ALB 10.6

issue 10.6

july 2012

AlB lAw AwArDS 2012: fUll COverAGe Of THe wInnerSPage 38

www.legalbusinessonline.com

AustrALAsIAnLEGALBUSINESS

PerTH: ThE rIghT SIdE OF ThE TwO SPEEd EcOnOMy

cAn AllEn & OvEry TAkE A STAnd AgAInST MAllIES?

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issue 10

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ALB 1006.indb 1 26/06/2012 3:57:02 PM

AUCKL AND

VERO CENTRE 48 SHORTL AND STREET

PO BOX 8 AUCKL AND NEW ZE AL AND DX C X10085

TELEPHONE 64 9 367 8000 FA X 64 9 367 8163

WELL INGTON

VODAFONE ON THE QUAY 157 L AMBTON QUAY

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Another Hat-trick!

Russell McVeagh has scooped up all three major New Zealand awards at the 2012 ALB Australasian Law Awards, and three of the five awards for which the

firm was nominated:

New Zealand Deal Team of the Year 2012

New Zealand Deal of the Year award for the Telecom Demerger

New Zealand Dealmaker of the Year awarded to Pip Greenwood

This is Pip's third Dealmaker of the Year Award – she also won in 2008 and 2010 – and the hat trick is a huge achievement.

Thank you to all our clients, we couldn’t have done it without you.

www.russellmcveagh.com

1CONTENTS

Perth 2012Asketh the lawyers: what global downturn?

Basel IIISome enlightenment on the all-important assets to capital ratio

India India – land of economic stagnation and lost opportunity?

FEATURES

COVER STORY

Allen & Overy v MAlleSOnSA&O is claiming to have gained valuable market share from Mallesons in the banking & finance space – but the view is not mutual. 10

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AlB law AwardsFull wrap of this year’s winners

TechnologyA look at data centres and near field technology

Practice management softwareThe battle between Aderant and Thomson Elite continues

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58

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NEWS

DeAlS

leAGUe TABleS

SPOnSOreD UPDATe Buddle Findlay

AClA PerSPeCTIve

APPOInTMenTS

PrOfIleS In-house perspective Brian Salter, AMP

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“My SEnSE IS ThAT ThE MArkET hAS ABSOrBEd MrrT And MOvEd On. IT hAS BEEn FAcTOrEd In And PEOPlE ArE MAkIng dEcISIOnS wITh IT And ThE cArBOn TAx IncludEd. I hAvE nOT SEEn Any EvIdEncE OF MAjOr dEcISIOnS nOT BEIng MAdE Or BEIng chAngEd BEcAuSE OF ThE InTrOducTIOn OF ThOSE TwO lEgISlATIvE rEFOrMS.”Andrew Pascoe, Allens Perth

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.6

ALB 1006.indb 1 26/06/2012 3:57:04 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.62

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Please contact Andrew Goldner with any [email protected]

ThOMSOn rEuTErSTruST PrIncIPlES

MANAGING DIRECTOR Andrew Goldner

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PANTONE 185C PANTONE 186U

GRAYSCALE VERSION


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S Y DN E Y

M E L BOU RN E

P E RT H

S Y DN E Y

M E L BOU RN E

P E RT H

4 EDITORIAL

Ah, the nostalgia. Fans of the Howard political era – and we suspect there are more than a few of them amongst the ranks of ALB readers – were recently treated to the sight of the man himself scurrying along, rodent-like, outside Buckingham Palace on the national news. Mr Howard was there to receive

the insignia of a member of the Order of Merit from Her Majesty Queen Elizabeth II, a rare honour which is limited to just 24 living recipients.

Howard’s political gift was an innate understanding of the conservative soul of the nation. Despite the constant mocking of talkback radio and tabloid columnists by the “progressive” media, this is still a part of Australian politics which travels surprisingly under the radar. Julia Gillard and Tony Abbott have made various attempts to “dog whistle” the populace, but only with limited success. Their efforts are opportunistic rather than a revelation of true conservatism; one gets the impression that Abbott in particular would happily support the Communist Party manifesto if he believed it would improve his electoral prospects.

Howard, with his white picket fences and vision for a relaxed and comfortable Australia, was a different beast. Here was a man who saw genuine value in the monarchy and Britain’s legacy in Australia; a man who instinctively understood the deep suspicion in some quarters towards the fundamental economic and geopolitical changes wrought in Australasia over the past three decades. Mind you, this conservatism did not necessarily translate into policy action – Howard’s policies had more in common with the Keating era than his personality would indicate – but somehow he still managed to create a convincing conservative aura.

Therefore, as we celebrate the Queen’s Diamond Jubilee, we extend the metaphorical salute to John Howard, the conservative soul of the nation and those deep ties to England. To all of the British law firms in Australia: Norton Rose, Ashurst, Allen & Overy, Clifford Chance, Holman Fenwick: the Union Jack still maintains pride of place upon the Australian flag and it is for thee. At least until the next referendum.

renU PrASAD Australasia editor, Australasian Legal Business,Thomson reuters

GOD SAve THe QUeen


ISSUE 10.6

JULY 2012

ALB LAW AWARDS 2012: FULL COVERAGE OF THE WINNERSPAGE 38


AUSTRALASIANLEGALBUSINESS

PERTH: THE RIGHT SIDE OF THE TWO SPEED ECONOMY

CAN ALLEN & OVERY TAKE A STAND AGAINST MALLIES?

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OFC_ALB10.06.indd 1 25/06/2012 11:26:34 AM

ALB 1006.indb 4 26/06/2012 3:57:13 PM

DEALS AUSTrAlASIAn leGAl BUSIneSSISSuE 10.66

Allen & Overy

Exego group refinancing A$264.8 million

Financiers Angela Flannery

Intermediate capital group’s majority stake in ScF group

undisclosed Intermediate capital group

grant koch, Martin larkman

Allens

Biota holdings proposed merger with nabi Biopharmaceuticals

A$240 million Biota holdings craig henderson The transaction is a reverse takeover of a nASdAQ-listed uS company, and the new company will be called Biota Pharmaceuticals

Privatisation of Sydney desalination Plant

A$2.3 billion consortium robert clarke, Simon lynch, Ted hill, Anthony Arrow, Michael graves, Bill Mccredie, james darcy, Martin Fry

Allens acted for MAp Airports on its A$1.6 billion asset swap with Ontario Teachers’ Pension Plan Board in 2011

Zijin Mining group co’s bid for norton gold Fields limited

A$212 million Zijin Mining group co campbell davidson

In july last year, Allens advised Zijin on its purchase of approximately 17 percent of norton shares for A$27.7 million

Agl Energy’s two solar power stations in nSw under the commonwealth government’s Solar Flagships Program

A$450 million First Solar Anthony Arrow, Tom Story, grant cathro

Ashurst Employees Provident Fund (EPF) joint venture with goodman Industrial Funds Management

A$400 million Employees Provident Fund (Malaysia)

Michael ryland, vivian chang, cameron Thomson, Michael ryland

kellogg company acquisition of Procter & gamble’s Pringles business in Australia

$uS2.7 billion (global value of Pringles business)

kellogg’s Ben Mclaughlin

Corrs Chambers Westgarth

nEc corporation’s acquisition of cSg limited’s Technology Solutions business

A$227.5 million

nEc corporation Teresa handicott, Andrew Mackenzie, helen clarke

Stanmore coal and Queensland coal corporation (Qcc)’s tenement swap

undisclosed Stanmore coal Bruce Adkins

dlA Piper advised Aviva Investors in the uk on its £400m refinancing for its Airport Property Partnership (APP) This is the first time the Australian arm has undertaken work for Aviva, which has previously used Freehills for work in the Asia pacific region. Tom Cantwell - DLA Piper

YOur mOnTh AT A gLAnCe

Firm Deal Value Client Lead lawyer Comment

DLA PiperAviva Investors stake in the new woolworths logistics centres

A$200 million Aviva Investors Tom cantwell dlA Piper advised Aviva Investors in the uk on its £400m refinancing for its Airport Property Partnership (APP)

ALB 1006.indb 6 26/06/2012 3:57:14 PM

DEALSAUSTrAlASIAn leGAl BUSIneSSISSuE 10.6

Freehills

AMP capital acquisition of the South Australia Schools PPP

A$232 million cBA and lend lease josh Sgro

Perron Investments’ acquisition of a 50 percent interest in three regional centro shopping centres

A$690.4 million

centro retail Australia

Michael Back, david Sinn

Brambles’ fully underwritten entitlement offer

A$448 million uBS and Merrill lynch

Philippa Stone,rob Finlay

Agl Energy’s successful application to develop two solar power stations in nSw under the commonwealth government’s Solar Flagships Program

A$450 million Agl Energy Toby Anderson, Alicia Albury

Freehills has previously acted for Agl in relation to the hallett group of wind farms in South Australia and the Oaklands and Macarthur wind farms in victoria

7

king & wood Mallesons also advised on Agl’s $650 million high equity credit subordinated note issue earlier this year.David eliakim, KW mallesons

YOur mOnTh AT A gLAnCe

Firm Deal Value Client Lead lawyer Comment

King & Wood mallesons

Perron Investments’ acquisition of a 50 percent interest in three regional centro shopping centres

A$690.4 million

Perron Investments Simone Menz

Agl’s retail entitlement offer (PAITrEO)

A$900 million citigroup global Markets Australia and deutsche Bank Ag, Sydney

david Eliakim, david Friedlander, Scott heezen

king & wood Mallesons also advised on Agl’s $650 million high equity credit subordinated note issue earlier this year

minter ellison

cFS sale of 50 percent stake in Myer centre Brisbane to ISPT

A$366 million ISPT helen Scott, Michael Byrom

holding redlich has advised its client ISPT for over 15 years

Intermediate capital group’s acquisition of Archer capital growth Fund’s majority stake in ScF group

undisclosed Archer capital growth Fund

dan Marks, greg May

AET SPv Management acquisition of a portfolio of Australian corporate real estate loans from BOS International (Australia) and capital Finance Australia

A$620 million lloyds International victoria Mathewson, john Elias, daniel Scotti, lindsay Powers, david McElhone

Minter Ellison has advised lloyds International in relation to a number of transactions – most recently on the first sale of distressed property loans, which took place in the second half of 2011

norton rose

general Electric company (gE) acquisition of Industrea and Industrea Mining Services (IMS)

A$470 million Industrea Shaun clyne clyne advised Industrea on its acquisition of Aj lucas grou’s underground In-Seam Services Business for A$25.5 million in March 2011

AMP capital acquisition of the South Australia Schools PPP

A$232 million AMP capital Adrian Ahern

Sk E&S stake in Timor Sea gas discoveries

uS$520 million

Sk E&S Alex cull

ALB 1006.indb 7 26/06/2012 3:57:15 PM

LEAgUE TAbLES AUSTrAlASIAn leGAl BUSIneSSISSuE 10.68

TOP m&A ADVisOrs - AusTrALiAn AnnOunCeD DeALs, YeAr TO DATe

rAnK LegAL ADVisOr VALue ($miL)

mKT. shAre DeALs

2 gilbert + Tobin 5,399.74 16.5 13

3 king & wood Mallesons 4,847.55 14.8 28

4 Ashurst 4,033.29 12.3 17

5 Allens 3,349.90 10.2 16

6 latham & watkins 3,309.12 10.1 1

6* jipyong jisung 3,309.12 10.1 1

8 Allen & Overy 2,161.47 6.6 7

9 clayton utz 1,990.53 6.1 18

10 norton rose 1,081.57 3.3 9

11 clifford chance 1,045.07 3.2 7

12 johnson winter & Slattery 856.23 2.6 1

13 Allende & Brea 840.03 2.6 2

13* Machado Meyer Sendacz & Opice 840.03 2.6 2

13* Bruchou Fernandez Madero lombardi & Mitradi 840.03 2.6 2

13* galicia Abogados 840.03 2.6 2

17 Baker & Mckenzie 825.28 2.5 8

18 corrs chambers westgarth 745.12 2.3 9

19 Simpson Thacher & Bartlett 600.94 1.8 1

20 Minter Ellison 578.44 1.8 17

21 Middletons lawyers 521.56 1.6 4

22 dlA Piper 406.84 1.2 4

23 Mayer Brown llP 400.00 1.2 1

24 herbert Smith 394.35 1.2 1

25 Mccullough robertson 292.58 0.9 10

Subtotal with legal Advisor 24,963.88 76.1 177

Subtotal without legal Advisor 7,832.64 23.9 487

Industry Total 32,796.52 100.0 664

(*tie) Based on ranking value inc. net debt of TargetSource: Thomson Financial date: 2012-06-12 08:30:48 EdT

NO.1 FreehiLLsvAluE ($MIl)

dEAlS: 27 MArkET ShArE: 33.4

10,945.93TOP m&A ADVisOrs - COmPLeTeD DeALs, YeAr TO DATe

rAnK LegAL ADVisOr VALue ($miL)

mKT. shAre DeALs

2 gilbert + Tobin 13,550.43 41.9 15

3 Allens 12,577.99 38.8 13

4 corrs chambers westgarth 11,709.38 36.2 12

5 Ashurst 11,424.25 35.3 17

6 clayton utz 10,830.51 33.4 24

7 Freehills 9,492.05 29.3 28

8 Minter Ellison 5,675.53 17.5 23

9 Allen & Overy 5,138.48 15.9 13

10 Mccullough robertson 3,134.02 9.7 11

11 cravath, Swaine & Moore 2,739.72 8.5 1

11* Baker Botts llP 2,739.72 8.5 1

13 Stikeman Elliott 2,414.38 7.5 2

14 cassels Brock & Blackwell llP 1,351.86 4.2 3

15 Orrick herrington & Sutcliffe llP 1,220.35 3.8 1

15* lawson lundell lawson & McIntosh 1,220.35 3.8 1

15* davies ward Phillips & vineberg llP 1,220.35 3.8 1

15* kalamba & Associes 1,220.35 3.8 1

15* linklaters 1,220.35 3.8 1

20 lawrence graham 1,194.03 3.7 1

21 clifford chance 1,027.56 3.2 6

22 Sullivan & cromwell 984.05 3.0 2

23 Baker & Mckenzie 788.99 2.4 9

24 Andrews kurth llP 526.85 1.6 1

24* Mayer Brown llP 526.85 1.6 1

Subtotal with legal Advisor 27,937.06 86.3 169

Subtotal without legal Advisor 4,441.31 13.7 313

Industry Total 32,378.37 100.0 482

(*tie) Based on ranking value inc. net debt of TargetSource: Thomson Financial date: 2012-06-12 08:18:09 EdT

NO.1 King & WOOD mALLesOnsvAluE ($MIl)

dEAlS: 31 MArkET ShArE: 53.6

17,350.11

ALB 1006.indb 8 26/06/2012 3:57:15 PM

New Zealand is now in the fi nal stages of joining the international trade mark registration system known as the Madrid Protocol. By implementing the Madrid Protocol, New Zealand will join its major trading partners who are already members, including its closest trading partner, Australia (a member since 2001) as well as the United States (a member since 2003) and the United Kingdom, the European Union and Japan.

As part of the fi nal implementation steps, the Intellectual Property Offi ce of New Zealand (IPONZ) issued a Discussion Document in May 2012, which outlined proposed amendments to the Trade Marks Regulations 2003. The amendments include necessary changes to give eff ect to New Zealand’s obligations under the Madrid Protocol and follow on from amendments already made in 2011 to the Trade Marks Act 2002 that implemented Madrid Protocol requirements.

While the Ministry of Economic Development (MED) has not provided a likely start date for the implementation of the Madrid Protocol in New Zealand, an MED offi cial stated that December 2012 was “optimistic” but a best estimate was more likely to be February 2013. Implementation follows on from the New Zealand Government’s decision in 2006 to agree to pursue accession to the Madrid Protocol (as well as the Singapore Treaty and the Nice Agreement) as administered by the World Intellectual Property Organisation.

The Madrid Protocol will allow owners of New Zealand trade marks to register their trade mark rights in member countries via the fi ling of a single application with IPONZ based on an existing trade mark application or registration in New Zealand. The system is intended to simplify and generally lower compliance costs associated with overseas trade mark registration. The Madrid Protocol will also allow foreign trade mark owners to more easily register their trade marks in New Zealand (i.e. without having to fi le a separate trade mark application in New Zealand, which is the present case).

Details for the implementation of the Madrid Protocol are yet to be fi nalised, but IPONZ has indicated in its Discussion Document that all

fi lings will be accepted electronically and that IPONZ will opt in for the 18 month refusal period (as opposed to the 12 month period). The decisions made by IPONZ are intended to closely align with IP Australia’s current administration of the Madrid Protocol in Australia.

The close alignment also appears to further signal the ultimate goal for New Zealand to create a single economic market with Australia. The alignment is also consistent with the announcement made in mid-2011 by the governments of New Zealand and Australia for the implementation of a simplifi ed fi ling and examination process for patent applications fi led in both countries by June 2014.

One diff erence, and in an apparent fi rst for the administration of the Madrid Protocol, IPONZ has indicated that it will not charge a handling fee when accepting Madrid Protocol applications. IPONZ does not intend to charge fees due to the anticipated low cost of administration because of IPONZ’s recently upgraded online fi ling system. IPONZ can however review Madrid Protocol charges in 2015.

Given the imminent implementation of the Madrid Protocol, it is recommended that New Zealand trade mark owners should review their trade mark portfolio and consider registering key trade marks/brands in advance of the implementation of the Madrid Protocol, including brands/trade marks in use but not yet registered. The rationale is that the Madrid Protocol is likely to see an increase in trade mark fi lings from overseas (as was the experience when Australia and Singapore joined). The increased foreign fi lings could potentially impede trade mark registration by New Zealand trade mark owners or at least make it harder for New Zealand trade mark owners to register their marks.

When considering trade mark protection outside of New Zealand, trade mark owners should assess the benefi ts of trade mark registration via the Madrid Protocol, particularly when registration is sought in multiple countries. In particular, it is recommended that trade mark owners should factor in the Madrid Protocol as an alternative to registering trade marks on a

country-by-country basis, which is generally less cost-eff ective than utilising the Madrid Protocol.

It is expected that once the MED has considered the feedback relating to its Discussion Document, the proposed amendments to the Trade Marks Regulations 2003 will be adopted and IPONZ will make an announcement as to the start date for the Madrid Protocol in New Zealand. When fi nally implemented New Zealand will belatedly join Australia and so enjoy the benefi ts of the Madrid Protocol.

Hamish Selby is a senior associate in the Auckland offi ce of Buddle Findlay, one of New Zealand’s leading law fi rms. Hamish is a specialist intellectual property lawyer with extensive experience advising clients in New Zealand, Australia and overseas. He can be contacted by phone on +64 9 363 0703 or email hamish.selby@buddlefi ndlay.com

HAMISH SELBYBuddle Findlay

MADRID PROTOCOL: THE NEXT STEP ON THE ROAD TO A SINGLE ECONOMIC MARKET BETWEEN NEW ZEALAND AND AUSTRALIA?

NZ Commentary

Firm Profi le

ALB 1006.indb 9 26/06/2012 3:57:15 PM

bANKINg & FINANCE AUSTrAlASIAn leGAl BUSIneSSISSuE 10.610

A&O nABS A MAlleSOnS BABy….

BAnkIng & FInAncE hAS EMErgEd AS ThE kEy BATTlEgrOund BETwEEn InTErnATIOnAl FIrMS And ThE TrAdITIOnAl AuSTrAlIAn

ALB 1006.indb 10 26/06/2012 3:57:18 PM

bANKINg & FINANCEAUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 11

….BUT MAllIeS ClAIMS MOrAl vICTOry.TOP TIEr – And AS ALB’S ReNu PRasad rEPOrTS, BOTh kIng & wOOd MAllESOnS And AllEn & OvEry ArE clAIMIng vIcTOry.

ALB 1006.indb 11 26/06/2012 3:57:19 PM


Here’s a sobering fact for those who claim that international firms are not making any impact on the Australian market: Allen &

Overy has scored roles on five out of the five covered bond programmes which have been brought to market by Australian issuers to date, including acting for the issuer in the case of the NAB and CBA programmes. Not a bad effort for a firm which many claimed was nothing more than a collective of disgruntled Aussies operating under a new logo. But is this really a watershed moment for Allen & Overy in Australia? Far from it, according to some observers. “It was their international capability which got them the job in most of those transactions – it had nothing to do with the fact they had a local office. It’s important to emphasise that,” one lawyer told ALB. Covered bonds are a

<design note> please see thinkstock for my choice of title page image – saved to lightbox 10.6. It is the shot of the paper men against a black background. The title will run across the top “A&O nabs a Mallesons baby….” and also across the bottom “….but Mallies claims moral victory.” The word “nab” and “moral victory” will be in pink and rest of title text will be white.Box BF 3 (see end of article) can be integrated into this title picture – white text against black.

<design note: please see text for exact location of boxes>

<design note> please incorporate photos for ALL lawyers cited in this article – they are in folder

King & Wood Mallesons – Berkeley Cox

Allen & Overy – 3 people

Eric Boone – Baker & McKenzie

Shaun McGushin - Corrs Chambers Westgarth partner

product with a strong European heritage and, on one analysis, A&O was simply winning work which it would have won even without an Australian presence.

Clearly this is not a view that particularly flatters Grant Fuzi’s local A&O team, although when asked to respond the firm preferred to maintain a dignified silence. There may be another reason why A&O is feeling quietly confident: while the exact parameters may be in dispute, there is no doubt that A&O Australia has inflicted some significant pain on its local rivals. The NAB is well known for its relationship with King & Wood Mallesons, yet the bank opted to use A&O for its debut covered bond programme. It’s a decision which KW Mallesons partner Berkeley Cox admits caused his firm some disappointment, but he says he is very comfortable with the firm’s relationship with NAB. “We are fortunate to continue to have a great relationship with the relevant people at NAB,” he says.

The real story, according to Cox, is to be found in an analysis of the issuer roles across the five transactions to date. “The role that everyone covets is the issuer’s documentation role, which we had on three of the five deals – ANZ, Westpac and Suncorp,” he notes. “Who was first to market? ANZ and Westpac. They wanted to use

syNdicated lOaNs: tOP legal advisORs, asia Pacific 2011

Proceeds Amount ($usm) Deals Proceeds Amount ($usm) Deals

Borrower Advisor

rank Proceeds market share %

rank # of Deals

market share % Lender Advisor rank Proceeds market

share %rank # of

Dealsmarket

share %

Mallesons Stephen jaques 1 19,079.4 2.6 1 33 1.1 Allens Arthur

robinson 1 32,620.0 4.4 1 52 1.7

Freehills 2 18,919.6 2.5 2 32 1.1 Freehills 2 17,620.4 2.6 5 28 0.9

Allens Arthur robinson 3 13,129.6 1.8 4 21 0.7 Mallesons

Stephen jaques 3 17,593.7 2.0 4 30 1.0

Baker & Mckenzie

4 8,007.1 1.1 3 24 0.8 clifford chance 4 13,269.5 1.6 3 34 1.1

Blake dawson 5 5,724.4 0.8 6 9 0.3 Baker & Mckenzie 5 9,215.9 1.6 2 43 1.4

AZB & Partners 6 5,502.2 0.7 20* 4 0.1 wong Partnership llP

6 5,315.9 0.8 7* 12 0.4

rajah & Tan llP 7 4,785.5 0.6 30* 2 0.1 Blake dawson 7 5,310.3 0.6 9* 10 0.3

Allen & gledhill 8 3,072.6 0.4 20* 4 0.1 Minter Ellison 8 4,687.8 0.6 9* 10 0.3

clayton utz 9 2,619.2 0.4 7* 8 0.3 luthra & luthra law Offices

9 4,517.4 0.6 29* 3 0.1

linklaters 10 2,545.5 0.3 12* 5 0.2 Zhong lun law Firm 10 4,434.5 0.4 44* 1 0.0

According to the Thomson Reuters “Syndicated loans legal advisory review” for the full calendar year 2011, the most prolific legal advisors in the Asia Pacific (including Japan and Australia) were Mallesons (on the borrower side) and Allens Arthur Robinson (on the lender side).

ALB 1006.indb 12 26/06/2012 3:57:19 PM


us because of the local law expertise that proved critical in the implementation phase of the legislation and the execution of all these trades. We’re very comfortable with the depth of our local law expertise, which sits favourably against any other firm – including Allen & Overy.” King & Wood Mallesons was able to lay claim to at least one other moral victory in the banking & finance space too – according to the Thomson Reuters’ Syndicated Loans Legal Advisory Review for the full calendar year 2011, the most prolific legal advisors in the Asia Pacific were Mallesons (on the borrower side) and Allens Arthur Robinson (on the lender side). The raw numbers only tell so much of the story, but there’s nothing like a good league table to keep the marketing people busy.

Aside from being one of the key battlegrounds in the war to win the Australian market, banking and finance practices are at the forefront of what is perhaps the real war of attrition in today’s ravaged global economy: the continual struggle to raise capital in an increasingly uncertain environment. Investors have been burned in the sharemarket and banks are shutting up shop – so it’s up to innovative lawyers to step into the breach.

lOaN vOlumesAccording to statistics from Thomson Reuters LPC, Australian loan volume for the first five months of 2012 totalled US$18 billion. The corresponding figure in 2011 was US$29 billion, so clearly there has been a significant drop off in activity.*

“This is a trend that we’ve seen and when we speak with other banking and finance groups around town, it’s pretty clear that overall there has been a drop off in volume – there is a drop off in the number of deals banks are prepared to look at,” observes Corrs Chambers Westgarth partner Shaun McGushin. Some obvious explanations come to mind – the departure of European banks from local activity, confidence issues relating to Greece and the general post GFC malaise. However, the year on year drop in loan volume could perhaps also be partly explained by an unusually high level of refinancing activity last year. “In 2011 and even 2010 there was a lot of refinancing – people just wanted to get it done as soon as possible, even if they didn’t need to do it at that point,” says McGushin. “That was quite common and I think that has died off now.” Baker & McKenzie partner Eric Boone agrees: “We had always anticipated this wall of refinancing – so there was a lot of refinancing activity ahead of maturities – they were refinancing ahead of time,” he recalls. Nor is the picture necessarily uniformly negative. Allen & Overy partner Jason Huinink points out that while he agrees with the broader picture of declining volumes, the market has many redeeming features too. “There’s still a lot of lending activity in the infrastructure and energy and resources space – we’ve been fortunate to be involved in many of those deals,” he observes. “There is absolutely no doubt that this activity is still continuing.” Huinink cites debt restructuring work and loan portfolio sales as two other examples of areas where activity has held up so far this year.

“ThEy wAnTEd TO uSE uS BEcAuSE OF ThE lOcAl lAw ExPErTISE ThAT PrOvEd crITIcAl In ThE IMPlEMEn-TATIOn PhASE OF ThE lEgIS-lATIOn And ThE ExEcuTIOn OF All ThESE TrAdES.”

Berkeley Cox, King & Wood mallesons

“IT’S PrETTy clEAr ThAT OvErAll ThErE hAS BEEn A drOP OFF In vOluME – ThErE IS A drOP OFF In ThE nuMBEr OF dEAlS BAnkS ArE PrEPArEd TO lOOk AT.”

shaun mcgushin, Corrs Chambers Westgarth

“wE hAd AlwAyS AnTIcIPATEd ThIS wAll OF rEFInAncIng – SO ThErE wAS A lOT OF rEFInAncIng AcTIvITy AhEAd OF MATurITIES.” eric Boone, Baker mcKenzie

“ThErE’S STIll A lOT OF lEndIng AcTIvITy In ThE InFrASTrucTurE And EnErgy And rESOurcES SPAcE – wE’vE BEEn FOr-TunATE TO BE InvOlvEd In MAny OF ThOSE dEAlS.”

Jason huinink, Allen & Overy

ALB 1006.indb 13 26/06/2012 3:57:22 PM


BONd vOlumesThe level of bond issues has remained steady. Thomson Reuters statistics show that Australian issuers had issued US$80 billion worth of debt in the year to date by mid May, which is a similar figure to the corresponding figure for 2011. Total number of issuances (155 this year, 170 for the corresponding period last year) were also similar.

The bond market has been a source of notable activity. BHP set the pace early in the year with a $US5.25 billion plan to tap the U.S. market, banks have been testing the covered bond market and there has been a resurgence in hybrid and subordinated note offerings.

The list of recent issuers of hybrid offerings includes Woolworths, Origin Energy, AGL Energy and the major banks and a KPMG analysis reported that total issuance of Australian hybrids for Q1 2012 alone was A$6 billion.

Boone says the motivation here is not simply limited to a need to refinance, but also to shore up different sources of funding. “With the Australian corporates – I think people have learned the lessons from the GFC, especially if we have another financial crisis – people recognise that there needs to be a diversification of funding sources,” he says.

Banks are issuing hybrids with one eye

on the looming shadow of Basel III. “Hybrids that are issued by banks are generally issued to meet prudential regulatory standards – particularly the Basel III standards coming into effect in January 2013,” says Allen & Overy senior associate Anand Sundaraj. “As a result a lot of existing bank hybrid capital will need to be retired as it doesn’t comply. We expect to see quite a number of banks issuing hybrids in the near future.”

Sundaraj says that it’s a stimulating line of work for legal advisors: “The interesting thing to note about hybrids is that, in contrast to a convertible bond where there’s not much variation in the terms of issue, with a hybrid everything is on the table and up for negotiation,” he says. “The terms of a hybrid will be tailored to meet the issuer’s specific situation and needs.”

Subordinated notes seem to be back in vogue. NAB’s first subordinated note issue in over 10 years attracted plenty of attention, particularly following the bank’s decision to double the size of the offer from A$500 million to A$1 billion. NAB was following in the steps of ANZ in this case and ANZ’s issue also involved a dramatic increase in the offering size – a tripling from A$500 million to A$1.5 billion.

“Subordinated notes seem to come in and out of favour over the years – probably more so than most other debt instruments,” observes Shaun McGushin. “Certainly they seem to go up and down with the market and the level of risk they are perceived to have.”

The brisk activity by banks in not only subordinated notes but other forms of capital raising has led many to conclude that we have already seen the bulk of activity that can be expected in this area for 2012. “Certainly with the big four banks – they’ve done so much financing late last year and the first three months of this year, they probably don’t need to do much more financing at this point for the fiscal year,” says Boone.

cOveRed BONd issuaNcesLast October Australian parliament passed legislation allowing financial institutions to sell covered bonds, which offer a higher level of investor security by securing the bond against designated bank assets.

Australian banks have been quick to take the initiative on covered bonds and all of the “big four” have made multi-billion dollar issuances in the latter stages of 2011 and early 2012, while regional player Suncorp is also testing the waters.

“We’re seeing the second wave of covered bonds coming into market with the Suncorp issue,” says Allen & Overy partner Karolina Popic. “This issue will feature a soft bullet so you have a maturity date which is extendable for a year if there is a default on the hard date. That kind of feature is predominant in the overseas market – basically all of the European issued covered bonds have that kind of feature - but it’s really the first time we’ve seen it in Australia.”

Covered bonds are frequently associated with the European market for historical reasons. “Covered bonds are very established products in Europe and have been in place for literally three hundred years,” says Clifford Chance senior associate Laura Sheridan Mouton. “They are a very well understood instrument there. That would be less the case in the U.S. markets, though there is increasing appetite for this type of instrument in the U.S. – however, it’s not a traditional product in the U.S. whereas it is in Europe – for legislative and historical reasons it’s something that is more familiar in Europe.”

HyBRid issuaNces - summaRy uP tO q1 2012

issuer Date Term risk margin Amount

Agl Energy Apr-12 27yrs 380bps A$650m

AnZ Mar-12 10yrs 275bps A$1500m

westpac Mar-12 8yrs 320-35-bps A$750m

colonial First State

Mar-12 25yrs 325bps A$1,000m

Tabcorp Mar-12 25yrs 425bps A$200m

Origin Energy dec-11 60yrs 400bps A$900m

woolworths nov-11 25yrs 325bps A$700m

Source: www.insto.com.au

ALB 1006.indb 14 26/06/2012 3:57:22 PM


However, covered bonds are not an exclusively European play and an April study by Insto and KPMG found that 42 percent of first quarter issuance was in Australian dollars and the Euro accounted for only 32 percent and the US dollar 10 percent. These figures demonstrate that issuers have placed weight on the diversity of funding sources in their programmes. “Pretty much all of the programmes have introduced a wide measure of flexibility so as to allow for issues into the US 144A market as well as EU Prospectus Directive-compliant issues listed on regulated markets in Europe,” says Mouton. “A couple of issuers early in the year – Commonwealth Bank and ANZ – did local issues and they were substantially sized transactions in the A$3 billion range. I think there is quite a bit of interest particularly from Asia in Australian dollar-denominated issues.”

Australian rules permit banks to issue the equivalent of 8 percent of their assets in covered bonds, which means banks could potentially issue up to $140 billion of these instruments. Banks have not yet reached this level, but the feeling is that the initial surge of covered bond activity has now peaked. “The banks are not yet [at the statutory issuance cap of 8 percent of their Australian assets], but I would agree that for a variety of reasons – for diversification, investor appetite and market driven reasons in terms of pricing – it’s unlikely that covered bond issuance will continue at the pace it did in the latter part of 2011 and early 2012,” says Mouton.

It is worth acknowledging the role played by New Zealand banks and lawyers in the covered bond area. The very first such issue in Australasia was from the Bank of New Zealand in mid 2010, a deal which went on to win Debt Market Deal of the Year in the 2011 ALB Law Awards. This was a rare example of a New Zealand deal beating a field of Australian nominees and must have been a pleasing result for the Kiwi lawyers involved. Interestingly, the deal preceded the introduction of a legislative framework in NZ, so lawyers had to draw on securitisation techniques. As this edition of ALB was going to print, the NZ government was still finalising a regulatory framework for covered bonds. *Loan volume figures record all syndicated and club loan types, including project finance, M&A, refinancing, working capital, asset finance etc. but exclude bond issuance.

“ThIS ISSuE wIll FEATurE A SOFT BullET SO yOu hAvE A MATurITy dATE whIch IS ExTEndABlE FOr A yEAr IF ThErE IS A dE-FAulT On ThE hArd dATE.” Karolina Popic, Allen & Overy

“hyBrIdS ThAT ArE ISSuEd By BAnkS ArE gEnErAlly ISSuEd TO MEET PrudEn-TIAl rEgulATOry STAn-dArdS – PArTIculArly ThE BASEl III STAndArdS cOMIng InTO EFFEcT In

jAnuAry 2013.” Anand sundaraj, Allen & Overy

“IT’S unlIkEly ThAT cOvErEd BOnd ISSuAncE wIll cOnTInuE AT ThE PAcE IT dId In ThE lATTEr PArT OF 2011 And EArly 2012.” Laura sheridan mouton, Clifford Chance

4%

42%

32%

10%

7%5%

Source: Insto, KPMG analysis as at 17 April 2012

cOveRed BONd cuRReNcy issuaNce By “Big 4” BaNKs

AUD

EUR

USD

CHF

NOK

GBP

ALB 1006.indb 15 26/06/2012 3:57:26 PM

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ANALYSIS AUSTrAlASIAn leGAl BUSIneSSISSuE 10.618

As U.S firm Dewey & LeBoeuf embarks on the humbling process of working through bankruptcy, creditors and former partners are

bracing themselves for a nasty court battle that could drag on for years.

Dewey, a storied firm with deep Wall Street connections, filed for Chapter 11 protection last month after veering toward collapse amid revelations of fat salary guarantees, risky loans and a culture of secrecy. Some former partners have hired lawyers in anticipation of clawback suits by the estate. Law firms that offered positions to former partners could also get embroiled in fights over rights to client fees. Creditors ranging from banks to temp services have started jockeying for position to maximize limited payouts.

Some contentiousness was on display at a recent bankruptcy hearing in Manhattan. Lenders were especially aggressive, asking the judge to approve a lien on certain litigation proceeds in exchange for letting Dewey fund its bankruptcy with money owed to the lenders. Judge Martin Glenn denied that request as unreasonable, at least in the interim, saying he would prefer to wait to make his decision until an official committee of unsecured creditors was in place. There also appeared to be communications issues during the hearing. Albert Togut, Dewey’s bankruptcy attorney, announced that the firm was “close” to a settlement framework. But he was contradicted by Mark Zauderer, an attorney representing a group of ex-Dewey lawyers, who said settlement talks were only preliminary.

WHeN assets WalK aWayIn a typical Chapter 11, a corporation uses its existing assets to continue generating revenue to fund a reorganization. The theme park Six Flags, for example, continued to sell tickets while in Chapter 11

dEwEy’S BAnkruPTcy: LET THE RUMBLE BEGINBy Nate RaymONd And NicK BROWN, rEuTErS

in 2009. The company also had tangible assets -- the theme-park rides themselves, real estate, merchandise -- which could have been sold off to raise money for creditors had it been necessary. Dewey has different kinds of assets: Its lawyers and their books of business, or clients. Once the lawyers walked away -- by now nearly all of its 300 partners have left the firm - the company had little means to produce revenue.

“Our assets went home every night,” Togut said, “until one night, they went home and never came back.”

According to bankruptcy filings, all that is left of Dewey’s once-robust operations are accounts receivable of about $255 million, about $13 million in cash, various pieces of artwork of unknown value, and about $11 million invested in an insurance consortium.

How effective Dewey will be in getting clients to pay those accounts is unclear, especially since the incentive of an ongoing client-firm relationship has disappeared. “You find reasons not to pay,” said Jonathan Landers of Jager Smith, who represented Citigroup Inc in prior law firm collapses.

cReditORs, get iN liNeAs of now, Dewey & LeBoeuf effectively exists to service its creditors, whose place in line to collect will be determined by a number of factors, including whether the debts were secured or not, and the vagaries of bankruptcy and employment law.

Typically, secured creditors get first dibs under federal bankruptcy statutes. In the Dewey proceeding, those include Dewey’s lenders and bondholders. JPMorgan Chase & Co and a group of lenders had a tab of $76.5 million under a secured credit agreement, according to bankruptcy filings. A group of investors who bought privately placed bond notes that Dewey issued in April 2010, meanwhile, are owed $150 million, according to court papers.

Next in line come employees who were terminated in the period prior to the bankruptcy. Under U.S. law, these people have priority status, ahead of other unsecured creditors.

Then the other unsecured creditors get their shot. Among these the U.S. Pension Benefit Guaranty Corporation has asserted the largest claim. The PBGC sued Dewey earlier this month to seize three pension funds it said were underfunded by $80 million. Dewey’s New York landlord, Paramount Group, claims to be owed $3.78 million for a lease at Dewey’s Manhattan headquarters on Avenue of the Americas.

Other unsecured creditors include HireCounsel, a staffing firm that put in a claim for $1.56 million, and HBR Consulting LLC, a legal consulting firm that claims about $656,700. Thomson Reuters, the parent of legal research company Westlaw as well as Reuters, entered a claim for $2.36 million, and rival Reed Elsevier’s

ALB 1006.indb 18 26/06/2012 3:57:27 PM

ANALYSISAUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 19

Wilfred Ong

In-house Q&A >>

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

I wouldn’t use the term ‘indispensable’ as no organization or individual in any profit-driven organization is ‘indispensable’. But the business is beginning to recognize the value the Legal/Contracting organization brings to the table. one of the main reasons is probably the effect of globalization. The reaction to globalization in some of the key markets in Asia like China & India are local regulations to protect the local market, or to enhance what they perceive as their security & ‘social harmony’. We help in identifying and trying to mitigate these regulatory risks. In the IT industry where competition for business is very keen, again, our organization helps to identify & mitigate risks in contracting terms. As the role of in-house lawyers are becoming more broad based, our organization adds value to the operationalization of business strategies by managing labor risks; negotiating disputes and in strategic business collaboration; helping the business to articulate & review business strategies; & mergers/acquisitions. It is only when in-house lawyers deal with these issues in a holistic manner, and appreciate the business objectives that needs to be achieved, that the business will clearly see the value that we bring to the table.

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

Counsel can wear the ‘hat’ of Lawyer, Legal Manager, Compliance Manager, and Company Secretary). In your opinion, do you believe this has increased your risk profile? not really, as these functions ‘come with the turf’. This is what makes our role unique. I personally do not view this as ‘increasing my risk profile’, but rather, I take it as a challenge to the ever growing complexity in the role of a corporate General Counsel. Any significant role in any business, especially multinational companies, has a dimension of risk. Why not ours? We should move away from the stereotyping of corporate counsels as being people who are entirely ‘risk averse’. Its unavoidable that our role embraces a certain level of risk.

3 What is the best advice you have ever received? someone once repeated to me the adage that ‘the grass is ALWAYs

greener on the other side’. If we keep comparing, we’ll never be satisfied. Its only natural that younger in-house counsels tend to move quite quickly from one job to another – to get better experience, exposure, more money to support their young families etc. But we must not lose sight of the intangible benefits that our current jobs may sometimes bring – fair & supportive bosses who walk the talk and whom we can respect; the sense of belonging & collegiality in our organization; and the hard-earned respect & recognition our organization has earned with the company. These are equally important. Please also answer these questions which will appear as part of your profile.

JLegal is a global specialist legal recruitment consultancy focused solely on providing recruitment solutions to the legal profession.For a confidential discussion about your career, contact one of our senior consultants today. www.jlegal.com

Melbourne t | +61 3 9910 6700 Sydney t | +61 2 8249 4730

Lexis-Nexis said it is owed $1.41 million. A spokesman for PBGC said the pension fund is continuing efforts to take over the pension plans. Representatives for Paramount group, HireCounsel, HBR Consulting and Thomson Reuters Corp did not return calls for comment. A representative for Reed Elsevier declined to comment.

The last group to recover money would likely be the former partners themselves. The firm, like most of its contemporaries, required members to make a capital investment at the time of partnership. Dewey’s fund at the time of writing stood at $52.4 million. It is far from clear whether there will be money left in that fund for ex-partners. What’s more, some of them could be vulnerable to clawbacks that would offset any money they are owed. Former partners have said privately for weeks that they’ve anticipated both bringing claims and being sued. Tracy Klestadt, who represents about 20 ex-Dewey partners, said he expected the estate would consider filing claims against all of Dewey’s partners.

Already one former Dewey partner, James Woods, has initiated arbitration before the New York City Bar Association for compensation he’s owed, according to bankruptcy filings. Woods, now with Mayer Brown, did not respond to requests for comment.

While Dewey’s bankruptcy attorney Togut has said that Dewey was nearing a settlement with former partners, it is unclear how many would participate. “I just heard it for the first time in court,” said Klestadt.

gOiNg afteR tHe fiRmsThe firms that poached the former Dewey partners could also be vulnerable to litigation by the Dewey estate.

When partners leave one firm for another they typically take their clients along. In some past law-firm bankruptcies the trustee for the bankrupt firm claimed that at least some of the fees generated by those clients belonged to the estate.

Last month a U.S. district court judge in Manhattan ruled that revenues generated by former Coudert Brothers lawyers on cases they took with them after that firm dissolved in 2006 belong to Coudert’s bankruptcy estate.

That ruling could pave the way for the Dewey estate to pursue its former partners’ new employers to collect on the profits of the so-called unfinished business. Among the firms that recruited the most Dewey & LeBoeuf partners are Morgan Lewis & Bockius; DLA Piper; Willkie Farr & Gallagher; Proskauer Rose; and Sutherland Asbill & Brennan. Spokespeople for Willkie, DLA, Morgan Lewis and Sutherland declined comment, while a representative for Proskauer had no immediate comment.

cHaPteR cHOiceUntil fairly recently, liquidations like Dewey’s usually were pursued under Chapter 7 of the bankruptcy code. Chapter 7 puts a debtor’s estate under the control of a trustee tasked with selling assets quickly and using the proceeds to pay off creditors.

Dewey, though, has chosen to file under Chapter 11, which provides for a more cooperative, deliberative process. Debtors typically prefer Chapter 11 because it lets them remain in control of their estate, usually without interference from a trustee.

Creditors often prefer Chapter 11 as well, because it allows them to form official committees paid for by the estate, gives them access to operating reports, and lets them exercise more control over how the debtor liquidates and how their bankruptcy claims are treated.

Given the sheer volume of competing interests and unresolved issues in the Dewey case, the unwinding could be slow going.

ALB 1006.indb 19 26/06/2012 3:57:27 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.620 bANKINg & FINANCE

cOBuRN’s guide to capital, assets, and chicken chilli BASEL III

Like its predecessors Basel II and I, the Basel Committee’s latest regulation is a framework to ensure global banks have the right proportion of funds owned to funds loaned.

Banking regulation is similar to cooking. You have a number of ingredients and a chosen recipe to follow. But often you fi nd you have more carrot than bok choy in your fridge and so you must take a more fl exible approach to the meal.

As long as you understand how to limit your use of the more risky ingredients, your meal will more than likely be all right. Too much fi sh sauce and your dinner will end up in the insolvency incinerator with the Lemon Brothers. Tony Coburn

ThE cAPITAl TO ASSETS rATIO IS A kEy POInT OF dIScuSSIOn In ThE FInAncIAl PrESS – BuT whAT dOES ThE TErM AcTuAlly MEAn And hOw IS IT cAlculATEd? FrEEhIllS cOnSulTAnT tONy cOBuRN PrOvIdES SOME EnlIghTEnMEnT.

ALB 1006.indb 20 26/06/2012 3:57:31 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 21bANKINg & FINANCE

ALB 1006.indb 21 26/06/2012 3:57:33 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.622 bANKINg & FINANCE

In the banking world, there are two main ingredients for making money: capital and assets. The recipe for avoiding a similar demise is ensuring an appropriate proportion of capital to assets, and more importantly, limiting the percentage of high-risk assets. This is what’s called the ‘capital to assets ratio.’ It’s the relationship between funds invested in the bank (for example, by shareholders) compared to the value of the bank’s assets. In banking, for the most part assets refer to financial property. This means the assets are comprised of the rights to repayment of any loans granted by a bank and the rights to payment of any money owed to the bank by third parties. This includes customers, governments and other banks.

Generating assets, such as credit cards, loans, or other derivative products, is how a bank makes its money.

In order to create these assets, obviously the bank needs money to lend. The bank raises funds through steps that include issuing shares, taking deposits from

customers, and issuing bonds or notes in debt capital markets. A bank has to repay depositors, bond holders and note holders. Failure to do so could result in the bank being sued and ultimately becoming insolvent.

Shares, on the other hand, are not repayable because a shareholder invests in the hope of receiving dividends from profits made. And the share price will reflect both retained earnings by the bank and the market perception of likely future earnings. Investing in shares comes at the risk of the bank making a loss. In that case, no dividends would be paid, and write offs of unrecoverable loans and obligations owed to the bank would reduce shareholders’ funds and therefore the market value of the shares.

So the capital to assets ratio is a test of the capacity of the bank to absorb losses. The more capital a bank has, the greater the number of losses it can write-off without risking insolvency.

Because of our comparatively conservative regulation, Australian banks have always had a significant amount of capital in proportion to their assets.

Quite straight forward? Here’s were it gets a little more complicated. Like our ingredients, some assets are more risky than others and so assets are “risk weighted”. This means different assets require varying amounts of capital to be held against them. For example, unsurprisingly the risk of non-repayment by a government is considered to be less than that of a credit card holder. Some credit cards and other unsecured loans and personal loans and may need to be risk-weighted at 100 percent. This means the full value of the loan must be taken into account in determining the amount of capital that the bank requires. But loans made to highly rated banks are likely to have a lower risk-weighting, perhaps closer to 20 percent of the loan value. Residential mortgages might be lower than unsecured loans or business loans, and might be weighted at, say, 35 percent of the loan value.

Under Basel III, banks will take a new approach to how they calculate the amount of capital that must be held available for its risk-weighted assets. Capital will now be divided into three different classes known as Common Equity Tier 1, Additional Tier 1 Capital, and Tier 2 Capital. And there will be minimum

BASEl III cAPITAl clASSES And rEQuIrEMEnTS:

Common Equity Tier 1 must be at least

4.5% of risk-weighted assets

at all times

Tier 1 capital (including Common Capital Tier 1)

must be at least

6% of risk-weighted assets

at all times

Total capital (Tier 1 Capital plus Tier 2

Capital) must be at least

8%of risk-weighted assets at all times

SO ThE cAPITAl TO ASSETS rATIO IS A TEST OF ThE cAPAcITy OF ThE BAnk TO ABSOrB lOSSES. ThE MOrE cAPITAl A BAnk hAS, ThE grEATEr ThE nuMBEr OF lOSSES IT cAn wrITE-OFF wIThOuT rISkIng InSOlvEncy.

ALB 1006.indb 22 26/06/2012 3:57:33 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 23bANKINg & FINANCE

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Lawyers Weekly Australia 155x220 FINAL.indd 1 31/05/2012 20:14

requirements as to the proportion of capital that must be Common Equity Tier 1 and Additional Tier 1 Capital. In total, capital of the bank must be in an amount that is at least 8percent of the risk weighted value of the bank’s assets. While we know that Common Equity Tier 1 will include all capital related to shareholders equity, for example shares, retained earnings or other disclosed reserves, it is not as clear what may be characterised as “Additional Tier 1 Capital” or “Tier 2 Capital”.

There are various forms of instrument which have some features similar to debt, but which may be treated as capital of the bank for these purposes. An example being some forms of convertible notes. The extent to which the rights of the note-holders are subordinated to other creditors will also affect the characterisation of these instruments. It is here that some of the most interesting and difficult issues will arise for banks complying with this new

regulation. Basel III will bring a change within the Common Equity Tier 1 for Australian banks because APRA proposes to adopt its treatment of dividends. That is, dividends will be deducted from retained earnings only after the dividends have been declared. Balancing this, there will be new guidelines on building retained earnings during good times to increase Common Equity Tier 1, and to create more of a buffer to absorb future losses.

Finally, on the asset risk weighting side, Basel III will recalibrate the level of risk attributed to some assets and in particular trading book assets such as holdings of structured products, collateralised repos and derivative products which produced material losses for some banks in the global financial crisis.

Given that Australia already had well developed prudential guidelines in place for capital requirements, and for risk weighting assets, the introduction of Basel III will have less impact here than in many other countries.

whIlE wE knOw ThAT cOMMOn EQuITy TIEr 1 wIll IncludE All cAPITAl rElATEd TO ShArEhOldErS EQuITy, FOr ExAMPlE ShArES, rETAInEd EArnIngS Or OThEr dISclOSEd rESErvES, IT IS nOT AS clEAr whAT MAy BE chArAcTErISEd AS “AddITIOnAl TIEr 1 cAPITAl” Or “TIEr 2 cAPITAl”.

ALB 1006.indb 23 26/06/2012 3:57:33 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.624 FEATURE

InDIA

In ThEOry, IndIA hAS ThE POTEnTIAl TO rIvAl chInA AS A rEgIOnAl EcOnOMIc POwErhOuSE – BuT wIll ThE hyPE EvEr MATch rEAlITy? By NisHaNt KumaR, ReuTeRS, wITh AddITIOnAl rEPOrTIng By ReNu PRasad, ALB

DeSTInATIOn UnknOwn

ALB 1006.indb 24 26/06/2012 3:57:35 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 25FEATURE

Southeast Asian nations are swallowing an outflow of money from India, as foreign investors lose patience with its policy paralysis and slowing growth and aim instead for more promising emerging markets such as Indonesia. Corruption

scandals and high inflation have added to India’s woes, which have seen growth slow to a three-year low while the fiscal deficit widened to 5.9 percent of GDP in the last financial year.

“India was sold on the promise of high growth which simply hasn’t panned out over the past four years,” said Gautam Prakash, founder of U.S. based hedge fund Monsoon Capital.

Foreign investors pulled a net $540 million out from India in March and April, compared with $13 billion in inflows in January-February. Foreign portfolio flows into Indian stocks have dropped 99 percent to just 5.17 billion rupees ($96.5 million) since a March budget that largely disappointed investors, compared with 427.36 billion rupees in 2012 before the budget. Among the most significant developments from the shift has been the direction in which money is headed – with a big chunk flowing to Jakarta and other Southeast Asian capitals. Two provisions put forward in the budget to tax indirect investments and combat tax evasion were the last straw for some global mutual funds, prompting an acceleration of money leaving India. While the provisions were later put on ice, the prospect that such a tax could be proposed in India was enough for some investors to send their Asia-allocated money further east.

“You’re seeing a situation where the ‘I’ in BRIC is being replaced by Indonesia,” said Tim Condon, head of research and strategy for Asia at ING.

iNdia – austRalia iNvestmeNt: OveRRated?Indian investors have made various forays into Australia over recent years, but Gilbert + Tobin partner Neil Pathak admits that the potential is somewhat overrated. “When you look at the last three to four years of investment, it’s been mainly resources focussed with a bit of IT – you could probably count it all on one hand,” he says. “You’ve got Adani, Lanco, GVK, Tata but not too much else. And so really I don’t see any great explosion in Indian businesses looking to set up in Australia.”

With the exception of resource-heavy industries such as power and steel, Pathak believes that, despite the geographical proximity to Australia, Indians will be looking further afield. “I think for Indians places like the U.S. and UK and, closer to home, Singapore will be more front of mind than Australia,” he says. “For example with the U.S., there are many Indian expatriates in places like Silicon Valley and the sheer size and scale of the U.S. economy means there is a certain affinity and opportunities which Australia could never compete with. So while we’re seen as a nice country with the shared interest in cricket, ultimately Indian investment in Australia will be about resources. For the other high tech industries or the industrial type companies looking to expand, they are more likely to look to places like Europe, America and other parts of Asia before they think about Australia.”

Pathak warns that Indian investment in Australian resources is highly price sensitive and cannot be taken for granted. “Power prices [in India] for example are quite regulated, so while there is interest in resources here they’ve got to get it at the right price in order to fit in with power regulation over there,” he says.

Australian miners have been threatening to take their investment off-shore in response to what they see as unfavourable government policy settings. According to Pathak it’s all part of the bigger picture where the future direction of Indian and Chinese investment

is hanging in the balance. He cites Africa as an example. “China and India also see huge opportunities in Africa – they can see themselves getting in more quickly and perhaps more cost effectively,” he says. “In some cases, the local governments may seem to be more welcoming of the foreign investment than maybe the case for an Australian investment. Indians will look at all of these destinations. China is in the same boat – they’ve definitely moved on a little bit from Australia and in many cases see more prospective opportunities and better pricing in Africa.”

left OutWhile Pathak concedes that India’s economic progress has been “sluggish” of late, he says a broader context is necessary. “I think India has done very well and while economic growth might be a bit more sluggish today than it has been its still above six percent and I am sure India’s growth will continue to progress quickly in the future,” he says.

Others have been less kind. An emerging market brochure distributed by Franklin Templeton last month had data on India missing from a world map. From a global leader in emerging market investing, led by omnipresent guru Mark Mobius, that omission was telling. India exposure in Asia’s biggest equity fund, the $18 billion Templeton Asian Growth fund, dropped to 16 percent of its assets at the end of March from nearly 20 percent a year ago, while exposure to Association of Southeast Asian Nations countries rose to 35 percent from 31 percent during the period.

An ASEAN-focused equity fund launched by Daiwa Asset Management started with about $366 million in February and has since grown to manage about $430 million, while Fidelity Funds-ASEAN has seen a net inflow of nearly $250 million in the last year. The bigger ASEAN markets do not necessarily offer a compelling case on valuation grounds.

“Generally we are more negative on India than we are positive on the alternatives, such as Indonesia and the Philippines where we feel the markets have perhaps run ahead of themselves,” said David Baran, co-founder of Tokyo-based hedge fund Symphony Financial Partners.

“However, the ASEAN alternatives do have more positives and less negatives than India and we think that foreign investment outflows from India into the ASEAN alternatives are highly likely to increase

ALB 1006.indb 25 26/06/2012 3:57:35 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.626 FEATURE

if anything.” Indian shares trade at price to book value of 1.9 times, higher than 1.4 times for Asia Pacific shares as a whole but less than 3.1 times for Indonesia, 2.2 times for Thailand and 2.5 times for Philippines, according to data from Thomson Reuters StarMine. The trend, nonetheless, is clear as money managers shift away from India, at least for the short-term, towards markets that offer the same favorable demographics and growth potential that had previously drawn investors to Delhi and Mumbai.

BettiNg ON aseaNFunds from firms such as Aberdeen, Matthews and T. Rowe with mandates to bet in Asia invested a smaller percentage of their assets in India at the end of March compared with the year-ago period and more in Indonesia and other Southeast Asian countries than they did a year ago.

Part of the drop is due to a fall in the value of holdings, but fund flow data tracked by Lipper shows mutual fund clients are responding as well, giving more ammunition to funds betting on Southeast Asia and less to those investing in India.

Investors pulled out nearly $480 million from offshore India dedicated funds in April, increasing the 12-month cumulative net outflows to about $4.1 billion, according to data from Lipper. By comparison, funds investing in Southeast Asia have seen net inflows of about $900 million in the year ending April. The gap between the total assets under offshore India funds and that of Southeast Asia fell to a three-year low of about $13.5 billion in April, indicating investors were buying into a region that is home to nearly 600 million people.

Indonesia focused bond funds are in favor too, with eight such funds collecting a cumulative $355 million in the year ending April. HSBC Indonesia Bond Open received $200 million alone.

“We are definitely seeing more interest in ASEAN,” said Matt Pecot, head of Credit Suisse’s prime broking unit in the Asia Pacific. Net exposure to India in Asia-focused hedge fund portfolios fell to 18.7 percent in April from 32.5 percent in January 2011, according to data compiled by Credit Suisse based on their client portfolios. The same measure for Indonesia surged to 51.8 percent in April from 24.7 percent in January 2011. Net exposure refers to the difference between a hedge fund’s long positions and short positions. A higher net exposure means funds are expecting the stock market to rise.

BRic Hits WallTen years ago, Chairman of Goldman Sachs Asset Management Jim O’Neill, then the bank’s chief economist, combined the emerging market growth stories of Brazil, Russia, India and China to coin the famous “BRIC” moniker. O’Neill recently called India the “biggest disappointment” of the BRIC nations.

“India was a 9 to 10 percent growth economy when the BRICs were put together and now it’s slowing. Indonesia was a 4 to 5 percent growth economy and it’s moving in the other direction,” ING’s Condon said.

The top-three BRIC mutual funds by assets invested a smaller percentage of their assets into India at the end of March than they did a year back, according to data from Lipper. They are also underweight compared with their benchmark, meaning they do not expect India to contribute to portfolio outperformance. Templeton BRIC fund had 11.7 percent of its assets in India, its lowest since June 2009.

“India is getting trapped in that high fiscal deficit, high current account deficit situation and there is no easy way out of that unless it takes the tough steps,” said Binay Chandgothia, portfolio manager at Principal Global Investors.

Indonesia and the Philippines, meanwhile, have neither current account nor significant budget deficits to worry about, although they do share some of India’s problems such as their own fuel and food subsidies, Symphony Financial Partners’ Baran said.

With combined GDP of $2 trillion, 10-member ASEAN is angling for foreign investment. Ranging from resource-rich Indonesia to impoverished Laos and financial centre Singapore, ASEAN is planning a union by 2015 to allow for free flow of goods, capital, services and labor.

“As far as stock prices go, foreigners own approximately 40 percent of the free float of the Indian market,” Baran said.

“It will not take much of an exodus for this to have a significant impact on the market and there are clearly plenty of alternatives in ASEAN.” ($1 = 53.5550 Indian rupees)

legal seRvices liBeRalisatiONLiberalisation of the Indian legal services market has become something of a bad joke among the international law firms who have been eyeing a possible market entry for many years now. Still, the delay allows for some time for reflection as to whether this would be the right path for Australian law firms, even if liberalisation did occur.

“I don’t see this as something that is a particularly fertile environment for Australian law firms – but I can imagine that for UK firms or global firms there is some logic in it,” says Pathak. “I’m not holding my breath that liberalisation will happen anytime soon – it will happen some day but in my view the upside won’t be as great as some people think it will be.”

Pathak can see the possible benefit of international firms opening Indian offices to advise Indian multinationals on their expansion westwards, but says Australians could be better placed to use a “fly in, fly out” model.

“The investment from India to here will be about resources and Australian based firms working in Australia will be well placed to capture that work provided they have relationships with such Indian companies,” he says. “I don’t see a need to set up an office in India to have those relationships.” Additional reporting by Abhishek Vishnoi in MUMBAI; Editing by Michael Flaherty and Alex Richardson

ALB 1006.indb 26 26/06/2012 3:57:35 PM

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AUSTrAlASIAn leGAl BUSIneSSISSuE 10.628 AUSTRALASIAN LEgAL bUSINESS

Welcome to this first column of In-house Observations. Each month we hope to bring some insightful commentary on

recent developments or matters of interest to the in-house legal profession. For the inaugural column we take a look at the implications of the High Court decision handed down in May this year in the James Hardie case.

Much has been written about the High Court decision – albeit a decision that can hardly be described as “ground-breaking”. Far from being a landmark decision, it has probably not taken the law relating to Directors duties any further. In fact, it probably does little more than reinforce what the Federal Court decided in the Centro case last year. The James Hardie case was one that simply revolved around a finding that the seven non-executive directors and three senior executives (the CEO, CFO and General Counsel) had breached their statutory obligation under section 180(1) of the Corporations Act to act with care and diligence in performing their duties. In a somewhat parallel decision to Centro, three significant points evolved for non-executive directors, namely:•there are significant limitations

on reliance on other directors, management and independent advisors•a high level of scrutiny must be given to

major transactions•directors have an important role to

play when internal policy is not complied with.

If nothing else, the penalties originally handed down by Gazell J in the NSW Supreme Court are certainly sobering. All 10 defendants in the civil proceedings brought by ASIC were banned from being a company director or from otherwise being involved in the management of a company

By TOnY De gOVriK, lEgAl AFFAIrS & cOMMunIcATIOnS dIrEcTOr, AuSTrAlIAn cOrPOrATE lAwyErS ASSOcIATIOn, ThE PrOFESSIOnAl BOdy FOr In-hOuSE lAwyErS.

In-hOuSE OBSErvATIOnS

for periods ranging from five years to 15 years. The monetary penalties ranged from $30,000 to $350,000. For in-house counsel, it is worth noting that the former general counsel and company secretary of James Hardie, Peter Shafron, received the second highest penalty (after former CEO, Peter Macdonald). Shafron copped a whopping seven year disqualification and a $75,000 penalty.

Although largely acting in his capacity as general counsel, Shafron was deemed to be an “officer” of the company under the broad definition of “officer” in section 9 of the Corporations Act. In a separate judgment in the High Court, Heydon J noted that “It is not possible to sever Mr Shafron’s responsibilities into watertight compartments, one marked ‘Company Secretary’ and the other marked ‘General Counsel’. The expression ‘company secretary’ is not a term of art.”

So what are the implications arising out of the case for in-house counsel? These may be summarised as follows:•the main message for in-house counsel is that the decision makes

it clear that senior executives (including general counsel) and other ‘officers’ of a company must ensure that they properly inform and advise the Board (or CEO) of material matters – particularly those that may be adverse to the interests of the company. Full and frank disclosure seem to be the operative words•the decision highlights to corporate counsel who also act as

company secretary the need for them to accurately record the minutes of a meeting and to issue them in a timely fashion and for directors and the chairman to pay particular attention to the accuracy of the minutes when being adopted and signed at the following Board meeting•other than the above, in practical terms, the decision will

probably have little impact on the role of senior in-house counsel in a company. This is because most corporate counsel who regularly attend and advise at Board meetings (whether acting in the dual role of company secretary or not) most likely consider themselves to be ‘officers’ of their company under the section 9 definition and conduct themselves accordingly.

While upholding the findings of the trial judge, the High Court has remitted back to the NSW Court of Appeal for consideration claims by the defendants to be excused from liability, penalty and disqualification. Under the Corporations Act a court may relieve a person from a liability where it appears to the court that the person has acted honestly and, having regard to all the circumstances of the case, the person ought fairly be excused for the contravention. So the James Hardie case has yet to be fully played out!

Tony de govrik

ALB 1006.indb 28 26/06/2012 3:57:36 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.630 ALb SpECIAL REpORT: pERTh 2012

A LEAGUE OF THEIR OWNPErTh PrAcTIcES ArE STIll BOOMIng – BuT FOr hOw Much lOngEr? Olivia cOlliNgs rEPOrTS

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AUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 31ALb SpECIAL REpORT: pERTh 2012

Western Australia: It’s the country’s largest state by size and increasingly by revenue and home to some of the biggest mining operations in Australia. More than A$200 billion is to be spent

on a variety of mining and LNG projects in the region in the coming years, on the back of a period of already significant investment. According to the latest update by the Bureau of Resources and Energy Economics Australia, if all the projects come to fruition as tabled, total resources sector investment in Australia will exceed half a trillion dollars, and more than half of that will be in Western Australia.

Unsurprisingly, on the back of all this investment, the economy of Western Australia is expected to grow by 4.5 percent this financial year and by four percent annually for the next three years, according to West Australian state treasury forecasts. Legal services within the state have also been experiencing a boom, with several new international legal brands setting up in the past 18 months including Norton Rose, Allen & Overy, Clifford Chance, Holman Fenwick Willan and Squire Sanders.

tHRiviNg maRKetDespite the increasingly competitive nature of the market, all firms ALB interviewed had revenue increases in the past year and expected further revenue and staff increases in the coming 12 months. Jackson McDonald for instance has had revenue increases of about seven percent this financial year and expects a nine percent increase next financial year. “This is due to the volume of work, rather than price increases,” says CEO John McLean. The firm is also looking to increase fee earner numbers by approximately five percent.

Allion Legal expects to grow revenue by 25 percent in the next year, because of existing clients’ needs but also because of the addition of a new litigation practice to be headed up by principal Dirk Fairweather, previously of Maxim Litigation. “We have a fairly aggressive plan for that practice and all up we would like four to five lawyers in that group within the next six to 12 months,” states managing principal Phil Lucas. The firm also has active briefs at the moment for additional staff across other practice areas including workplace relations.

Most of Fairweather’s former colleagues at Maxim Litigation have joined Lavan Legal. The firm has also recruited a new front end construction partner, Donald Turley. “We are expecting growth both because of Maxim and in addition to it,” says managing partner Greg Gaunt. He also expects to add 10 or more senior fee earners in the next 12 months.

Michael Blakiston, whose previous firm Blakiston & Crabb joined Gilbert + Tobin in late 2010, has also had a successful year following the merger. “The transactions we are working on now are bigger than what we had worked on previously, and that is obviously a reflection of the G+T brand,” says Blakiston, who is the managing partner of the office. “It’s fair to say we expect a buoyant year and we are working to ensure we are geared up for the market’s needs.

ALB 1006.indb 31 26/06/2012 3:57:38 PM


PeRtH fiRms By laWyeR HeadcOuNt

Firm Partners Fee earners (Lawyers) Total

Allen & Overy 4 (not disclosed) (not disclosed)

Allens 13 63 76

Allion legal 11 29 40

Ashurst 22 95 116

corrs chambers westgarth 15 45 60

Freehills 27 123 150

gilbert + Tobin 8 32 40

jackson Mcdonald 32 110 142

king & wood Mallesons 17 91 108

lavan legal 21 90 111

Middletons 7 29 36

norton rose 21 52 73

Squire Sanders 14 43 57

Right across the firm we have added five or six people and in the resource space we expect to add staff again in the next six months.”

uNceRtaiNtyHowever, despite the solid fundamentals, some in the market can see the cracks beginning to form as a result of the region’s reliance on the resources and energy industries. “All the projections around the West Australian state economy are on the back of the resources sector remaining strong,” says Norton Rose Australia Perth head partner Jenni Hill.

With ongoing uncertainty across the globe from Europe to China, even some in Western Australia are approaching decisions cautiously according to Phil Lucas from Allion Legal. “The success of Western Australia is at all times dependent on the broader international position and demand for commodities which we produce,” he says. The delicate state of the global financial market is having an impact on the ability of projects and companies in the state to gain funding or raise capital according to Allens Perth head partner Andrew Pascoe. “It remains very challenging for a number of projects to get appropriate debt finance, there have been some successes recently, but overall it remains challenging. The general lack of confidence globally could have an impact on the willingness of companies to execute major transactions or investment decisions in the short term,” he says. A significant reduction in the GDP growth in China would also have a significant impact on the West Australian economy.

At a more local level, ongoing issues such as infrastructure, labour and legislative changes are also beginning to impact sentiment within the state. “Within our market sector there is a lot of caution, and a lot of the work and success will be dependent on whether

Dirk Fairweather,Allion Legal

Phil Lucas,Allion Legal

“All ThE PrOjEcTIOnS ArOund ThE wEST AuSTrAlIAn STATE EcOnOMy ArE On ThE BAck OF ThE rESOurcES SEcTOr rEMAInIng STrOng.” Jenni hill, Norton Rose

John mcLean, Jackson McDonald

Jenni hill, Norton Rose

some of the domestic issues get resolved,” states Lucas. “There is a frustration that because of what is happening domestically we are not taking advantage of all the opportunities that are there, because people are more circumspect in their outlook.”

Geoff Simpson, Allen & Overy Perth managing partner, says that the introduction of the Mining Resources Rent Tax (MRRT) has already had a negative impact on the state because the junior miners will pay a disproportionate share of the tax. “It is our impression that the tax has already had a significant impact on foreign investment because of the uncertainty which it has generated over the last 18 months or so,” he states. “This, along with the impact of other factors has prompted many foreign investors, especially in coal, to have a closer look at opportunities elsewhere.” However, this view is not shared by Pascoe: “My sense is that the market has absorbed MRRT and moved on. It has been factored in and people are making decisions with it and the carbon tax included. I have not seen any evidence of major decisions not being made or being changed because of the introduction of those two legislative reforms.”

BOOmiNg state, BOOmiNg cOsts While Perth firms are undoubtedly reaping the benefits of working in a resources and infrastructure vibrant state, behind the mounds of work lies more serious issues. The side impact of all the wealth from the mining and resources sector is that “the costs of operating any business in Western Australia has increased in the last five years,” says partner in charge of the Perth King & Wood Mallesons, Michael Lundberg.

Perth has climbed the ranks in terms of most expensive cities to live in across the world, coming in at 13 last year, well ahead of global cities such as London, Rome, Berlin, Hong Kong and Beijing. According to commercial real estate services firm

*list does not purport to cover all Perth firms. Figures supplied by firms.

ALB 1006.indb 32 26/06/2012 3:57:39 PM


iN-HOuse salaRies iN PeRtH

Year level Low high middle

1 PQE $65,000 $80,000 $77,000

2 PQE $70,000 $94,000 $89,000

3 PQE $85,000 $118,000 $110,000

4 PQE $100,000 $143,000 $131,000

5 PQE $120,000 $160,000 $149,000

Based on Mahlab Recruitment data 2011

Office sPace cOmPaRisON (PRemium)

LocationCurrent vacancy Q1 2012

Projected vacancy

( next 6 months)

Price per square metre

melbourne 5.3% 6% $565

sydney 9.6% 9.2% $1,000

Perth 3.3% 4.5% $840

Data from Colliers International

CBRE, rents in Perth jumped 6.3 percent in the second half of 2011 as vacancies plunged to 3.3 percent. “We have the lowest tenancy vacancy in Australia and possibly in the world,” says Norton Rose’s Hill. “You have to be creative about how to maximise offi ce space, as people have very clear ideas about how a law fi rm should look and operate.” Allion Legal is currently evaluating its options as it looks to add a new practice and up to fi ve new lawyers in the coming 12 months. “The sheer expansion of the fi rm has put pressure on this offi ce in terms of its size,” says Lucas. “One of the issues we are getting our heads around at the moment is how do we satisfy our offi ce requirements in the short-to-medium term, in a highly competitive market, where it is almost full tenancy? Not to mention fi tting out the premises if you do move.”

Rates PRessuReThe increasing cost of doing business has caused many fi rms to re-evaluate their rates and what they charge their clients in order to remain profi table. “The cost of doing business leads to pressures on hourly rates,

“ThE cOSTS OF OPErATIng Any BuSInESS In wESTErn AuSTrAlIA hAS IncrEASEd In ThE lAST FIvE yEArS.” michael Lundberg, Perth King & Wood Mallesons

PaRtNeR RemuNeRatiON iN PeRtH

Firm size mode

Top Tier/Major $1,325,000

Mid tier $745,000

Small commercial $385,000

Based on Mahlab Recruitment data 2011

PRivate PRactice Wages fOR PeRtH majOR/tOP tieR fiRms

Year level Low high middle

1 PQE $67,000 $79,000 $78,000

2 PQE $77,500 $96,500 $87,000

3 PQE $86,500 $117,500 $102,000

4 PQE $98,500 $132,500 $115,500

5 PQE $112,500 $147,500 $130,000

Based on the combined information of Hays and Mahlab Recruitment data 2011

PeRtH OveRHeads

and then people start saying lawyers are expensive,” says Blakiston. “You have to make sure that your proposition represents good value.” Lucas has also seen increasing pressure on hourly rates because essential services are becoming more expensive. However, he does not see the need to disproportionately push up rates in the near future. “We don’t feel the need to go above and beyond the increase in costs, which are going up about 10 percent a year,” he says.

While many in the market are aware that they need to increase rates in order to remain profi table, according to a number of fi rms one international fi rm is discounting rates in order to secure work, particularly in the transactional space. Several fi rms, who asked not to be named, claimed Allen & Overy in particular had been “below market average” or “overly competitive”. However, Simpson from Allen & Overy Perth, claimed otherwise: “I have not felt the need for A&O to be overly competitive in regards to rates in the past 12 months,” he says. He did however add that it was a highly “competitive market” and in pitches against other fi rms for work “one element of the pitch is price,” he observed.

ALB 1006.indb 34 26/06/2012 3:57:40 PM


One of Western Australia’s most respected corporate and resources law firms

INSIDE Wa’s ResOuRces BOOmOlivia cOlliNgs SPEAkS wITh PErTh lAwyErS On ThE lATEST dEvElOPMEnTS In ThE lng And hArd rOck SPAcE.

Having already established itself as a valuable source of hard rock minerals and precious stones, in recent years the Western

Australian economy has also become a growth area for oil and gas, predominantly Liquefied Natural Gas (LNG). Of the five LNG projects involving Australian operators which received a final investment decision last year, three were in Western Australia, including Wheatstone (A$29 billion),

Prelude Fields (A$10.3 billion) and Ichthys (A$34 billion). The Ichthys project off north Western Australia will include a

900-kilometre underwater pipeline, the longest in the world, to Darwin where the gas will be processed. The project is owned by Tokyo-listed Inpex Corporation and the French oil and gas multinational Total. The project has the potential to meet 10 percent of Japan’s LNG needs, which are likely to grow as Japan turns away from nuclear power following last year’s earthquake and the nuclear leak at Fukushima Daiichi nuclear plant. Allen & Overy have been advising the sponsors of the project and expect to be doing more work as the project develops. “We are the overarching

ALB 1006.indb 35 26/06/2012 3:57:46 PM


legal advisor on that project and have had partners working on it out of Tokyo, Sydney and Perth,” says A&O Perth managing partner Geoff Simpson.

According to Allens’ oil & gas partner Anthony Patten, Australian gas is seen globally as a ‘premium product’ because of its reliability and also because of its economic cost. However, one of the biggest potential risks to Australia’s LNG success is the United States, where gas is priced substantially lower. “The price of gas in the United States is about US$2.50 per unit,” states Patten. “The price going into Asia is between A$15 and A$18 per unit. Depending on what happens to those prices, and if someone can work out a way of getting that gas from America into Asia at those prices, then that could have an impact on Australian operations.”

Patten does not expect this to be a serious threat as the United States manufacturing industry is heavily reliant on the low cost of domestic gas, and if it were to start sending gas overseas, it would have to increase the price which would be “politically unpopular”. However he believes that Australia’s gas is unlikely to drop in price any time soon as there are a limited number of contractors and workers to complete the projects tabled, therefore pushing the cost of projects up.

Another aspect of LNG set to keep legal advisors in the market busy is the M&A work associated with these billion dollar projects. Woodside Petroleum recently announced it was selling 14.7 percent of the A$30 billion Browse project off Western Australia for A$1.9 billion to Japan’s Mitsubishi Corporation and Mitsui & Co. The sale saw Woodside’s share of the project fall from 46 percent to 31.3 percent. The Japanese Government together with a

consortium of Japanese companies are also set to buy a 10 percent stake in Chevron’s Wheatstone LNG project for A$4.35 billion. The project is valued at A$29 billion and has been forecast to produce as much as 8.9 million tonnes of natural gas annually, beginning 2016. “I think we will see a bit more divestment activity, as more companies spread their project risks and financing commitment,” explains Patten. “More owners bringing in partners to help get projects to their next stage – there are lots of willing partners around.”

Simpson agrees: “Firstly because the Japanese are being more aggressive in their acquisition of energy assets and also because there are a number of players in the market who will have to sell interest in their projects in order to meet their funding requirements while the capital and debt markets remain tight,” he says.

HaRd ROcKWhile there is a lot of excitement in the market about the potential of LNG, hard rock mining and infrastructure are not about to fall off the wayside any time soon. For example, Hancock Prospecting’s Roy Hill iron ore project is valued at A$9.5 billion and is set to create more than 3,000 jobs during its construction in the Pilbara region.

BHP and Rio Tinto are also highly active in the market, although both have cast doubts in recent times about future Australian expansions, such as BHP’s mooted A$20 billion expansion of its Olympic Dam copper-uranium mine in South Australia or Rio Tinto’s outer harbour Port Hedland iron ore ship-loading facility.

However, the impact for law firms may not be as great as initially expected even if these projects do not proceed. According to Simpson, because their projects are self funded and they have large in-house capabilities, the BHP/Rio mega projects do not involve the same volume of legal work for law firms as with other projects, such as the Roy Hill and LNG projects. “Our work is mainly focused on the new developments where there is work around project development – that is where the big ticket legal work lies,” he explains. What is, however, generating a volume of legal work is the development of ports and rail capabilities in the state to service the growing mining industry. The Oakajee integrated port and rail project, a A$3.5 billion undertaking, continues to be one of Western Australia’s most significant projects due to its role in opening up the mid-west iron ore region, allowing a number of projects to come online and supply ore to international markets as economically as possible. Developments currently proposed around Western Australia’s existing and newly planned ports total A$80 billion, and this investment level is expected to continue into the future as ports reach their tonnage limits.

Along with mining related infrastructure the legal fraternity is also busy working on social infrastructure in the state such as the Perth Waterfront project, a A$440 million dollar state government redevelopment along the Swan River, and a number of public infrastructure projects such as the New Children’s Hospital and the WA Gateway road project. “There are a number of public projects that will have a major impact on Western Australia,” says Freehills Perth office head Jason Ricketts. “We have roles on a number of those projects.”

PROjects BReed disPutes A number of projects in the Mid West have already been highlighted in the media as potential litigation cases as a result of budget and schedule overruns and even cancellations. “Some of the

“Our wOrk IS MAInly FOcuSEd On ThE nEw dEvElOPMEnTS whErE ThErE IS wOrk ArOund PrOjEcT dEvElOPMEnT – ThAT IS whErE ThE BIg TIckET lEgAl wOrk lIES.” geoff simpson, Allen & Overy

ALB 1006.indb 36 26/06/2012 3:57:46 PM


www.jacmac.com.au Ph: +61 8 9426 6611

Jackson McDonald is delighted to be 5th time recipient of the ALB Perth Law Firm of the Year award.

In our 90th year, we remain committed to supporting WA’s key industries by providing specialist commercial legal advice.

WINNER2012

McDonaldFirst Class Legal Service

Jackson

Delivering first class legal service to WA for 90 years.

Level 25, 140 St Georges Terrace. Perth, WA

projects being undertaken in Western Australia are immensely complicated, therefore the scope for litigation and dispute is there,” says Lavan Legal managing partner Gaunt.

An increasing volume of litigation and dispute resolution work in the market has prompted Allion Legal to appoint a litigation partner after years of referring this work to other firms. “The big area of growth we see for us in the coming 12 months is the move into litigation,” says managing principal Phil Lucas.

One of the key factors likely to feed disputes is that companies are agreeing to undertake work without first having the necessary skilled labour to complete the work, according to Gaunt. “If all the projects are to go ahead we need the people to do it,” he says. Lucas agrees that the sheer volume and size of projects being undertaken at the same time is putting a strain on the labour market, and therefore the cost of completing a project is changing. “The cost of getting business done and the ability to find people to get the business done is a major issue for our clients,” he says.

iNteRNatiONal PlayDuring the past decade a lot of the international work undertaken by firms in the market was inbound investment, but now a growing number of Australian-based companies are heading offshore in search of resources in jurisdictions in Africa and South America.

“We work for quite a few clients who are busy looking overseas for projects,” says Lucas. “The industry in Western Australia is relatively mature, so a number of clients have gone overseas in order to

purchase or establish new projects there… we anticipate that the level of activity will continue. “There will still be inbound work, but I think less so as Australia is increasingly hard to do business in from an outsider’s perspective.” By contrast, Jackson McDonald is actively targeting inbound work: “We have some opportunities to service our clients overseas on project/contract needs, in Asia, South America and Africa; but our strength is our offering in Western Australia,” says CEO John McLean. “We expect an increasing flow of this work during the next 12 months.”

“ThE cOST OF gETTIng BuSInESS dOnE And ThE ABIlITy TO FInd PEOPlE TO gET ThE BuSInESS dOnE IS A MAjOr ISSuE FOr Our clIEnTS.” Jason ricketts, Freehills

ALB 1006.indb 37 26/06/2012 3:57:48 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.538 pROFILE Finding the right lawyer should be this easy.

recruitment made easy

Candidate 3For a legal recruitment company that likes to keep things simple contact

Brisbane 07 3231 1200 Sydney 02 9375 2222 Melbourne 03 9098 8750 Perth 08 9288 1855

or visit www.empirecareers.com.au

Appointmentsrecruitment made easy

Brought to you by

Candidate 1

Candidate 2

EMP18599 ALB Issue 10.5 V2.indd 1 9/05/12 5:23 PM

PArTner APPOinTmenTs

Name Practice area going from going to

matthew Beazley commercial lawyer norton rose russell kennedy

richard Chew Intellectual property & technology king & wood Mallesons Piper Alderman

Joanne Daniels resources, infrastructure & competition

Middletons Allens

neal Dallas Superannuation & revenue practice Mccullough robertson McInnes wilson

lawyers

Jan Dransfield Employment law Ashurst johnson winter & Slattery

mick garner Financial services Allens Maddocks

robert Johnston litigation hwl Ebsworth johnson winter & Slattery

Ben macdonald M&A deutsche Bank gilbert + Tobin

John matthews Building & construction carter newell Mills Oakley

stephen moulton corporate/M&A Pricewaterhousecoopers clayton utz

Keith nathan Financial services dlA Piper Maddocks

robert ritchie Financial services corrs chambers westgarth Ashurst

Alistair salmon Industrial relationsOffice of the Australian Building & construction commissioner

holding redlich

Quentin solomon Banking & finance clayton utz hopgoodganim

ruth stringer Financial services & superannuation Ashurst lander & rogers

Donald Turley construction & infrastructure clyde & co lavan legal

Chris Wille Property & projects Minter Ellison holding redlich

shawn Wytenbur Financial services corrs chambers westgarth Ashurst

Middletons Allens

alleNs RecRuits middletONs’ PaRtNeRAllens has recruited resources, infrastructure and competition lawyer joanne daniels as a partner in Brisbane. Most recently a partner at the Melbourne office of Middletons, daniels began her career with the Queensland government and has also been a partner at clayton utz.

Australian Building & Construction Commissioner

Holding Redlich

Minter Ellison Holding Redlich

HOldiNg RedlicH adds tWO NeW PaRtNeRs holding redlich has appointed two new partners, one in Sydney and one in Brisbane. Industrial relations expert Alistair Salmon has joined the Sydney workplace relations and safety group from the Australian government, where he was most recently executive director – legal (Eastern) with the office of the Australian Building and construction commissioner. Prior to this role he was a partner at FcB workplace lawyers.

Former Minter Ellison special counsel chris wille has joined the firm’s Brisbane office as a partner in the property and projects group.

King & Wood Mallesons

Piper Alderman

PiPeR aldeRmaN adds it PaRtNeR iN sydNey

Piper Alderman has appointed a new partner in its intellectual property and technology team.

richard chew joins the firm from king & wood Mallesons Sydney where he was a senior associate. he was a member of the IT industry for more than 10 years prior to law.

Clyde & Co Lavan Legal

lavaN secuRes fORmeR me cONstRuctiON exPeRt Perth-based lavan legal has added international construction counsel, donald (don) Turley.

Turley is a senior construction and infrastructure specialist with more than 30 years of experience in major energy, infrastructure and construction projects across dubai, Australia and new Zealand.

Prior to his move to Perth he was at clyde & co as a consultant in the riyadh office of an associate firm in Saudi Arabia, Abdulaziz.

McCullough Robertson

McInnes Wilson Lawyers

mciNNes WilsON NaBs mccullOugH ROBeRtsON taleNt Brisbane-based McInnes wilson lawyers has added another principal to its team. neal dallas has joined the firm’s superannuation and revenue practice from Mccullough robertson where he was a special counsel.

Norton Rose Russell Kennedy

Russell KeNNedy aPPOiNts NORtON ROse PaRtNeRFormer norton rose partner Matthew Beazley has been appointed a principal (partner equivalent) at Melbourne-based law firm russell kennedy. Beazley is a commercial lawyer who has focussed on government, planning, and environment law for more than 12 years. At norton rose, Beazley worked within the planning and environment group, specialising in statutory and strategic planning, environmental law, property law (including compulsory acquisition), governance, and water law.

Clayton Utz HopgoodGani

HOPgOOdgaNim RecRuits seNiOR clutz PaRtNeR hopgoodganim has recruited former clayton utz partner of 15 years Quentin Solomon as

ALB 1006.indb 38 26/06/2012 3:57:49 PM

project banking and finance director. Solomon is a senior banking and finance lawyer with more than 25 years’ experience in the financing of major projects in the energy, mining and transport sectors, and in corporate restructuring and brings a wealth of international experience to the role. he has previously worked with Minter Ellison and norton rose, and lectured in the Masters of laws programs at both Melbourne and Monash universities.

DLA Piper Maddocks

Allens Maddocks

maddOcKs gROWs fiNaNcial PRactice WitH alleNs aNd dla taleNt Maddocks has made two senior appointments to the financial services team: special counsel Mick garner and consultant keith nathan. garner was most recently a special counsel at Allens while nathan was a partner and consultant at dlA Piper. Both lawyers have significant experience in superannuation, investment and funds management having held senior positions with leading law firms.


Ashurst


Ashurst

asHuRst RecRuits cORRs’ fiNaNcial guRus Ashurst Australia has recruited two new partners for its Sydney financial services practice. robert ritchie and Shawn wytenburg join Ashurst from corrs chambers westgarth where they were both partners.

ritchie is an experienced Australian and cross-border projects and corporate finance practitioner. wytenburg is a leading advisor in leveraged and acquisition financing.

Carter Newell Mills Oakley

mills OaKley Builds BRisBaNe PaRtNeRsHiP agaiNMills Oakley has added a new partner in its Brisbane building and construction practice.john Matthews has joined the firm from carter newell, where he was a senior associate in construction and engineering, with extensive experience in front end construction work.

Ashurst Lander & Rogers

laNdeR & ROgeRs adds asHuRst PaRtNeR lander & rogers has appointed financial services and superannuation partner, ruth

Stringer, to spearhead the development of the firm’s financial services offering in the Sydney market. Stringer has practised financial services law for more than 20 years and joins from Ashurst (previously Blake dawson) where she was a partner. Prior to Ashurst she spent 11 years at Minter Ellison, where she established its superannuation practice and was a founding member of the firm’s funds management practice. She has also had in-house general counsel experience.

Deutsche Bank Gilbert + Tobin

g+t RecRuit deutscHe BaNK m&a guRu gilbert + Tobin has recruited a new M&A partner, Ben Macdonald, from deutsche Bank where he was a senior vice president in the natural resources group based in Melbourne.

Macdonald brings to g+T a wealth of experience in M&A and mining and resources. Prior to being an investment banker he was a senior corporate/M&A lawyer at Freehills in Melbourne and spent time working at Allen & Overy in london.

AshurstJohnson Winter

& Slattery

HWL EbsworthJohnson Winter

& Slattery

asHuRst aNd HWl PaRtNeRs jOiN jWs johnson winter & Slattery has expanded its partnership with the appointment of two new partners based in its Sydney office.

jan dransfield, formerly a partner with Ashurst (Blake dawson) in Sydney, has joined the firm along with robert johnston, formerly a partner at hwl Ebsworth in Sydney. dransfield has practised extensively in employment law for more than 20 years, acting for major corporations across the financial services, transport, retail, professional services and IT sectors. johnston is a senior commercial litigation lawyer with experience in managing large scale, multi-party, complex cases.

Sole practice Allion Legal

alliON legal adds litigatiON PRactice Perth-based Allion legal is launching into litigation following the appointment of experienced litigator, dirk Fairweather.

Allion has previously referred client litigious work to other firms, including Maxim litigation where Fairweather worked prior to the majority of partners at the firm moving to lavan legal earlier this year.

Finding the right lawyer should be this easy.

recruitment made easy

Candidate 3For a legal recruitment company that likes to keep things simple contact

Brisbane 07 3231 1200 Sydney 02 9375 2222 Melbourne 03 9098 8750 Perth 08 9288 1855

or visit www.empirecareers.com.au

Appointmentsrecruitment made easy

Brought to you by

Candidate 1

Candidate 2

EMP18599 ALB Issue 10.5 V2.indd 1 9/05/12 5:23 PMALB 1006.indb 39 26/06/2012 3:57:49 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.640 ALb AWARDS

2012 ALb LAW AWARDS:WINNERS REVEALED

It was the last hurrah for the firm previously known as Mallesons Stephen Jaques. The 2012 ALB Awards recognises firms for work completed in the previous

calendar year, so the Australian legal community were treated to the sight, for one final time, of the old Mallesons Stephen Jaques branding up in lights as the firm’s lawyers took to the stage to collect more than their fair share of awards. Mallesons may have topped the award count, but that

was an honour which they had to share with Corrs Chambers Westgarth, surely one of the most improved performers at this year’s Awards. Corrs must have been particularly pleased with managing partner John Denton finally securing the coveted Managing Partner of the Year trophy, after several years as a nominee. Both Mallesons and Corrs scored six awards each. Freehills secured five trophies, but one can’t help but wonder if Gavin Bell’s team are quietly

feeling that they have secured a moral victory of sorts: it is notable that two of the more prestigious deal awards of the night – Australian Deal Team of the Year and Australian Dealmaker of the Year (Philippa Stone) went to this firm. At least one trophy resurfaced at local nightspot Ivy a few hours later, where it was duly confiscated by security on precautionary grounds. We hope the Freehills team remembered to redeem it. Another firm quietly counting

On ThurSdAy 24Th OF MAy, ThE 9Th AnnuAl AlB lAw AwArdS wErE hEld AT ThE SydnEy TOwn hAll In A nIghT TO cElEBrATE ThE AchIEvEMEnTS OF ThE PrEvIOuS yEAr.

ALB 1006.indb 40 26/06/2012 3:57:52 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 41ALb AWARDS

its honours was New Zealand’s Russell McVeagh, which picked up New Zealand Deal Team of the Year (corporate team), while Pip Greenwood won New Zealand Dealmaker of the Year. The Kiwis were also behind the shock result of the night: Bell Gully zoomed past a field full of Australian rivals to win the award for Corporate Citizen Firm of the Year. This is a result which demonstrates that the ALB Awards are a true meritocracy and that all firms,

regardless of size or jurisdictional origin, are competing on an even playing field. On the in-house front, it was a spectacular night for Origin Energy, with the award for In-House Lawyer of the Year going to Origin’s Daniel Krutik while the Origin team was also collectively on hand to receive the In-House Team of the Year. UBS continued its domination of the Investment Bank In-House Team of the Year category, yet another affirmation that this team is one of

the true class acts of the industry. SABMiller plc’s acquisition of Foster’s Group Limited won the title for M&A deal of the year while there was a notable thematic consistency with the winner of the trans-Tasman Deal of the Year categories: the winner of the New Zealand deal of the year was the Telecom demerger while the winner of the Australian Deal of the Year were the definitive agreements for the National Broadband Network.

ALB 1006.indb 41 26/06/2012 3:58:02 PM


2012 AlB AwArd wInnErS

enerGy & reSOUrCeS DeAl OF ThE yEAr

Winner Peabody’s US$5.2 billion hostile takeover of Macarthur Coal

DeBT MArkeT DeAl OF ThE yEAr

Winner Australia And New Zealand Banking Group Limited Global Covered Bond Programme

eQUITy MArkeT DeAl OF ThE yEAr

Winner Origin Energy’s A$2.3 billion capital Raising

ALB 1006.indb 42 26/06/2012 3:58:05 PM


PrOjeCT fInAnCe DeAl OF ThE yEAr

Winner Wiggins Island Coal Export Terminal

M&A DeAl OF ThE yEAr

Winner SABMiller plc’s acquisition of Fosters Group Limited

IPA InSOlvenCy & reSTrUCTUrInG DeAl OF ThE yEAr

Winner Centro restructure

BAker & MCkenzIe BAnkInG & fInAnCIAl ServICeS In-HOUSe TeAM OF ThE yEAr

Winner Challenger Limited

ALB 1006.indb 44 26/06/2012 3:58:09 PM

WINNER2012

Herbert Geer Full Page Ad_210mmX268mm Award FA OL.indd 1 14/06/12 10:59 AM


fInDlAw InnOvATIve USe Of TeCHnOlOGy fIrM OF ThE yEAr

Winner Gilbert + Tobin

lITSUPPOrT COrPOrATe CITIzen fIrM OF ThE yEAr

Winner Bell Gully

lITSUPPOrT CSr fIrM OF ThE yEAr

Winner Mallesons Stephen Jaques

BAker & MCkenzIe enerGy & reSOUrCeS In-HOUSe TeAM OF ThE yEAr

Winner Origin Energy Limited

GIlBerT + TOBIn InveSTMenT BAnk In-HOUSe TeAM OF ThE yEAr

Winner UBS AG

ALB 1006.indb 46 26/06/2012 3:58:12 PM

WINNER2012


SPArke HelMOre InSUrAnCe In-HOUSe TeAM OF ThE yEAr

Winner Allianz Australia (Corporate)

DOlMAn eMPlOyMenT SPeCIAlIST fIrM OF ThE yEAr

Winner Middletons

InSUrAnCe SPeCIAlIST fIrM OF ThE yEAr

Winner Lander & Rogers

lAw STAff IP SPeCIAlIST fIrM OF ThE yEAr

Winner Griffith Hack

Gr lAw InTernATIOnAl fIrM OF ThE yEAr

Winner Sullivan & Cromwell

ALB 1006.indb 48 26/06/2012 3:58:16 PM

Insurance

constructIon & engIneerIng

resources

corporate

commercIal property

lItIgatIon & DIspute resolutIon

avIatIon L A W Y E R SCNcn/187-alB

Carter Newell Lawyers… AWARD WINNING LAW FIRMCarter Newell Lawyers… AWARD WINNING LAW FIRM

WINNER 2012 Brisbane Law Firm of the YearWINNER 2008FINALIST 2007, 2009, 2010 & 2011

WINNER 2012Disability Employment Award AHRI Diversity Awards

WINNER 2012 Brisbane Law Firm of the YearWINNER 2008FINALIST 2007, 2009, 2010 & 2011

WINNER 2012Disability Employment Award AHRI Diversity Awards

CN187-ALB_fp_AD.indd 1 15/6/12 1:26:37 PM


MUrDOCH UnIverSITy PerTH fIrM OF ThE yEAr

Winner Jackson McDonald

HUOn IT MelBOUrne lAw fIrM OF ThE yEAr

Winner Herbert Geer

lITSUPPOrT BrISBAne fIrM OF ThE yEAr

Winner Carter Newell Lawyers

BUrGeSS PAlUCH ADelAIDe fIrM OF ThE yEAr

Winner Finlaysons

eMPIre CAreerS SyDney fIrM OF ThE yEAr

Winner Henry Davis York

ALB 1006.indb 50 26/06/2012 3:58:21 PM

WINNER2010

WINNER2011

WINNER2012

Untitled-1 1 26/06/2012 4:29:05 PM


rUSSell MCveAGH new zeAlAnD In-HOUSe TeAM OF ThE yEAr

Winner Fletcher Building Limited

ClAyTOn UTz AUSTrAlIAn In-HOUSe TeAM OF ThE yEAr

Winner Origin Energy Limited

In-HOUSe lAwyer OF ThE yEAr

Winner Daniel Krutik, Origin Energy

AUSTrAlIAn DeAlMAker OF ThE yEAr

Winner Philippa Stone, Freehills

new zeAlAnD DeAlMAker OF ThE yEAr

Winner Pip Greenwood, Russell McVeagh

ALB 1006.indb 52 26/06/2012 3:58:25 PM

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.6 53ALb AWARDS

new zeAlAnD DeAl OF ThE yEAr

Winner Telecom demerger

AUSTrAlIAn DeAl TeAM OF ThE yEAr

Winner Freehills Corporate/ M & A Team

new zeAlAnD DeAl TeAM OF ThE yEAr

Winner Russell McVeagh Corporate Team

AUSTrAlIAn DeAl OF ThE yEAr

Winner National Broadband Network – definitive agreements

CICerO MAnAGInG PArTner OF ThE yEAr

WINNER John Denton, Corrs Chambers Westgarth

ALB 1006.indb 53 26/06/2012 3:58:29 PM

AustrAlAsiAn legAl BusinessISSUE 10.654 alb awards

Baker & Mckenzie Baker & McKenzie is unrivalled in delivering the knowledge, experience and capabilities of a truly global law firm to our clients in Australia and across the globe. In Australia since 1964 and with 68 offices in 40 countries, we provide the innovative legal solutions clients expect, together with practical advice and seamless execution. ContactChris Freeland, National Managing Partner T: 02 9225 0200E: [email protected]: www.bakermckenzie.com

Burgess Paluch legal recruitMent Burgess Paluch is a leading legal recruitment group with significant experience in local and international markets. Utilising a strategic approach and providing accessible, proactive advice, Burgess Paluch is one of the leading legal recruiters in Australia. Burgess Paluch focuses on creating successful outcomes for both lawyers and law firms. ContactPaul Burgess, Director

award SponSorST: 03 8676 0372E: [email protected]: www.bplr.com.au

cicero Cicero is an Australian-owned specialist legal executive search, selection and training

firm with a reputation for honesty and responsiveness. Cicero’s focus is working closely and strategically with clients to build their businesses and also assisting lawyers to progress their careers. Cicero has national reach within Australia, and with associated international offices in Asia and throughout the UK. ContactJonathan Gill, Managing Director T: 02 9008 1122E: [email protected] W: www.cicero.com.au

clayton utz A top-tier law firm with a difference: Clayton Utz take a fresh, pragmatic, commercial approach to legal practice that focuses on achieving the best results for their clients. Their ability to bring together

teams of our country’s finest lawyers with unique and diverse skills is why they advise on Australia’s largest and most complex deals and litigation. ContactLauren Scott, National Corporate Affairs Manager T: 03 9286 6972E: [email protected]: www.claytonutz.com

Dolman is a leading legal recruitment/search consultancy based in Australia. Established in 1994, Dolman provides services to law firms and corporates in Australia and internationally. We place junior lawyers through to General Counsel/Partners and our clients include top and mid tier Australian, UK and US firms and ASX listed and international companies. ContactDaniel Stirling,General ManagerT: 61 2 9231 3022E: [email protected] W: www.gtlaw.com.au

eMPire careersEmpire Careers is a specialist legal recruiter providing both professional and support staff to leading law firms and in-house legal teams of blue chip organisations. Our consultants are very well known in the market and have all worked in legal recruitment for a minimum of five years, they bring long standing relationships with both clients and candidates. Empire Careers has a national presence with offices in Sydney, Melbourne, Brisbane and Perth.ContactLucy Brady P: 02 9375 2222E: [email protected] W: www.empirecareers.com.au

AustrAlAsiAn legAl BusinessISSUE 10.6 55alb awards

gilBert+toBinGilbert+Tobin is a leading corporate law firm and a key player in the Australian legal market. They work on transactions and cases that define and direct the market. The firm’s reputation for expert advice extends across M&As, private equity, capital markets, banking & finance, real estate and projects, tax, competition and regulation, communications and technology, intellectual property and litigation.ContactDanny Gilbert, Managing PartnerT: 02 9263 4000E: [email protected]: www.gtlaw.com.au

gr law GR Law is a global specialist legal recruitment consultancy assisting clients and candidates from the newly qualified level through to partnership. Our highly experienced team of consultants work for the majority of international firms multinational corporations in London, Australia, Asia, Europe and the UAE offering a truly international service.ContactNicole Garrett, Senior Consultant – Australia & AsiaP: 02 9220 4400 E: [email protected] W: www.grlaw.com.au

huon itHuon IT are industry renowned Legal Technology Specialists, with a focus on providing strategy, IT management, systems integration and 24x7 support to a range of professional service organisations.

Established in 1989, Huon IT has established long term partnerships with firms across Australia, with offices in both Sydney & Melbourne. Working alongside both management and technical departments within their client’s organisation, Huon IT helps to align technology systems with executive vision to maximise business performance.

ContactDamian Huon, Chief Executive OfficerP: 02 8401 8000E: [email protected]: www.huonit.com.au

iPaThe IPA’s vision is building professional excellence, achieved by our members’ commitment to the highest

standards of professional and ethical conduct and through their adherence to our continuing education requirements and professional code of practice. We work cooperatively with regulators and consult with our members frequently to ensure that Australia has one of the most effective and efficient insolvency systems in the world. ContactLeanne Carter, Publications and Marketing Manager T: +61 2 9290 5770E: [email protected]: www.ipaa.com.au

law staff Law Staff is an award winning legal recruitment specialist, experienced in assisting lawyers, paralegals, legal secretaries, executive and personal assistants and shared services staff on a permanent, temporary and contract basis. Our clients include top tier, mid tier and boutique law firms, as well as in-house departments of major corporations throughout Australia.ContactMelanie Hawcroft,General ManagerT: 02 9235 3399 E: [email protected]

litsuPPortLitSupport is Australia’s leading provider of secure and confidential document copying, printing and scanning services. Our clients include law firms, government departments, financial services institutions and all corporate and commercial organisations who require critical and sensitive document reproduction. We operate a 24/7 service from a national network of offices in Sydney, Melbourne, Brisbane and Perth.

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russell McveaghWe are regarded as New Zealand’s premier law firm. Russell McVeagh has an extensive and celebrated history of representing New Zealand’s leading corporations and financial institutions.ContactGary McDiarmid, CEOT: 64 9 367 8091E: [email protected] W: www.russellmcveagh.com

sParke helMore lawyers Sparke Helmore Lawyers is the 2011 Australasian Law Awards Insurance Law Firm of the Year. We are a firm of 600 people working from eight offices across Australia, serving the needs of the insurance, government, corporate and financial services sectors. Our expertise spans commercial to construction, workplace to insurance, mining to manufacturing, and property to procurement.ContactRhett Slocombe, National Practice Group Leader - Insurance P: 02 9373 3555 W: www.sparke.com.au

AUSTrAlASIAn leGAl BUSIneSSISSuE 10.656 pROFILE

emPHasis ON valueBRiaN salteR MAy hAvE dEvElOPEd AS A PrIvATE PrAcTIcE lAwyEr In A TOP TIEr FIrM, BuT hIS AllEgIAncE IS nOw MOST dEFInITEly TO hIS BuSInESS And ThE BOTTOM lInE, wrITES Olivia cOlliNgs

Brian Salter never dreamed of being a lawyer when he was a young man. Instead he dreamed of being a pilot, an engineer or

an archaeologist; luckily for his current employer AMP and his previous law firm Clayton Utz, those didn’t work out. “I ended up as a lawyer by default,” says Salter, who is group general counsel and company secretary at AMP Limited. “At the Australian National University in those days, if you applied for law you automatically got into everything else… I turned up on the first day of semester and found myself enrolled in law; I was not very keen on it, I found it very difficult and dry.”

During his legal studies he took a year off to work in the public services as well as undertaking a double degree in archaeology; but being determined not to leave any stone unturned, Salter went back to law and completed his degree. He then

packed up his car drove up the Hume Highway to Sydney where he commenced as a legal practitioner at Clayton Utz, a firm he remained at for the next 27 years. “When I started there I worked with the 12th partner on the letter head; when I left there were more than 200 partners,” says Salter of his time at Clayton Utz. “Banking was taking off in Australia and the firm was going through a rapid growth phase – for me it was very exciting.”

Having never intended to be a lawyer Salter found himself to be rather apt at banking and finance law and built a large team around his specialisation of structured finance and securitisation. But, as with many legal practitioners, having become a partner, built a practice, taken on senior management positions it was time for a change, and so in 2008 he joined AMP as general counsel, months ahead of what is now called the global financial crisis. “It was a very demanding period, but also very interesting,” says Salter of his timing. “Some people would say that I dodged a silver bullet, because securitisation collapsed, and I had just stepped out of that market.”

yesterday, today and tomorrow The company Salter joined those four years ago is strikingly different to the one he works for today. Having navigated the

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financial crisis and strengthened its capital position in early 2011 AMP merged with AXA Asia Pacific Holdings’ Australia and New Zealand, to form AMP Limited. The deal, which was worth A$14.6 billion, saw a largely Sydney centric organisation, AMP, incorporate a very substantial Melbourne presence as well as a greater presence in New Zealand through AXA. Salter’s team in particular has grown and changed as a result of the merger. He now has approximately 100 staff across the legal and secretariat group, located in Melbourne, Sydney and New Zealand. The team was last year named Banking & Financial Services In-house Team of the Year at the ALB Law Awards.

Earlier this year AMP changed again, this time through an alliance with Japanese-based Mitsubishi UFJ Trust and Banking Corporation (MUTB). As a result of the transaction MUTB acquired a 15 percent minority shareholding in AMP Capital Holdings, the parent company of the AMP Capital group of companies, and in return AMP group’s regulatory capital resources increased by approximately A$380 million. “There will always be M&A and treasury transactions,” says Salter. “But, going forward I think there will be much more focus on business critical transactions…instead of doing one major transaction a year, the team will be handling half a dozen transactions.”

In addition to these large and ongoing transactions, AMP has also been facing an ever changing regulatory environment. “The volume and pace of regulatory change is extraordinary, the challenges are enormous, but we will meet them,” says Salter.

One of the main changes to impact the financial services sector is the introduction of the Future of Financial Advice (FOFA) legislation. While originally intended to start on 1 July 2012 the regulation has since become optional until 1 July 2013. “My team led the market in relation to FOFA,” says Salter. “Understanding the legislation, briefing the business and industry groups in relation to it… I’m very proud of them.”

The proposed changes to superannuation through the Simplified Superannuation Reforms and other taxation changes tabled by the government are also likely to keep Salter and his team busy. The legal team is also undertaking a number of internal projects, such as improving the experience

for its customers through the design of products, disclosures and the support they provide to the customer facing divisions of the business. “Over the years I have challenged our team as to how we can improve our customer experience,” says Salter. “It’s important to demonstrate how a function, which is not customer facing, can have a positive impact on the customer experience.”

in search of value and service As a result of the AXA merger and organic growth the AMP legal team has grown in the past year, but private practice firms still play an important part in AMP’s legal undertakings. In an effort to better manage the costs of those external legal providers Salter has created a new legal panel to complement its existing one. The existing legal panel that AMP had has been rebadged as a commercial legal panel while the new legal panel has been badged as a general legal panel. “Traditionally, AXA had tended to focus on low cost legal providers, while AMP was slanted towards the top tiers,” explains Salter. “What we have done with the two panels is bring the best of the two together. The feedback I am receiving is that it has been very successful: We have received very attractive rates, but also because we are using specialist law firms in those areas, we are receiving superior service.”

The general panel focuses on commoditised legal work such as claims, property leasing, securities enforcement and other work along those lines. Many of the firms on the new panel provide their services on a fixed-fee basis, says Salter. “25 to 30 percent of our general panel is fixed fee. The other work on the commercial panel tends to be more bespoke; it’s harder for firms to quote a fixed price in relation to that.”

In addition to fixed fees Salter would like to see law firms assisting him manage AMP’s legal costs by paying closer attention to their own. “I would like to see the law firms delivering more value to their clients by managing their own middle lines…by adopting more cost efficient ways of doing business,” he states. “I would like to see law firms being more conscious of the needs of their customers when it comes to their charge-out rates; in the last panel tender some law firms wanted to increase rates by 30 percent – in a market which is incredibly tough it seems to be completely out of sync with the market and their clients.”

A focus on costs has become of particular importance to Salter, since moving in-house. “Our middle line is just as important as our revenue line,” he says. Although he has only been at AMP for four years, the internal legal team has been tracking external legal expenses for the past 10 years, and now has very reliable data on the cost of outsourcing matters compared to the cost of an in-house legal team. “Economically it’s much better to do work in-house rather than externally,” he adds.

“In ThE lAST PAnEl TEndEr SOME lAw FIrMS wAnTEd TO IncrEASE rATES By 30 PErcEnT – In A MArkET whIch IS IncrEdIBly TOugh IT SEEMS TO BE cOMPlETEly OuT OF Sync wITh ThE MArkET And ThEIr clIEnTS.”

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THe CHAnGInG wOrlD Of DATA CenTreS

In today’s global cloud environment, one might assume that a single data centre would suffi ce for an organisation’s worldwide operations. While this is

technically possible, local regulations are inevitably forcing global organisations to establish a presence in multiple locations; local data storage is required to manage the risks arising in relation to the US Patriot Act, privacy and other regulatory obligations in local jurisdictions. Customers need to know exactly where their data is, right down to the server level. In essence, regulatory requirements mean that it is necessary to build managed services in the cloud “in country”.

These issues are driving data centre investment in multiple jurisdictions. In the Asia Pacifi c, data centre demand is heavily outweighing supply. Lead times for data centre construction are estimated to be approximately three years, while digital customers are working with very short decision-making timeframes and demanding minimal lead times (as little as 12 weeks) for the delivery of new or increased capacity.

This increased demand has created opportunities for premium revenues, particularly in comparison to more commoditised revenues derived from the associated network and real estate industries. However, stability remains a key factor in the selection of a particular data centre location – whether in relation to the regulatory, infrastructure, fi nancial or geographical features of the location. Also, risk-adjusted returns are generally considered to be more variable across the Asia Pacifi c region, with there being a higher risk of “getting it wrong” in comparison with data centre investment in the United States and Europe.

cHalleNges iN eNeRgy maNagemeNt Ten years ago, the focus of data centre operators was maximising security. Today, it’s more about energy management, as rising energy prices drive up the cost of capital and data centre “density” becomes an important driver of profi tability. These challenges are requiring data centre operators to become specialists in energy management.

Operators are driving innovation in energy conservation through the use of renewable fuels, cooling systems, distributed energy generation and Datacentre Automation Software and Hardware (DASH) to reduce electricity consumption and CO2 emissions.

tHe imPact Of clOud cOmPutiNgThe vast majority of data centres across the Asia Pacifi c region remain in-house. However, data centres are fast becoming an enabler for cloud computing developments – creating the potential

dATA cEnTrE dEvElOPErS ArE BEIng FOrcEd TO InnOvATE And AdAPT TrAdITIOnAl BuSInESS MOdElS TO MEET ThE dEMAndS OF ExPOnEnTIAl dIgITAl grOwTh And IncrEASEd STOrAgE dEMAndS, AS wEll AS dEvElOPMEnTS In clOud cOMPuTIng And rISIng EnErgy cOSTS, wrITES gIlBErT + TOBIn PArTnEr BeRNadette jeW

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to dis-intermediate traditional IT solutions and provide a platform for multi-tenant infrastructure.

These cloud developments are, in turn, forcing data centre operators to change their own service offerings – and to provide more elastic “pay as you grow” packages that are more closely aligned to the scalable cloud service offerings delivered via shared resources on a pay per use basis.

There is little doubt that cloud developments will drive greater contestability in data centre services – since cloud customers will no longer be entrenched in a particular data centre for 10 or 20 years. If a data centre is not competitive and efficient, it will be relatively easy to move the cloud to an alternative data centre.

sPecialised PlayeRsWe are seeing an exponential increase in the scope and scale of data centres. The trend is moving from 1-3 MW facilities to 50-100 MW facilities. This means that in many cases it is no longer viable for a single entity to provide all of the data centre elements – or to assume all of the risks – on an end-to-end basis. As a result, specialised players have emerged, dedicated to either real estate or data centre operations. While there are still some “one stop shops” which provide all aspects of a data centre offering, this is not the predominant trend.

We are also seeing the emergence of property funds which aggregate specialised real estate holdings for data centres – offering “white cold space” on a long-term basis. These funds do nothing more than lease the property to data centre operators for

10 to 20 years, without offering operational services. Alliances are commonly being developed with telecommunications providers and other data centre operators for the separate delivery of operational services, via a separate contract with the data centre customer.

cONclusiONThe future of data centres is inextricably linked with cloud computing developments and the seemingly insatiable demand for digital storage. This is pointing to continuing exponential growth across the Asia Pacific region over the next two to three years, focusing in particular on favoured locations such as Sydney, Melbourne, Hong Kong, Singapore and Tokyo. As the data centres become larger, specialised players are emerging in real estate and operational services, and data centre operators are being forced to consider greener energy options. Similarly, traditional long-term, rigid packages are losing favour to service offerings that more closely reflect the scalability and flexibility of service offerings in the cloud.

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A TOuch OF cOnvEnIEncEwhIlE nExT gEnErATIOn TEchnOlOgIES, Such AS cOnTAcTlESS PAyMEnT SySTEMS ArE MAkIng Our MOdErn lIvES EASIEr And MOrE EFFIcIEnT, ThEy AlSO POSE SIgnIFIcAnT lEgAl IMPlIcATIOnS, wrITES gIlBErT + TOBIn PArTnEr KeN sauRajeN.

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With digital goods payments tipped to account for nearly 40 percent of the market by 20151, near field communications

technology has received a good deal of attention for its potential to re-invent the physical point of sale experience and appeal to the modern consumer’s desire for convenience, device consolidation and better security.

This brings with it a challenge of a different kind and one on which the successful commercialisation of solutions may depend: the development of consistent global standards for near-field technology.

From a legal perspective, the standardisation of clear functional and technological requirements for NFC solutions will play a huge role in assisting reliable and efficient contracting in a future mobile payments landscape.

A wider take-up of NFC will attract a range of new business arrangements that need to intelligently balance the interests of a range of stakeholders. Those stakeholders will include hardware (handset and chip) manufacturers, applications developers, technology integrators, telecommunications companies, banks, payment schemes, individual consumers and merchants.

While everybody may have a simple, intuitive sense of what near-field technology is and what it should achieve, recording the finer detail of those solutions in legal terms is much more complex. This is because near-field solutions encompass a wide range of unique technology aspects and specific demands: for instance, integration of the NFC chip with a potentially vast array of manufactured proprietary handsets with different firmware and operating

systems; interoperation between the chip with handset; further interoperation between both chip and handset with various point of sale devices; expansion of SIM card and device capability to support different applications and store information for multiple banking accounts; and, of course, robust information security and authentication features to protect the sensitive personal data that will be contained on the mobile device.

These functions comprise a broader technology supply chain extending across design, build, implementation and support. However, because each of these functions in the transaction chain can potentially be provided and supported by different stakeholders, legal accountability can become blurred. To avoid this, the interaction and handover between (and legal responsibility for) each element needs to be very clearly expressed.

All parts of this supply chain are important for a robustly contracted solution, from both a supplier and customer perspective. Obviously, there is also the need to appropriately manage legal risk and liability against the performance of each of those supply chain elements as well as the end-to-end solution. However, while lawyers have a tendency to focus on traditional contract risks, high-end contracting for new and emerging technology solutions, such as NFC, requires a more sophisticated approach. This is because many contract risks arise from non-legal matters such as proper descriptions of scope, performance parameters and desired product outcomes. A clear standard or statement of technology requirements will go a long way to minimising the risk and the possibility of disputes.Contracting for NFC solutions is not all about managing risk. There is also the opportunity to creatively structure

whIlE EvEryBOdy MAy hAvE A SIMPlE, InTuITIvE SEnSE OF whAT nEAr-FIEld TEchnOlOgy IS And whAT IT ShOuld AchIEvE, rEcOrdIng ThE FInEr dETAIl OF ThOSE SOluTIOnS In lEgAl TErMS IS Much MOrE cOMPlEx.

Ken saurajen

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relationships in a way that positively aligns the interests of various NFC stakeholders and offers strong incentives for good behaviour, thereby increasing the chances of a near-field project’s success. Future regulatory impacts will also be important. While NFC technology is not subject to specific regulation at present, it makes sense to design solutions in ways that are conscious of existing and likely future regulatory requirements. To the extent that the industry is proactive and capable of reaching consensus, there arrangements could be self-regulatory, or operate with a minimum degree of external regulatory oversight.On one view, a universally positive technology result is in all stakeholders’ interests, because consumers may not immediately discriminate between different proprietary NFC solutions. In the early stages of technology adoption, it is possible that consumers’ initial experiences may influence their opinions about the technology more broadly. This is particularly the case with near-field technology, the performance quality and useability of which are directly exposed to the consumer and reflected in quick end-user perceptions.

Documenting the requirements for NFC solutions will require some care and precision. Smarter lawyers will seek to contract for agreement outcomes in functional as well as pure technology terms, because (in addition to what the detail of particular technology specifications might say) ultimately the fundamental test is that the technology delivers a specific transactional experience for the user in a functionally equivalent way.

1. Juniper Research Report, July 2011

SMArTEr lAwyErS wIll SEEk TO cOnTrAcT FOr AgrEEMEnT OuTcOMES In FuncTIOnAl AS wEll AS PurE TEchnOlOgy TErMS.

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PRactice maNagemeNt sOlutiON sOftWaRe: THE UNDERAPPRECIATED UNDERBELLY OF LEGAL PRACTICEPrAcTIcE MAnAgEMEnT SOFTwArE SOluTIOnS ArE A cOMPlIcATEd AFFAIr FOr AnyOnE EngAgEd In lEgAl BuSInESS. staNley HONg OuTlInES ThE kEy PlAyErS And cAnvASSES MArkET OPInIOn On ThE SuBjEcT.

In Australia, there are approximately 15 major players offering practice management solution (PMS) software all of whom are vying for the hearts

and minds of law firms across the country. Of the major players, four stand out: LexisNexis and Leap Legal Software are both competing with one another for supremacy in the smaller to mid-sized practices, while Thomson Reuters (owner of this magazine) and Aderant, are both fighting tooth and nail in trying to capture the attention of the top-tier firms. Furthermore, thrown into the mix are a number of independent players and overseas vendors which have begun to enter into the country. The result is an extremely crowded marketplace all jostling to become the preeminent software provider in a multimillion dollar industry.

PRactice maNagemeNt sOlutiON sOftWaRe: mORe tHaN just aN accOuNtiNg tOOlPractice management solution software, much like the operating system on a personal computer, can often be underutilised and many people working within law firms may not have a full appreciation of what the technology can offer – with the problem being especially acute in small to mid-sized firms, and with sole practitioners. One potential problem may lie in the fact that, like other forms of technology, PMS software has to constantly evolve in order to meet the needs of the

client. Looking at Aderant’s technology for example, we can see that the software has moved away from the core functionality of the traditional time and billing services, and is now more of enterprise solution, with the software able to offer a larger array of tools.

These tools include: matter planning and scheduling, business intelligence workflow and customer relationship management (CRM) as Bruce Heaney, Sales Director of the Asia-Pacific Region for Aderant noted via email.

However, with the addition of more features, the software can also potentially seem more daunting for the uninitiated. A 2011 study, conducted by Kate Hart of KD Consulting in conjunction with the State Law Society, reviewed the area in relation to Queensland legal practitioners and found that a significant number of lawyers did not fully grasp the whole scope of the technology. According to Hart the lawyers were essentially using the software as an, “accounting program, without appreciating that the solution had a number of other tools that were already part of the software, [and] not realising that they did not need to make any additional purchases to manage their practice”.

The study found that the biggest mistake made by many legal practitioners was not being able to recognise the true power of the software in assisting with workflow, CRM and the document automation process. As a result important matters such as ensuring that compliance issues were being adhered to, or the ability to seamlessly bring up any essential information when dealing with a client which forms part of CRM, as well as granting more senior lawyers the capability to easily monitor the work of their more junior counterparts, meant that many practices were not as efficient and productive as the PMS software would allow them to be. This could potentially impact their bottom line, says Hart.

tHe Key PRactice maNagemeNt sOlutiON PROvideRsWhen discussion revolves around the PMS software offerings in relation to the top-tier law firms, there are only essentially two entities that control the top end of the legal market: Aderant, with their ‘Aderant Expert’ offering and Thomson Reuters, with its suite

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of integrated legal business management solutions from their ‘Elite’ legal software division.

Looking beyond the top-tier, the competition in regards to practice management solution software is especially fierce in the mid-tier law firm market with numerous vendors battling hard to gain the upper hand. In recognition that there is a market ripe for the picking, Thomson Reuters has made a number of acquisitions in the past year, acquiring Mattersphere, which is a full matter and document management solution that now sits alongside the Elite 3E solution and UK mid-market leader, Pilgrim Systems and their LawSoft solution.

According to Lucas Garlepp, Director of Sales Asia Pacific for Elite these acquisitions further broaden Elite’s suite of products and the Lawsoft acquisition in particular targets a segment of the market that has been underserved in recent years.

Thomson Reuters’ recent aggressive acquisition of a number of business platforms has increased the range of products that is now available to clients and allows Elite to offer their solutions to a broader spectrum of law firms and other professional services organisations. On the back of their recent success in the region, Elite can now count 15 of the top 30 ALB law firms amongst its clientele, whilst in the past 18 months alone, four of Aderant’s top clients have moved to Elite (among them Ashurst Australia and King Wood Mallesons) which is a far cry from where Elite was sitting eight years ago when they had zero clients.

Meanwhile, we’d be remiss to ignore the other major PMS software provider, Aderant, whose Aderant Expert range of software is used by Clayton Utz, Allens Arthurs Robinson, Freehills and Piper Alderman, Norton Rose in Australia, while in New Zealand, Chapman Tripp, Russell McVeagh, Simpson Grierson and Duncan Cotterill are some of the other prominent firms who utilise Aderant Expert, signifying how fierce and lucrative the competition is amongst Aderant and Thomson Reuters.

adeRaNt vs elite: a tWO HORse RaceIn many ways, the battle for supremacy between Aderant and Elite for the hearts and minds of the top-tier law firms is akin to a two horse race in the Melbourne Cup because both software solutions are architecturally similar, a fact Ben Swindale, Chief Information Officer for King & Wood

Mallesons, noted when the firm decided to embark on a recent review of which software solution the firm should implement.

So with Aderant and Thomson Reuters essentially controlling the top end of the PMS software market, the question that should be asked is: how are the two vendors separated from each other? In one corner, we have one of the leading sources of intelligent information in Thomson Reuters, while in the other, sits the largest independent software company in the world that is servicing the legal vertical in Aderant.

Starting with Ashurst Australia and King Wood Mallesons, the primary considerations when both firms recently chose Elite 3E as their software of choice boiled down to the ability for both firms to customise the software and the ease of use.

Helen McKenzie, Deputy Managing Partner of Ashurst Australia (formerly Blake Dawson) acknowledged that although the Aderant Expert solution was excellent in its own right; “[T]he main requirement was the system had to be user friendly and had to have the capacity to be customised to what the firm wanted, rather than an off the shelf solution. We wanted a high level ability to modify the system and to tailor the software to the needs of the practice.” The adaptability of the software was a recurring theme and Tony Brennan, Chief Operating Officer and Chief Financial Officer for Minter Ellison Australia, whose firm also recently decided to adopt Elite 3E, said that after an extensive review process the ability of Elite to “manage multi-jurisdictional requirements, and the ability to leverage new technology in the future” was a deciding factor.

Brennan’s sentiment was echoed by Swindale, who added that the roadmap, as well as the “multi-currency and multi-language support” were all important aspects when the firm decided to go with Elite 3E as opposed to Aderant.

tHe clieNt is KiNg (OR queeN) WHeN it cOmes tO PRactice maNagemeNt sOlutiONsAs the top law firms increasingly look to expand overseas taking in a large amount of new clients in the process, the emphasis will be increasingly focused on CRM and workflow, and the technology has to not only be adept in dealing with mission critical occurrences, but also needs to be “accurate, reliable and robust” as Neil Shoebridge of Clayton Utz pointed out. Shoebridge further noted that the Aderant Expert software allowed the firm to customise their reports to key clients that fit in with their reporting needs; “[B]eing the firm the size we are, we’re involved with a number of legal panels and a number of our customers demand information either in reports or in their bills that must adhere with the type of format or data that fits in with our client’s needs.” Shoebridge also added, “because of the openness of the Aderant Expert system, we’ve been able to customise it in such a way where we can include add-on features for our clients on the various data elements that they may request.”

McKenzie similarly emphasised the importance of any PMS software to meet the needs and expectations of Ashurst’s clients, stating that: “Practice management software is about delivering a quality service to your clients. The interaction that you have with your clients, such as bills, is an important part of the overall service, and it’s important that a practice management system is able to deliver the information to clients of the value of what the firm has done, the cost, and where the real value is, along with the quality of service that has been delivered. Ultimately, we are in a service industry and in particular for the top-tier firms, it’s increasingly about value for the client.”

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