ISSUE 8.11
Integrated Legal Holdings Applying lessons from accounting to law
In-house career path Is a private practice stint essential?
Christchurch earthquake Lessons in disaster planning
Bridget Powell, HSBC Globalisation and the GC role
Photography by Thilo Pulch
MARKET-LEADING ANALYSIS
COMPREHENSIVE DEALS COVERAGE
DEBT & EQUITY MARKET INTELLIGENCE
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ISSUE 8.11
EDITORIAL >>
Integrated Legal Holdings Applying lessons from accounting to law
In-house career path Is a private practice stint essential?
Christchurch earthquake Lessons in disaster planning
Clocking in
Bridget Powell, HSBC Globalisation and the GC role
Photography by Thilo Pulch
MARKET-LEADING ANALYSIS
COMPREHENSIVE DEALS COVERAGE
DEBT & EQUITY MARKET INTELLIGENCE
www.legalbusinessonline.com
IN THE FIRST PERSON
V
irtual servers, virtual PCs, virtual files: while it seems that everything about the modern law firm has gone virtual, one aspect has remained a stubborn constant: the physical office itself, and the need for lawyers to be there. Even as recently as ten years ago, there was a clear reason for this. Quite simply, telecommunications systems and online work tools were often not sophisticated enough to support a large remote workforce. Case management interfaces may have been in existence, but it was questionable whether these could provide the same level of facility to the home user as that available in the office. But as progressive generations of IT systems become increasingly sophisticated, remote access has become less of an obstacle. Indeed, some data centres in the best-known law firms in Australia are themselves located off-site, to save on valuable CBD office space. So if the computers can work off-site, why can’t the lawyers? Many firms, of course, do offer flexible working conditions. These, however, are more often than not the exception to the rule: a liberty afforded to those in particular circumstances – for example, maternity – where office attendance is not practical. But outside of these particular exceptions, spending one’s working week in the office remains the default position. In some segments of the profession, the phrase “work/ life balance” is still frowned upon. However, in an environment where the market for talent is likely to return to its customary tightness, work/ life balance is an important lever for firms looking to attract the best lawyers. A liberal new approach to office hours might just be the selling point that tips the scales in favour of progressive firms.
“Usually the acquirer’s lawyer gets a gig in the business going forward. If there’s [more M&A in the construction industry], that might lead to pressure on the companies to add to or review their panels” Peter Pether, Mallesons (p38)
“There is no question that a number of companies are going to be on the receiving end of class actions in the next year” Alistair Little, TressCox Lawyers (p32)
“It’s exciting to see large Australian firms that are truly going global – to see some of our panel firms really establishing themselves, for example, in China and that we can leverage from that” Bridget Powell, HSBC (p26)
In an environment where the market for talent is likely to return to its customary tightness, work/ life balance is an important lever for firms looking to attract the best lawyers 2
Australasian Legal Business ISSUE 8.11
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contents >>
contents
ALB ISSUE 8.11
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22
HSBC
Bridget Powell
50
COVER STORY 26 Global connectivity International firms are moving into Australia and Australian firms are going global – and that can only mean a better quality of service
ANALYSIS 10 In-house career paths Is a stint in private practice an essential grounding for a fruitful in-house career? 12 Christchurch earthquake Last month’s earthquake shook Christchurch law firms to the core. ALB finds out how they reacted to the shock and what they have learned about disaster planning 14 Bonds market Corporates are venturing back into the bond market – but this time there’s a retail twist
FEATURES 32 Litigation Will a spike in class actions help disputes lawyers beat the famed counter-cycle? 38 Construction Front end optimism gains momentum as credit flows slowly thaw 48 Private equity Some clarity on the latest developments in the PE space
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50 Driving IT ALB speaks with IT managers of law firms on the latest hardware and software trends
PROFILES 22 ALB-LexisNexis Managing Partner Profile series: Graeme Fowler, Integrated Legal Holdings Understanding the method behind Australia’s first law firm aggregator 26 ALB-Kensington Swan In-house Perspective: Bridget Powell, HSBC Bridget Powell speaks with ALB about the increasing globalisation of the legal services market and why the arrival of international firms on our shores is a good thing
REGULARS 6
DEALS
16 NEWS • Slater & Gordon to acquire Keddies in A$35m deal • M+K forced tback to drawing board in Great Southern case • Clutz, Freehills act on ASX-SGX merger
• Australian Business Lawyers acquired by NSW Business Chamber • Bakers, Clifford Chance strongest law firm brands • Franchise industry drives M&A, private equity • Mid-tier merger of ClarkeKann and Gray & Perkins 11 UK Report 15 US Report 19 In-house Q&A 20 Appointments 62 M&A Deals data 63 Capital Markets Deals data
COMMENTARY 18 Employment law Sparke Helmore 21 New Zealand Buddle Findlay
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australasian legal business ISSUE 8.11
NEWS | deals >>
| DEBT |
deals in brief
►► PORT OF NEWCASTLE FINANCING
| DEBT | ►► DBP DOMESTIC NOTES ISSUE A$550m Firm: Allens Arthur Robinson Lead lawyer: James Darcy Client: Commonwealth Bank of Australia, Macquarie Capital Advisers. Firm: Mallesons Lead lawyers: Nicholas Creed, Jonathan Oldham, Rowan Russell Client: DBP Finance/ DBP Group • Issue consisted of A$150m in fixedrate notes and A$400m in floatingrate notes, maturing in 2015 • Mallesons also advised on the A$125m Primary Health Care retail bond offer earlier this year, a deal in which Freehills advised the joint lead managers Deutsche Bank and Ord Minnett
| RESOURCES | ►► GOLDCORP ACQUISITION OF ANDEAN RESOURCES SHARES
A$3.2bn acquisition of Felix Resources and Macarthur Coal’s acquisition of Custom Mining and its subsidiaries • Mallesons has acted on a string of gold deals this year, including Integra Mining’s A$64m financing of its Randalls Gold Project, Macquarie Bank’s A$73m Duketon Gold project financing for Regis Resources and Catalpa Resources’ A$92m Edna May open-pit gold operations
| RESOURCES | ►► SINGAPORE SPORTS HUB INFRASTRUCTURE PPP PROJECT A$1.05bn Firm: Malleson Stephen Jacques Lead lawyer: Scott Bouvier Client: World Sport Group Firm: Norton Rose Lead lawyers: Nick Merritt, Jeff Smith, Nicky Davis Client: Singapore SportsHub Consortium
A$3.7bn Firm: Corrs Chambers Westgarth Lead lawyer: James Rozsa Client: Andean Resources Firm: Mallesons Lead lawyers: Nigel Hunt, Stephen Minns, David Perks, Richard Snowden Client: Goldcorp • Goldcorp will acquire outstanding shares in Andean Resources with each common share of Andean exchanged for 0.14 common shares of Goldcorp, or a cash payment of C$6.50. • Deal represents one of the largest M&A deals in the market • Recent resources deals by Corrs include Adani Group’s acquisition of a coal tenement in Queensland’s Galilee Basin, Yanzhou Coal’s A$3.3bn
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James Rozsa Corrs Chambers Westgarth
• Slated for completion in April 2014, the deal will see the development of a national stadium and sporting and leisure facilities Nick Merritt Norton Rose – the world’s largest sport infrastructure PPP project to date • Under the deal, WSG will provide sports consultancy and sports event procurement services for the Singapore Sports Hub, and manage all commercial rights relating to the Singapore Sports Hub for the next 25 years • First time Mallesons has advised WSG. The firm recently acted on a number of deals relating to the sports industry, including the establishment of XXXX Gold Beach Cricket and sponsorship deals for the Melbourne Cup, the V8 Supercars and the Australian Formula One Grandprix.
A$1.5bn coal tenement acquisition from Linc Energy and A$1bn Meridian and AGL Macarthur wind farm projects
| RESOURCES |
Firm: Allens Arthur Robinson Lead lawyers: Phillip Cornwell, Rob Watt Client: Banks and lenders
►► TOTAL SA STAKE ACQUISITION IN GLADSTONE LNG PROJECT
Firm: Blake Dawson Lead lawyers: David Mason, Matthew Stott, Jamie Ng Client: Newcastle Coal Infrastructure Group
Firm: Allens Arthur Robinson Lead lawyers: Gavin MacLaren, Igor Bogda Client: Total SA
Firm: Freehills Lead lawyer: Lucy McCullagh Client: BHP Billiton Finance • Deal involves the development of an infrastructure link that will enable Australian coal exports and mine expansions over several project stages. It also includes a US$1.9bn seven-year debt facilities package, a A$470m 12 year junior debt note series and a A$420m preference equity tranche • Blake Dawson has advised Newcastle Coal Infrastructure Group on stage 1 and stage 2AA of the Port of Newcastle project financing. Newcastle Coal Infrastructure has been a client of the firm since January 2007 • Allens advised three of the major Australian banks and 13 international banks involved in the deal refinancing, year junior debt note series and a A$420 million preference equity tranche
| RESOURCES |
A$770m
Firm: Freehills Lead lawyers: Tony Damian, Matt Fitzgerald, John Tivey Client: Santos Firm: Vince & Elkins Client: Santos
Tony Damian Freehills
• Total has signed an agreement to acquire a 20% interest in the proposed Santos Gladstone liquefied natural gas (LNG) project in Queensland • Total SA is the fifth-largest oil company in the world • Freehills has advised Santos on a number of matters, including most recently its hybrid note release
| FINANCE | ►► APN SENIOR AND MEZZANINE FACILITIES FOR NATIONAL STORAGE PROPERTY TRUST A$170m
►► GALAXY RESOURCES PROJECT FINANCING A$160m
Firm: Hall & Wilcox Lead lawyers: Mark Inston, Tony Macvean Client: APN Property Group
Firm: Norton Rose Lead lawyers: Ian McCubbin, Alen Pazin Client: China Development Bank, Raiffeisen Zentralbank Osterreich AG
Firm: Henry Davis York Lead lawyer: Ben Emblin Client: Gresham Funds Management lenders
• Funds will be used to support the development of a lithium carbonate processing facility in Jiangsu Province • Other recent resources deals by Norton Rose include the Adani’s
Firm: Mallesons Lead lawyer: Aaron Bourke Client: NAB Firm: DLA Phillips Fox Lead lawyer: Ron Eames Client: National Storage Australasian Legal Business ISSUE 8.11
NEWS | deals >>
• Funding for APN’s National Storage Property Trust was secured by its 37 properties around Australia. Security was provided by the sole tenant of the properties, National Storage Operations
►► YOUR MONTH AT A GLANCE Firm Allens Arthur Robinson
• Other recent property deals by Mallesons include advising HSBC on the refinancing of 1 Shelly Street and Invista Real Estate Investment Management on the closing of the estimated US$85m BOSS Partnership • Hall & Wilcox previously advised APN Property Group on its buyout of APN’s European joint venture partner UK Australasia Limited
Baker & McKenzie
Blake Dawson
| PRIVATE EQUITY | ►► VICTORIAN GOVERNMENT TRAM PURCHASE A$350m Firm: Allens Arthur Robinson Lead lawyer: Paul Kenny Client: Victorian Department of Transport Firm: Minter Ellison Lead lawyer: Jacinda de Witts Client: Yarra Trams • Purchase is part of A$807m investment by the State Government, which also includes a new tram maintenance and storage depot at Preston
Chapman Tripp Clayton Utz Corrs Chambers Westgarth Freehills
Gilbert + Tobin Hall & Wilcox Hardy Bowen Harmos Horton Lusk Henry Davis York HopgoodGanim
Jacinda de Witts Minter Ellison
• Allens has advised the Victorian Government on a number of major transport projects, including the Metropolitan Rail Franchising Project, which was completed last year • Minter Ellison previously advised Yarra Trams on the leasing of five low floor ‘Bumblebee’ trams from the French town of Mulhouse
| M&A | ►► ECOYA ACQUISITION OF TRILOGY NATURAL PRODUCTS LIMITED NZ$20m www.legalbusinessonline.com
Kensington Swan Logie-Smith Lanyon Lawson Lundell LLP Maddocks Minter Ellison Mallesons
Norton Rose Paul, Weiss, Rifkind, Wharton & Garrison LLP Steinepreis Paganin Thomsons Lawyers Vince & Elkins
Jurisdiction Aus Aus, France Aus Aus Aus Aus, Canada, US Aus Aus, Singapore Aus Aus Aus, Malaysia Aus Aus Aus Aus, NZ Aus Aus, Canada Aus Aus, France Aus Aus Aus Aus Aus, Canada, US Aus, NZ Aus Aus Aus NZ Aus, Singapore Aus, Canada, US Aus Aus Aus, Canada Aus, Sing Aus Aus Aus Aus, Sing Aus, China Aus, Canada, US Aus Aus Aus, France
Deal name Financing of Port of Newcastle Total SA stake acquisition in Gladstone LNG project Victorian Government tram purchase DBP domestic notes issue Indigenous Land Corporation acquisition of Ayers Rock Resort Mirabela Nickel capital raising Tap Oil capital raising Salta industrial portfolio acquisition Valspar Wattyl acquisition financing Indigenous Land Corporation acquisition of Ayers Rock Resort Camco–Khazanah Nasional Berhad JV Financing of Port of Newcastle New Hope Corporation bid for Northern Energy Corporation Spark Infrastructure capital raising Ecoya acquisition of Trilogy Natural Products Limited RBS Social Infrastructure acquisition by AMP Capital Investors Goldcorp acquisition Andean Resources shares Financing of Port of Newcastle Total SA stake acquisition in Gladstone LNG project Santos rate note release Sale of Lane Cove Tunnel Sale of WFML to Australian Unity APN mezzanine facilities project Mirabela Nickel capital raising Ecoya acquisition of Trilogy Natural Products Limited APN mezzanine facilities project MCG acquisition of tenement MDL162 from Stanwell New Hope Corporation bid for Northern Energy Corporation Hellaby Holdings rights issue Salta industrial portfolio acquisition Mirabela Nickel capital raising Urbex–Nigel Satterley real estate transaction Victorian Government tram purchase Goldcorp acquisition Andean Resources shares Singapore Sports Hub infrastructure PPP project DBP domestic notes issue Spark Infrastructure capital raising APN mezzanine facilities project Singapore Sports Hub infrastructure PPP project Galaxy Resources project financing Mirabela Nickel capital raising
Tap Oil capital raising Valspar Wattyl acquisition financing Total SA stake acquisition in Gladstone LNG project
A$m 3,200 770 350 550 300 172
Practice debt resources private equity debt M&A resources
82 equity n/a equity n/a finance 300 M&A 50 JV 3,200 debt 193 M&A 295 equity 15 M&A n/a M&A 3,700
resources
3,200 770 n/a 630 n/a 170 172
debt resources debt M&A M&A finance resources
15 M&A 170 finance 360 resources 193 M&A 22 equity n/a equity 172 resources 80 350 3,700 1050 550 295 170 1,050 160 172
property private equity resources resources debt equity finance private equity resources resources
82 equity n/a finance 770 resources
Does your firm’s deal information appear in this table? Please contact
alb@keymedia.com.au
61 2 8437 4700
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NEWS | deals >>
Firm: Chapman Tripp Lead lawyers: Roger Wallis, Tim Tubman Client: Ecoya Limited Firm advising: Harmos Horton Lusk Lead lawyer: Greg Horton (partner) Client: Vendors of Trilogy Natural Products Limited • Chapman Tripp also advised Ecoya on its IPO on the New Zealand stock exchange in May • Ecoya has funded the acquisition from new bank facilities, a placement to institutional and highnet worth investors and a share purchase plan
| M&A | ►► NEW HOPE CORPORATION BID FOR NORTHERN ENERGY CORPORATION A$193m Firm: Blake Dawson Lead lawyers: Bruce Macdonald, David Ryan, David McManus Client: New Hope Corporation Firm: HopgoodGanim Lead lawyer: Brian Moller Client: Northern Energy • New Hope Corporation has announced a hostile all-cash takeover offer for Northern Energy Corporation after a proposal for an agreed transaction was rejected
Brian Moller HopgoodGanim
• Northern Energy is a longstanding client of HopgoodGanim
| M&A | ►► INDIGENOUS LAND CORPORATION ACQUISITION OF AYERS ROCK RESORT
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Undiscl Firm: Gilbert + Tobin Lead lawyer: Adam Laura Client: Westpac Banking Corporation
David Ryan Blake Dawson
Firm: Allens Arthur Robinson Lead lawyers: John Gallimore, Katrina Parkyn, Aaron Davis, Tom Wilkinson Client: GPT Group • Acquisition involved purchase of 10,000 hectares of land, six hotels, the town of Yulara and Ayers Rock Airport • GPT is a longstanding client of Allens Arthur Robinson. The firm previously advised GPT on its A$1.2bn capital raising in May 2009 and more recently its sale of Homemaker City Bankstown to Baycrown Pty Limited for A$25.2m in April 2010 • Contracts were exchanged on 15 October 2010
| EQUITY | ►► SPARK INFRASTRUCTURE CAPITAL RAISING A$295M Firm: Mallesons Lead lawyer: John Sullivan Client: Spark Infrastructure
• Offer price of $1.50 represents a premium of 57.9% to the closing price of Northern Energy shares the day prior to New Hope’s formal approach
A$300m
Firm: Baker & McKenzie Lead lawyers: Ben McLaughlin, Bryan Paisley, Robert Williams Client: Indigenous Land Corporation
Firm: Blake Dawson Lead lawyers: Sarah Dulhunty, David McManus, James Fairley Client: Deutsche Bank and UBS (underwriters) • Deal involves subsequent restructure subject to security holder and court approvals • Repositioning of Spark follows a comprehensive strategic review announced in February this year and is set to be the first trust “tophat” restructure • Mallesons has acted for Spark Infrastructure since its IPO in 2005
| M&A | ►► SALE OF WFML TO AUSTRALIAN UNITY
• Acquisition is part of Westpac Banking Corporation’s strategic review of its property funds management business • Westpac Funds Management Limited (WFML) will be renamed Australian Unity Diversified Property Fund • Gilbert + Tobin recently advised WBC on the merger of the Westpac Office Trust with the Mirvac Property Trust, which resulted in the acquisition of control over the WOT asset portfolio by Mirvac
| EQUITY | ►► GIC ACQUISITION OF SALTA INDUSTRIAL PORTFOLIO Firm: Allens Arthur Robinson Lead lawyer: Nicholas Cowie Client: GIC Real Estate Firm: Logie-Smith Lanyon Client: Salta Property Group • GIC Real Estate (GIC), the real estate arm of the Government of Singapore Investment Corporation, will acquire a portfolio of industrial properties around Australia • Deal represents GIC’s first direct investment in Australian industrial property and is one of the most significant industrial transactions seen in the country this year • Recent real estate deals by Allens include advising LaSalle on its 25% investment interest in an office tower development at 163 Castlereagh Street, Sydney; ALE Property Group on its A$100m offer of unsecured notes; and Charter Hall on its A$108m agreed acquisition of the majority of Macquarie’s core real estate management platform
| RESOURCES | ►► MIRABELA NICKEL CAPITAL RAISING A$172m
Lead lawyer: Robert Pick Client: Macquarie Capital Advisers Limited and UBS AG, Australia Branch Firm: Hardy Bowen Client: Mirabela Firm: Paul, Weiss, Rifkind, Wharton & Garrison LLP Client: Mirabela Firm: Lawson Lundell LLP Client: Mirabela • Deal involves global offer consisting of conditional and unconditional tranches and an offer of shares listed on both the ASX and the TSE • Funds raised will be used to prepay Mirabela’s senior debt facility and expand its Santa Rita nickel sulphide mine in Brazil • Hardy Bowen acted as Australian counsel to Mirabela; Paul, Weiss, Rifkind, Wharton & Garrison LLP as US counsel and Lawson Lundell LLP as Canadian counsel • Allens advised joint lead managers, Macquarie Capital Advisers and UBS AG, Australia Branch. Has previously advised UBS in relation to the fully underwritten institutional placement of A$400m for Sims Metal Management
| DEBT | ►► SANTOS NOTE RELEASE Undiscl
Firm: Freehills Lead lawyerS: Patrick Lowden, Philippa Stone Client: Santos Finance • Santos Finance has issued Euro 700m subordinated fixed-to-floating rate notes with a tenure of 60 years due 2070 • Notes will be used to strengthen Santos’ balance sheet to generate funds for the multi-billion Gladstone liquefied natural gas (GLNG) project, in which Santos has 45% stake • Freehills has previously advised Santos on secondary raisings, off-market tender share buy-back and most recently its A$3bn nonrenounceable entitlement offer
Firm: Allens Arthur Robinson Australasian Legal Business ISSUE 8.11
NEWS | deals >>
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NEWS | analysis >>
ANALYSIS >>
PRACTICE IN PRIVATE Should aspiring general counsels take a private practice detour before attempting to move in-house?
A
s a new cohort of ex-private practice lawyers such as Blake Dawson’s David Williamson and Piper Alderman’s Stephanie Vass settle into new inhouse roles, it is timely to look into how many years of private practice has given these lawyers the unique skills they need to handle a GC role. Does one need private practice experience in order to become a GC? This is a topic which has been raised repeatedly during ALB’s monthly general counsel profile series and has attracted a number of divergent views. Tabcorp’s Michael Anderson, for example, suggested that four to six years of private practice experience was recommended before tackling a senior in-house role. “You need a number of years under your belt before you can be really effective in-house,” he told ALB earlier this year. “Otherwise you just don’t have the experience and breadth of knowledge to know what you don’t know.” This is not an uncommon view. Indeed, some GCs such as Ted Williams of Thiess prefer to recruit new lawyers from private practice because of the perceived advantages of a private practice training. However, Williams says that this may change in future as the training available to in-house lawyers improves: “Maybe with more of us working together a similar skill set might develop in-house but that 10
hasn’t been the case historically,” he said. Incitec Pivot GC Kerry Gleeson is another who recommends “at least five years” of private practice experience before going in-house. On the other hand, there are no shortage of examples of respected GCs such as Annette Spencer of UBS – who has led the team which has won the prize for Investment Bank In-house Team of the Year at the ALB Law Awards multiple times – who have spent all or the vast majority of their career in-house. Recently promoted HSBC GC Bridget Powell says that she
culture and it may be time for their clients to follow suit. Recently, USbased Hewlett-Packard (HP) took the rather unconventional step of offering law graduates in-house training contracts. According to HP’s global general counsel Michael Holston, the in-house team’s graduate training program will be based loosely on the training contract system offered by most US and UK law firms. Graduate trainees will take ‘seats’ or rotations through the legal team’s major departments including litigation and dispute resolution, intellectual
“I had a real interest in all the areas of the bank. I took the opportunity to take up different roles which meant that by the time I applied for the GC role, I’d had exposure to all parts of the bank, from a legal perspective" BRIDGET POWELL, HSBC was able to gain valuable experience inhouse by actively seeking different roles within the bank: “I had a real interest in all the areas of the bank. I took the opportunity to take up different roles which meant that by the time I applied for the GC role, I’d had exposure to all parts of the bank, from a legal perspective,” she recalled. Law firms have often prided themselves on a “grow your own”
property, commercial law and risk management. The four trainees who will start this year (chosen from Harvard, Northwestern and the University of California at Berkeley) will work out of the legal team’s base in Palo Alto and will have their progress closely monitored by senior lawyers to ensure that they develop a balance of both technical skills and the more commercial skills that are essential to Australasian Legal Business ISSUE 8.11
NEWS | analysis >>
the role of an in-house lawyer. The company’s decision to take law graduates into its in-house legal department is both a direct consequence of the belt-tightening that was induced by the financial crisis and the changing nature of the in-house legal role. Holston, who has presided over a comprehensive restructuring of the company’s in-house legal function, believes that not only is graduate recruitment the key to streamlining internal legal costs, but their grounding in-house means they are also more predisposed to giving commercially viable and sector-specific advice. Holston said that more mature lawyers such as those with 5-7 years PQE who come from private practice often struggle with the requisite levels of commerciality needed and “take far too long” to switch their advisory mindset from risk avoidance to risk management. However, not everyone is convinced.“[The success of models like those being used by HP] will depend on the level of complexity you have in your in-house legal department,” said Andrew Bellers, the Asia-Pacific general counsel for Aon. “I would be sceptical whether an in-house environment allows for the development of the ‘hard law’ skills. In very large legal departments this may be theoretically possible but I have my reservations as to whether this will be achieved to an acceptable level for the individuals and the companies concerned.” Not having the ‘hard skills’ that Bellers speaks of may limit the career development opportunities available to those who chose to start their legal careers in-house. Ben Cooper, vice president at CML Recruitment says although schemes such as HP’s will allow lawyers to fast-track their careers in-house, bypassing private practice training can be a long-term risk. “The disadvantage of bypassing the private practice stage of the [traditional] in-house path is that associates will not gain the thorough technical training lawyers receive in structured training contract programs,” he said. “As a lawyer you want to have thorough training and knowledge so you have something to fall back on.” ALB www.legalbusinessonline.com
uk report UK firms re-introducing intellectual ability to the graduate recruitment process Top UK law firms are introducing more ‘intellectual ability’ tests and phone interviews aimed at testing communication skills into the graduate recruitment process, to help determine whether candidates are suited to a career in law. Other measures such as psychometric testing, which is commonly used in other professions to assess graduate candidates, are also being considered. Top 10 firm Herbert Smith has introduced an on-line situational judgment test, taken as soon as the application form is filled out. It has also added a logical reasoning test to its existing verbal reasoning exam. Head of resourcing Peter Chater said the measures will improve the objectivity of the process and reduce the length of the application, so the firm can reply to candidates more quickly. Pinsent Masons has also introduced a telephone interview for candidates to establish that they are right for the firm both on and off paper. “As an increasing number of people apply for a career in law, we’ll need more ways to distinguish between applicants other than the traditional application form,” said Pinsent Masons graduate recruitment manager Edward Walker. Linklaters comes bearing gifts In a move deemed appropriate for London’s gloomy weather, UK firm Linklaters is providing shelter from
the rain of the GFC for graduates with a return to levels of merchandising not seen since before the crisis began. The firm now offers Linklaters branded umbrellas at graduate recruitment fairs, encouraging students to share them around, mimicking the bike-sharing schemes now well established around Europe. In addition, Linklaters has promised to donate GBP20,000 to be divided between three educational charities. Franchising looking possible in UK firms As firms look for ways to decrease marketing and promotional costs, law firm franchise QualitySolicitors is said to be on the verge of signing 4 of the UK’s top 100 firms and is preparing to launch 50 branches within the next two years. While Quality Solicitors chief executive Craig Holt would not reveal the names of the firms, he said: “There’s more than one top 100 firm with whom we’re in discussions presently about taking on the QualitySolicitors branding alongside their own, but I can’t say more than that, I’m afraid.” All is set to be revealed once the firms have signed on the dotted line. Part of QualitySolicitors approach to growth is to take on more commercial work. Firms that sign up to QualitySolicitors pay an annual fee and their name is listed alongside the QualitySolicitors brand as part of the law firm’s title. The fee is used for marketing and advertising purposes.
ROUNDUP
• London is preparing to welcome seven new partners from US legal giant White & Case. The firm appointed 35 new partners globally in October • Slaughter and May has set up its own outsourcing panel of three LPO providers it is willing to work with, caving to client pressure to keep fees down • Clifford Chance and Linklaters are two of only seven top firms leading the way by offering the accelerated LPC course to new recruits. Others include Slaughter and May, Norton Rose and Herbert Smith • Slaughter and May has been chosen as an advisor on the proposed takeover of Liverpool FC by the owner of the Boston Red Sox • Simmons & Simmons held its annual partner weekend on 12-13 October. Partners confirmed that a transAtlantic merger is still an option. China was also emphasised as a key part of the firm’s planned growth strategy • Herbert Smith has boosted its Singapore arm with the relocation of partner Adrian Cheng from the firm’s London office • Allen & Overy, Linklaters, Clifford Chance, Norton Rose and Herbert Smith were all among the firms chosen for Lloyd’s combined legal adviser roster
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NEWS | analysis >>
ANALYSIS >>
Christchurch earthquake puts disaster planning into play When a 7.1 magnitude earthquake shook the city of Christchurch in the early hours of September 4, law firms across the region jumped straight into action and onto the phones
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anaging partners and senior staff were quick to react to the situation, with many firms sending staff into the city on the day of the earthquake to inspect the damage and make alternative arrangements. Cavell Leitch Lawyers managing partner and IT
staff went to the firm’s office Saturday morning to assess the situation, prior to the CBD being cordoned off by police and army personnel; Duncan Cotterill CEO Janice Frederic and her IT manager were on site Saturday morning as well. Many firms immediately contacted
CHRISTCHURCH Buddle Findlay: Chapman Tripp: EARTHQUAKE: Chairman of partners Chief executive, Alastair Curruthers THE LAW FIRM Christchurch, John Buchan PERSPECTIVE
Earthquake impact: The office suffered some structural damage with a number of large cracks in the walls. There was also some damage to office furniture. The building was closed to the staff for the first week and closed to the general public for two weeks. I can’t recall anything as serious as this happening in Christchurch before. Disaster planning: We were prepared; we had a contingency plan in place. Our Christchurch office phones were diverted to the Wellington call centre as usual and staff kept in contact via mobiles and email.
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Earthquake impact: We are on the seventh floor of a 20 storey building. The building swayed significantly in the upper floors, whereas our floor was part of the flex zone. The stairwells had extensive superficial damage as stairs are designed to behave independently from the building so they don’t create a brace. Isolation plugs popped out of landings (as intended) lifting lino, and most of the plaster walls were damaged. The stairwell damage took some days to clear, as it’s critical to have uninterrupted escape routes. Our tenancy appears to have stretched by about an inch in one direction, revealing gaps in reception flooring and non-structural internal walls. Sliding doors were derailed. Emergency response: We contacted staff and clients by phone immediately and set up SMS groups. Within hours we had established the safety of our staff, convened an emergency response team, put in place a communications tree, secured alternative premises and located back-up equipment/ duplicate supplies. We flew in staff from other centres the following day to manage things on the ground, so that the Christchurch staff could focus on their own situation. Disaster planning: We had recently updated our contingency plan and ran a surprise practice scenario only a few months prior. Our plan was rolled out smoothly. We had identified specific roles for each team member and prepared emergency kits in advance, which were vital. Our system worked well, but businesses need clearer guidelines about how people should behave in a major earthquake. For example, most emergency plans presume a fire is the cause of the emergency and teach people to evacuate immediately, but in an earthquake, staying in the building until the situation is calm is likely to be the safest thing to do.
Simpson Grierson: Chief operating officer,
Matthew Taylor
Earthquake impact: We were fortunate enough not to suffer any material damage in our office, although the building housing our office remained closed for the following two weeks. All Christchurch staff were immediately contacted and a group email was sent out advising of the incident and confirming that staff were safe. A notice was placed on our website updating the status of our office and advising alternative contact details. Phones were diverted to our Wellington office. All staff remained in contact via their BlackBerries and worked remotely in the weeks afterwards. Disaster planning: The earthquake was the highest level of incident to occur under our Incident Management Continuity (IMBC) plan which outlines the actions to follow and establishes an incident management team. IMBC plans need to be continuously updated to ensure all possible incidents and variations are covered. Critical personnel need to have up-to-date copies of the plan at all times and after-hours contact list for staff. The earthquake also reminded us of the importance of having car chargers for BlackBerries and mobile phones.
Australasian Legal Business ISSUE 8.11
NEWS | analysis >>
staff via phone and/or text messages, although there were announcements on the radio asking residents to refrain from using their mobiles. Staff and clients were directed to log onto firm websites, which were being up dated regularly – sometimes hourly. Office phone lines were diverted to partner mobiles or other offices and by Monday morning many firms were up and running despite numerous obstacles. Some had staff working from home, while others sent staff to partners’ homes or rented out hotel meeting rooms. Duncan Cotterill also sent staff to nearby branch offices, which were not affected by the earthquake. Thanks to modern technology, email and client files were available to staff working remotely via internet,
“A few were nervous because of the aftershocks and being in an office building when it shook" CELIA BARKER, CAVELL LEITCH
although there were some brief power outages following some of the bigger aftershocks. Some land lines were also affected by the earthquake, which took local Telecom authorities some time to repair. Buddle Findlay organised for additional laptops to be couriered from the Wellington office to the Christchurch staff who were working remotely, while Chapman Tripp set up a fully operational alternative office in a hotel, complete with laptops, printers,
Duncan Cotterill:
Cavell Leitch Law:
Chief executive officer,
Partner,
Janice Frederic
Earthquake impact: The offices of the firm have sustained some damage, including cracks in the walls and floors, a broken computer monitor, some broken partitions and broken book shelves. Emergency response: The top priority was to contact all the staff in Christchurch. Contact lists are emailed to each of the management team’s personal email addresses each month, so after hour contacts were easily accessible. This meant that we were able to talk with all our 120 Christchurch people, check their well-being and find out whether there was anything they needed. We then posted a comprehensive message for all staff on our website homepage and set up a telephone hotline with information and my personal contact details. Myself and the information technology manager Roger Sillars were able to enter the office on the morning of the earthquake. We got the computer network up and operating, which was important because the firm’s practice management system and database were all on the head office system. The main Christchurch phone line was re-directed to the Nelson office. The office was shut to staff until the Thursday after the quake, and shut to the general public until September 20. After one of the larger aftershocks during the week after the quake we decided to move the main server to the disaster recovery site, which is in a purpose built facility, and move the disaster recovery server on-site. Having completed a major refurbishment of the offices only two months prior to the quake, the offices will again have to undergo repairs, with each floor temporarily moving out while they are done. Disaster planning: The thing about disaster planning is that you never know what it is you are planning for. However, we are grateful that we had done that preparation for an event such as this. The most important thing I have learned is that even with a plan, you need to be flexible as things change all the time. The key thing is to have good communication with your people.
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stationary and more. Staff reacted in a number of different ways to the quake. A number of Duncan Cotterill staff were eager to return to work immediately, but CEO Frederic said they had to turn them away from the office for safety reasons. Other staff were more reluctant about returning to work. “A few were nervous because of the aftershocks and being in an office building when it shook,” she said. ALB
Celia Barker Earthquake impact: Our office building is 17 stories high and just over 20 years old. Plaster cracked in the stairwells and bits dropped off, but it was otherwise unscathed. Initially the damage inside the office on all three levels appeared worse than it subsequently was. There was a huge mess with bookcases tipped over and files strewn, office doors not opening as bookcases had fallen against them. Large photocopiers/printers looked as though they had been picked up and thrown casually around. They were however in working order when restored to usual positions, although broken parts took a few days to fix. The managing partner and one of our IT staff were able to get into our building on the Saturday and checked the situation. Our servers were all fine, so we had a functioning computer network. We made plans to move into disaster recovery mode. This included inspecting our Riccarton and New Brighton offices. As these two offices had been classified safe, they became the bases for operations on the Monday morning. We placed some administration staff at Riccarton while other staff were able to work remotely from their homes, so any transactions taking place on Monday were able to continue. Early Monday afternoon (6 September) our Christchurch office was classified safe and we were able to arrange a team to commence tidying up and repairs. Access to the building was still tenuous, as any major aftershocks resulted in the building being evacuated. On the Friday after the quake access to the main office was granted, although access for clients was restricted until September 21. Some staff continued to be based at Riccarton for some days after we returned to the town office as it took a few days for the lifts to work again. Disaster planning: Over the past four years we have been building our disaster recovery plan as we have gradually had an increasing number of staff able to access our computer network remotely from their homes. As a result of the earthquake, we now have additional spare computers stored in our Riccarton branch office. We realised that we need to upgrade our survival kits and have them inspected regularly. We have now had all our bookcases well secured to walls. We have also now considered how we would cope if some key personnel had been injured, and have since checked our policies and updated them as necessary to ensure there is enough institutional knowledge held in obtainable form, and that enough people know how to obtain it. We realise now that we also need to have a plan for the possibility that some methods of communication may be unavailable for some time.
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NEWS | analysis >>
news in brief >> GRIEVE TAKES ON CHAIRMAN ROLE AT PIPER ALDERMAN Piper Alderman has appointed former managing partner Gordon Grieve as the new chairman of partners. Grieve was replaced by deputy managing partner Tony Phelps in July after four years in the top job and will now replace Tony Abbott, who is retiring from the position after 11 years in the role. Grieve will be in the role for the next two years. During Abbott’s term as chairman, Piper Alderman grew from strength to strength, Gordon Grieve Piper Alderman consolidating its Sydney presence and opening offices in Melbourne and Brisbane. Piper Alderman has entered the ranks of the 30 largest firms in Australasia for the first time this year, with 55 partners and 95 lawyers. The firm's revenues reached A$51m in FY2010, a similar result to that seen for FY2009. Despite stepping down from the position of chairman, Abbott will continue his practice at Piper Alderman in the dispute resolution, litigation, intellectual property and technology divisions. He will also continue in his role as a member of the Consultative Group to the Council of Australian Governments (COAG) National Legal Profession Reform project. BLAKE DAWSON TO EXPAND JAPAN OPERATIONS ON STRENGTH OF CAPITAL FLOWS Blake Dawson will expand its Japan team significantly in the coming months on the back of strengthening outbound M&A deals and PPP partnerships between the two countries. According to Blake Dawson M&A practice head Ian Williams, Japanese financial stalwarts such as Nomura and Bank of Tokyo – Mitsubishi are aggressively expanding their operations in Australia, in addition to a flood of acquisition deals coming to market between the two jurisdictions. “Japanese trading houses are active participants in PPP deals in Australia,” Williams told ALB. “We see continued strong participation in energy and resources. There is a lot of M&A work outbound from Japan with plenty of buying interest in coal mines and LNG from Japan to Australia. As a separate category the number of PPPs likely to be available for Japanese investors – whether it be constructors or equity arrangers or investors – is growing,” he said. The firm is set to bring an additional three lawyers to its Tokyo office in the next six months, bringing the total number of lawyers up to 10. The office was launched in April this year.
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ANALYSIS >>
It’s got to be bonds Corporates are venturing back into the bond market – but this time there’s a retail twist
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swallow does not a summer make, but the recent A$125m Primary Health Care retail bond offer and the A$550m domestic medium term notes issue by DBP Finance and the DBP group may herald a change of fortunes for lawyers advising on the debt capital markets. It’s been a lean few years for these lawyers, with even banks retreating from bond activity – but there are hopes that the tide has turned. “At one point we had no one entering the market at all in Australia – even the banks,” said Freehills partner Patrick Lowden. “They did come back, but the corporates remained sidelined. We had a couple of starts last year and earlier this year but both cases were a false Patrick Lowden dawn – nothing seemed Freehills to follow through. But probably since May it has picked up and we had a number of corporate issues get away.” The DBP and Primary Health Care issues represent two important aspects of the current bond market. The DBP issue is significant because of the nature of the issuer. “What’s particularly refreshing about the issue is that it’s an actual operating business that has been able to access the capital markets,” said Mallesons partner Nicholas Creed. “That’s positive because it indicates that the market is prepared to take proper business risk. It’s a measure of confidence in the market. There is an industrial feel to the character of the issuer that indicates that it’s not just the financials and the pure mining companies that are able to access the capital markets.” The DBP bond issue was oversubscribed, which is another positive sign. “This bodes well for the domestic bond market, and we are already seeing a number of bond deals in the making, so the pipeline looks
good - particularly in the property, resources and infrastructure sectors,” said AAR partner James Darcy. Creed said that while his team was also seeing activity in the Euro bond market, they were expecting increased interest locally: “Australian issuers are going to find that they’re an attractive proposition for investors internationally because of the strength of the Australian economy. When you compare Australia with the economies in the world, Australian issuers are just a better credit than the European and US issuers at the moment,” he said.
Retail bonds
The Primary Health Care issue is significant because it represents the first offer using ASIC’s new class order on retail bond offers, which was designed to be less onerous for issuers. The consensus is that there is a significant potential for companies to tap the retail bond market. “We can’t just rely on the institutions to provide [the necessary] debt,” said Nicholas Creed. “There’s been a report suggesting that as Australia moves more towards being an integrated international financial centre, we need to free up the retail bond market to provide another source Nicholas Creed Mallesons of funding and to get Australia in line with overseas counterparts who are more used to having what international investors would describe as a fixed interest component to their investment portfolio.” Patrick Lowden agrees there is potential, but says he would not predict a huge rush towards the retail bond market in the near future. “Both on the demand side and the supply side there’s probably more work to be done,” he observed. “It doesn’t seem to be something that there’s a huge Australasian Legal Business ISSUE 8.11
NEWS | analysis >>
► RECENT DEBT MARKET DEALS ► PRIMARY HEALTH CARE RETAIL BOND OFFER A$125M Firm: Mallesons Lead lawyers: David Eliakim, David Friedlander, Phil Harvey Client: Primary Health Care Limited Firm: Freehills Lead lawyer: Philippa Stone Client: Deutsche Bank and Ord Minnett
► DBP DOMESTIC NOTES ISSUE A$550M Firm: Allens Arthur Robinson Lead lawyer: James Darcy Client: Commonwealth Bank of Australia, Macquarie Capital Advisers. Firm: Mallesons Lead lawyers: Nicholas Creed, Jonathan Oldham, Rowan Russell Client: DBP Finance/ DBP Group
appetite for. Retail investors are more familiar with investing in shares – we don’t yet have a high level of interest, which differentiates Australia from the overseas market.” Lowden says there is also some reticence on the issuer side of the equation: “I think there’s still probably a lack of familiarity and bit of reluctance by a lot of corporates to go down the route of raising funds under a prospectus from retail investors and the more onerous standard of legal liability which applies when you raise funds under a prospectus,” he said. While the prognosis for retail bond activity may be lukewarm, lawyers are in agreement that bond issuances, in whatever form, will play an increasingly important role in the Australian market: “There are billions of dollars worth of financing deals to be done in the resources sector,” said Nicholas Creed. “The traditional bank syndicated market is not going to be able to fulfil all of that, and there’s also appetite in the international investment community to get exposure to the Australia/ Asia growth story. We will see more Australian corporates with a resources flavour coming to market rather than going straight to the international bank debt market.” ALB www.legalbusinessonline.com
us report Red becomes Red, White and Blue in Liverpool FC sale Liverpool FC’s traditional red is looking set to become Red, White and Blue this month as US firms Shearman & Sterling and Weil Gotshal & Manges advise on the sale of an English institution, Liverpool FC, to the owner of the Boston Red Sox, New England Sports Ventures (NESV). European managing partner Creighton Condon is understood to be leading the team acting for longstanding Shearman client NESV. Weil Gotshal’s managing partner for London, Mike Francies, is said to be advising the current owners of the club, Tom Hicks and George Gillett. Corporate rainmaker Nigel Boardman, from UK firm Slaughter and May, will also be advising Liverpool FC. It is also still unclear whether Allen & Overy has a role in the takeover, which requires premier league permission before the deal can progress. White & Case confirms 35 new partners world-wide, Asian focus strong US legal giant White & Case LLP has named 35 new partner appointments world-wide as the firm continues to grow and strengthen its Asian presence. The appointments follow the promotion of 33 partners in December 2009. English qualified Charlie Wilson will head the
firm’s M&A practice in Singapore, while Tokyobased bengoshi Yuji Ogiwara will be the partner for commercial litigation in its Tokyo office. HKand English-qualified lawyer Baldwin Cheng will head the banking practice in Hong Kong. Barclays Capital kicks off review of US legal advisers – sparks competition frenzy BarCap has begun its first review since the US$1.75bn Lehman acquisition and competition from both sides of the Atlantic is fierce. US firms Skadden Arps Slate Meagher & Flom and Weil Gotshal & Manges and UK firm Linklaters are heading the pack, but anything could happen as some members of its 52-strong panel of advisers could even be removed from the roster. The addition of the US arm of Lehman appears to have sparked the frenzy – with one US partner commenting: “Barclays’ investment arm has gone from a second thought on Wall Street to a power player. BarCap has always been major league in M&A, but with the addition of [the US arm of] Lehman the group boasts a top-notch balance sheet.” BarCap has also made several new hires recently in an effort to boost its global standing. The company completed its last full panel review in July 2009 and appointed a number of new advisers after the process.
ROUNDUP
• A former Dewey & LeBoeuf lead counsel has garnered support from Google and other investors for a US$5bn offshore wind energy project in the mid-Atlantic • UK firm Allen & Overy has relocated London partner Andrew Fraiser to its New York practice with a view to taking the market lead on PPP and infrastructure project advice • Winston & Strawn has poached its new Beijing chief, Jem Li, from fellow US operation Cadwalader Wickersham and Shaft • Baker Botts made two new partner hires for its London office. Global projects lawyer Hamish McArdle and litigator Alejandro Escobar were the only two promoted outside the US • Cleary Gottlieb Steen & Hamilton and Sullivan & Cromwell LLP were both selected to advise Russian internet group Mail.ru on its listing on the LSE for approximately US$5bn • White & Case LLP has launched a new Beijing seat for its trainees, expanding its secondment program from existing seats in Singapore, Hong Kong and Tokyo • Jones Day Madrid chief Luis Riesgo will be relocating to Sao Paulo to head the firm’s new Brazil office base. Partners Sanjiv Kapur and Wade Angus will follow when they are qualified to practice • Weil, Gotshal & Manges, Jones Day and other US firms confirmed that the billable hours for unwinding the now defunct Lehman Brothers broke the US$1bn barrier in October
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NEWS >>
INDUSTRY >>
Slater & Gordon to acquire Keddies in A$35m deal
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isted law firm Slater & Gordon has announced a plan to purchase personal injury firm Keddies Lawyers for A$35m. The acquisition of Keddies, which has Andrew Grech forecast full year revenue Slater & Gordon of approximately A$25m for this year, will be a major boost to Slater & Gordon’s goal of increasing its share of the NSW personal injuries litigation market. “We’ve said from when we listed that leading the consolidation of the Australian personal injuries market was a prime aim for us, with
Queensland and NSW the main targets,” Slater & Gordon managing director Andrew Grech said. “Our recent acquisition of Trilby Misso has gone a long way towards our market share goals in Queensland, and now the Keddies acquisition will give us a huge lift in NSW, in particular in Greater Western Sydney.” The addition of Keddies’ four offices in NSW and its Brisbane office give Slater & Gordon a clear dominant market share across the three eastern states of Australia, which account for around 85% of the national personal injuries litigation market. Under the proposed agreement
Keddies will be fully integrated into Slater & Gordon within as short a time frame as possible. The transaction is subject to the execution of a formal agreement and further due diligence, but is expected to be completed by mid January 2011. The A$35m offer will comprise of A$3.7m in shares, the takeup of Keddies’ approximately A$11m debt and a cash payment, some of which will be deferred for up to 30 months. While there is close to sufficient capacity in Slater & Gordon’s existing debt facility to fund the transaction, the company has negotiated an increased facility of A$95m with its current financiers Westpac. ALB VICTORIA >>
M+K forced back to drawing board in Great Southern case M
Yering station sculpture exhibition - Arnold Bloch Leibler
Law firm Arnold Bloch Leibler has again sponsored the annual Yering Station Sculpture ►► SSS
Exhibition and Awards. This is the 10th anniversary of the exhibition and awards, which aim to promote contemporary Australian sculpture, and the sixth year Arnold Bloch Leibler has been involved. As part of its sponsorship the firm hosts the finalists’ works in the foyer of its Melbourne office throughout October and this year also invited back past finalists to participate in a one-off exhibition. Pictured here at the exhibition is finalist Aliey Ball, with her sculpture titled Diato.
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acpherson + Kelley’s class action against Bendigo and Adelaide Bank has been thrown out of the Supreme Court of Victoria. The multimillion dollar class action brought against the two banks sought to recoup the losses of investors in the failed Great Southern Plantations managed investment schemes. While Justice Croft has left the door open for Macpherson + Kelley to pursue a new argument, the dismissal has delivered a damaging blow to the case. Macpherson + Kelley has spent the past 15 months preparing its claim. Based on figures released by the Australian Securities & Investments Commission (ASIC), M+K calculates that 25,000 investors poured money into Great Southern’s projects between 2005 and 2009. The firm is also in the early stages of preparing a class action against the Willmott Forests Group on behalf of investors who lost millions of dollars in its tree plantation schemes. ALB Australasian Legal Business ISSUE 8.11
NEWS >>
AUSTRALASIA >>
Clutz and Freehills act on ASX-SGX merger
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layton Utz and Freehills are acting on behalf of the Singapore Exchange (SGX) and Australian Securities Exchange (ASX) on the parties’ A$8.4bn merger implementation agreement. Clayton Utz, led by corporate partners Karen Evans-Cullen and Rod Halstead, are advising SGX on the merger, with additional advice from Allen & Gledhill LLP. The ASX is being advised by Freehills, led by partner Fiona Gardiner-Hill, with additional input from Stanford Law in Singapore.
The combination of the two exchanges will mean the combined entity will have more than 2,700 listed companies from more than 20 countries, and will create the world’s second-largest cluster of companies in the resource sector. The combined exchange group, ASXSGX Limited1, will have revenues of approximately US$1.1bn and earnings before interest and income tax of approximately US$700m, based on the audited financial statements of ASX and SGX, each for the financial year ended 30 June 2010. The merger transaction will involve ASX shareholders receiving A$22.00 (approximately S$28.04) in cash and 3.473 new SGX shares. The aggregate value of the share consideration is S$5.8bn (approximately A$4.6bn). The value of the merger based on the aggregate cash and shares is valued at approximately A$8.4bn (approximately S$10.8 billion). Subject to the progress of the regulatory approval needed in both jurisdictions, it is anticipated that the relevant shareholders and court meetings will take place in the first half of 2011, with the proposed combination expected to be implemented during the second quarter of 2011. ALB
INDUSTRY >>
Australian Business Lawyers acquired by NSW Business Chamber
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ustralian Business Lawyers (ABL) has been acquired by a wholly owned subsidiary of the NSW Business Chamber. Under the new arrangement, ABL will be known as Australian Business Lawyers and Consultants. The chamber and ABL have had a longstanding relationship and it is expected the purchase will lead to numerous benefits for both parties. “The advantages that will result from the acquisition are that a closer working relationship will enable each organisation to better achieve their goals,” said Tim Capelin, managing partner of ABL. “The acquisition will bring with it an increase of available capital to the firm which will be used to www.legalbusinessonline.com
improve service delivery to clients and members. There will also be coordinated delivery of related services provided by Australian Business Lawyers and the Chamber,” said Capelin. Capelin and John Stanton will continue as senior practitioners after the acquisition and continue to manage the practice during the transition. ABL recently lost one of its most senior lawyers, workplace safety expert Siobhan Flores-Walsh, who joined Norton Rose Australia as special counsel. Flores-Walsh has more than 20 years experience in the OH&S field, and has previously worked for top-tier law firms, Shell Oil and the ABC, where she was the industrial relations manager, television. ALB
news in brief >> NZ: QUEENS COUNSEL TITLE SET TO RETURN The New Zealand government is moving to reintroduce the title of Queens Counsel (QC), following its abolition under the previous government. A bill to reinstate the title of QC has passed its first reading in parliament. The QC title had previously been replaced by Senior Counsel (SC) in line with the elimination of Privy Council appeals from New Zealand. However, Russell McVeagh litigation partner Hamish McIntosh said there had been some confusion in recent years as a result of the QC abolishment: “The title of Senior Council has two meanings, it could be practitioner of Queens Council status or a practitioner who is senior and has many years of experience,” said McIntosh. “The difference is the level of recognition each title deserves – the public, profession and clients know what a QC is, but few will know what an SC is,” he said, adding that in some cases corporate clients require QCs to act for them. ALLENS TO RAKE IN A$4.8M ON QR IPO The QR National initial public offer will see Allens Arthur Robinson walk away with a healthy pay check of A$4.8m. Allens was among the seven advisors involved in the IPO who will share in more than A$34m worth of fees. Minter Ellison and Mallesons Stephen Jaques provided legal advice to QR management and board, receiving A$1m and A$750,000 respectively. Allens partners Erin Feros and John Greig were the primary legal advisers to the Queensland Government while Minters partners Bruce Cowley and Khory McCormick were leading the team for QR. The joint lead managers (JLMs) including Credit Suisse, Goldman Sachs, Merrill Lynch, RBS and UBS, will each get a management fee of A$3m. KPMG Transaction Services will receive A$5.3m, while its auditing arm is getting a further A$7.5m for three years of auditing work and another A$1.4m for work on the offer. Advising the five JLMs was Clayton Utz, led by corporate partners Stuart Byrne (Sydney) and Tim Reid (Brisbane). The Queensland state government is looking to raise between A$3.7bn and A$5bn through the sale of QR National, making this Australia’s biggest IPO in a decade. Between 1.464 -1.684 bn shares are expected to be sold for between A$2.50 and A$3 per share. QR National is expected to enter the ranks of Australia’s top 50 companies when it lists on November 22, and will be the largest new Australian stock market listing since Telstra Corporation was privatised in stages from 1997.
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NEWS >>
UPDATE >>
GLOBAL >>
Survey: Baker & McKenzie, Clifford
Employment Law Full Bench upholds ‘not guilty’ finding for CEO
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ecently, the Full Bench of the NSW Industrial Court has upheld a WorkCover appeal against a ‘not guilty’ finding for a CEO. The decision provides further clarity on the interpretation of the term ‘director’ under the NSW Occupational Health and Safety Act 2000 (OHS Act). The first-instance decision provides guidance on what constitutes ‘influence’ for the purposes of establishing a defence under the OHS Act.
Background
In Inspector James v Ryan, Mr Ryan, CEO of Dekorform Pty Ltd was charged under the OHS Act following a fatal incident in 2006. It was alleged Mr Ryan was a director. At first instance, the court found Dekorform’s appointment of Ryan as director was invalid as it was not done in accordance with its constitution. There was also no evidence that Ryan had performed any act or engaged in any conduct consistent with the definition of director under the Corporations Act 2001 (Cth). His involvement with Dekorform, where it could be said he acted ‘in the position‘ of director, was limited to signing three documents.
Who is a director for the purposes of the OHS Act?
WorkCover contended that ‘director’ was not confined to a person appointed to this position in line with a company’s constitution, but extended to include the definition of director under the Corporations Act. The court disagreed, stating the ordinary meaning of the term should be applied.
Was a defence available to Ryan?
The court provided reasons why the defence of ‘not in a position to influence’ would be available to Ryan, stating: • he had not demonstrated any involvement in the management/ affairs of the business except for signing three forms; • he had no active role in its OH&S activities nor in connection with implementation of the OH&S strategies and programs of the business; and • nothing happened that could reasonably have alerted him to any state of affairs that called for any reaction or action on his part.
The appeal
On appeal, WorkCover contended the term ‘director’, for the purposes of the OH&S Act, extended to persons defined in the Corporations Act, including de facto directors. The Full Bench found the term ‘director’ embraced the concept of ‘de facto director’ and the court had erred in finding it did not include the extended meaning of director in the Corporations Act. However, the appeal was dismissed as the Full Bench agreed that the appointment of Ryan as a director of Dekorform was invalid. He was not a director within the meaning of the term under the Corporations Act and there was no evidence the other directors were accustomed to act in accordance with his instructions or wishes, nor did he issue any instructions or wishes to the other directors in their capacity as directors about any Dekorform matter.
For further information, please contact Carlie Holt, Special Counsel carlie.holt@sparke.com.au +61 2 9373 1412
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Carlie Holt
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aker & McKenzie has been named the strongest law firm brand in the Acritus worldwide ‘sharplegal Global Elite Brand Index 2010’. The survey was based on feedback from more than 1,000 executives worldwide, including general counsel, chief legal officers, CEOs and COOs at 604 companies with revenues of US$1bn or more and operating in all major industry sectors and regions. Respondents were asked to evaluate law firms based on top-of-mind name awareness, overall favourability, and likelihood to be considered for multijurisdictional deals, as well as multi-jurisdictional litigation. Other firms to be listed in the index in order of brand awareness were Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters, Allen & Overy, Jones Day, DLA Piper, Hogan Lovells, Skadden and White & Case. According to Acritas, the top six global law firm brands achieved almost double the revenue growth since 2007 of their global 100 peers, while the top 15 law firm brands achieved 50% higher revenue growth since 2007 than their global 100 peers. One of the key aspects of those firms to make the index was a commitment to a global network strategy. Baker & McKenzie has 68 offices in 40 countries and critical mass in both emerging and developed markets. The firm serves more than half the world’s largest public companies, based on the M&A >>
Franchise industry drives M&A, private equity
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he Australian franchising sector is set to drive more M&A activity and PE deals, according to a leading franchise lawyer. Partner at Norton Rose, and national head of the Australian retail trade & distribution group, Stephen Giles, has a number of deals on the go, involving both multiple franchises and PE firms. “Even though the broader capital market is saying it’s quiet, within the franchising sector it’s very lively,” said Giles. “The maturity of the sector and the fact that there have been a number of successful PE firms involved in capital raising deals has further validated the market.” Franchisors are using private equity to assist with expansion and development, and firms are developing an appreciation and understanding of the franchise sector, which can be highly lucrative. “Franchises were previously seen as an alternative to capital raising, but in recent years it has been a challenge to find new franchisees, because of low unemployment, a drop in migration and a tighter credit market,” said Giles. With more than 1,100 franchises listed in Australia, most with less than 25 franchisees, it’s not surprising that some consolidation is also occurring in the market. A number of mergers and acquisitions, such as the acquisition of Mobil filling stations by 7- eleven, have occurred in the past year, and Giles said it was likely to continue as companies look for better economies of scale. ALB Australasian Legal Business ISSUE 8.11
NEWS >>
Chance ‘strongest law firm brands’ ►► THE TOP 15 GLOBAL ELITE BRAND LEADERS ACCORDING TO ACRITUS Rank
Firm
1 2 3 4 5 6 7 8 9 10 11 12 13 =14 =14
Baker & McKenzie Clifford Chance Freshfields Bruckhaus Deringer Linklaters Allen & Overy Jones Day DLA Piper Hogan Lovells Skadden White & Case Herbert Smith Sidley Austin LLP Slaughter and May Cleary Gottlieb Norton Rose
Brand Index 100 86.9 67.3 66.5 56.3 52.3 39.7 37.8 37.7 26.3 26.2 26.1 23.8 22.2 22.2
Forbes Global 2000, including nearly all of the 100 largest and more than 75% of the top 500, according to Baker & McKenzie chairman John Conroy. ALB INDUSTRY >>
Mid-tier merger: ClarkeKann and Gray & Perkins join forces
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larkeKann Lawyers and Sydney-based Gray & Perkins have merged to create a single firm named ClarkeKann. Managing partner at ClarkeKann John Toigo said a merger made sense and was instigated by the partners at each of the firms. “We believe there are many synergies between the two firms. We were John Tiogo looking to bolster our property practice in Clarke Kann Sydney and Gray & Perkins has that capability. They also have a dedicated banking & finance practice, which we don’t,” he said. “We see that the market for legal services has changed since the GFC. We think that clients no longer assume they need the big end of town, and the new firm will fill the gap,” he added. The new combined firm will feature 15 partners, five from Gray & Perkins and 10 from ClarkeKann. Toigo will remain managing partner of the new firm, and chairman of ClarkeKann, Patrick Gallagher will also maintain his role. Gray & Perkins senior partner Miles Anderson will become a board member, while fellow partner John Gray will assume a senior management role. Toigo said that the ClarkeKann Sydney staff would move into the Gray & Perkins offices later this month. He added that no redundancies were expected as a result of the merger, and that he hoped instead there would be additions to staff numbers on the team. ALB
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IN-HOUSE Q&A integrity legal
EMILY MADDER General Counsel
Pacific Cluster Siemens Ltd
have in-house lawyers become an increasingly 1Why indispensable part of an organisation? The last 15 years has seen a significantly increased level of complexity and customisation in the contracts required to be signed for projects. Legal involvement is needed far more frequently. In-house lawyers have unique knowledge of the company’s own risk appetite, its products and services, and specialise in the legal issues facing the company on a day-to-day basis. And yes, in-house lawyers are cost-effective.
recent times, the role of the general counsel has 2Indiversified into a multi-faceted role, (where the GC can wear the ‘hat’ of lawyer, legal manager, compliance manager, and company secretary). Do you believe this has increased your risk profile? I do not agree with the ongoing debate regarding “independence” and legal professional privilege. As I see it, the general counsel is required by the company and the law to give independent legal advice, uninfluenced by business development pressures facing law firms. The company secretary is required to advise the board of their legal obligations under the Corporations Law, the compliance manager is required to advise executives and the business on obligations under other laws and regulations. These roles should not increase the general counsel’s risk profile. Clients are entitled to receive business focussed, practical legal advice from both in-house and external lawyers, but this does not require professional standards to be compromised.
do you consider to be the main challenges you 3What and your team will face in 2010/2011? It is an exciting time for our business as our offerings are positioned to provide solutions to the mega-trends of climate change, demographic change, urbanisation and globalisation. This involves understanding new technology and the associated risk profile.
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NEWS >>
APPOINTMENTS ►► LATERAL HIRES Name
Practice areas
Organisation coming from
Organisation going to
Roland Burt
Building and construction Insurance and litigation Commercial property
Mills Oakley Zervos Lawyers Freehills
Macpherson+Kelley Lander & Rogers Lander & Rogers
Siobhan FloresWalsh
OH&S
Norton Rose Australia
Frank Hurley Alex Moriarty Emma PelkaCaven Amanda Seaton Vicki Sharp
Employee relations Litigation Insurance and litigation
Australian Business Lawyers Freehills Tucker & Cowen Baker & McKenzie
Energy & resources
CMS Cameron McKenna
JWS
Property, development & construction Energy and resources Industrial relations
Herbert Geer
Middletons
Allens Freehills
Jones Day Mallesons
Ben Dowling Rachel FelixDavies
Tony Wassaf Philip Willox
Wrays TressCox Lawyers Lander & Rogers
►► PROMOTIONS Firm
Name
Area
Lynch Meyer
Cathy Mayfield Justin Thornton Nevine Youssef James Caird Gerald Lanning
Litigation Commercial Family law Banking and finance Government and infrastructure
Marsdens Law Group Simpson Grierson Simpson Grierson Freehills
Wrays
New CEO for Wrays Frank Hurley has been appointed chief executive officer at Wrays, Perth. Hurley joins the intellectual property firm from Freehills where he was practice group head in employee relations for four years. Hurley has previously Frank Hurley lectured in management at the University of Western Australia and Murdoch University. He has also held positions as director of research and development at Murdoch University and as a management consultant. Allens
Jones Day
Jones Day lures AAR’s Wassaf Allens Arthur Robinson resource partner, Tony Wassaf, has joined the Sydney office of Jones Day. Wassaf has more than 25 years’ experience in the resources sector, including experience in major Australian mining, pipeline and energy projects. Wassaf has been a director of the Resources and Energy Law Association (AMPLA) for the past Tony Wassaf 10 years. He is also a member
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of the section on energy, environment, natural resources and infrastructure law of the International Bar Association and an officer of the council of that section. Tucker & Cowen
TressCox Lawyers
New partner for TressCox TressCox Lawyers has added litigation lawyer Alex Moriarty to the partnership. Moriarty has joined the Brisbane office from Tucker & Cowen, and has previously worked at Fisher & Jeffries in Adelaide, Clayton Utz in Sydney and the Commonwealth Attorney-General’s Department in Canberra. CMS Cameron McKenna
JWS
JWS adds new partner Johnson Winter & Slattery has boosted its energy and resources expertise. In Adelaide, energy & resources specialist Amanda Seaton has been made partner after returning from London, where she worked in the energy, projects and construction group of CMS Cameron McKenna. Herbert Geer
Middletons
Middletons lures property expert Middletons has poached Herbert Geer property, development & construction partner Vicki Sharp. Sharp advises major corporates and owners, tenants
and landlords, assisting them to develop and manage their property portfolios as well as emerging and established property developers. Sharp joined Herbert Geer in 2006 from Clayton Utz, where she was also a partner. Associate to partner
Simpson Grierson promotes from within Simpson Grierson’s commercial division has been bolstered with the addition of two new partners from within the ranks – banking and finance specialist James Caird and local government and infrastructure specialist Gerald Lanning. James Caird Caird specialises in insolvency, restructuring, and banking and finance litigation and acts for financial institutions, liquidators, receivers, directors and creditors. Lanning advises on all aspects of resource management and local government law, with particular expertise in the transport and infrastructure sectors. Freehills
Mallesons
Perth Mallesons poaches from Freehills Freehills partner and Perth practice leader in the employee relations, Philip Willox, has left the company to join Mallesons Stephen Jaques from December as a partner. Willox has significant experience in industrial relations and occupational health and safety particularly in the energy and resources sector. Willox’s appointment is effective from December 2010. Lawyer to partner
New partners at Marsdens Law Sydney-based Marsdens Law Group has added two partners to the partnership. Nevine Youssef has been promoted to a partner in the family law department, while Justin Thornton has been promoted to partner in the commercial department. Youssef has been with Marsden’s since 1996 and is an accredited family law specialist in addition to having a Bachelor of Science and a Bachelor of Education for the University of New South Wales majoring in microbiology. Thornton has been with Marsdens for over 10 years and is head of the commercial and corporate areas of the commercial property department. Mills Oakley
M+K
New principal at M+K Roland Burt has joined commercial law firm Macpherson+Kelley (M+K) as principal of the building and construction practice. Burt joins the M+K Melbourne office from Mills Oakley Melbourne. Australasian Legal Business ISSUE 8.11
Firm Profile
Buddle Findlay
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NZ COMMENTARY
Private equity LBOs: “that was then – this is now”
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he number and magnitude of New Zealand private equity transactions reached their height in 2006 and 2007 with a series of large scale leveraged buyouts, including the acquisition of Yellow Pages by Unitas Capital and Ontario Teachers Pension Plan (NZ$2.2b) and the acquisition of Independent Liquor by Pacific Equity Partners and Unitas Capital (NZ$1.3b). Since then, with the credit crunch affecting the availability of debt, New Zealand has not seen any upper end leveraged buyouts until early this year when Shell New Zealand’s downstream assets were sold to a consortium of Infratil and the New Zealand Superannuation Fund for NZ$700m. The Shell deal, the largest of its kind this year, is rumoured to have also attracted interest from a number of offshore private equity funds. 2010 is expected to finish with a flourish with reports that Pacific Equity Partners has indicated a desire to sell Tegel Foods and talk of other deals to be announced before the year end. While we are seeing a revival in activity during 2010 what is of interest is how the terms have changed and how they are being negotiated between the parties. The acquisition multiples have obviously come down from a phenomenal range of over 10 times EBITDA pre credit crunch in some instances to anything as low as around 3.5 times EBITDA depending on the particular industry. Exclusivity, whether formalised or not, is a common occurrence. Vendors are more likely to bypass a traditional auction process and go to the most logical buyer or with whom they have developed a relationship and deal with them first. Pre credit crunch, exclusivity was resisted as vendors lived in hope (which was often fulfilled) that an offshore sponsor might fly in and gazump other bidders. Such opportunities are a thing of the past as offshore sponsors have retrenched to deal with their existing portfolios and are wanting the security of a proprietary deal before they jump on the plane to New Zealand.
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Pre credit crunch, break fees were sometimes being demanded by the buyer so that the vendor could not walk away without incurring broken deal costs. Now we are seeing the introduction of reverse break fees which allows the buyer to walk away for a negotiated cost. Other buyer protections like financing conditions, market (or general) material adverse change clauses (MACs) are hard to come by. Another dimension is the number of receivership sales. Post credit crunch vendors may commonly be a receiver appointed by lenders which can make for some interesting deal dynamics in terms of access to due diligence materials and warranty protection. Receivers or liquidators by their nature will be reluctant to give any warranty protection. As always, the buyer needs to carefully consider who is standing behind the warranties. The same warranty issue has arisen with the first turn of the private equity cycle in New Zealand and the rise of secondary transactions with private equity sponsors as vendors. Some deals have seen the introduction of warranty and indemnity insurance as a way of mitigating the reluctance to give warranties and the associated risk. With liquidity drying up in the LBO market during the credit crunch, the subsequent tightening up of credit criteria has seen some substantial changes to leveraged loan characteristics. Pre credit crunch, senior lenders were willing to offer large underwrites and lend up to around 70% of enterprise values. We are now seeing only small underwrites, if any, and “clubbed” deals with senior lenders sometimes syndicating together. Senior lending is down to around 50% of enterprise values with total acceptable debt levels at between 50% - 70%. As expected, post credit crunch, capital expenditure facilities have much more stringent use criteria and acquisition facilities are much smaller if available at all. On the fees and margins side, upfront fees and senior debt margins are up on average 200 basis points.
Bidders are also looking to negotiate exclusivity arrangements, locking up their lenders for a certain period while they negotiate and close the deal. As the market changes, with more activity forecast, it will be interesting to see how financiers respond to increased competition and the (expected) pressure from sponsors for improved terms. Terms such as “yank the bank”, which allowed a borrower to remove a lender if it dissents on a decision other lenders had approved, or “snooze you lose”, which deemed consent as having been given by a lender who failed to respond within an agreed time, were popular during the height of the boom. Borrower friendly terms such as these are not expected to make a return any time soon. It is an interesting time for all involved in the private equity LBO market. Expectation is that with more activity, acquisition multiples and financing fees should begin to adjust to pre 2006 levels. What other deal terms return from pre credit crunch days and what post credit crunch terms survive remains to be seen.
This article was written by Grant Dunn and Benjamin Sutton. Grant is a corporate partner and Benjamin is a senior solicitor in the Auckland office of Buddle Findlay. Grant can be contacted by phone: +64 9 363 0636 or e-mail: grant.dunn@buddlefindlay.com Grant Dunn, Buddle Findlay
Benjamin Sutton, Buddle Findlay
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PROFILE | managing partner >>
ALB 2010 MANAGING PARTNER SERIES
Graeme Fowler, Integrated Legal Holdings
Integrated fortunes In 2009, Integrated Legal Holdings was the fastest growing law firm in Australasia. But managing director Graeme Fowler has even higher aspirations beyond that – he’s convinced that this mid-market specialist firm will eventually take on the top commercial firms in scale and revenue. He speaks with ALB’s Renu Prasad
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raditional law firms refer to it simply as “the aggregator”. They call it a loose collective of individual law firms united by a website and an ASX listing. A parent company which owns, but does not necessarily operate, law firms. So how exactly does one describe Integrated Legal Holdings? Is it a law firm or a holding company? Managing director Graeme Fowler has his views, but ultimately he’s not sure the question is worth pondering. “We call it a law firm but I’m not sure it matters,” he says. “What we do is provide legal services to clients. To me that classifies us as a law firm, but it doesn’t really bother us. It seems to bother other people, but I’m not sure why. There are other examples of national firms that are more like federations than partnerships – is this any different?” Fowler is an accountant by trade, a background which he says is a good grounding for running a business. “Accounting is a good discipline for running anything,” he says. “In a lot of
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►► QUICK FACTS: INTEGRATED LEGAL HOLDINGS Partners Lawyers Revenues FY2010 Revenue growth FY2010 Fee earner growth FY2010
17 55 A$24M 41% 19%
ways it’s better that I’m not a lawyer. It means I can bring something different and I’m not caught up in the old ideas of how to run law businesses.”
The WHK inspiration
Accounting runs in the veins of ILH in more ways than one. The firm’s structure was inspired in part by accounting aggregator WHK, which is currently the fifth-largest accounting firm in Australia. It is easy to see the parallels between ILH and WHK – both are comprised of mid-market specialist member firms, with a cultural emphasis on allowing each
firm to operate autonomously. In both models there is a conspicuous lack of centralised control and no attempt to force a “top-down” transition on issues such as branding. WHK member firms did eventually choose to adopt the WHK brand, but of their own volition. It’s a similar approach which will be taken at ILH. “Now that’s important,” says Fowler. “The firms are in a better decision to decide whether the brand is going to add value to their business. Absolutely we might end up under one brand. But if it does happen, it’s not going to be a top-down decision.” But in the short term, Fowler cannot see the benefit of applying the ILH brand across member firms. “What we’ve done here is gone out and bought these businesses,” he says. “They’re strong businesses and they have their own positioning in the market – why would we bugger that up by changing the brand?” Fowler says that WHK has distinguished itself by being one of the few professional service firm aggregators to have been successful. Australasian Legal Business ISSUE 8.11
Photography by Thilo Pulch
PROFILE | managing partner >>
www.legalbusinessonline.com
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PROFILE | managing partner >>
“As a listed company, we have a need to grow and as a result each of the businesses have pretty significant growth targets on an annual basis” Graeme Fowler
Integrated Legal Holdings
“If you look at accounting aggregators in US and England, most – if not all – of them have been spectacularly unsuccessful: WHK is probably the only successful one in the world,” he says. Fowler has spent considerable time studying aggregator models at home and abroad and has identified three common mistakes made by aggregators. “One, they paid too much for the businesses upfront,” he comments. “Two, remuneration was not on a performance basis. And most importantly, they centralised everything rather than leaving the businesses in the hands of those that were running it well.” It is a lesson he has taken to heart at ILH. “We do not centralise anything, we do not take management control of those businesses,” he says. “We buy businesses that are well managed and expect them to continue running themselves.”
Growth strategy
ILH achieved 41% revenue growth for FY2010, in a year where Fowler says there were no acquisitions. “Last year’s growth was all organic,” he says. “We did a fair bit of acquisition in 2009 so we wanted to consolidate that.” The ultimate plan is for the group to expand to about 15 to 20 member firms, which could conceivably see the group crossing the A$400m revenue mark and entering into the kind of turnover figures usually associated with large corporate law firms. But unlike the large firms, ILH is dealing with a space where there is a notable absence of major competition. M+K Lawyers is perhaps the only other major mover in this space, while fellow listed firm Slater & Gordon is better known for its personal injury practice. Fowler estimates that there are about 250 potential member firms which might fit the ILH criteria and he is confident that there will be no difficulty finding the right candidates. “The numbers indicate that it’s all very possible – it’s just a question of execution,” he says. No other firms have followed Slater & Gordon and ILH down the listing 24
path, something partially explained by the GFC, but it is likely that firms will be watching the progress of ILH very carefully – with a view to canvassing their own options. Also watching the firm’s progress will be the more conservative elements of the profession who bitterly opposed the idea of a law firm float. “I don’t think we’ve proven the critics wrong yet,” says Fowler, “Things are going well but there’s a lot more for us to do and we are confident that we are going to be very successful.”
Target firms
Fowler says that medium-sized firms are extremely constrained in their growth options.“It’s very hard for medium-sized law firms to grow,” he explains. “It’s hard for them to get capital. Generally these partners will end up with mortgages over their own properties, and all sorts of financial risks that they’ve absorbed – so where do they get more capital from? It’s very hard for them to continue to grow – and that includes by acquisition. What we provide is an opportunity for them to realise their growth aspirations. We provide the capital to support that growth.” ILH is targeting firms in the SME and private client space with A$3mA$8m turnover and a broad commercial offering. “Usually these firms will also have something else – for example, in the case of Argyle they had a large financial services business. Then we add other services such as tax litigation, tax advice,” he says. “Many law firms around this size have traditionally been very transactionfocussed. We are trying to get more of a relationship focus with our client base.” The key, however, is cultural fit and a commitment to above-market growth. “If people just want to come in and coast along, it’s the wrong environment,” says Fowler. “As a listed company, we have a need to grow – and as a result each of the businesses have pretty significant growth targets on an annual basis –over 15% – and anyone that comes in needs to be aligned to that.” ALB Australasian Legal Business ISSUE 8.11
Photography by Thilo Pulch
Photography by Thilo Pulch
FEATURE | interview >>
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Australasian Legal Business ISSUE 8.11
FEATURE | interview >>
IN-HOUSE PERSPECTIVE
Bridget Powell, HSBC
Global connectivity International firms are moving into Australia and Australian firms are going global – and that can only mean a better quality of service for clients, as HSBC general counsel Bridget Powell explains
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hen ALB last paid a visit to the in-house legal team at HSBC in 2008, general counsel Amanda Parshall spoke of a diverse legal career which had led her from London to Paris to Hong Kong and Australia. Parshall can now add Latin America to that list – she has since moved on to a global markets advisory role with HSBC in Mexico. Replacing her in the hot seat at HSBC Australia is Bridget Powell, who has been at HSBC for several years, most recently as deputy general counsel, and still keeps in touch with Parshall. “That’s one of the attractions of working at HSBC – the global opportunities are real,” she observes. “It’s not just the usual hubs – we are a global organisation and those opportunities do exist.”
GFC and beyond
The last two years for Powell were focussed on navigating the GFC rather than on the big transactions. “It was an interesting time for us as most of the lawyers in my team were used to the boom times, so they had to adjust to a new environment,” she recalls. www.legalbusinessonline.com
“There was a decline in ‘business as usual’ work as a result of the crisis, but this gave rise to opportunities in other areas. For example, one of our senior lawyers was seconded to our credit risk team, a reflection of where the skills were needed and of where the work was,” she says. Powell says her team is now very much back in “growth mode” and the flow of new projects has recommenced. Her team, which includes the legal team, compliance team and the corporate secretariat, has 25 people and she is looking to recruit more. “This year will definitely be busier for us,” she says. “This is a product of both HSBC expanding in Australia and where Australia sits as a nation in an emerging markets region. The opportunities for Australia are driving expansion across the country.” Perhaps the best example of this sentiment is the retail banking business, where HSBC has recently opened two new branches – the bank’s first new Australian branches since 2001, and more branches are planned. The bank is expecting organic growth in other segments too. “In our corporate side, we are expecting more
transaction work and likewise in our debt capital markets area,” says Powell. Lawyers in Powell’s team report centrally, as distinct from other models where lawyers are scattered around the various business units. “This [model] helps us develop a holistic and strategic view of what’s going on,” says Powell. “It also allows lawyers to take up opportunities in other practice areas that perhaps they wouldn’t get if there were “silos” in the legal function. For example, one of our senior retail lawyers has moved into a corporate transactional role. He’d had some exposure to that area, he expressed an interest, an opportunity came up. And that’s the advantage – you’re exposed to that variety and you have those opportunities.”
External advisors
Powell uses a panel that is comprised of national firms and supported by statebased smaller firms. While she agrees that a typical division of work would see the national firms doing more of the sophisticated work, she is open to new ideas. “It’s not an automatic decision – we will very consciously look at the work and where the best fit is. 27
FEATURE | interview >>
“This year will definitely be busier for us. This is a product of both HSBC expanding in Australia and where Australia sits as a nation in an emerging markets region. The opportunities for Australia are driving expansion across the country” Bridget Powell
HSBC
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That’s not a huge shift [in policy] – the traditional model does still exist, but I don’t think it’s as entrenched as it has been previously. We have an open mind as to giving any external brief to any of our panel firms,” she says. HSBC also has a global panel and Powell expresses enthusiasm for the fact that global players such as Allen & Overy and Norton Rose have entered the Australian market. “It can give the bank global connectivity,” she explains. “One of the challenges of working for an international bank is that there’s that added layer of complexity in terms of offshore laws applying to the bank here in Australia and having the firms that are truly global firms here means we can tap into their expertise. For example, if there’s something going on in the UK that is potentially going to impact us down the road in Australia, you see that benefit where you’ve got the firms tapped into the UK. And it’s not just the UK. Regulatory change is global – some UK-driven, some US-
driven, some Australia-driven.” That seems to affirm one of the key selling points raised by law firms such as Allen & Overy in Australia. However, Powell also notes that Australian firms are increasingly able to deliver the same global connectivity. “It’s exciting to see large Australian firms that are truly going global – to see some of our panel firms really establishing themselves, for example, in China and that we can leverage from that,” she says. When asked to name the factors she values the most from a law firm, Powell nominates knowledge of the business and, above all, a strong working relationship. ”In dealing with law firms, the most important factor for me is building a strong two-way relationship,” she says. “That means really knowing our bank and understanding our business. Open communication is critical. If we have issues, we like to raise them immediately and I want firms to do the same thing with me. For instance,
Australasian Legal Business ISSUE 8.11
FEATURE | interview >>
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FEATURE | interview >>
if a firm has taken a haircut on a deal, I want them to tell me. Another important factor is knowing our risk appetite and understanding HSBC’s strategy both within Australia and globally. And again, cultural fit is very important to us.”
Advice for aspiring general counsel
Photography by Thilo Pulch
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General counsel roles at the top corporations are not easy to attain and Powell says that gaining management experience and exposure to different parts of a business should be key priorities for aspiring in-house lawyers who are eyeing a GC post. “As an in-house lawyer, as you become more senior, the reality is you don’t practice law as much because you’re managing people,” she says. “So I would say to anyone that is interested in becoming a general counsel that managing people is a big part of the role, so try to get experience in that as well as legal experience.” Taking advantage of the variety of experience on offer is also important.
“I had a real interest in all the areas of the bank. I took the opportunity to take up different roles which meant that by the time I applied for the general counsel role, I’d had exposure to all parts of the bank, from a legal perspective,” says Powell. “One of the great things about working at HSBC is that we have such a broad offering so there’s a lot of variety in terms of legal work, which provides a great opportunity to learn about many different areas.” The modern GC is a wearer of many hats and Powell says the role draws on the technical, strategic and leadership capacity of the lawyer. “It’s about getting the technical expertise, but also having the strategic piece,” she says. “In my role, I also sit on the executive committee, which means you need to be commercially minded, pragmatic and strategic. But it’s also about having the leadership skills. If you can develop all of that in your career, you’ll be well-placed to become a general counsel.” ALB
Australasian Legal Business ISSUE 8.11
FEATURE | interview >>
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FEATURE | litigation and dispute resolution >>
Always contentious
Once considered to be one of the most counter-cyclical areas of law, litigation and dispute resolution have now become a practice area for all seasons
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itigation and dispute resolution lawyers have been kept on their toes in the past few years, not least because of the global financial crisis. But modern-day litigation workflows are anything but predictable. Conventional wisdom is that workflows improve during a downturn, but lawyers interviewed by ALB were split on this point. TressCox, for example, has been underwhelmed by the level of downturn work. “We thought there would be a lot more insolvency work, based on experiences in previous downturns,” says practice head Alistair Little. In contrast, the downturn has been a key driver of work over the past two years at Clayton Utz, and partner Doug Jones says that he expects the flow of business to continue. Mallesons partner Moira Saville points out that a strong economy can also drive litigation, particularly in relation to commercial work. “Generally more M&A work in the market can lead to more disputes and therefore more Moira Saville litigation work,” she Mallesons says. The Mallesons team is among many to notice an increase in the size of claims in comparison to those made two or three years ago, and a drop in the number of smaller claims.
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Australasian Legal Business ISSUE 8.11
FEATURE | litigation and dispute resolution >>
This may at least be partly attributable to an increase in class action activity. According to Slater & Gordon’s head of litigation, Ken Fowlie, such actions often lag behind the economy because it takes time for people to decide whether they want to pursue a claim. Across the Tasman, Russell McVeagh partner Hamish McIntosh adds a contrasting note to this mixed state of affairs. He says that there is a belief in New Zealand that litigation work has tapered off over the last Ken Fowlie 12 months, after being Slater & Gordon buoyant for the previous six years.
Recruitment
The spike in work, whether related or not to the GFC, has resulted in recruitment activity seen across many Australian litigation departments. The Maddocks litigation and disputes team has grown by 50% during the past two financial years, with a corresponding increase in revenue. At TressCox the team has increased by five lawyers since the start of this year, including two new partners, while at Carter Newell the strategy is to lure talent in anticipation of a tighter market. “We have been opportunistic in the appointments we made because of the quality of the candidates available,” says partner Stephen Humphreys. The appeal of experienced litigation lawyers returning from overseas markets such as the UK was a significant factor for recruitment at the firm. In New Zealand however, recruitment within the sector has plateaued in line with the work available, but the new concern now for Russell McVeagh is retaining staff. “Once the UK firms start hiring again, we will be faced with the
challenge of trying to hold onto staff,” says McIntosh.
Industries and class actions
Disputes are arising in a wide range of areas including construction, professional indemnity, real estate and property and financial institutions. “We are seeing a lot of construction work and professional indemnity work,” says Little. “The construction, real estate and medical area are always busy, but have increased their share of cases in the past year.” Clayton Utz’s Jones agrees that construction-related disputes have always been a driver of litigation work, but says he has seen more of a spike in shipping-related work. In the professional indemnity area, accountants are on the receiving end of a number of claims as a result of changes to the taxation system. “A lot of the work is a result of things that happened a decade ago,” says Little. In particular, he notes that taxation schemes established by accountants on behalf of clients that were never approved by the Australian Taxation Office (ATO) are now leading to disputes between the clients and accountants. Class actions have also had a hand in driving litigation – and there is a theory that the increase in litigation funders in the market is assisting the class action spike, as more overseas players look to make a dollar in the Australian market. “There has definitely been an increase in the number of litigation funders,” says Mallesons’ Saville. Where once firms such as Maurice Blackburn and Slater & Gordon were required to fund the action, large groups of claimants are now turning to funders, who are well organised and positioned to identify and pursue claims which they consider
“There is no question that a number of companies are going to be on the receiving end of class actions in the next year” Alistair Little
TressCox Lawyers
14.6 13.8% 51%
Average number of class action proceedings every 12 months since the Part IVA regime under the Federal Court of Australia Act was introduced in 1992
Average opt-out rate for class members in proceedings under Part IVA
Average opt-out rate where class members in the Federal Court have had direct contact with the defendants
SOURCE: Study, Department of Business Law and Taxation Monash University, September 2010 www.legalbusinessonline.com
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FEATURE | litigation and dispute resolution >>
“The Sydney International Dispute Centre gives parties another option to hold arbitration in Australia. We are beginning to see agreements that nominate Sydney as the venue of choice for arbitration” Moira Saville
Mallesons
worthy. “A lot more investigation goes into a class action before the case begins when a funder is involved,” says Little. However, a significant proportion of cases do not make it to court. Of the 16 such cases in the Federal Court, 51% of claimants dropped out before the case had been resolved. In the Victorian Supreme Court the drop-out rate is even higher at 84.5%. In New Zealand, McIntosh predicts future litigation work will be driven by the mining and resources boom which is set to occur in the coming years. The firm has already been engaged by a local council in an area with huge resource potential on the South Island, where a NZ$15m briquetting plant is to be built. Russell McVeagh is also the official legal firm for the Rugby World Cup in 2011, which despite being a celebration of sport, “will undoubtedly” include disputes, says McIntosh.
Arbitration, mediation and litigation While many litigation lawyers claim it is their goal to keep clients out of
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court, the number of clients wanting to go to court instead of resolving disputes outside is on the increase, according to Carter Newell’s Humphreys. “Clients are more aware of their rights and are taking advice earlier in a dispute, and this has led to them being more Stephen Humphreys prepared to go to trial,” Carter Newell he says. The fact that the court system can often be far cheaper than alternatives such as arbitration is another driver of the trend, says TressCox’s Little. Arbitration can also only be used in cases where there is a clause in the contract that stipulates that arbitration must be undertaken prior to court in regards to commercial disputes. “We see parties preferring to go to litigation rather than arbitration. Arbitration generally takes parties to a different location, which increases costs,” says Maddocks partner Michelle Dixon. Yet in contrast to Australia, arbitration in
Australasian Legal Business ISSUE 8.11
FEATURE | litigation and dispute resolution >>
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FEATURE | litigation and dispute resolution >>
“We see parties preferring to go to litigation rather than arbitration. Arbitration generally takes parties to a different location, which increases costs” Michelle Dixon
Maddocks
36
New Zealand is a thriving business according to McIntosh, accounting for a third to half of his practice’s work. “Most corporations don’t like going to court, and will consider other options first,” he says. In NSW the arbitration system is in for an overhaul following the introduction of the Commercial Arbitration Act 2010 on October 1. The act aligns NSW’s domestic arbitration regime with international processes using a United Nations law as a model, and is designed to distinguish arbitration from court proceedings, and stipulates that arbitration must be cost-effective and expeditious. It will also reduce the options for parties to seek court intervention such as appeals. While NSW is the first state to pass the new law, other states are looking to adopt similar laws – including Victoria, where if re-elected the Brumby Government will introduce it next year. “I hope it will revive the use of arbitration in Australia and therefore provide more experience for Australian lawyers in this area,” says Doug Jones Clayton Utz’s Jones, who Clayton Utz is also president of the Australian Centre for International Commercial Arbitration. On an international level, Sydney and Australia are also set to host more arbitration as a result of the opening of the Australian International Disputes Centre in Sydney in August. “We have had a very good response to the centre and there have been a significant number of bookings made,” says Jones. It is designed to attract some of the multi-billion dollar international arbitration industry which has been predominantly dominated by centres such as London, New York and in AsiaPacific, Singapore and Hong Kong. At Mallesons, international arbitration is seen as an area of significant potential, says Saville. “The Sydney International Dispute Centre gives parties another option to hold arbitration in Australia. We are beginning to see agreements that nominate Sydney as the venue of choice for arbitration,” she says.
However, while arbitration has lagged in Australia, mediation has blossomed. According to the NSW Supreme Court annual review, the number of cases being diverted to mediators has grown by more than 128% in the past three years. Dixon says a lot of commercial agreements now require parties to undertake mediation prior to court,a potential factor in the rate of mediation spike.
Rates and resources
During the downturn lawyers were generally cautious about increasing their rates, but dispute lawyers are now revising this position. “We have certainly had an increase in rates this year,” says Dixon. In fact, Little says there has been an increase “around town” following a period of caution – but Mallesons may be an exception to that opinion, with Saville claiming all rates across Mallesons have been left the same for the current financial year as the previous one. In some cases, using outsourced providers can assist in keeping legal costs down, while in other cases utilising in-house resources is more effective, says Little. He uses e.law Asia Pacific when working on a large case. Similarly, at Mallesons the in-house applied legal technology team looks after electronic discovery in litigation cases, while in some circumstances the firm’s panel of preferred external providers are engaged to undertake services such as collection, scanning, bulk copying and email deduplication, “when it is more cost effective for our client to do so,” says Saville. E.law Asia Pacific director and CEO Allison Stanfield says she has seen noticeable growth in the use of electronic documentation within Allison Stanfield the litigation area. “The e.law Federal Court issuing CM6, which outlines very clearly the way in which data needs to be prepared and exchanged during discovery and in court, has put more certainty into the e.discovery space,” she says. ALB Australasian Legal Business ISSUE 8.11
FEATURE | construction >>
Building for L better times Front-end optimism and a continuing disputes workflow are characterising construction law practices across Australia, lawyers report
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awyers are in agreement that banks are far more willing to lend for development, and more willing to do so on much less restrictive terms than previously. This does not mean a return to preGFC heights, but the market remains optimistic. “The flow of money is gathering pace. Certainly our property guys are busy and that will flow on into front-end construction,” says Mallesons partner Peter Pether in the property, construction and environment client group. Similarly, Herbert Geer’s partner Paul Muscat says that his team is seeing more frontend activity: “From our perspective, the industry is certainly starting to recover,” he says. “If I were speaking earlier this year, I would have said that most of our instructions would have involved projects which were on hold. Australasian Legal Business ISSUE 8.11
FEATURE | construction >>
But now we’re seeing a lot more new opportunities.” Minter Ellison’s Phillip Greenham says that he has not seen a significant change in the number of major new projects starting up, however, he also notes that the drop-off during the GFC was not as bad as reported in some circles. “There is one view that for good quality projects, the Ted Williams Thiess funding never dried up,” he says. “Because funders became a little more selective about the projects they were inclined to fund, the good quality projects perhaps had an abundance of funding. It was not as much a case of funding being available – it was a case of financiers being selective about where they would place their funding.” Bovis Lend Lease general counsel Rashda Rana also makes a similar point. “We’ve been busy – the situation is buoyant, I think,” she told ALB. “Things are going well and going as expected – it’s hard to say that things have picked up as we didn’t have a tail off [of projects] to start with.” Whichever way one might characterise the downturn, Minters’ Greenham senses an improvement in conditions. “Just in the past month there have been a couple of new highrise residential towers announced in the Melbourne CBD which contrasts with what’s been happening in the past two years. That might be an early indicator that we’re seeing signs of a pick up,” he says. There has also been a shift in emphasis at the “mega-project” end of the market, where a number of projects ►► CONSTRUCTION LAW: RECENT LEGAL DEVELOPMENTS • The NSW Government has released a discussion paper outlining proposed changes to the Building and Construction Industry Security of Payment Act. These changes would be likely to result in the exclusion of certain types of claims, such as delay and disruption claims. • The 2010 case of Chase Oyster Bar v Hamo Industries in the NSW Court of Appeal clarifies the court’s power to quash an adjudication determination
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such as the Victorian desalination plant, Sydney’s Royal North Shore hospital development and Brisbane’s Airport Link kept top-tier builders busy, even through the GFC and beyond. Thiess GC Ted Williams says that the flow of major new projects slowed towards the end of 2009, but there is now a new generation of projects in areas such as resources and rail. However, he says that these are of a different nature from the previous generation of projects. “There is a different level of intensity required there, and a different focus, ” he observes. “For example, offshore gas projects, while they are very big projects, don’t have the project finance aspect to them. However they are procured quite differently and often by parties who have a different appreciation of risk. They require a different level of legal analysis.”
Smaller and mid-cap builders
The sub A$100m bracket was particularly badly hit by a tightening of lending criteria during the downturn. “There was a lot of difficulty in getting projects to commencement because of a lack of availability of finance,” recalls M+K principal Brendan Archer. “There were about five projects which I was dealing with which were deferred and are still offline.” Conditions have since improved and M+K is seeing a steady flow of projects such as shopping centres, apartment complexes and office refurbishments. “It has progressively started to increase but seems to be a bit erratic,” observes Archer. “Certainly I’ve had more instructions for front-end work in the last six months than the preceding six months.” Archer says that residential developments seem to be making the most advances for lower-cap builders. “There’s a trend towards the innersuburban apartment complexes – there seems Brendan Archer to be a demand rapidly M+K creeping up for those and there’s substantial potential for developments down around Southbank and Docklands areas [of Melbourne],” he says. By 39
FEATURE | construction >>
“There is one view that for good-quality projects, the funding never dried up. Because funders became a little more selective about the projects they were inclined to fund, the good quality projects perhaps had an abundance of funding” Phillip Greenham
Minter Ellison
40
contrast, Peter Pether says he has not seen much residential activity from his client base.
Market play
The construction Phillip Greenham Minter Ellison market in Australia has traditionally been dominated by Leighton, which owns Leighton Contractors, Thiess and John Holland, and German-based Bilfinger Berger, which owns Abigroup, Baulderstone and Bilfinger Services. It is a state of affairs which looks set to change – Bilfinger Berger famously cancelled the float of its Australian operations (renamed Valemus) earlier this year but is reportedly considering a dual track process in early 2011. Meanwhile, Leighton is pondering the implications of a takeover bid of its parent company, German-based Hochtief, by Spain’s ACS. It’s early days yet, but this state of affairs raises some interesting questions about where the market is
headed. “What happens if there’s a new owner of the Valemus businesses – do they keep them together, do they break them up?” asks Pether. “And what happens to the in-house lawyers? What happens to the projects they’re doing, what will the new owners want to be bidding for? Where will they be aiming the business? Inevitably there will be change.” Certainly there will be pressure to modify the Leighton-Bilfinger duopoly, but Greenham says that there is unlikely to be a forced break-up of the groups. “If the ACCC was inclined to do that I’m surprised that they haven’t done so already,” he points out. “However, we certainly may see new overseas participants in the market and some shuffling of the deck of cards in relation to the groups.” Crucially, that change may involve a shake-up of panel arrangements. “Usually the acquirer’s lawyer gets a gig in the business going forward, if there’s a sale that might lead to pressure on the companies to add
Australasian Legal Business ISSUE 8.11
FEATURE | construction >>
to or review their panels,” observes Pether. It’s a scenario which may have particular implications for Australian firms operating in Asia, where international firms already have an established presence. For the lawyers within these large construction families, it is business as usual. “I can’t see how it would have a huge impact on us, to be honest,” says Thiess general counsel Ted Williams. “Each of the [Leighton] companies operates very independently anyway. I don’t foresee there will be any impact in the short term. But whatever happens will happen. The best way for us to survive is to keep doing what we’re doing well.”
Second-tier on the move
Some lawyers have commented on the rise of “second-tier” builders on CBD projects at what appears to be the expense of the larger players. There are a number of possible explanations – second-tier builders could be winning work from the larger construction companies, or the larger companies may simply be focussing their efforts elsewhere – for example, on resources projects. “Some of those conventionally secondtier builders are doing big projects and when you talk to some of them, they say that the tender lists now for A$100m buildings are different from what they were a few years ago. And what seems to be different is the rise of the second-tier builders,” says Pether. “I don’t know whether the [large builders] are bidding or not, but they just don’t seem to be on the list for whatever reason. There could be a number of reasons for that.” Greenham says that the top-tier builders are increasingly focussed on resources and infrastructure projects, and particularly projects such as PPPs where there is the opportunity to invest in equity. “That’s been happening for some time – I think it’s become a lot more visible now though,” he says. “As the historical first-tier builders have become ‘super builders’ – they have vacated a lot of space behind them. As an example of that, I don’t think you will see any high-rise residential projects in the CBD by that first-tier any more. You are a seeing a very significant lift in profile of the secondwww.legalbusinessonline.com
tier builders. And in Victoria, that is visible also with the presence of what have been historically NSW builders trying to get a piece of that second-tier action.” Williams points out that his company does still participate in the CBD development sector. However, he admits that jobs in the order of A$400m-A$500m present a different challenge to the multi-billion dollar projects on the Thiess books. “I think that maybe we can bring the scale and when that scale doesn’t exist there’s probably room for competitors,” he says. “We feel that we can’t expose ourselves to the level of risk on the smaller projects that the others may be prepared to accept. “ Rashda Rana says that there has been some rise in second–tier builders, but not necessarily in the CBD areas. “They may well be aspiring to reach that $100m project mark, Rashda Rana Bovis Lend Lease but it’s not necessarily something new. It’s one thing to be active in tenders and another thing to win them – I haven’t seen much of the latter,” she observes. Smaller builders are also increasing the stakes. “I have two or three clients who are progressing from $A5m to A$9m [projects] and taking it up to A$25m. But it’s being done quite conservatively – just a progressive increase, very controlled to a large extent because of the lack of funding available,” says M&K’s Archer. He says the increasing size of projects is likely to be related to the shortage of suitable land. “Availability of land is not good and of course everyone is trying to get the biggest benefit as far as they can from the land that is available,” he says. However, he stops short of inferring that this trend is causing mid-cap builders in turn to push into the A$100m space. “That’s a very large step to take. And it assumes available funding for development and people who want to advance their limits. I think the funding is a pretty significant issue,” he says.
Disputes and changing workflow
The GFC has perhaps not delivered on the expected extent of disputes work, 41
FEATURE | construction >>
“Some of those conventionally second-tier builders are doing big projects and when you talk to some of them, they say that the tender lists now for A$100m buildings are different from what they were a few years ago” Peter Pether
Mallesons
42
however, there are reports that there has been an increase in the number of new instructions in this area in recent months. “Some cases that I think have been bubbling under the surface have risen to the surface. So we’re getting some new work with a frequency now that’s greater than it has been for the last couple of years,” says Pether. This is not necessarily indicative of the start of a new “counter-cycle”. “I know there’s a school of thought which says that disputes increase during a downturn and there were people hovering Peter Pether Mallesons on the edges waiting for that to happen – I don’t think it did happen and I don’t think it will happen. That traditional market cycle in respect of disputes has left us for good – there’s been a permanent structural change in the way clients want construction disputes dealt with which has meant that we won’t go back to that rhythm,” says Greenham.
“There is an area of dispute work which I regard as dispute work – which many don’t – which is one of our significant growth areas: the pre-formal dispute work where the client wants you to come in and to analyse the problem and provide some strategic advice as to how the problem might be managed. Often the client might go away and take that insight and participate in commercial discussions on their own and bring about a solution. Sometimes it will find its way into facilitated mediation or conciliation. But you’re certainly not seeing large, long disputes in either court or arbitration with significant teams of lawyers that you have in the past.” Construction lawyers are accustomed to the phenomenon of certain species of work disappearing or transforming into another kind of work. It’s something which has been occurring for many years in the front end, where increasingly skilled and sophisticated in-house teams – often comprised of
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FEATURE | construction >>
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FEATURE | construction >>
“What’s happened is that the calibre of people in-house is getting better. They generally have come from larger firms and had specialised training. They are bringing the equivalent of private practice capacity to the in-house teams” Ted Williams
Thiess
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lawyers recruited from private practice – have taken a greater share of the front-end workload. Ted Williams’ 16-lawyer team at Thiess is an example of a large inhouse unit which does most of the company’s front-end work. Williams says that this option is cheaper, but the real point is the increased efficiency and alignment with the business. “We’re closer to the business – there’s a lot better understanding of what the business imperatives are. We understand the risks the business will and won’t accept,” he says. “And it’s also faster. It’s easy for someone to knock on my door and walk in and ask something, as opposed to having to arrange a meeting with an [external] lawyer. Williams agrees that the capacity of in-house teams to undertake work has improved. “What’s happened is that the calibre of people in-house is getting better. They generally have come from larger firms and had specialised
training. They are bringing the equivalent of private practice capacity to the in-house teams.” All of Williams’ lawyers have a private practice background. “We actually don’t employ lawyers who have developed their skills in-house,” he says, and agrees that this practice may evolve in future: “Maybe with more of us working together a similar skillset might develop in-house – but that hasn’t been the case historically.” Front-end work may be heading in-house, but law firms are reporting extra work in surprising areas. “What we’re seeing now is clients wanting contracts reviewed for risk in Paul Muscat Hebert Geer particular, where they previously would not have done so in the past,” says Muscat. “Maybe that’s in response to the litigation they’ve been through – I’m not sure.” ALB
Australasian Legal Business ISSUE 8.11
FEATURE | construction >>
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PRIVATE EQUITY | Gilbert + Tobin >>
Private Equity
Andrew Bullock
Adam Laura
Deborah Johns
ave we been A
s we write this article, the acquisition of Healthscope by the TPG and Carlyle consortium has just closed; KKR is in discussions to acquire Perpetual and a range of other bold, public to private transactions are under negotiation or construction. In this context, the questions raised by many market spectators are understandable. Is this 2006/7 all over again? Was anything learned during the GFC? From our perspective the answers to these questions are clear: we are not re-living 2006/7 - mainly because debt availability and demand are not as strong. Moreover, the terms of deals that are getting done this year
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demonstrate that many lessons have been learned from the transactions completed during the boom. This article will discuss our perspective on the state of play in the Australian private equity industry. Gilbert + Tobin works across the fund life cycle for a range of clients and it is across this that we will detail our observations on the current state of the market.
Raising funds
Fund managers with ‘dry powder’ – uncalled capital – in their funds are invariably thankful that they raised their current fund when they did and are not faced with persuading LPs to Australasian Legal Business ISSUE 8.11
PRIVATE EQUITY | Gilbert + Tobin >>
Peter Cook
John Schembri
Charles Bogle
here before? commit to new funds now. Those who are currently in or about to enter the fundraising market are, comparatively, having a tough time of it. There has been a tightening of terms in the last 2 years – particularly in relation to management fee and carry arrangements but most significantly there has not been the quantum of local LP capacity necessary to achieve
Raising new funds www.legalbusinessonline.com
sponsors’ expectations. Whilst there are some green shoots, it is fair to say that, other than for managers with the strongest track records, it remains harder to raise the funds than to spend them at the moment. A key recent change in the fundraising space has been the introduction of the Managed Investment Trust (or MIT) regime.
Making leveraged investments
Bryan Pointon
Much has been written about how it works – and how it doesn’t – in many cases. However, even with its limitations, in the wake of the confusion created by the ATO’s attempt to tax TPG’s gains from the Myer IPO, it is a welcome “safe harbour” for funds able to qualify. Very broadly, the MIT regime provides deemed capital account
Increasing the value Exits by IPO of investments or trade sale 47
PRIVATE EQUITY | Gilbert + Tobin >>
treatment on the disposal of most assets by the MIT. The key effect from a private equity perspective is: • a complete tax exemption for foreign investors where the gain is made in respect of assets which do not comprise land or non-portfolio interests in landrich entities; and • eligibility for a discounted tax regime for Australian resident investors who are individuals or superannuation funds. For foreign investors in MITs, the MIT regime also provides for a final withholding tax rate of 7.5% on certain distributions (e.g. distributions made in respect of gains on land) made by an MIT to foreign residents where those foreign residents reside in “information exchange countries” (including the United States, the United Kingdom, Canada, the British Virgin Islands and New Zealand and soon including the Cayman Islands, the Bahamas and Bermuda). One important condition to the MIT benefits, however, is the requirement that the MIT not control an Australian trading company. This does limit its application and is a complexity that requires careful management. A related effect is that fund managers’ “carried interest” must, in an MIT, be treated as income not a capital gain. The side effect of all this may be the gradual lessening in importance of the venture capital limited partnership – at least for domestic investors – due to the lack of certainty (for everyone other than the fund manager) of the treatment of distributions from the partnership.
Making investments
As we read in the newspapers every day, activity driven by financial sponsors constitutes a significant base load of the total activity in the M&A markets. The key reason is the availability of uncalled capital in the large buy-out 48
funds investing in Australasia and the re-emergence of sufficient leverage to pull together $1+ billion finance packages. In leverage finance, some of the trends we are currently seeing include: • the re-emergence of the equity cure, the mulligan, clean-up and certain funds provisions, some with slight variations from the 2006-07 boom; • banks focusing on lower starting leverage (around 4.0x) and reducing leverage sooner, with a preference for amortising A tranches at levels around two-thirds of the business/ deal-specific bullet tranche; • a shift away from fully underwritten commitments to sponsors looking for club or take and hold positions; • financial covenants with head room of around 20-25%. On the sell side of deals, we are seeing the availability of leverage being jealously guarded. There are strict prohibitions on bidders tying up financiers exclusively to ensure that the re-emerging leverage is not horded by particular sponsors to their competitive advantage. The availability of debt and equity funding is providing a strong “secondaries” market where private equity fund managers are bidding for assets being sold by other fund managers in competition with trade buyers. Examples include Loscam, which was recently acquired from Affinity Partners by China Merchants Group after stiff competition from interested sponsors; Study Group which was sold by CHAMP to Providence in its first successful deal in this market and Crescent Capital’s exit from National Hearing. It is also emboldening sponsors in the public-to-private space as well, where sponsors are having relatively more success than pre-GFC. Since 2009, P2P processes have resulted in
two hostile bids completing (Archer / MYOB and PEP / EDL) as well as the Healthscope deal which was agreed following an auction process contested between two sponsors. Whilst boards are not exactly rushing into the arms of private equity, they are facilitating due diligence and takeover offers (albeit unrecommended) where large shareholders are demanding they do so.
Increasing the value of investments
One of the things keeping everyone’s feet on the ground is the fact that it is still hard work increasing the value of existing investments in many funds’ portfolios. The restructuring and recapitalisation process undertaken in many over leveraged assets in 2009 was commercially and legally very difficult. It has largely been completed with some very interesting deal technology being created in the process. However, there remain some assets that were too difficult to deal with then and remain so now. These ‘zombie’ investments were not prevalent in fund portfolios in 2006/7 and do serve to temper enthusiasm for overgearing new deals. Even during the GFC, for funds with uncalled capital, “bolt-on’ transactions never went away and they remain a key focus of many sponsors’ activity. A number of our clients are having success not only with good organic growth in many of the businesses they have acquired but are augmenting those increasing earnings with new acquisitions. Releasing good management and leadership teams to focus on growing their businesses with clever, patient capital remains a key priority for our clients. It is not all positive though and certainly, since 2007, a good portion of sponsors’ investments have been battered by a softer economy and retail sector, constrained counterparties and Australasian Legal Business ISSUE 8.11
PRIVATE EQUITY | Gilbert + Tobin >>
low liquidity. To keep management incentivised, a number of management equity plans have had to be reset. Many assets are recovering well, but those who have also been victims of changes in regulatory or government pricing or structural changes in the market for their products remain very challenged – particularly if they have significant debt.
Exits
As noted earlier, secondaries and trade sales are proving the most popular exit method. Interestingly, in comparison to the period before the GFC, Chinese buyers are figuring prominently in buyer logs and are increasingly proving successful – see China Merchants
►► GLOBAL PRIVATE EQUITY EXIT ACTIVITY QUARTERLY (EXCLUDING IPO EXITS)
Group’s acquisition of Loscam. The newspapers regularly list the IPO candidates waiting for the capital markets to open as an exit path but, in our experience, each month there is no more certainty as to precisely when “the window” will open. IPO exit structures continue to evolve to suit the circumstances of the relevant businesses and their ownership structure.
Conclusion
As the charts set out below show, there is some reason for optimism if you work in the private equity space. Still bearing some scars and treading carefully, our friends in private equity firms appear to have their mojo back.
►► GLOBAL PE BUYOUT M&A ACTIVITY QUARTERLY
►► GLOBAL PRIVATE EQUITY SECONDARY BUYOUT EXIT ACTIVITY - QUARTERLY
300
50
300
70
100
20 10
100
50
50
0
0
Qt 10 9 Qt 20 9 Qt 30 9 Qt 40 9 Qt 11 0 Qt 21 0 Qt 31 0
0
300 200 100 0
Qt 10 9 Qt 20 9 Qt 30 9 Qt 40 Qt 9 11 0 Qt 21 0 Qt 31 0
30
150
Value of deals ($bn)
150
400
80 30
60 20
40 10
20
0
0
Qt 10 Qt 9 20 Qt 9 30 Qt 9 40 9 Qt 11 0 Qt 21 0 Qt 31 0
40
200
100
40
500
Volume of deals
200
Volume of deals
50
Value of deals ($bn)
250
250
60
120
600
Volume of deals
80
Value of deals ($bn)
“Still bearing some scars and treading carefully, our friends in private equity firms appear to have their mojo back.”
Value ($bn)
Value ($bn)
Value ($bn)
Volume
Volume
Volume
Source: Press Release: mergemarket M&A Round-up for Q1-Q3 2010
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FEATURE | information technology >>
Virtual technology, A virtually here
s new technologies are developed law firms need to be sure they are on the ball, to ensure they are staying competitive in an increasingly challenging market. Information technology or IT can make or break the efficiency, effectiveness and accuracy of legal work, according to some of Australia’s top-tier IT managers.
Hardware
At the heart of every law firm is a dynamic and indispensable technology system. ALB looks at what new developments are taking place in this essential area of practice
50
One of the most obvious aspects of IT are the computers that legal practitioners work on, both in and out of the office. Traditionally an area dominated by PC brands such as Dell and Hewlett-Packard (HP), Apple computers are increasingly making waves within the business community. Australasian Legal Business ISSUE 8.11
FEATURE | information technology >>
“Apple is really starting to move into the business area,” says Norton Rose Australia director of business information systems Philip Scorgie. While the firm still uses HP desktop computers in the office, Scorgie says the legal fraternity is increasingly turning to Apples, particularly for portable devices because Philip Scorgie of their robustness and Norton Rose simplicity. Apple iPhones and iPads have been particularly popular with the legal fraternity, according to firms contacted by ALB. However, not all firms have embraced Apple mania. Corrs Chambers Westgarth still uses only Dell computers for desktop and laptops. Chief information officer Jon Kenton says that having a single provider of hardware for computers means maintenance and support issues are less complicated and the firm gets a better deal by having only one supplier. At Maurice Blackburn, lawyers use Toshiba Laptops because of their lightness and durability, while in the office HP desktop computers are used. However, national IT manager Justin Westbrook adds that the partnership at the firm has “embraced” the Apple iPhone, so it might be only a matter of time before Apple becomes more prevalent. While some firms chose to buy hardware outright and upgrade at their discretion, other firms have a leasing or rolling upgrade program. At Mallesons Stephens Jaques, hardware is turned over when there
is a new innovation in the market. The firm replaced its server and desktop hardware last year, in order to take advantage of new Windows 7 technology, but business integration technology executive director Gerard Neiditsch says it is unlikely they will upgrade again in the near future, as innovation in the hardware area in recent years has not been as significant as in the mobile device area. In contrast, Middletons has leased equipment rather than bought outright, in order to be more flexible as new technologies become available. Meanwhile, with the increased use of ‘thin client’ technology, the need to upgrade hardware will decrease over time, says Westbrook. Thin client computers pass on Gerard Neiditsch Mallesons some of the traditional hardware capabilities to a server, as opposed to the individual computer having the capabilities to complete all tasks independently of a server. Westbrook says thin client computers are attractive as they use less power than traditional PCs and therefore create a greener IT environment.
Servers
One of the key drivers in the increasing use of thin clients is the increased use of Virtualisation software such as VMware and Microsoft’s Hyper V. Virtualisation software for servers or systems makes it possible to partition a single physical server
►► KEY TERMS Virtualisation:
Virtualisation software for servers or systems makes it possible to partition a single physical server into multiple virtual machines. The individual virtual machines can then be deployed multiple times in diverse environments.
Cloud computing:
Cloud computing is internet-based computing whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid.
Thin Client:
A thin client, sometimes called a lean client or network computer, is a low-cost, centrally-managed computer. Thin clients function as regular PCs, but lack hard drives and typically do not have extra features associated with PCs. They generally have minimal software stored on them and instead run programs and access data from a server.
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51
FEATURE | information technology >>
“Offshore storage is an overrated problem. You can easily solve issues around jurisdictional data storage with a good contract for cloud services” Phillip Scorgie
Norton Rose
52
into multiple virtual machines. The individual virtual machines can then be deployed multiple times in diverse environments. Virtualised servers are able to run multiple software systems at the same time. Despite sharing the resources of that one physical machine, there is no conflict between various software systems housed in each virtualised server. What’s more, each virtualised system is completely compatible between hardware devices. A number of law firms have embraced the virtualisation method for various reasons. At Corrs they try and virtualise everything, so that they are spending less money on hardware and using less power (as servers require lots of power for cooling). At Maurice Blackburn, 90% of their servers are virtualised through VMware so that they have more flexibility, as they don’t need to invest in new hardware when they need to expand their system. Norton Rose also uses virtualisation software, but the firm chose the Microsoft Hyper V offering, as it was cheaper than VMware, according to Scorgie. Blake Dawson also uses Hyper V and has, since installing the software, decreased the number of servers it requires from 200 to 110, with potential for further reductions. While a majority of law firms house their servers on-site, the data recovery centres Bruce Heaney or back-up servers are Aderant predominantly located off-site. Norton Rose has opted for this combination for cost and performance reasons; at Maurice Blackburn, 90% of the firm’s IT infrastructure is located in the Melbourne CBD, including the data recovery centre. However, Westbrook expects to move it off-site in the near future for cost reasons. Mallesons has taken a different approach and invested significant money in moving its main server and back-up servers off-site six years ago. The advantages of not having them onsite are also cost-driven, as prime CBD space is significantly more expensive than outer CBD locations.
Interoperability
One of the many challenges facing law firm IT managers is the interoperability or integration of programs with each other, and the two main hardware options – Apple and PC. The release of Microsoft’s Windows 7 has made interoperability easier in some ways, as the system communicates with other software systems such as Practice Management Systems, document management systems, case management systems and more. Most systems require some work by the law firm to make them communicate with the existing systems being used by the firm, but it is getting easier. “Most of them can talk to each other immediately, but to make it work properly requires lots of work,” says Maurice Blackburn’s Westbrook. While most systems will operate well in Windows systems, few operate well with Apple. This is because the main legal software providers have for many years worked in partnership with Microsoft to ensure their systems communicate well with the Windows system. Aderant, which makes one of the two main practice management systems in the market, Aderant Expert, is in the process of developing Apple-compatible software, particularly in the mobile device area. “Apple is doing interesting things, and we are dovetailing them to make sure some of the more useful Aderant applications are available on Apple products,” says Aderant’s vice president Asia-Pacific sales, Bruce Heaney. Similarly, case management software provider Caseflow is also looking into extending its software so that it works within the Apple internet web browser Safari, says director – technology and development, Brian Smith. However, after so many years of focusing on Microsoft, Westbrook says it will take some time before systems are compatible with both Microsoft and Apple.
The new frontier: cloud computing and paperless offices
One of the most significant developments in both general business Australasian Legal Business ISSUE 8.11
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“There are cost benefits to cloud computing, because it gets you access to facilities [software] that individual firms could not afford on their own, which would allow firms to grow more quickly” Jon Kenton
Corrs Chambers Westgarth
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IT and legal firm IT is the development of cloud computing. While traditional software payment models have required users to pay significant upfront cost and recurring costs, cloud computing could significantly drop the costs, as users would only be paying for the software when they use it. “Cloud computing is very interesting conceptually, and it’s very appealing as businesses move away from operating hardware. However, the industry still needs Jon Kenton to mature,” says Corrs Corrs Chambers Westgarth CIO Kenton. “There are cost benefits to cloud computing, because it gets you access to facilities [software] that individual firms could not afford on their own, which would allow firms to grow more quickly,” he adds. According to Kenton, some of the challenges faced by firms in moving into cloud computing include regulatory issues, as the rules around storing data are very strict. With clouds data could be stored anywhere that a provider has the infrastructure available. However, Scorgie from Norton Rose disagrees with this. “Offshore storage is an over-rated problem. You can easily solve issues around jurisdictional data storage with a good contract for cloud services,” he says. Norton Rose has a number of systems operating through the cloud already. Aside from jurisdictional issues, Westbrook says one of the main reasons businesses are not ready for cloud computing in Australia is that the bandwidth is not wide enough here to make it worthwhile. “Our current bandwidth would make it far too expensive,” he Brian Smith says. Another key factor Caseflow in law firms moving towards the cloud is that there is not the infrastructure available yet. “You need substantial infrastructure to host a cloud and there is no one willing to establish a cloud in the market at present,” says Caseflow’s Smith. Caseflow is ready to go into a cloud
and is preparing to launch a document system there called Net Documents, in the next six months. However, along with companies investing in the cloud, Smith says there also needs to be a lot of users, to make it financially viable. Aderant’s Heaney says cloud computing is targeted at a specific type of business, firms with five-20 users. “Our traditional market has been top-tier firms, and we don’t envisage the cloud being taken up by them,” he says. Aderant’s cloud based software system Practice Manager was released in the US earlier this year and subject to interest, the system is likely to be released in the Asia-Pacific region during 2011. The other major development in law firms is the push to become paperless. A number of firms including Maurice Blackburn Mildura and boutique Sydney law firm Bransgroves Lawyers have already achieved this, while others are making headway. Maurice Blackburn’s Westbrook says it is almost “comical” that law firms still print everything, but says a number of steps need to be taken before firms can become paperless. “The key to becoming paperless is making it as easy as possible for the lawyers. We need to invest more in multifunction devices, such as those which scan documents straight into document management systems,” he says. Bransgroves Lawyers use scanners which can convert hardcopy documents, including PDF documents, into searchable text and have multiple screens per employee, so that staff can view multiple pieces of information at the same time. The firm has been paperless since 2005 and makes a point of throwing out papers left on staff desks as a way of curbing paper use. Along with environmental benefits, IT managers are convinced there are cost and efficiency benefits to being paperless. Westbrook says in the long term, being paperless will make lawyers more efficient, because they won’t have to find the file they are working on physically. Scorgie from Norton Rose says this will increase the mobility of lawyers, which is an important issue for a law firm with offices located around the world. ALB Australasian Legal Business ISSUE 8.11
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MARKET DATA | M&A >> In association with
M&A TRANSACTIONS AND STATISTICAL ANALYSIS Top 10 Announced Deals - Australasia (25 September, 2010 - 22 October, 2010) Announcement Date
Target Company
Target/Seller Legal Advisor
Bidder Company
Bidder Legal Advisor
19-Oct-10
Minerals and Metals Group
Advising seller: Freehills
Minmetals Resources Limited
Blake Dawson
15-Oct-10
The MAC Services Group Limited
Freehills
Oil States International Inc
Mallesons Stephen Jaques; Vinson & Elkins
28-Sept-10
NHC Group Pty Limited
Amplifon SpA
Baker & McKenzie
Macquarie Group Limited; and Crescent Capital Partners Limited
460
29-Sept-10
Duquesne Light Holdings Inc (29% Stake)
Advising seller: Post & Schell; Skadden Arps Slate Meagher & Flom
Government of Singapore Investment Corporation Pte Limited
Jones Day
Diversified Utility and Energy Trust
371
20-Oct-10
Dominion Mining
Johnson Winter & Slattery
Kingsgate Consolidated Limited
Clayton Utz
Dominion Mining
359
22-Oct-10
GlobeStar Mining Corporation
Osler, Hoskin & Harcourt
Perilya Limited
Allion Legal; Fraser Milner Casgrain; Pellerano & Herrara
188
19-Oct-10
Republic Coal Pty Limited
JFE Shoji Trade Corporation
Blake Dawson
165
08-Oct-10
Northern Energy Corporation Limited (95.1% Stake)
New Hope Corporation Limited
Blake Dawson
160
05-Oct-10
Jinzhou Huachang Photovoltaic Technology Company Limited
Solargiga Energy Holdings Limited
01-Oct-10
CalEnergy Gas (Australia) Limited
Toyota Tsusho Corporation
Notes:
HopgoodGanim Lawyers
Seller Company
Deal Value (AUDm)
China Minmetals Non-Ferrous Metals Company Limited
1,867
686
Sunvision Capital Investment Limited; Prosperity Lamps & Components Limited; Wintek International Corp; Seaquest Ventures Inc; Lithium Energy Holdings Company Limited; Grand Sea Investments Limited; and You Hua Investment Corporation
111
Blake Dawson
100
Based on announced deals, including lapsed and withdrawn bids, from 25 September 2010 to 22 October 2010•Based on geography of either target, bidder or seller company being Australasia•Includes all deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m•Activities excluded from table include property transactions and restructurings where the ultimate shareholders' interests are not changed•League tables are ranked by volume•Q4 10 * = 1 October 2010 to 22 October 2010
League Table of Legal Advisors to Australasian M&A (Jan 01, 2010 - Oct 22, 2010)
League Table of Financial Advisors to Australasian M&A (Jan 01, 2010 - Oct 22, 2010)
Value (AUDm)
Deal Count
Rank
Value (AUDm)
Deal Count
1
Mallesons Stephen Jaques
39,602
41
1
Goldman Sachs
18,758
25
2
Freehills
38,756
50
2
UBS Investment Bank
18,017
15
3
Allens Arthur Robinson
31,220
28
3
Macquarie Group
15,958
17
4
Blake Dawson
15,429
29
4
Lazard
15,422
6
5
Stikeman Elliott
13,556
5
5
Bank of America Merrill Lynch
14,804
9
6
Minter Ellison
12,266
38
6
Grant Samuel
14,784
8
7
Gilbert + Tobin
10,743
15
7
Credit Suisse
13,891
9
8
Sidley Austin
9,117
1
8
Greenhill Caliburn
9,376
3
9
Clayton Utz
8,897
25
9
Deutsche Bank
8,243
12
10
Skadden Arps Slate Meagher & Flom
7,218
4
10
Deloitte
7,077
16
Rank
House
House
Australasian M&A Activity - Quarterly Trends 200
70,000
180 160
Value (AUDm) Volume
50,000
140 120
40,000
100 30,000
80
20,000
60 40
10,000 0
Number of deals
Value (AUDm)
60,000
20
Q1 03
Q2 03
Q3 03
Q4 03
Q1 04
Q2 04
Q3 04
Q4 04
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Q4 08
Q1 09
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
Q3 10
Q4 10*
0
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MARKET DATA | capital markets >>
EQUITY CAPITAL MARKETS TRANSACTIONS LIST Australia, New Zealand Oct 3-Nov 1 NB: Does not include transactions valued at less than than USD10m, best efforts transactions and private placements Issuer
Proceeds (USDm)
Issue date
Currency
Bookrunner(s)
Sector
AUSTRALIA GPT Group
659.401
10/26/10
AUD
Deutsche Bank (Australia)
Real Estate
Tabcorp Holdings Ltd
423.708
10/18/10
AUD
UBS Australia Ltd
Media and Entertainment
Paladin Energy Ltd
300.000
10/27/10
USD
Barclays Capital; JP Morgan
Materials
Ten Network Holdings Ltd
237.388
10/19/10
AUD
UBS Australia Ltd
Media and Entertainment
WorleyParsons Ltd
179.133
10/21/10
AUD
Goldman Sachs & Partners AU
Industrials
Mirabela Nickel Ltd
176.462
10/27/10
AUD
Macquarie Equity Capital Mkts; UBS Australia Ltd; GMP Securities Ltd.
Materials
Northern Iron Ltd
137.119
10/13/10
AUD
Macquarie Equity Capital Mkts; Euroz Securities Ltd
Materials
OceanaGold Corp
114.552
10/05/10
CAD
Macquarie Equity Capital Mkts; Citi
Materials
Western Areas NL
107.754
10/21/10
AUD
Macquarie Equity Capital Mkts; UBS Australia Ltd
Materials
Arafura Resources Ltd
94.696
10/28/10
AUD
BBY Ltd; Bell Potter Securities Ltd
Materials
Rex Minerals Ltd
84.142
10/13/10
AUD
E L & C Baillieu Stockbroking
Materials
Tap Oil Ltd
81.559
10/15/10
AUD
UBS Australia Ltd
Energy and Power
Bathurst Resources Ltd
73.831
10/05/10
AUD
Helmsec Global Capital Ltd
Materials
Aurora Oil & Gas Ltd
69.129
10/20/10
AUD
Euroz Securities Ltd
Energy and Power
Industrea Ltd
49.485
10/18/10
AUD
Credit Suisse Australia Ltd
High Technology
Hunnu Coal Ltd
38.837
10/27/10
AUD
Azure Capital; CPS Securities
Materials
Mermaid Marine Australia Ltd
34.509
10/26/10
AUD
Morgan Stanley Australia Ltd
Industrials
Metminco Ltd
29.487
10/11/10
AUD
BGF Capital Group Pty Ltd
Materials
Azumah Resources Ltd
29.073
10/19/10
AUD
Clarus Securities Inc.; BGF Capital Group Pty Ltd
Materials
Solomon Gold PLC
23.720
10/22/10
GBP
Fairfax IS Ltd
Materials
Australian Governance
20.223
10/21/10
AUD
Dixon Advisory
Financials
Finders Resources Ltd
19.865
10/12/10
AUD
Foster Stockbroking Pty Ltd; Black Swan Equity Partners
Materials
Norseman Gold PLC
17.873
10/06/10
GBP
Ocean Equities Ltd; Seymour Pierce Ltd
Materials
Centaurus Metals Ltd
17.424
10/22/10
AUD
Hartleys Ltd; Southern Cross Equities Ltd
Materials
Northern Uranium Ltd
16.127
10/05/10
AUD
Patersons Securities Ltd
Materials
South American Ferro Metals
14.655
10/06/10
AUD
Patersons Securities Ltd
Materials
Signature Metals Ltd
13.117
10/27/10
AUD
Patersons Securities Ltd
Materials
MetroCoal Ltd
10.362
10/18/10
AUD
Patersons Securities Ltd
Materials
Bookrunner(s)
Sector
Source: Thomson Reuters
DEBT CAPITAL MARKETS TRANSACTIONS LIST Australia, New Zealand Oct 3-Nov 1 Issuer
Proceeds (USDm)
Issue date
Currency
AUSTRALIA Fortescue Resources Pty Ltd
2,040.000
10/26/10
USD
JP Morgan; RBS
Materials
National Australia Bank Ltd
1,395.284
10/19/10
EUR
Credit Suisse; Deutsche Bank AG; National Australia Bank
Financials
National Australia Bank Ltd
1,316.781
10/29/10
AUD
National Australia Bank
Financials
Westpac Banking Corp
900.494
10/26/10
EUR
Deutsche Bank AG; UBS Investment Bank
Financials
Telstra Corp Ltd
679.978
10/19/10
EUR
BNP Paribas SA; Deutsche Bank AG; HSBC Holdings PLC
Telecommunications
CFS Retail Property Trust
442.802
10/20/10
AUD
ANZ Banking Group; Commonwealth Bank of Australia
Real Estate
Santos Finance
419.463
10/15/10
EUR
Deutsche Bank AG; UBS Investment Bank
Energy and Power
Westpac Banking Corp
279.260
10/06/10
CAD
Scotia Capital Inc; RBC Capital Markets
Financials
Dexus Wholesale Property Fund
242.197
10/28/10
AUD
Commonwealth Bank of Australia; Westpac Institutional Bank
Financials
Westpac Banking Corp
222.000
10/07/10
USD
Barclays Capital
Financials
Commonwealth Bank of Australia
75.546
10/25/10
NZD
TD Securities Inc
Financials
National Australia Bank Ltd
50.000
10/04/10
USD
JP Morgan
Financials
Westpac Banking Corp
50.000
10/06/10
USD
Morgan Stanley
Financials
Commonwealth Bank of Australia
50.000
10/12/10
USD
Morgan Stanley
Financials
Westpac Banking Corp
49.354
10/06/10
USD
Morgan Stanley
Financials
Adelaide Airport Ltd
48.455
10/20/10
AUD
ANZ Banking Group
Industrials
Commonwealth Bank of Australia
15.474
10/06/10
HKD
HSBC Holdings PLC
Financials
National Australia Bank Ltd
12.894
10/07/10
HKD
Barclays Bank PLC
Financials
NEW ZEALAND ASB Finance Limited London
155.352
10/20/10
Swiss Franc
Credit Suisse; RBS
Financials
Tauranga City Council
56.640
10/15/10
NZD
ANZ Banking Group (NZ); Craigs Investment Partners Ltd
Government and Agencies
TrustPower Ltd
55.980
10/22/10
NZD
ANZ Banking Group (NZ); Forsyth Barr"
Energy and Power
Source: Thomson Reuters
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