a start date of 1 January 2014. Recent transactions which Semple has advised on include Trust Company’s defence of rival bids by Equity Trustees and Perpetual, Future Fund’s $2 billion acquisition of airport interests from AIX, Australia Post’s acquisition of StarTrack Express and the sale by Melbourne IT of its DBS business division to CSC.

Melbourne: K&L Gates construction expert heads to CBP Construction lawyer Nathan Abbott has joined the Melbourne office of Colin Biggers & Paisley. Abbott has acted on construction disputes in all Australian jurisdictions and also works in the non-contentious areas of construction law, providing advice and drafting and negotiating contracts on behalf of his clients.

Brisbane: Piper Alderman lures CGW transport expert

Piper Alderman has welcomed a corporate transport team to the firm’s Brisbane Office. The

team is led by partner Peter Dwyer , a corporate and commercial lawyer with a specialist practice in the bus and road transport sector throughout Australia. He and his team represent bus operators across a range of legal areas including negotiations for State government service contracts and mergers and acquisitions, as well as acting for property owners and developers in sales, acquisitions, leases, development applications and subdivisions across Australia.

Brisbane: Piper Alderman doubles in size

Piper Alderman has welcomed a new insolvency partner in Brisbane. Warren Jiear, previously at Hynes Lawyers, has joined the firm with a team of six lawyers, including special counsel Celestine Frost and senior associate Mario Esera. The new arrivals, along with the previously announced appointment of transport expert Peter Dwyer, will see the Brisbane headcount double in size.

Jones Day continues top tier raid with senior Freehills projects partner

Jones Day has announced that projects expert Bill Napier has joined the firm in Sydney. Napier joins the firm after 22 years at Herbert Smith Freehills and will work alongside John Cooper, another top tier recruit who recently joined the firm after 26 years at Allens. “We believe that there will be more projects and infrastructure work over the next few years and in response, we are building our practice with Australia’s highest calibre project lawyers,” said Chris Ahern, partner-in-charge of Jones Day’s Sydney office.

Landers recruits IT partner from Henry Davis York

Lander & Rogers has announced that it has appointed corporate and regulatory lawyer Robert Neely from Henry Davis York. Neely’s practice involves large scale ICT procurement and outsourcing initiatives, communications and media regulation and commercial arrangements in the IT and telecommunications sectors. As an experienced competition lawyer, Neely also advises on mergers, restrictive trade practices, infrastructure access and competition policy initiatives.

HopgoodGanim snares senior litigator from ClarkeKann

HopgoodGanim has welcomed senior Queensland lawyer Ian Hughes to the firm. Hughes’ experience includes multi-million dollar claims on behalf of major international organisations such as Italy’s national energy agency, Ente Nazionale Idrocarburi and machinery manufacturer, Same & Lamborghini, Britain’s ED&F Man, the U.S. Department of Navy and the Panama Canal Commission.

QLD: M+K adds property partner

Queensland property expert Ralph Praeger and his team have joined M+K Lawyers. Formerly of

Praeger Ellem Solicitors, Praeger has over 30 years experience advising developers, owners and industry bodies on high profile matters including the redevelopment of the Cairns Queensland Rail site into a retail complex and the development of several resorts.

Carter Newell boosts corporate team

Carter Newell has welcomed Matt Couper to the firm as special counsel in the corporate team. Couper will work alongside partner Tony Stumm and brings almost 10 years’ experience advising public and private companies and government entities in relation to mergers and acquisitions, strategic investments, joint ventures, structuring, due diligence and general corporate and business issues. Couper was previously at Minter Ellison.

Former Allens managing partner joins Corrs

Corrs Chambers Westgarth has announced the appointment of Allens corporate/M&A partner Robert Clarke. Clarke brings a depth of experience in the Singapore and South East Asian markets and has been both a partner and managing partner of the Allens Singapore office for several years. He relocated to the Allens Melbourne office in 2011. Corrs CEO John Denton said the new appointment was a major coup for the firm. “Robert is a good fit for Corrs which is focused on developing and retaining only the highest calibre candidates for its partnership,” Denton said.

Hall & Wilcox strengthens banking practice

Hall & Wilcox has announced the appointment of Richard Mann as a special counsel in the firm’s banking & finance team. Mann was most recently with Minter Ellison and has extensive experience on both the borrower and lender side of transactions and has acted for ‘big four’ banks and other financiers.

Kemp Strang continues to build financial services

Vicki Grey has joined Sydney-based firm Kemp Strang as a partner. Previously at Gadens, Grey is an experienced lawyer advising credit and financial services participants. She has worked with several of the Big Four domestic banks, as well as other leading Australian lenders in helping develop their Self-Managed Super Fund (SMSF) lending policies.

Mills Oakley’s partnership surge

Mills Oakley Lawyers has significantly expanded its partnership, adding six new partners and taking its total partnership count to 45. The lateral hires are Brisbane litigator Dale Cliff, previously of Moore Stephens, Melbourne financial services expert Chris Ketsakidis from Maurice Blackburn and Sydney building & construction expert Peter Meades from Maddocks.

analysis

Australasian Legal Business ISSUE 11.06

The merger, the myth and the media Ashurst Australia chairman Mary Padbury speaks candidly about the Blake Dawson/Ashurst merger and the firm’s recent board appointments. Report: Renu Prasad.

ALB: When will the merger vote be taking place? MP: We’ve said that the vote will happen by the first of May 2014; we are hopeful of doing it prior to that but we haven’t set a date for the vote yet. But we’re working to have it as soon as possible. ALB: What’s the sentiment within the firm in relation to the merger? MP: For a lot of partners it’s almost something they don’t think about because we’ve adopted common branding, international client teams, we recently had a common partners’ conference which a number of our partners attended. So for lots of partners in a way it’s already happened. But what we’re really talking about is the financial integration of the two firms and we’ve always said we wanted a single profit pool and there’s some complexity in doing that because both firms have different systems, then there’s tax and structuring issues; those details will take some time to work through. We’re pretty well advanced on all of those and obviously when we’re ready we’ll tell the world exactly how we’re going to do it. But things are on track and a lot of

the major challenges – most of those structural or a difference in approach or tax regimes – we’ve been working through all them. ALB: What elements have you already reached agreement upon? MP: We’ve largely reached agreement on a lot of those elements I’ve touched on but there’s a package and importantly we’ll have a process with our partners and obviously we want to do this before we tell the world exactly how it’s all going to work. ALB: The Australian Financial Review carried a report earlier this year claiming that Ashurst Australia is planning to significantly reduce its partner headcount. Is there any truth to this? MP: No. John Carrington’s on record as saying we don’t anticipate much change in the total number of partners in the firm as at merger, so the report was inaccurate. ALB: Do you anticipate any changes to the size of the partnership post merger? MP: No. The size of the partnership will always reflect the market you’re practising in and what I think everyone is focussed on is that it’s a challenging market at the moment and it’s stronger in some areas of practice than others; so we, in common I suspect with all of our competitors, are very focussed on doing our best to serve client needs in what is a tough and uncertain market. We’ve had some areas that have gone well this year – our feeling is we’ve done reasonably well compared to our peer firms and we’ve been fortunate to have some good litigation and other things which have substituted for having a quieter time in the corporate front.

Australasian Legal Business ISSUE 11.06

ALB: So there’s no “grand plan” or target numbers in terms of partnership size? MP: No. ALB: In terms of equity partnership – do you anticipate any change in the proportion of salaried partners as distinct from equity partners? MP: We can’t comment on the specifics; those things might change a bit but generally no dramatic changes, no. ALB: What’s been your experience of the current market for legal services? MP: You tend to see things through the prism of your own practice area. I’m in IP

analysis

and we’ve probably had our best year ever. We had an incredibly strong year: major litigation for AstraZeneca; we’ve been involved in the Samsung/Apple iPhone litigation which is a good example of a part of the practice going extremely well - so I’m a bit more bullish than others. ALB: Some senior lawyers have described the current market as the toughest market they’ve ever encountered. What are your thoughts? MP: It is a difficult market. Whether it’s the most dire ever I think that’s a big call - my own experience is that people tend to be too pessimistic or too optimistic so at the moment there is too much pessimism around. Some of the steps the Reserve Bank are taking in relation to the dollar will have a positive effect in terms of increasing activity; the long term trend in terms of Australia’s place in the fastest growing part of the world and supplying resources

ANALYSIS: THE PERILS OF PRIVACY “Major law firm Ashurst is secretly planning to cull up to 50 of its 189 partners in Australia in an attempt by local management to make profit margins more attractive ahead of an upcoming vote for a financial tie-up with the global operation.” Australian Financial Review, 1/02/2013 “Our firm does not comment on internal partner matters. The article is wildly inaccurate and very disappointing.” John Carrington, in response to the AFR article. “We don’t anticipate much change in the total number of partners in the firm as at merger, so the report was inaccurate.” Mary Padbury, ALB interview. John Carrington’s statement that Ashurst “does not comment on internal partner matters” highlights an important dilemma faced by modern law firms. On the one hand, Ashurst is a private partnership and is entitled to conduct its internal affairs as it sees fit. It is not listed. Its shareholders are internal. Why should it engage publically on what was in essence a private matter? Unfortunately the industry rumour mill abhors a void. There is a general presumption that all firms which have entered international mergers will need to slim their equity partnerships in order improve profitability. There are many firms implementing mergers. It is unclear why Ashurst in particular has been singled out for attention. Perhaps the firm’s desire for privacy worked against it. Ashurst has consistently denied any plan to conduct a large scale partner cull. Unless the conspiracy theorists can furnish substantial evidence to the contrary, there is little more that can be said on this matter. The annual legal industry surveys, which record partner headcount across all the firms, will be interesting reading this year. Some commentators have been interested by Carrington’s refusal to unequivocally rule out a partnership reduction or de-equitisation; the preferred formulation when expressing the firm’s position - which was also adopted by Padbury for this interview - is that the firm is not anticipating any “dramatic” changes. Is there a concealed message in the vagueness? The more obvious explanation is also more likely: partnership size is driven by market conditions and it would be foolish to go on record as guaranteeing the safety of any role when all indicators are that firms, merged or otherwise, will need to be tightening their belts in the coming months. None of these challenges are unique to Ashurst. The same innuendo could have been directed at a number of other firms. No doubt those firms are secretly rather relieved that the public discourse has unfolded in the manner that it has.

analysis

Australasian Legal Business ISSUE 11.06

Mary Padbury and David Turner

to China, Korea and Japan - nothing has changed in relation to those. So yes, we have some particular challenges at the moment and a bit of uncertainty around the election; with all of those things together it will be a tough market but not a disaster at all. Things will gradually improve and there will be pockets such as restructuring and employment that are doing [better than average]. ALB: Will you have revenue growth in FY2013? MP: If we fall short of having growth, we won’t be far short of it. It hasn’t been a year of huge growth, but it hasn’t been too bad. ALB: You’ve recently made the firm’s first external board appointment, with CBA Chairman David Turner coming on board. How did you make this selection and was Turner previously connected with the firm? MP: No, David doesn’t have a prior relationship with the firm and it’s important to us that he really is an independent person and bringing an independent perspective. We had a formal search process. It was important to us that we had a professional process and identify the attributes for the person we

“ It was important to us that we had a professional process and identify the attributes for the person we were looking for.”

- Mary Padbury

were looking for. So we used an executive search firm who came up with a shortlist of fantastic people; in the end we were delighted David agreed to do it. We currently have a board of seven – at the end of the day we’re all lawyers so [David brings] the perspective of someone who can bring some different skills – financial skills and having been CEO of a major company and frankly to remind the board to focus on strategy and clients and things outside the firm and not get too fascinated in our own business. It’s a fantastic opportunity and something I’ve personally wanted to do for a long time so I’m thrilled we’ve finally done it. David will help us be more outward looking in our thinking; he is someone with experience in international business and someone who will bring some skills and perspective that we [did not have because] we are all lawyers working in our own business.

Australasian Legal Business ISSUE 11.6 11.06

insurance

Still more on Section 54:

Highway Hauliers T he Western Australian Court of Appeal recently handed down its decision in Matthew Maxwell v Highway Hauliers Pty Ltd [2013] WASCA 115. The decision concerns the application of s54 of the Insurance Contracts Act 1984 (Cth), one of the most debated legislative provisions in insurance. The judgment is of interest because it conflicts with the Queensland Court of Appeal’s decision in Johnson v Triple C Furniture & Electrical Pty Ltd (2010) 243 FLR 336. Johnson narrows the operation of s54, whereas Highway Hauliers takes a broader view.

Paul Spezza, Partner

Raisa Conchin, Special Counsel Authors Paul Spezza, Partner, and Raisa Conchin, Special Counsel, are heading up the team at Wotton + Kearney’s new Brisbane office, which opened on 1 July 2013.

Background Highway Hauliers Pty Ltd (the Insured) operated a trucking business. The Insured held an insurance policy with Lloyds underwriters (the Insurers) which covered accidental damage to its trucks. In June 2004 and April 2005, two trucks were damaged in separate incidents. The Insured made two claims against the policy. The Insurers declined cover because the drivers of the trucks had not obtained the minimum score on a driver test known as the PAQS test. The policy contained an endorsement which excluded cover if the driver had not obtained the minimum PAQS score. The Insured sued the Insurers for indemnity. At trial The Insured argued that the drivers’ failure to obtain the minimum PAQS score was an omission to which s54 applied. Section 54 provides that an insurer may not refuse to pay a claim by reason only of an act or omission of the insured (or some other person) during the period of insurance. The trial judge found in favour of the Insured, rejecting the Insurers’ arguments that: • s54 could not apply because non-satisfaction of the PAQS endorsement took the claims outside the scope of the cover; • alternatively, the drivers’ failure to obtain the minimum PAQS score was not an omission within s54 because obtaining the minimum score was not within their control. On appeal The Insurers’ appeal was unanimously dismissed on 6 May 2013. The Western Australian Court of Appeal held that: • when applying s54, the correct focus is the inherent restrictions or limitations on the claim by reference to the type of insurance (e.g. where a claim is made against an occurrence policy, but the occurrence did not occur during the policy period, s54 is not engaged); • the satisfaction of the PAQS endorsement was not an inherent restriction or limitation on claims against the policy, but rather a matter of detail within the policy (therefore s54 did apply); • either the drivers’ failure to obtain the minimum PAQS score, or the Insured’s act in allowing those drivers to operate its trucks, constituted an act or omission within s54.

The Court considered certain aspects of the Johnson decision relied on by the Insurers. Johnson concerned a claim against an aviation policy. The Queensland Court of Appeal held that s54 did not apply to the failure of a pilot to complete a flight review. Firstly, the failure took the claim outside the scope of the cover, and therefore s54 did not apply. Secondly, the failure was not an act or omission within s54 because the pilot had no control over whether the completion of the flight review was successful. The Court in Highway Hauliers distinguished Johnson on the first point. Murphy JA explained that the Court in Johnson had determined that the completion of a flight review was an inherent requirement of claims against the aviation policy. On the second point, McLure P openly disagreed with Johnson. Whether the passing of a test was within the relevant person’s control was irrelevant. The flying of a plane or the driving of a truck without first having passed the relevant test was an act over which the pilot or driver had complete control. Her Honour also disagreed with Chesterman JA’s comment that the relevant act or omission must be in relation to an activity which the policy “requires, allows or contemplates”.

Conclusion The interaction between Highway Hauliers and Johnson creates some uncertainty for insurers. It is reasonably clear that s54 will not apply where the declinature is based on an inherent restriction or limitation on claims against the policy, specifically by reference to the type of insurance. The problem for insurers is that the facts in the two cases were on one view very similar, yet different conclusions were reached. Less clear is the secondary issue about acts or omissions within the meaning of s54. The cases to some extent disagree on how to identify the relevant act or omission, and whether the act or omission needs to be within the relevant person’s control to qualify under s54.

analysis

seyfarth shaw In depth:

Q&Awith Darren Gardner

Darren Gardner, chair of Seyfarth Shaw’s international practice, discusses the firm’s Australian plans with ALB’s Renu Prasad.

Darren Gardner

ALB: You’ve opted to open new offices in Sydney and Melbourne, rather than the Sydney/Perth combination which has been favoured by other international firms. Can you tell us about why you opted for these locations? DG: Our perception, based on client relationships and our research, is that to run a national practice you have to have Sydney and Melbourne. We’re committed to having a national practice so it made sense to start with both. If you look at the largest Australian corporates, they tend to either operate out of or have significant operations in Sydney or Melbourne. ALB: Do you plan to expand into a full service offering in Australia? DG: That’s certainly not part of our plan. We are very keen to focus on what we know we’re good at and where we can deliver best value to clients. If you want to run a specialist function [such as workplace law], from our experience we don’t think it needs to be part of a full service firm and frankly more often than not the full service could be a distraction. Australia is not our home ground; we wouldn’t have the hubris to come here and try and compete on a full service basis. ALB: Will you have a particular focus, within the workplace relations space? DG: No, we’ll be a full service [workplace practice], covering the spectrum of workplace issues. That’s part of why we recruited eight partners. ALB: Tell us about the firm. Do you operate full service in your home jurisdiction? DG: We are a full service firm with 800 odd lawyers in the U.S. We grew up as a labour/employment firm; it was founded by a couple of labour/employment partners in Chicago 70 odd years ago and it’s grown to a national full service firm from that. But a good 50 percent of the firm is still labour and employment. We also have a very deep litigation practice

because employment law in the U.S. tends to be more litigation than advisory. So we’ve got a strong heritage in that space, an exceptionally large and well versed practice acting for two thirds of the Fortune 500. ALB: And what is the firm’s strategy on international expansion? DG: We haven’t really colonised the world as other firms have; we focus on key jurisdictions and using them as a hub for local and regional work and Australia fits within that. We have the opportunity to bring some perspective and innovation from an international point of view and that doesn’t really seem to exist at the moment in Australia. ALB: Workplace relations law obviously varies according to jurisdiction. How would an international perspective be relevant in this practice area? DG: The largest project I’m working on at the moment involves more than 150 countries at once. If you look at any large multinational the thing they have the most of is employees. With globalisation of business you end up with all sorts of people in all sorts of locations and there are strategic, structural and compliance considerations; generally also a significant transactional component as that’s the way people tend to grow. So to be able to assist large companies on a global basis and to be able to help expand multinationals irrespective of where they’re from is a real advantage. As Australia continues to internationalise there’s a real opportunity to help with that perspective. ALB: Which firms would be your key rivals in this regard? DG: Most of the global firms tend to focus on corporate or disputes work or finance; there are very few…. there are some that have employment lawyers in a variety of offices around the world, but there are very few that have a true cross border focus in any depth in this area. ALB: Will your new partners come on board as equity partners? DG: Yes they will. We have one partnership, everyone’s a part of that. ALB: So there’s a single profit pool? DG: Yes. ALB: Have you found that a challenge to implement? DG: We’ve opened in other locations; our London office was the proving ground for what we’re doing here - it’s doing brilliantly and has gone from strength to strength. The pool and performance is really a function of how an integrated operation works. ALB: When will the new operation start in Australia? DG: Our partners have obligations to existing firms - they’ll fulfil those and we’ll start up once we’ve got ourselves in a position to be able to do that. Obviously we’re hoping to do that as soon as we can. ALB: Is there a tentative start date? DG: No, we’re going through the formalities of the setup - we’ll be ready to go when they are.

the internationals are back

analysis

ANALYSIS:

RAID ON FREEHILLS REOPENS OLD WOUNDS After a brief hiatus, the international invasion has resumed – but this time there’s a new twist.

ack in 2010, when Allen & Overy raided Clayton Utz to start its Australian operation, many predicted the demise of the traditional top tier firms. The top tiers, it was predicted, would slowly be picked apart by new international arrivals who would poach the best talent in the most lucrative practices. The prospect of being the target of such an A&O style raid, albeit on a much larger scale, has always been the worst case scenario for the big firms. That scenario has not really eventuated. It is true that firms such as Jones Day have been rather active in the recruitment market. Gilbert + Tobin has also been busy. We have not yet seen, however, the kind of mass defections predicted by the doomsayers. With the cooling of the Australian economy, the international threat seemed to have subsided. Until now. The recent arrival of Seyfarth Shaw and Quinn Emanuel signals a new phase of international expansion into Australia; one with a rather counter-cyclical feel. The same old fears about the large national firms being picked to death are back. Once upon a time, the international threat was thought to be confined to banking and finance and M&A. Now we learn that our offshore friends also have their eyes on other areas such as workplace relations and disputes - areas which have been the bulwark of Herbert Smith Freehills’ excellent revenue performance in the 2012 financial year. Herbert Smith Freehills has become a target for the head hunters. The firm lost Michael Mills and Michelle Fox to Quinn Emanuel last month; the firm now faces a loss of a further five senior lawyers to Seyfarth Shaw.

It is far too early, however, to eulogise Freehills and the full service model. The top tiers have lost talent in the past; there is no reason to believe that they cannot bounce back once again. The new international entrants also face the task of convincing a sceptical market that they can truly deliver a new value proposition. The usual arguments will be played out: international firms will claim a more efficient, targeted service than their full service rivals and they will also claim to bring a more worldly perspective. Allen & Overy has already claimed a uniquely global perspective on banking and finance. Bird & Bird, if and when it arrives, will claim a uniquely global perspective on TMT. Seyfarth Shaw, workplace relations. Quinn Emanuel, disputes. Full service firms will be challenged on every front by rivals claiming a specialisation which cannot be found in a local Australian practice. The difficulty is that using specialist firms will make life more complicated for the GC who will now be tasked with maintaining relationships and managing costs with a host of firms rather than the single point offered by a full service firm. Still, some GCs may prefer to run their business that way. Some international firms are capable of co-ordinating delegate firms on behalf of the GC in a quasi full service manner. These problems are not insurmountable. The question is whether GCs are interested enough to give the newcomers a go. So while the internationals are circling the wagons around the likes of Freehills, it remains to be seen whether this represents a truly new state of play. The flow of revenues will tell the story in due course.

Quick facts Seyfarth Shaw in Australia Offices: Sydney, Melbourne Partnership size: 8 Focus: Workplace relations Recruits: Darren Perry, Chris Gardner, Justine Turnbull, Ben Dudley and Luke Edwards (ex Herbert Smith Freehills) ; Rachel Bernasconi and Michael Tamvakologos (ex Ashurst) and Henry Skene (ex Arnold Bloch Leibler) Start date: TBA; subject to gardening leave

mergers & acquisitions

Australasian Legal Business ISSUE 11.06

THE SILVER LINING

mergers & acquisitions

Australasian Legal Business ISSUE 11.06

M&A volumes are down – but advisors are still finding pockets of activity, writes Gina Dombosch.

f we were using the Magic 8 ball to diagnose the M&A market for 2013, it would read “outlook not so good” and “my sources say no”. While last year many predicted 2013 would improve over low 2012 numbers, the trend so far has actually been in the reverse direction. Thomson Reuters figures indicate that as of 29 May 2013, there were 450 completed deals with a total value of $20.2 billion. The same time period for 2012 yielded 497 completed deals with a total value of $39.6 billion – so this year’s figures represent a near 50 percent drop off. To add insult to injury, looking at the number of deals for the first six months of the year, 2013 has yielded the lowest volume in the last 10 years. But while M&A is clearly coming off the highs of previous years, it’s not all doom and gloom. The good news is there are marked signs of improvement and noticeable bright spots in certain sectors.

Australian M&A – 10 year trend, announced deals

Source: Thomson Reuters

mergers & acquisitions

Philip Breden, Ashurst

Karen EvansCullen, Clayton Utz

Peter Cook, Gilbert + Tobin

M&A Snapshot for 2013 To review the state of the M&A market, ALB approached three leading M&A partners: Phil Breden of Ashurst, Karen Evans-Cullen of Clayton Utz and Peter Cook of Gilbert + Tobin. They agree that the 2013 market is a story of mixed fortunes. “If you look at the public company deals that we survey to go into our Real Deal publication, deals over $50 million for 2012 totaled 41 and for 2013 there have been only seven as of mid May which is just depressing for this space,” says Evans-Cullen. Breden describes 2013 as a choppy market: “I think the market from time to time shows signs of good improvement and then it faces what are said to be hurdles so it gets choppy again,” he says. “So it’s an up and down market. There are some bright spots and some challenges and it’s the type of market where… when something happens which is a little adverse in a market sense it puts a significant damper on activity. While there are less company transforming transactions there is still continued activity with corporates adjusting their portfolios.” Which sectors are hot? The sectors that have attracted the most attention for investors in 2013 include infrastructure, property, agribusiness, high value energy assets and divestment of noncore assets by major mining houses. Ashurst’s Breden believes that regulated assets within the infrastructure sector such as the Port Botany transaction as well as various pipeline deals where there is regulated cash flow are being hotly contested both by foreign investors - in particular overseas pension funds as well and domestic players such as Australia super funds and infrastructure investors. “For me, that’s the key market where we are seeing some good growth,” he says. “To give you an example, recently there was an announced process in connection with Fortescue’s Western Australia rail assets looking to sell down a significant stake in the asset; that’s the type of asset where you are basically buying a future valuable cash flow – similarly, Australia Pipeline Trust recently sold a gas pipeline and again it was hotly contested.” Both Cook and Evans-Cullen see movement in the property sector. Cook believes there is still quite a bit of interest in the property trust sector. Evans-Cullen added: “Property has been a little bit more active in the last 12 months because of the

Australasian Legal Business ISSUE 11.06

Major deals - 2013  Port Botany acquired by Industry Funds Management

$5 billion

 Graincorp acquired by Archer Daniels Midland

$3.2 billion

 SPAus Net acquired by State Grid Corporation of China

$5 billion

 Inghams Enterprises acquired by TPG $871 million low valuations. People have a little bit of confidence now about the bottom of the property market having been reached so we are seeing more activity.” Breakdown of Australian M&A – completed deals, by sector.

2012

2013

Ranking Value ($ Mil)

Number of deals

Ranking Value ($ Mil)

Number of deals

Energy and Power

10,275.6

3,488.1

Real Estate

9,450.8

5,198.4

Financials

1,867.2

4,233.0

Media & Entertainment

757.5

1,331.5

High Technology

767.5

1,600.9

4,282.4

105

7,557.8

242.9

224.6

8,595.3

260

2,886.9

205

816.4

502.6

Healthcare

1,676.2

546.1

Consumer Staples

400.5

1,898.3

Retail

337.8

2,301.6

GOV

26.8

Industrials Telecommunications Materials CPS

Source: Thomson Reuters

Another sector which is seeing activity in 2013 is agribusiness. Growing economies are looking to procure farm land or food resources and also address concerns about food security. Cook recently advised on the $3.2 billion Graincorp-Archer Daniel Midlands deal, which he says “is driven by demand for food product or resources – agriculture assets which are very attractive to offshore interests right now.” Likewise, Evans-Cullen sees agribusiness as a continuing trend for 2013 M&A activity particularly as an expansion of Chinese interest beyond the usual mining sector: “We have seen the Chinese buy Cubbie Station and have a big interest in the agriculture and food sector. You hear they are buying lots of farming land so this is a real sector where we predict there will be continued investment,” she says.

Australasian Legal Business ISSUE 11.06

mergers & acquisitions

“Property has been more active in the last 12 months because of the low valuations. People have a little bit of confidence now about the bottom of the property market having been reached so we are seeing more activity.” - Karen Evans-Cullen

Breden identifies two other likely prospects for M&A activity: consolidation of high value energy projects and divestment of non-core assets by major mining houses. “We anticipate there will be a level of consolidation in the Queensland LNG projects; in Queensland you have four large LNG projects being developed and those participants are all publicly saying that they might be some consolidation there,” he says. Evans-Cullen also believes there is an opportunity for more deals and consolidation of players in the marketplace in the mining sector: “Resources were half of the M&A deals we surveyed last year and they had been like that for the last few years. I think there will still be activity there just because they make up a large proportion of our listed companies,” she says. “We are still seeing some deal flow in this space as the commodity prices have come off a lot from the highs which has led to a lot of consolidation amongst smaller players in that sector. We saw a lot of that last year and I think you will continue to see this in order to fund projects. There’s not likely to be many deals therefore at that upper tier but at the lower level there will be.” Breden has also seen activity amongst the major mining houses looking to sell off their assets. “We have also seen BHP and Rio have each announced their intention to dispose of non-core assets, we have a good level of work from potential acquirers of these assets largely driven by offshore demand – particularly Japanese, Korean and probably Chinese investors.” he says. The financial services sector was also mentioned as a likely suspect for inbound investment. Sectors which are undergoing structural challenges, such as retail and media, are also likely to come under scrutiny from opportunistic buyers. Confidence Many would-be acquirers appear to be stuck in “wait and see” mode. “What is causing people to hesitate with deal announcements is a variety of factors: uncertainty in everyone’s mind, a real fear of doing the wrong deal, paying too much or being seen to take a risk they shouldn’t be taking in the current environment,” says Evans-Cullen. Cook adds that there is uncertainty as to whether certain sectors have bottomed out: “Deals breed more deals and momentum and we haven’t had that momentum for awhile. I had expected board confidence to improve last year and I don’t think it’s any different now – there is more optimism but you don’t see that translating into [a real push] on acquisitions,” he says. The upcoming federal election seems to also add another layer of uncertainty to the M&A market. “We are in a period where any

transaction which has any sort of public element to it which would get the attention of the mainstream media – whether it’s because you want to close factories or whether you are buying sensitive land – all those sorts of things that could be used as a political football, everyone’s saying let’s just wait it out and see what happens in September,” observes Evans-Cullen. Breden also believes the election provides a valid reason for the market to take a pause. “If you are looking at a big deal and find an investor, you will have a concern at the moment [in relation to] FIRB especially if the asset is politically sensitive,” he says. “You’ll pause to think about whether you should hold off until post election. You can see that happening at the moment with the Archer Daniels Graincorp Deal where the politicians could make something of that deal which they wouldn’t be in a non-election year.” While many companies have healthy balance sheets and credit is relatively cheap, the acquisition sprees seem to be a thing of the past. Shareholders are closely scrutinising transactions and many companies have decided instead of spending capital on mergers and acquisitions to return dividends to their shareholders. Evans-Cullen described this exact scenario with mining giants BHP and Rio Tinto: “If you look at BHP and Rio, they had a pretty active acquisition spree the last five years with some very large acquisitions before the market crashed – they have suffered a lot as a result of that” she says. “Both have appointed new CEOs and said they are not about acquisitions any more, we are going to drive operational efficiency and focus on what we do and paying massive dividends to shareholders to return some of this cash. That’s happening at the very top end of the market and that influences how others act as well.” Breden agrees. “The market’s thirst for yield has made companies cautious when undertaking large scale M&A. The focus on yield is something which is going to drive capital management by boards and senior management and that drive for yield will always have an impact on the level of M&A activity and level of capital management initiatives undertaken by clients. You found in the most recent reporting season that most of the banks are paying special dividends,” he says.

mergers & acquisitions

Conservatism Examining the deals closed to date, there is also a clear bias toward conservatism with the focus on smaller, more selective deals. “Corporations are looking at rationalising their portfolios and looking at smaller steps to take in terms of bolt-on acquisitions or saying this business doesn’t make sense and someone will pay more than what we will get out of it. Clayton Utz is acting for a number of large clients who are doing those smaller deals,” says Evans-Cullen. Breden has had a similar experience with his clients: "The large corporates over a period of years have been fine tuning their portfolios which has resulted in divestment of non-core assets which drives a level of mid market activity and when I think of my clients and the work that I have done, a lot of it has been divestment work of non-core assets,” he says. Pricing within the Australian market is obviously a major concern. Earlier this year, Ingham Enterprises went to market with their family business. The original price expectations were approximately $1.4 billion and TPG closed the deal at $880 million. Evans-Cullen thinks the opportunities are still out there, but everyone is worried the prices and valuations are still too high. “We go through lots of processes where, at the end, no one puts the price on the table the vendor is willing to accept so we are seeing people not wanting to have those big full blown competitive tender processes [which were] the Holy Grail five years ago, so there’s more focus now on the processes of finding who do we think is going to be the most likely to be able to pay our price and be keen to do this – and do an exclusivity arrangement with them, thereby producing a better outcome,” she says. Cook also agrees that the high valuations are a discouraging factor in such high share markets. “You have to look at the markets which are running pretty hot. The share market is going gangbusters and the value of companies is increased significantly which naturally puts a brake on M&A activity,” he says.

Australasian Legal Business ISSUE 11.06

What about China? Pricewaterhouse Coopers reported that while China had record outbound M&A of $64 billion in 2012, the proportion of this investment which was directed to Australia fell from 11.7 percent in 2011 to 8.8 percent in 2012. There appears to be a cooling-off with China’s interest in Australia which is partially due to their prior experience here and the desire to look for investment opportunities further offshore in places such as Africa, South America and Canada. Breden anticipates growth in China’s outbound investment toward both Europe and Africa. “It’s been a challenging year for Chinese investment and they have probably invested a suitable allocation of their money into Australia. Europe is an area with depressed prices and Africa is an area of growth. I think we have moved through the concerns regarding the Chinese election which was a significant constraint last year. Our view now is that there will remain a decent flow of inbound Chinese investment but not to the same level [as previously],” he says. Evans-Cullen agrees: “I think the Chinese may be reducing their interest in investing in Australia slightly – maybe because many of their previous investments have not gone particularly well and they have learnt a lot through that process. The question they now ask is how they are going to run the asset going forward. I think they might look to making strategic investments and not necessarily taking control of assets as they had in the past,” she says. “Certainly last year from a public deal sense, all of the deals were in the mining and resources sector. We have now seen them investing in property and showing a continued interest in the agriculture and food sector such such as their purchase of Cubbie Station. You hear they are buying lots of farming land so we predict there will be continued investment from the Chinese in those sectors.” Cook agrees that the level of interest is not nearly what has been seen in the past few years. “I don’t believe there is anywhere near the level of interest Chinese have had in Australia in previous times – certainly [there has been] a drop off of foreign Chinese investment in Australia. Activity levels may increase because there is not that uncertainty as to the regime change and what the policy will be but we’ve yet to

mergers & acquisitions

Australasian Legal Business ISSUE 11.06

see that so it will be interesting in the next 12 months,” he says. Other Asian Interest in Australia The Australia Trade Commission cites Japan as one of the top 10 countries with foreign direct investment in Australia. Breden observes that there has always been surprisingly large levels of investment by Japanese corporates in Australia and that will continue. “There’s returning levels of Asian interest in Australian assets – especially Japanese corporates looking for growth,” he says. “Japan and Korea are very important markets from an inbound perspective. Korea is a huge economy and an important market for Australia. Japan is an extremely low growth if not negative growth economy. Japanese corporates, particularly post-Fukushima, have realised they need to see growth offshore which is driving levels of activity including participation in the divestment of non-core assets by the large

mining houses. So there is a natural group of buyers which includes Japanese and Korean corporates.” Breden adds that financial resources is also an interesting sector for Japanese inbound investment: “Mitsubishi Bank recently took a 15 percent interest in AMP’s fund business which is an example of a transaction where the Japanese take a minority investment in potential areas of growth,” he says. “It is rumoured to be Japanese banks looking to enter the home loan market in Australia as that’s an area of growth for them.” What about the United States? Despite the significant hype in the media surrounding Chinese investment in Australia, the U.S. remains the largest investor in Australia. Several of the major 2013 M&A deals have involved U.S. purchasers. “America is still the number one foreign investor in Australia and has always been a favoured investor [in the context of] similarities between our nations,” says Cook. Breden believes the expected decrease of the Australia dollar will have an impact on the usual steady stream of U.S. investment into Australia. “If the pundits are correct and the Australia dollar is heading to .85 or .90, we would anticipate that that will lead to a good pickup of U.S. inbound investment,” he says.

Sydney + Melbourne + Brisbane

The next chapter Brisbane, 1 July 2013

On 1 July 2013, Wotton + Kearney, the only Australian law firm based in more than one city practising solely in insurance law, opened the doors of its Brisbane office. The team is led by Partner, Paul Spezza, and Special Counsel, Raisa Conchin, specialist insurance lawyers with over 20 years’ combined experience in the industry. In recent years the firm has been increasingly involved in a broad range of Queensland based disputes, including those arising out of the Queensland floods, the collapse of Storm Financial and the RiverCity Motorways class action. Through Paul and Raisa’s presence in Brisbane, Wotton + Kearney is ideally placed to continue to provide first class legal services to the Queensland insurance market.

www.wottonkearney.com.au

perth 2013

Australasian Legal Business ISSUE 11.06

Special report

boom A slowing energy and resources boom is forcing Perthâ&#x20AC;&#x2122;s legal market to remember the way business used to be. However as BEN ABBOTT discovers, the sun isnâ&#x20AC;&#x2122;t about to set in the West.

Australasian Legal Business ISSUE 11.06

perth 2013

& gloom

perth 2013

Australasian Legal Business ISSUE 11.06

n May, Australia’s Bureau of Resources and Energy Economics released a report showing the value of committed investment in major energy projects had reached a peak, and had in fact begun to drop off. Seized on by the nation’s business media as evidence of the end of an unprecedented boom in resources investment, the report tipped a 31 percent fall over a three-year period, from $268 billion to $185 billion by the end of 2015. It is a trend law firms in Perth have watched with unease. In a market that has for some time relied either directly or indirectly on the fortunes of the resources sector for its forward pipeline of work, strong indications since the beginning of the 2013 calendar year are that boom times are over, which is leading to questions over what is next for the legal market. “The heady days of previous years have slowed down and there is a real malaise [in the mining and oil and gas sectors], and it seems to be feeding on itself,” explains Lavan Legal managing partner Dean Hely. “There are some suggestions that as we move through the election this year we’ll see people re-energized, but I’m not sure if that is the case. I have a feeling this may be a sustained down cycle in that sector.” The WA state government followed the publication of the Bureau of Resources and Energy Economics figures with its own bombshell: a $2 billion write-down in expected state revenues over the four years to 2016-17, largely due to revised iron ore prices and royalty forecasts. National accounts in June showed that WA’s economy had contracted at the fastest rate since the 1982-1983 recession, with unemployment jumping over 10 months from 3.5 percent to 5.2 percent. Meanwhile, consumer sentiment has plunged, with WA’s Chamber of Commerce and Industry research showing only 10 percent of consumers believe the economy will improve over the three months to the end of August, down from 25 percent. “Business sentiment seems to depend on which month you are talking about,” says head of Allens’ Perth practice Andrew Pascoe. “In April I would have had my cheery hat on, but in May there was less certainty as to the outlook. Sentiment seems to ebb and flow on almost a weekly basis.” In such conditions, law firms could be forgiven for being pessimistic about their future prospects. However, despite a market-wide readjustment in expectations, they remain comparably optimistic, arguing that Perth remains one of the better national markets in which to practice law. Remembering normal It has been some time since lawyers in Perth have had to face up to an uncertain future. “My view is that people have a distorted view of what trading conditions are like in the ordinary course of business in Perth because the last few years have just been

“People have forgotten what normal is because of what has been happening, and normality is returning.” Phil Lucas, Allion Legal

so busy and active,” says Allion Legal managing principal Phil Lucas. “People have forgotten what normal is because of what has been happening, and normality is returning.” His view is echoed by other Perth practice heads, who argue more normal conditions pale in comparison to previous boom years. “The practice here has been strong in many areas and extremely strong in others, but one of the difficulties in looking back over the last 12 months is the tendency to compare it with the incredible performances from the several years before that, and it doesn’t quite measure up to those years,” says Pascoe. Law firms agree that corporate has been the hardest hit practice area. Herbert Smith Freehills Perth-based corporate partner David Gray, who says he has witnessed a ‘flat lining’ of activity overall in the Perth market, is seeing clients keen to investigate new potential deals and projects, but these are taking longer and there is more of a reluctance to commit capital. Equity capital markets work is one area that has been “extremely hard hit” over the past year, according to Allion Legal. “Corporate has been tough,” says Dean Hely. “You have to work pretty hard to pick up work and there is quite a lot of cost competition among law firms.” While firms have enough existing resources-related work to last them from the short to mid-term, attention is turning to other practice areas. For example, property “still has some legs”, Hely says. “There seems to have been a lot of new projects in property over the past six months, but I have got some concerns over how long that will sustain itself.” However, firms such as Jackson McDonald and Lavan Legal, who both rely on dispute resolution for over 50 percent of their revenue, are finding this and other traditional counter-cyclical practices are helping boost prospects. “Jackson McDonald has been relatively busy in general commercial litigation, so one can say that the downturn, which we see as just taking the heat out of the market, is playing a little to our strengths,” chairman of partners Richard Sandover says. While the firm is not expecting a large wave of disputes work and Sandover says the slowdown may in fact be short-term, he

Australasian Legal Business ISSUE 11.06

says an uptick in disputes as things slow down is likely. “We also have a strong restructuring and insolvency side, a planning, environment and property practice, and we are very active in the indigenous royalties and indigenous trusts area and in insurance,” he says. A focus on costs has resulted from the slower 2013 market. Lavan Legal for example has seen lawyer numbers drop off through natural attrition over the past year since it acquired Maxim Litigation Consultants in 2012. “We’ve tightened up on costs over the last six months to ensure our staff numbers are at the right level to service our clients,” says Hely. Many firms also cite renewed efforts to remain closer than ever to their clients, with relationships becoming critical. “We have sharpened our focus on our clients, and the slowdown in Western Australia has required that focus,” says Sandover. “We have a bedrock of clients that we have attended to and developed over a long period and the stable partnership has enabled us really to maintain those relationships and grow them, so overall we are reasonably confident.” Likewise, Allens’ Pascoe: “We are working with clients on their particular needs through these market conditions, and ensuring that the value proposition that we have continues to be significant and readily recognized by our clients,” he says.

perth 2013

“As the new players have come in they have really shaken up the market and competition is as fierce as I have ever known it in Perth.” Nick Nichola, K&L Gates

perth 2013

Perth’s ‘parochial’ internationalists

While described affectionately as a parochial market by some lawyers who practice there, it is perhaps ironic that Perth has become a key hub for the export of in-demand legal skills to markets around the region. “Perth is being recognised more and more as a critical axis in this region for work in sectors critical to the region,” Allens’ Andrew Pascoe says. Blossoming from Perth’s depth of experience in mining, energy, resources and major infrastructure, Perth lawyers are taking advantage of a convenient time zone and geography as well as their experience to look further afield. “Offices of a number of firms here are thinking more regionally and even globally in terms of their practice, to see where their skills can be best deployed,” says Pascoe. “This is a broadening of horizons that has in part come from international firms coming to this market, but likewise those firms can be seen as coming here because of those broader horizons.” This has seen law firms switch from a primarily inbound investment play from key regional markets like Japan, China, India and South Korea in past years towards a greater focus on the movement of capital out of Australia. “Skills are readily exportable with technology,” says K&L Gates’ Nick Nichola. “You don’t necessarily have to be put on a plane to Singapore for six months to do a transaction there; you can still live in Perth and do a lot of that work from Perth given the time zone and the technology.” Herbert Smith Freehills’ Gray says he sees great potential for helping his Perth-based clients move further afield, using the international resources of the firm in combination with its local experience. He gives the example of Asia, as well as the ‘equally valuable’ Africa. “Herbert Smith has a well-credentialed mining and resources team based in Paris, who all have satellite phones and yellow fever injections and are all capable of going to Africa and executing the type of deals we didn’t have the same access to previously; my clients love that, they are looking for this type of work,” he says. Pascoe says Allens is aiming to cultivate a wider view of what it sees its market as being, though lawyers may still be based in Perth. “We see the opportunity to export our intellectual capital and experience into the region more broadly and to use our Perth office as a hub for key resources skills that we have developed,” he says. “Partners are spending more time on planes than they did a few years ago, and we are encouraging a broader outlook as to what they see their market as being.”

Australasian Legal Business ISSUE 11.06

“We’ve tightened up on costs over the last six months to ensure our staff numbers are at the right level to service our clients.” Dean Hely, Lavan Legal

Segmentation and choice The recalibration of Perth’s boom comes at an interesting time for the legal market, which has seen an influx of international firms in recent years. Though most of the same partner faces remain under different firm names, lawyers argue the new firms do represent significant market change. “It has shaken up the market,” says Dean Hely. “There was a real rush to those international firms, and I don’t think it’s over yet. Potentially we will see even more international firms come in.” “I think it has affected the market; it has made it very, very competitive,” says K&L Gates Australia managing partner Nick Nichloa. “As the new players have come in, and particularly the foreign entrants, they have really shaken up the market and competition is as fierce as I have ever known it in Perth. The new entrants have brought their own slant on things, and these are formidable firms, who are well resourced and managed and have a very clear strategy and vision.” At times international firms are competing aggressively on price as they look to land work and demonstrate value amid this tough market competition. “In a couple of instances we’ve been asked to tender and have been up against international firms, and have found out later they’ve offered a loss-leading 50 hours free at the front-end to get the work in the door,” Hely says. The result is a legal ‘buyers market’, where clients are now able to pick and choose the type of service they want from their firm. “You are seeing segmentation occurring in the legal services market,” says Lucas. “It’s a question of what service is relevant to the client. The clients that we deal with that have a more Western Australian or national focus for example might question the relevance of an international offering. However at the end of the day, for those international firms operating with local practitioners, the international piece is an additional offering not a replacement offering.” Nichola says clients have a great amount of choice, from boutiques to global firms. “For a market where the population is relatively small, there is an enormous amount of choice,” he says. New international offerings are opening up new opportunities for local clients looking abroad for investment. However, they are also helping local firms contrast compelling state and national offerings, which fill a niche in terms of both size and culture that many WA clients still demand. “The legal profession has become

Australasian Legal Business ISSUE 11.06

perth 2013

From East to West? The recruitment market in Perth has executed an about-face over the last half a year. “It was previously very difficult to get good people, but the market is a lot softer than it used to be, and there are opportunities out there now to pick up good people,” says Allion Legal’s Phil Lucas. That includes east coast lawyers looking to make the move west. “Over the last couple of years we have really noticed an increasing preparedness for people to come West from the East Coast, where traditionally that has not been the case,” says Lucas. “It will be interesting to see as the economy starts to soften whether people will continue to look to the West in terms of their career. Will there be a bit of a drain [from Perth] to the East Coast or international markets as they pick up?”

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perth 2013

less collegiate and more competitive, which is probably a factor of size and possibly the business models being introduced by larger firms with global strategies,” Sandover says. “I think our strength is we have stayed true to our core values, and because of the tapestry of clients and practice areas we have we are reasonably placed to profit from the current downturn. That’s reflected in our high morale.” No sunset in the West Perth firm Allion Legal threw open the doors of a brand new Sydney office at the beginning of July. Recruiting in David Walker and Jon Cane from Holding Redlich as principals of the new office, Allion Legal’s decision to expand its boutique services to the East Coast is as much about diversification of the business out of the Perth market as it is about gaining the niche skills it requires and meeting client demand for a Sydney presence. “We want to grow the business, and we thought long and hard about whether we continue to remain just in Perth, or diversify the businesses exposure,” says Lucas. “The softening of the Perth market has really been a validation and a vindication or our strategy,” he says. However, Perth remains the bedrock for firms such as Allion Legal, who believe that despite a slowdown in the resources and energy sector, it remains one of the best markets in Australia in which to practice. “Our business is growing, and we are still looking for growth opportunities. We are just having to work harder to find opportunities rather than work opportunities presenting themselves. That’s how it used to be,” says Lucas. K&L Gates likewise sees only opportunity for growth in Perth.

Australasian Legal Business ISSUE 11.06

Having launched the office in 2008 through the merger of then-Middletons and local firms Franklyn Legal and Salter Power, Nichola says further expansion is planned. “We still think the Perth office is smaller than it needs to be. We’ve got seven partners, and I would have thought the optimal size would be between 15 and 20 partners. So we will look to double in size over the next little while, but of course we will be cautious about that,” he says. Nichola is still upbeat about the overall health of the Perth market. “I still think it is an exciting place to be, notwithstanding the slight softening in the market. We are still in a position that a lot of the Eastern states would give their right arm for.” And if lawyers should ever doubt that they have still got things good in Perth, Nichola says there are ways to remind themselves. “Try getting a hotel room in Perth where you are not paying a fortune, or try going into a restaurant and getting a table for four without ringing ahead; that’s usually a good litmus test,” he says. “It’s still an exciting place to practice, and it will remain so for some time to come.”

alb awards

Australasian Legal Business ISSUE 11.6

ALB LAW AWARDS 2013:

Nine scores

a perfect Ten

Australasian Legal Business ISSUE 11.6

t may have been the 10th anniversary ALB Australasian Law Awards, but Nine was the number on everyone’s lips as the media company led a star cast of winning deals and dealmakers. In a year described by some dealmakers as the toughest in recent memory, it is fitting that the Australian Deal of the Year was a restructuring deal: Nine Entertainment’s restructure, to be precise. The winner of the Energy & Resources Deal of the Year was also a cause to reflect on the changing fortunes of the profession: according to some commentators, the Ichthys LNG Project Financing may be the last mega-project of its kind for the foreseeable future. Still, the big deals can come from unexpected sources. It was pleasing to see the Equity Markets Deal of the Year go to the Fonterra Shareholders’ Fund IPO,

alb awards

a rare example of a New Zealand deal beating a field of Australian rivals. It was a great night for the Fonterra Legal team, who also went on to win New Zealand deal of the year and New Zealand In-house Team of the Year. A number of finalists successfully retained titles which they have held for several years now: UBS continues its reign as Investment Bank In-house Team of the Year; Philippa Stone continues her outstanding run as Australian Dealmaker of the Year and Finlaysons, Carter Newell, Herbert Geer and Jackson McDonald continued their domination of their respective State firm of the year categories. The In-house entrants were of a particularly high standard this year and we congratulate the AMP, Westpac, BHP Billiton, Fonterra, UBS and AIG legal teams and Nine Entertainment’s Amanda Laing as

anniversary

the winners of their respective categories. And is there a particular moral we can draw from the night’s celebrations? We can think of a couple. First, beware of statues in dark places. But more importantly, we note the continuing dominance of Herbert Smith Freehills at the Awards across many categories including Deal Team of the Year and Dealmaker of the Year. This perhaps was not an unsurprising verdict given the firm’s strong 2012 and the fact that the Awards recognise achievements of the previous calendar year. But can Freehills continue its dominance throughout 2013? We look forward to checking back in on this narrative at next year’s awards! We’d like to acknowledge the valuable contribution of our judging panel, who spent many hours poring over the submissions, and a special congratulations once again to the finalists and winners.

alb DEAL awards

Australasian Legal Business ISSUE 11.6

Debt Market

energy & resources

WINNER: Fortescue Metals term Loan B Financing

WINNER: Ichthys LNG Project Financing

Firms: Allen & Overy, Skadden Arps, Gilbert + Tobin, Sullivan & Cromwell Banks & accountants:JP Morgan, Credit Suisse, Credit Suisse Securities, UBS

Firms: Allen & Overy, Allens, Herbert Smith Freehills, Clayton Utz, Latham & Watkins, Baker & McKenzie

Equity Market

IPA Insolvency & Restructuring

DEAL Of the Year

deAL Of the Year

WINNER: Fonterra Shareholdersâ&#x20AC;&#x2122; Fund IPO Firms: Bell Gully, Russell McVeagh, King & Wood Mallesons, Harmos Horton Lusk Limited, Chapman Tripp, Minter Ellison Rudd Watts, Buddle Findlay Banks & accountants:JKPMG, PricewaterhouseCoopers, Goldman Sachs, Deutsche Bank NZ, UBS NZ

DEAL Of the Year

WINNER: Nine Entertainment Group Restructure Firms: Corrs Chambers Westgarth, Arnold Bloch Leibler, Gilbert + Tobin, Herbert Smith Freehills, King & Wood Mallesons, Minter Ellison, Ashurst, Henry Davis York, Allens Banks & accountants:PricewaterhouseCoopers, Ernst & Young, PPB Advisory, Macquarie Capital, Moelis & Company LLC, Rothschild, KordaMentha, McGrath Nicol, Goldman Sachs, UBS

alb DEAL awards

Australasian Legal Business ISSUE 11.6

project finance

report factory M&A

WINNER: Ichthys LNG Project

WINNER: Foxtel acquisition of Austar United Communications

deal of the Year

Firms: Allen & Overy, Latham & Watkins, Allens, Herbert Smith Freehills, Clayton Utz, Baker & McKenzie

deal of the Year

Firms: Herbert Smith Freehills, Ashurst, Allen & Overy, Allens, Gilbert + Tobin, Minter Ellison Banks & Accountants: Goldmans Sachs

new zealand

New zealand

WINNER: Bell Gully Corporate/Commercial Team

WINNER: Graeme Quigley - Russell McVeagh

DEAL TEAM Of the Year

DEALMAKER Of the Year

Australasian Legal Business ISSUE 11.6

new zealand deAL Of the Year

WINNER: Fonterra Capital Restructure (Trading Among Farmers) Firms: Russell McVeagh, Chapman Tripp, Bell Gully, Buddle Findlay, Minter Ellison Rudd Watts, Harmos Horton Lusk, King & Wood Mallesons Banks & accountants: ASB Bank Limited, ANZ National Bank Ltd

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Australasian Legal Business ISSUE 11.6

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australian

WINNER: Philippa Stone - Herbert Smith Freehills

WINNER: Nine Entertainment Group Restructure

DEALmaker Of the Year

DEAL Of the Year

Firms: Corrs Chambers Westgarth, Arnold Bloch Leibler, Gilbert + Tobin, Herbert Smith Freehills, King & Wood Mallesons, Minter Ellison, Ashurst, Henry Davis York, Allens Banks & accountants: PricewaterhouseCoopers, Ernst & Young, PPB Advisory, Macquarie Capital, Moelis & Company LLC, Rothschild, KordaMentha, McGrath Nicol, Goldman Sachs, UBS

Banking & Financial Services in-house team Of the Year

WINNER: Westpac Group - Legal & Secretariat

Energy & Resources in-house team Of the Year WINNER: BHP Billiton Group Legal

Carter Newell Lawyers…

back to back… LAW FIRM of the YEAR

Brisbane Law Firm of the Year 2013, 2012 & 2008 FINALIST 2011, 2010, 2009 & 2007

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alb in-house awards

Australasian Legal Business ISSUE 11.6

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WINNER: Amanda Laing - Nine Entertainment

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Australasian Legal Business ISSUE 11.6

gilbert + Tobin investment bank

in-house team Of the Year WINNER: UBS Legal & Compliance

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russell mcveagh new zealand

anniversary

in-house team of the Year WINNER: Fonterra Legal Team

alb in-house & FIRM awards

Australasian Legal Business ISSUE 11.6

Celebrating the 10th anniversary CLAYTON UTZ australian

LAW MASTER Corporate Citizen

WINNER: AMP Legal & Governance

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in-house team Of the Year

firm Of the Year

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Australasian Legal Business ISSUE 11.6

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alb awards

law in order Employment Specialist firm Of the Year

WINNER: Harmers Workplace Lawyers

Australasian Legal Business ISSUE 11.6

law in order Innovative Use of Technology firm Of the Year

WINNER: Corrs Chambers Westgarth

law in order Insurance Specialist

avantiq IP Specialist

WINNER: Sparke Helmore

WINNER: Griffith Hack

firm Of the Year

FIRM Of the Year

Australasian Legal Business ISSUE 11.6

International law firm of the Year WINNER: Allen & Overy

alb awards

anniversary

burgess paluch Adelaide law firm Of the Year WINNER: Finlaysons

brisbane

huon it melbourne

WINNER: Carter Newell Lawyers

WINNER: Herbert Geer

law firm Of the Year

law firm of the Year

alb awards

perth

law firm of the Year WINNER: Jackson McDonald

Australasian Legal Business ISSUE 11.6

signature consulting sydney law firm of the Year WINNER: Gilbert + Tobin

scarlis pringle Managing Partner Of the Year

WINNER: Gavin Bell - Herbert Smith Freehills

thank you to all our 2013 award sponsors

alb awards

Australasian Legal Business ISSUE 11.6

anniversary

our 2013 award sponsors AUSTRALASIAN 2013

Avantiq Avantiq® specialises in multinational online and offline trademark, domain and company name search services. Founded in 1986, our innovative approach to global trademark searching has earned us a reputation as an industry leader. Our team operates from offices in Luxembourg, United States and Australia, complemented by more than 100 associate attorneys worldwide. Contact: Amanda Treleavan, General Manager Oceania P: 08 8374 2453 E: amanda@avantiq.com W: www.avantiq.com

Burgess Paluch Legal Recruitment Burgess Paluch is a leading legal recruitment group with significant experience in local and international markets. Utilising a strategic approach and providing accessible, pro-active advice, Burgess Paluch is one of the leading legal recruiters in Australia. Burgess Paluch focuses on creating successful outcomes for both lawyers and law firms. Contact: Paul Burgess, Director T: 03 8676 0372 E: paul@bplr.com.au W: www.bplr.com.au

CLAYTON UTZ Clayton Utz is one of Australia’s most respected and successful independent legal practices. We are proud of our reputation as a commercial, client focused firm that works strategically alongside our clients to help them achieve their business objectives. We have a diverse domestic and international client base which reflects the broad-based experience and specialisations of our lawyers within our core practice areas of Corporate, Banking and Financial Services, Litigation and Dispute Resolution, and Property, Environment and Construction. Clayton Utz also has a dedicated Pro Bono practice, which reflects our commitment as a firm to helping individuals and organisations access the legal system where they may not otherwise be able to. Contact: Lauren Scott, Head of Corporate Affairs T: 03 9286 6972 E: lscott@claytonutz.com W: www.claytonutz.com

Corrs Chambers Westgarth Corrs Chambers Westgarth is a premium independent law firm committed to driving Australia’s competitiveness and its economic engagement with Asia. Corrs is regularly recognised for its high profile work and is the only large national law firm to be awarded ALB Gold Employer of Choice 2011-2012 two years in a row. As a national firm with strong partnering relationships globally, Corrs is ideally placed to support national and international clients. Contact: Andrew Messenger, Division Leader, Corporate Chair of International Engagement T: 02 9210 6721 E: andrew.messenger@corrs.com.au W: www.corrs.com.au

Gilbert + Tobin Gilbert + Tobin is a leading corporate law firm and a key player in the Australian legal market. They work on transactions and cases that define and direct the market. The firm’s reputation for expert advice extends across: mergers and acquisitions, private equity, capital markets, banking and finance, real estate and projects, tax, competition and regulation, communications and technology, intellectual property and litigation. Contact: Danny Gilbert, Managing Partner T: 02 9263 4000 E: email@gtlaw.com.au W: www.gtlaw.com.au

Huon IT Huon IT are industry renowned Legal Technology Specialists, with a focus on providing strategy, IT management, systems integration,& 24x7 support to range of professional service organisations. Established in 1989, Huon IT has established long term partnerships with firms across Australia, with offices in both Sydney & Melbourne. Working alongside both management and technical departments within their client’s organisation, Huon IT helps to align technology systems with executive vision to maximise business performance. Contact: Damian Huon, Chief Executive Officer T: 02 8401 8000 E: dhuon@huonit.com.au W: www.huonit.com.au

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Celebrating the 10th anniversary IPA The IPA’s mission is to support insolvency and recovery professionals in their quest to restore the economic value of underperforming businesses and to assist financially challenged individuals. We deliver this through the provision of innovative training and education, upholding world class ethical and professional standards, partnering with government and promoting the ideals of the profession to the public at large. Contact: Denise North, Chief Executive Officer T: 02 9290 5741 E: dnorth@ipaa.com.au W: www.ipaa.com.au

JLT JLT is part of the Jardine Lloyd Thompson Group of companies, an international group of Insurance Brokers, Risk Management Consultants and Employee Benefits Specialists and one of the largest companies of its type in the world. JLT provides clients total solutions tailored to their unique risk and insurance needs through a combination of specialism, innovation and geographical reach. JLT’s Employee Benefit Specialists provide consultancy and administration services to corporate and private clients across a wide range of company paid and voluntary employee benefits including Health, Group Risk insurance and Life Insurance. Contact: Stuart Whitbread, General Manager Benefit Solutions P: 02 9290 8023 E: stuart.whitbread@jlta.com.au W: www.jlta.com.au

Law In Order Established in 1999, Law In Order is the leading supplier of hardcopy and electronic document processing services to the Australian Legal Industry. Providing specialised technology and document management solutions to over 2,000 law firms, corporations and government agencies nationally; Law In Order prides itself on a reputation of innovation and versatility whilst maintaining core values of Integrity, Excellence, Teamwork & Leadership. Contact Tisha Kelemen, National Sales & Marketing Manager P: 02 9223 9200 E: Sales@lawinorder.com.au W: www.lawinorder.com.au

LawMaster 100% Australian since 1988, LawMaster is designed as the ultimate practice resource for lawyers. LawMaster is the most integrated and complete system available in Australia for seamlessly managing both back and front office requirements of legal practices. Our easy to access solution provides everything in one system using Microsoft platforms for reliability and excellent risk management. Contact: Robert Laird Director - Sales, Marketing & Alliances P: 1300 135 214 E: information@lawmaster.com.au W: http://www.lawmaster.com.au

marriott international Marriott International is a leading lodging company with more than 3,900 properties in 74 countries and territories worldwide, we remain grounded in a set of core values: put people first, pursue excellence, embrace change, act with integrity and serve our world. Marriott Australia offer a complete choice of properties - from a resort getaway to our sensational city hotels along the east coast, Marriott are here to make sure all your experiences are everything you imagined and more. For business travel and events. For weddings and meetings, for food and fitness. From check in to check out, we’re here for you. To comfort and delight you. Welcome to Marriott. Contact Sydney Harbour Marriott Hotel 563 Guest Rooms & Suites 30 Pitt Steet, Sydney, NSW, 2000 Australia T: +61 2 9259 7000 W: www.sydneyharbourmarriott.com.au Melbourne Marriott Hotel 186 Guest Rooms & Suites Cnr. Exhibition & Lonsdale St, Melbourne, VIC 3000 Australia T: +61 3 9660 1171 W: www.melbournemarriott.com.au

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alb awards

Australasian Legal Business ISSUE 11.6

anniversary

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mental health

Australasian Legal Business ISSUE 11.06

PREVENTING

KARĹ&#x152;SHI: Why mental health matters

Failure to address mental health issues in the workplace could result in litigation against firms, writes Gina Dombosch.

Australasian Legal Business ISSUE 11.06

mental health

Australasian Legal Business ISSUE 11.06

t is well established that people in the legal profession suffer from disproportionately high levels of anxiety and depression.1 There is general agreement that this issue represents a major moral challenge for firms. Beyond this, however, this issue should also be understood in a business context: to put it bluntly, firms which fail to address mental health in their workplace could find themselves paying a heavy price down the track: litigation from exemployees and increased insurance costs are just some of the factors which may loom large in this equation. Litigation In Australia, there are many lawyers who routinely work 60-100 hours per week or are pressured to bill 3000 annual hours. We are unaware of instances in Australia of firms being sued by employees on the grounds of being overworked, but there are precedents in overseas jurisdictions: the Japanese concept of “karoshi” or “death from overwork” (see box-out) is a notable case in point. Likewise, Canadian Courts have rendered legal decisions attributing the cause of some types of mental disorders to the acts or omissions of the employer. Canadian judges have stated that the common law contract of employment now contains implied terms for the protection of mental health and psychological comfort. In the UK, one employer was found liable for psychiatric injury due to stress caused by work related factors where the employer’s occupational health department had brought to the attention of the employer that the employee’s depressive condition was caused by work factors. As this was not acted upon, the employer was rendered liable for the injury suffered. Some believe it is only a matter of time before there is prosecution of or a civil action against Australian law firms as a result of working conditions. Dr Robert Fisher, Head of the Department of Psychiatry and Psychological Services at St Vincent’s Clinic and St Vincent’s Private Hospital, believes this is a huge stick that should motivate law firms to take this issue more seriously. “Evidence suggests that the working conditions of lawyers, particularly the hours worked, is

Karoshi: Death from overwork, Japanese style The Japanese have coined a term acknowledging the problems of work related stress and illness: the word “karoshi” translates into “death from overwork”. The concept has been legally recognized for over 30 years and claims for karoshi have greatly increased in the last 10 years. According to the Japanese Ministry of Health, Labour, and Welfare (MHLW), “sudden deaths of any employee who works an average of 65 hours per week or more for more than four weeks or on average 60 hours or more per week for more than eight weeks may be karoshi.” If a death is deemed to be karoshi, surviving family members not only receive governmental workers’ compensation monies but are routinely awarded large sums of damages against the employer. Cases involving workers subjected to 100 hours per week or more than 3000 hours per year and have subsequently died well before the age of 40 have been deemed karoshi.

Australasian Legal Business ISSUE 11.06

FOOTNOTES: 1 See for example Courting the Blues: Attitudes Toward Depression in Australian Law Students and Legal Practitioners, a 2009 study by the University of Sydney Brain and Mind Research Institute and the Tristan Jepson Memorial Foundation (TJMF) 2 The development of the statutory law and common law regarding workplace bullying is also clearly going to be a growth industry in litigation, Professor Mason believes. “This will include psychological bullying including that by partners or senior lawyers who are sometimes tolerated.”

likely to breach the occupational health and safety laws. So firms could be open to prosecution on those industrial grounds,” he said. Fisher believes no trade union would agree to the terms and conditions thrust upon lawyers, commenting in a recent speech that firms have “more in common with the satanic mills of 18th century England than a 21st century, well functioning business.” But what is the Australian legal position? Professor Keith Mason, the former President of the NSW Court of Appeal and Chairman of the Tristan Jepson Memorial Foundation, says that law firms could potentially find themselves on the receiving end of three types of claims: fault based workers’ compensation claims from current employees, retrospective claims from ex-employees and government criminal prosecution for violations of occupational health and safety legislation. Professor Mason also noted that there have already been a few damage awards against employers due to stress related injuries where the employer acted unreasonably either in directly causing the stress or in not preventing it. 2 Norton Rose Fulbright partner and well known workplace law expert Michael Tooma also comments that overwork is a “work health and safety legal compliance issue for law firms.” “We know that overwork can lead directly to health issues,” he says. “We also know that fatigue caused by working long hours can be a safety concern if people are then hopping in a car and driving.” Tooma recommends that firms record the hours worked by legal professionals – total hours worked, not simply just billable hours. “The meticulous recording of time will one day prove very helpful evidence for a prosecutor trying to construct a case against a firm,” he says. “A firm is capable of knowing with a high degree of accuracy the hours worked by its staff and is therefore able to monitor overwork. Failure to do so is a breach of the duty of care.” Joydeep Hor, workplace law partner and managing principal of People & Culture Strategies, believes there is fertile legal ground for a civil action or government prosecution with regard to the high rates of anxiety, depression and psychological distress that lawyers are suffering,

mental health

“Evidence suggests that the working conditions of lawyers, particularly the hours worked, is likely to breach the occupational health and safety laws. firms could be open to prosecution on those industrial grounds.” Dr Robert Fisher, Head of the Department of Psychiatry & Psychological Services at St Vincent’s Clinic and St Vincent’s Private Hospital

particularly when in other countries, courts are holding law firms liable. “It is absolutely only a matter of time before there is a level of scrutiny applied to professional services,” he said, adding that this is an issue that the large accounting firms are also struggling to come to terms with. “But the legal profession is one that will struggle with it more than others,” he says. “While I don’t disagree that external litigation does force change, however, I don’t think it’s going to be as simple as one or two catalysts. You are dealing with a lot of people who are influencing the maintenance of this structure; a lot of people with a high level of arrogance. It is very different than the approach taken by other corporations.” How would firms defend against these litigation claims brought by former or current lawyers? Professor Mason believes the firm’s defenses to these sort of actions will include the clients’ demand for “24/7” professional service and the worldwide law firm culture of long hours and economic conditions. However, he says this is similar to the coal miners’ defense of sending children to work in the mines: the fact that a practice has been acceptable in the past does not make it acceptable today. He says the problem is akin to that of WWI soldiers where there is a steady stream of young people willing to assimilate themselves into this situation, or who thrive off the stress and pressure. Duty of Care It will be interesting to see how the concept of “duty of care” evolves in light of the awareness by law firms of the mental health issues plaguing their legal professionals. Professor Mason affirmed there is undoubtedly a duty of care owed by employers which extends to both physical and psychological injury. While there is a recognised duty of reasonable care, there is some uncertainty as to what an employer has to do if they are ignorant of an employee’s psychological vulnerability. “The next evolution in this area of law is for a court to recognise the statistical data and extent of the risk,” he says. “It is only a matter of time before a court finds the statistics are such that everybody should anticipate there are a percentage of psychologically vulnerable people in their workplace and it is insufficient to allow self reporting to be the touchstone. I cannot see the courts faced with the evidence of these alarming statistics failing to recognize it is reasonably

mental health

forseeable that the pressure of excruciatingly long hours, mindless aspects of modern legal work are triggers for the psychologically vulnerable people in your workforce.” “Also, given the fact that many legal employers are taking initiatives, they will be unable to claim they didn’t realize there was a problem or use the ‘I couldn’t do anything’ defense. The challenge, of course, from the plaintiff’s perspective will be demonstrating that the workplace culture, the long hours etc were the trigger and materially caused their breakdown, mental illness and/or psychological injury.” Fisher believes key is in the personality profile of the lawyers: “If you drill down to the individual and there is a high probability that the people coming into your firm are both perfectionist and pessimistic – the personality profile of individuals attracted to law – and very hard working, you need to think about how you can help build their resilience in the face of immutable stress – how do you remove unnecessary stressors,” says Fisher. “Once you can identify that someone has broken down because of the identified factors lawyers have consistently reported they find stressful about their profession – excessive work demand, hours worked, a culture of toughness and the need to not be perceived as weak, billable time pressure, lack of support and encouragement – and the firms know these factors exist combined with the intrinsic individual personality profile – why wouldn’t they be deemed culpable? It is only a matter of time.” This risk profile also has implications for other parts of the business, such as insurance costs. “Some firms’ premiums have more than doubled in the last couple of years purely as a result

Australasian Legal Business ISSUE 11.06

of the claims experience from lawyers and partners in particular,” observes Stuart Whitbread, General Manager of Benefits Solutions at JLT. Professor Mason agrees that there is a surge in workers compensation stress related claims which is something that firms are not eager to publicise. Good business sense Anxiety, depression, and other stress related illness can be devastating to a firm’s bottom line and have a significant impact on the economy as a whole. The Australian Human Rights Commission has published statistics concerning the cost of stress related illness to Australian businesses and the economy. The key findings were: o A total of 3.2 days per worker are lost each year through workplace stress; o Stress-related workers’ compensation claims have doubled in recent years, costing over $10 billion each year; o In relation to psychological injury claims, work pressure accounts for around half of all claims made; o Preliminary research shows that

Australasian Legal Business ISSUE 11.06

mental health

“there is a high probability that the people coming into your firm are both perfectionist and pessimistic which is the personality profile of individuals attracted to law. you need to think about how to help build their resilience in the face of immutable stress including removing unnecessary stressors.” Dr Robert Fisher

Australian businesses lose over $6.5 billion each year by failing to provide early intervention/treatment for employees with mental health conditions. There have been many reports in the media that Australia’s executives do not take the mental health of their employees as seriously as they should. ‘’People in the boardrooms of major Australian companies, who are often a bit older, are more reluctant to acknowledge mental health as an issue that needs to be addressed,” says Jack Heath, the Director of SANE Australia. Canada is suffering the same cost to its economy. Dr Jayne Barker, Vice-President Policy & Research and Mental Health Strategy for the Mental Health Commission in Canada estimates that mental illness costs the Canadian economy $51 billion per year in terms of health care service use, lost workdays and work disruptions. Change Professor Mason believes that in an era of specialist plaintiff firms dealing with work related issues and some high profile discrimination cases, it is only a matter of time before this issue comes before the courts. “It will take the will to do it but if you have a loved one who commits suicide, you are extremely motivated. Many groundbreaking civil claims are brought by the parents of a deceased child or spouse and all that is required for a derivative action is the family member to have suffered nervous shock or even the payment of funeral expenses,” he says. “Apart from strategic

litigation, the hope for culture change really lies with young lawyers, who are well organised and aware of the pressures imposed, working in partnership with those older players who appreciate the true risks and the costs of doing nothing. “Society generally and in particular the legal profession are aware and talking about mental health issues which were previously swept under the carpet. The legal profession is realising how costly this issue is but you cannot simply sweep away the problem on this basis” he says. “Firms will realise insurance premiums are increasing, the risk of litigation is evermounting and they must be seen to be doing something but part of this challenge is the recognition by the firms that part of the problem lies in their business model.” Professor Mason believes that while, in recent years, there have been improvements in recognition of the problem, this recognition is coupled, sadly, by little sign of real change in the culture of workplaces. However, this is a problem of epidemic proportions that law firms cannot afford to ignore.

employer of choice

Australasian Legal Business ISSUE 11.06

gina dombosch explores the rationale behind the 2013 employer of choice criteria.

employer of criteria choicE: explained

Australasian Legal Business ISSUE 11.06

employer of choice

n a few weeks time, the judges of the 2013 Employer of Choice Awards will be unveiling a list of law firms which they believe have shown exceptional leadership in providing a truly supportive workplace for their employees. That decision will be made in accordance with the Employer of Choice criteria (see box on right): a list of criteria which has been developed by the Tristan Jepson Memorial Foundation (TJMF) in conjunction with ALB and a wide range of industry stakeholders. “The EOC Criteria are hopefully intuitive. If you are concerned with your employees’ satisfaction, enjoyment, work-life balance, one leads to another in terms of positive outcomes. We have intentionally made the criteria quite broad allowing people to do it in different ways,” explains Jeremy Hyman, communications advisor to the TJMF. In this article, we examine the EOC criteria in detail and ask the experts to explain some of the rationale behind each criterion. 1. Commitment to employee satisfaction, quality of employee engagement in firm decision making and responsiveness to employee feedback. Jessica Cucchiaro, a registered psychologist working with Jardine Lloyd Thompson (JLT)’s in-house rehabilitation team states that employee engagement is a very important factor. “Employees must feel they are being heard….it allows them to have that internal locus of control so it doesn’t feel that all of the decisions are being made without their input particularly on items they spend so much time on,” she says. Cucchiaro provides some examples of this: self-managed work streams, employee committee or task forces that are headed up by themselves, continuous improvement teams and ensuring participative decision making processes within the organization itself. TJMF director Marie Jepson agrees, noting it is important employees are included in discussions about how their work is done and how decisions are made so that employees feel connected to their work and motivated to do their work well. 2. Effective board and/or senior executive approved policies and procedures which support physical and psychological health and wellbeing in the workplace.

Australasian Legal Business ISSUE 11.06

EMPLOYER OF CHOICE – CRITERIA 2013 Criterion 1: Commitment to employee satisfaction, quality employee engagement in firm decision making and responsiveness to employee feedback. Do employees participate in your firm’s decision making? How? Do you have any examples of situations where your firm has implemented changes in response to employee feedback? Criterion 2: Effective board and/or senior executive approved policies and procedures which support physical and psychological health and wellbeing in the workplace. Do you review the effectiveness of these policies? How? How often? Criterion 3: Effective education relating to psychological health and safety issues in the workplace and provision of confidential and professional avenues of support for employees experiencing psychological stress or distress. Who provides the services? Are they widely known within the firm? Are managers trained to recognise signs of psychological distress? Are staff? Criterion 4: Effective processes and/or policies established to provide reward and recognition to employees outside of annual performance reviews. Is there a consistent, ongoing system of feedback? Criterion 5: Commitment to pro bono and CSR activities with a high level of staff participation. Criterion 6: Commitment to monitoring employee hours at work and taking steps to ensure these hours are consistent with a healthy work/life balance; ensuring flexible work arrangements are available to employees. Do you keep track of the amount of time employees are spending in the office or hours they are required to work overall? Criterion 7: Commitment to supporting employees (including support staff) throughout all stages of their career – for example, post promotion and returning from parental leave. Criterion 8: Commitment to facilitating ongoing professional, commercial and legal training and development with strong input from employees. What employee engagement processes exist to assist employees in shaping their careers? How is the success of this policy measured?

Australasian Legal Business ISSUE 11.06

Hyman believes that a change of culture within the workplace must come from leadership: “Firms have to create not only the role modeling but the sense that it is acceptable to show weakness and vulnerability and ask for help,” he says. Marie Jepson says that evidence that this criterion was being applied might include the following: (a) supervisors and coworkers being supportive of psychological health concerns and responding appropriately as needed; (b) consultation of employees about the level of support they receive; (c) that the EAP program and salary continuation programs are in place and talked about by management in an open and positive way; (d) that feedback about policies and procedures regarding mental health are welcomed and respected; (e) that the policies are openly supported by management and executives; and (f) that they are effectively communicated to the staff. 3. Effective education relating to psychological health and safety issues in the workplace and provision of confidential and professional avenues of support for employees experiencing psychological stress or distress. Dr Robert Fisher, Head of the Department

employer of choice

of Psychiatry and Psychological Services at St Vincent’s Clinic and St Vincent’s Private Hospital believes that partners, team leaders and Human Resources personnel should be aware of the expected prevalence as well as the types of psychiatric disorders which are likely to occur and be vigilant in relation to them. “Managing partners and HR personnel should make it their business to ascertain whether they have a “happy ship” and if not determine what factors or which personnel are leading to that unhappiness” he says. Jessica Cucchiaro also believes that “top down” training is important: “[This means] training partners and managers not only as to why this is important and why you need attention drawn to this but what you can do from your position, what are the yellow flags that a psychologist would be looking for, what you should be noticing and looking out for” she says. “So much time is spent together between the partners and their associates or lawyers so the senior people should be educated as to what should be noticed as yellow flags.” Marie Jepson says that it is vital for management and not just HR personnel to have proper training and coursework to gain greater awareness and understanding of the issues of psychological safety and wellness. She says that some things firms should consider are as follows: (a) it is important for there to be ongoing training opportunities for staff and supervisors in mental health and that it is considered a priority in the workday and not “made up” after attending such courses or training; (b) the Employee Assistance Programs should be talked about by management in an open and positive way, it should be confidential and employees should give feedback on its effectiveness; (c) EAP service providers should be screened and have the requisite skills and expertise to treat people with serious mental illness. 4. Effective processes and/or policies established to provide reward and recognition to employees outside of annual performance reviews. “Mental health policy information provided at induction into a legal institution or workplace is crucial in addition to during individual performance reviews. Annual reviews, mentoring or periodic reviews are all points of contact to address the mental well being in an intrinsically stressful job” says Dr Fisher. Jeremy Hyman adds that small efforts such as hosting appreciation lunches or events recognizing the staff can make a huge impact on firm culture. “It builds connections in the workplace and helps communicate to the staff what you are about. It can form and shape one’s culture which is the most important thing” he says. Marie Jepson advises that there are many considerations a firm can give to this criteria: (a) appropriate acknowledgement and appreciation of employees’ efforts in a fair and timely manner; (b) employees receiving encouragement and support in the development of their interpersonal emotional and job skills; (c) employees should feel valued through civility and thanks for a job done and recognition of the effort spent or weekends worked; genuine praise and encouragement and public recognition; (d) a confidential survey where employees can provide feedback on their experience at the organization in this regard.

employer of choice

5. Commitment to pro bono and CSR (corporate social responsibility) activities with a high level of staff participation. Jessica Cucchiaro says that this criterion is geared toward developing a sense of social responsibility and to drive toward a higher purpose. “Doing well for others and doing something for others makes you well yourself” she says. TJMF’s Jeremy Hyman agrees: “If lawyers are provided the opportunities to be more than a commercial lawyer and have other facets of their life especially to think altruistically then it will have a positive impact on firm culture” he says. Marie Jepson adds that there should be genuine opportunities to participate in CSR and genuine management support for employee participation in these areas. 6. Commitment to monitoring employee hours at work and taking steps to ensure these hours are consistent with a healthy work/ life balance; ensuring flexible work arrangements are available to employees. It is well known in the legal profession that lawyers work excruciatingly long hours. The advent of smartphones and 24/7 connectivity to the workplace has only added to these hours and resulting stress. But what is the solution when a law firms’ profitability is tied to their lawyers’ high billable hours? Dr. Fisher believes long work hours are the cardinal factor in the mental illness problems plaguing the legal profession and there has been little motivation to change it - until now. “Increased insurance premiums and removing the threat of a government agency prosecuting firms for unsafe work practices should be motivation enough for immediate change,” he says. A fundamental question is whether both the firm and the individual really consider the work/life balance issue something important enough to do something about it or not.” Jessica Cucchiaro believes that this is something that needs to change but it will likely be a slow process. “Removing billable hours is going to be a very difficult thing to change. Instead, perhaps [firms should try] smaller policies and procedures that drive home to people they have responsibilities outside the workplace: working from home, childcare or eldercare assistance AND flexible leave options.” she says. 7. Commitment to supporting employees (including support staff) throughout all stages of their career – for example, post promotion and returning from parental leave. Jeremy Hyman explains that there are period of anyone’s life which are going to create emotional upheaval and life pressures get added onto work pressures. “If the employers understand that and work with their employees, that’s where the relationship gets strongly enforced. These issues are noted and remembered toward building a long lasting employment relationship,” he says. Marie Jepson said the firms should consider things such as: (a) what policies and procedure demonstrate management’s support for ongoing training and development to learn skills and optimize opportunities for personal and professional success; (b) mentoring for new roles; and (c) ongoing training as staff assume new roles and new skills are required.

Australasian Legal Business ISSUE 11.06

“Removing billable hours is going to be a very difficult thing to change. Instead, perhaps [firms should try] smaller policies and procedures that drive home to people they have responsibilities outside the workplace: working from home, childcare or eldercare assistance AND flexible leave options.” Jessica Cucchiaro, psychologist, Jardine Lloyd Thomspon

8. Commitment to facilitating ongoing professional, commercial and legal training and development with strong input from employees. Our experts agree that the importance of training cannot be underestimated. The stress and anxiety of feeling that you do not have the tools you need to do your job well can be a precipitator to extreme stress and anxiety. It is vital that a firm not only equip people with the tools necessary to perform their job but provide them a clear understanding of where they can seek additional training and development to expand their skills sets throughout their careers. Jessica Cucchiario sees employee engagement combined with training as a win-win. “On the one hand you are providing them with training and helping them grow and develop as a professionals but on the other ensuring input from the employees produces a double benefit,” she says. Not only are you providing them with the training they likely need but you are providing them

Australasian Legal Business ISSUE 11.06

employer of choice

FUNDAMENTALLY FLAWED?

with an internal locus of control so they feel they have said something and it’s been listened to and then produced.” Viewing the Criteria Through a Different Lens Both Dr. Fisher and Jessica Cucchiaro explain that in the practice of medicine, problems are addressed from a three tiered approach: primary preventative measures, secondary early intervention and treatment once problems have arisen in order to minimize collateral damage and lastly, tertiary prevention which is geared at assisting people in the process of rehabilitation, minimizing long term negative consequences of having been ill and preventing relapse. Dr. Fisher said: You have to take a step back regarding these 8 criteria and say “what do you believe in as a firm? What does the word profession mean? How do you believe the criteria should be applicable to the workplace in which human beings interact with one another – that’s the starting point.” he says. The 8 EOC criteria could thus be analyzed by the firms from this perspective – which of the three levels – primary, secondary and tertiary – are you addressing with each of these criteria? As Jeremy Hyman poignantly said, “When you approach these awards generally speaking, wherever you sit on the spectrum, we are asking “Can you do one more thing? Can you do more? We are always striving for improvement on these programs and initiatives. We don’t want to see it as “who is doing wrong” but focus more on “what positive things are you doing and what more can you do?”

Joydeep Hor, workplace law partner and Managing Principal of People & Culture Strategies says that the legal profession is one of the most archaic and traditional of all of the professions in the country. “There are so many norms and values that are unwritten but hold massive sway in terms of expectations that are still held [as to] what a lawyer does and should do and what a good lawyer and a bad lawyer looks like” he says. “It starts with the organizational structure – partnership models as opposed to incorporated legal practices and everything works backwards from there which is one of the fundamental problems.” The competition for work, the unbilled work hours and client pressures are all factors which add to this problematic model as well as a disconnect between supply and demand, he says. “These institutional challenges can lead to a lot of under-recording” he says. “Lawyers might be in the office for 70-80 hours per week but only recording 3040 hours of chargeable time.” “All of this paints a picture of a very troubled profession.” But Hor believes there are feasible alternatives to the billable hour model such as fixed fees and monthly retainers in which the practice is based, measured and judged on quality and deliverables. Dr. Robert Fisher, Head of the Department of Psychiatry and Psychological Services at St. Vincent’s Private Hospital and Clinic believes that rostering attorneys would solve the problem of individual lawyers forced to work 15-18 hour days in order to meet client deadlines. Rostering is used in the medical profession to monitor workplace hours and he believes that it would easily work within the legal profession. “There is not reason why a team cannot be built within a firm recognizing the deadline and allocating a certain number of manpower hours split within the rostered lawyers. This would produce a better product more efficiently than someone trying to work 15 hours straight.” he says. “I see no reason why the Bar Council, Law Society and Judicial Commission should not take the same basic approach to the issue of protecting the public interest while ensuring the legal practitioner remains mentally well and safe to practice.” Joydeep Hor also says that working conditions are massively regulated in Australia but it’s only in more recent times there has been an extension into psychological safety issues which is relatively new legal territory. “Working hours have historically been regulated by the awards and minimum terms and conditions with reasonable additional hours and overtime provisions. When dealing with professionals, [they are] not covered by those protections” he says. “So again another way of looking at it is why don’t we make that a core in legal profession? If partners had to pay overtime every time a lawyer stayed back and it impacted their pocket, wouldn’t that be interesting?”

acla

Australasian Legal Business ISSUE 11.06

PRIVACY REFORMS

– Should there be a right to privacy? By Tony de Govrik, Legal Affairs & Communications Director, Australian Corporate Lawyers Association, the professional body for in-house lawyers.

Tony de Govrik

rincess Margaret once famously said “I have as much privacy as a goldfish in a bowl.” These words resonate even more nowadays with so much happening in the privacy space that it is hard to keep on top of developments. In my May column this year I highlighted the changes which have been introduced by the passing of the Privacy Amendment (Enhancing Privacy protection) Act 2012 which became law last year although compliance with the new requirements will not be enforced until March next year. This month I am focussing on two other areas of privacy – mandatory data breach notifications and invasions of privacy in the digital era. In relation to the former, new laws will require businesses and government agencies to notify individuals when a data breach affecting their privacy occurs. Data breaches can be the result of hacking, poor security and sometimes carelessness. Federal Attorney-General, Mark Dreyfus, has advised that “With businesses and government agencies holding more information about Australians than ever before, it is essential that privacy is safeguarded. The new laws will alert consumers to breaches of their privacy, so that they can change passwords, improve security settings and make other changes as they see fit. Some data breaches have exposed the personal information of tens of thousands of Australians.” The Privacy Amendment (Privacy Alerts) Bill 2013, which passed the House of Representatives in the first week of June and is currently before the Senate, amends the Privacy Act 1988 to establish a framework for the mandatory notification by regulated entities of serious data breaches to the Australian Information Commissioner and to affected individuals. According to Federal Attorney-General, Mark Dreyfus, it is hoped that the new mandatory data breach notification scheme will commence next year as will the other amendments to the Privacy Act. As noted, the new laws will require notification of data breaches to the Office of the Australian Information Commissioner. To make sure that the new laws have teeth, the Information Commissioner will be able to direct agencies and business to notify individuals of data breaches. The Commissioner will be able to seek civil penalties if there is serious or repeated noncompliance with the notification requirements. The laws will apply to all entities covered by the Privacy Act 1988 including many businesses, but the A-G maintains that they will not impose an unreasonable burden on

business. The notification requirements do not apply to all data breaches, only breaches that give rise to a risk of “serious harm”. Turning now to the other issue of invasions of privacy in the digital era. American comedian and political commentator, Bill Maher, once quipped “I thought that privacy was something we were granted in the Constitution … when in fact the word privacy does not appear in the Constitution.” And so it is in this country – there is no right to privacy entrenched in the Australian Constitution. While some European jurisdictions may jealously, and even zealously, guard their right to privacy, there is no entitlement to such protection here in Australia. This shortcoming (if indeed it is one) has once again been highlighted, with the Federal A-G just last month announcing that he had asked the Australian Law Reform Commission (ALRC) to conduct an inquiry into the protection of privacy in the digital era. The inquiry will address both prevention and remedies for serious invasions of privacy. The A-G said that further work needs to be done on whether to create a right to sue for breach of privacy. Earlier consultations by the ALRC in 2008, and responses to the Government’s 2011 discussion paper, showed little consensus on how a legal right to sue for breach of privacy should be created, or whether it should be created at all. A range of issues were raised, including whether a new tort could create a more litigious culture, how it could impact on free speech and how the implied right to political communication could be balanced with an individual’s right to sue. The A-G is asking the ALRC to consider this issue in light of changing conceptions of community privacy and rapid growth in information technology capabilities. New technologies and modes of communication that provide new opportunities to connect, collaborate and create also pose new privacy challenges. The ALRC has been asked to provide its final report to the A-G by June 2014. The Government will carefully consider the findings of the ALRC before making a decision on any future reforms. While the government says it believes strongly in protecting the privacy of individuals this needs to be fairly balanced against the Australian public’s right to freedom of communication and expression. In-house counsel , while being kept busy over the next 12 months ensuring compliance with the new privacy regime, also have an important role to play in ensuring that these rights are recognised and properly protected.

fri 25th

Financial

OctOber

2013

& MEDia MarkEts

Location

Middle Harbour Yacht Club Mosman

charity rEgatta

cost of entry

yacht entry: $2,000 (plus GST) per yacht Price per Guest: $150 (plus GST) ViP spectator Guest: $300 (plus GST)

free with entry All competitors will receive: • a polo shirt • a cap • gourmet lunch pack • entry to beach after party including BBQ, complimentary drinks, auction and raffle draws.

This fun sailing event is a great way to help support worthwhile charities whilst entertaining your clients, networking or even thanking your staff!

ViP Boat A spectator boat will follow the race. This is an alternative to racing. Guests are able to view the regatta whilst enjoying a seafood buffet served with fine wines.

For entry Forms or sponsorship applications please contact: david.brocklehurst@thomsonreuters.com or call 02 9373 1984 or 0412 411 366

All class of boats are welcome. Race operated on a handicap basis. Current cup holder: Deutsche Bank Yacht name: Sputnik

visit www.asxreutersregatta.com.au

on illi m $1 han help raise more t

ity ar h rc fo

Last Year sponsors

fri 25th

Financial

OctOber

2013

& MEDia MarkEts

Location

Middle Harbour Yacht Club Mosman

charity rEgatta

cost of entry

yacht entry: $2,000 (plus GST) per yacht Price per Guest: $150 (plus GST) ViP spectator Guest: $300 (plus GST)

free with entry All competitors will receive: • a polo shirt • a cap • gourmet lunch pack • entry to beach after party including BBQ, complimentary drinks, auction and raffle draws.

This fun sailing event is a great way to help support worthwhile charities whilst entertaining your clients, networking or even thanking your staff!

ViP Boat A spectator boat will follow the race. This is an alternative to racing. Guests are able to view the regatta whilst enjoying a seafood buffet served with fine wines.

For entry Forms or sponsorship applications please contact: david.brocklehurst@thomsonreuters.com or call 02 9373 1984 or 0412 411 366

All class of boats are welcome. Race operated on a handicap basis. Current cup holder: Deutsche Bank Yacht name: Sputnik

visit www.asxreutersregatta.com.au

$1 han help raise more t

y rit a ch or f n lio mil

Last Year sponsors

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