ALB 11.1

ISSUE 11.01 FEBRUARY 2013

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AUSTRALASIANLEGALBUSINESS

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hAS thE RESoURcES Boom RUn oUt oF pUFF?

The Coke Side Of Life:IN-HOUSE AT COCA COLA

EMPLOYMENT LAW ASIC LITIGATION TECHNOLOGY

www.bplr.com.au

BPLJAN13

In-House Counsel 4-6 PAE

Market Leading Brand Commercially Focused Role

Our client is an industry-leading national services company built on a passion for providing superior service with the very best people and a commitment to safety and the community. For many years it has been producing exceptional results for clients across Australia. Based in Melbourne, the company now has a role for a dynamic lawyer with broad experience. The role reports to a down to earth General Manager Legal, and works with the Company Secretary and Group General Counsel.

We seek a commercially astute 4-6 year lawyer who has experience in providing strategic and commercially focussed legal advice. You should enjoy reviewing, negotiating, drafting and finalising contracts. Experience in company secretarial, property/leasing and HR/IR work would be helpful, although not all of these are essential. There will also be opportunities in IP. You will be involved in substantial corporate transactions.

In-House Counsel 4-7 PAE

ASX 200 Company

To discuss these exclusively retained roles in confidence email Doron Paluch at [email protected] or call 03 8676 0302

Commercially Focused Role 12+ Month Contract

Toyota Australia, Australia’s automotive sales market leader, has a new outstanding opportunity for a commercial lawyer to join its legal team in Melbourne. This diverse, interesting and challenging role will appeal to commercially focused lawyers looking to advance their career on a contract which will run for at least 12 months.

Toyota Australia is a leading manufacturer, distributor and exporter of vehicles, and has been the number one car seller in Australia for the last 8 years. Toyota Australia employs more than 4,000 people and has corporate and dealer representation across Australia.

Working in a friendly team, this broad role will provide substantial autonomy and independence. You will work closely with the business, and provide advice and assistance in relation to all of the company’s legal matters, including contract negotiation, intellectual property protection and employment and industrial law. Your role will also involve assisting with ensuring compliance with legal regulatory requirements such as Competition and Consumer and Corporations Laws. The ideal candidate will be a motivated team player, great communicator with excellent technical, time management and project management skills. You will also be a self-starter, capable of forming strong relationships with the legal team and your business customers.

This is an excellent opportunity to apply your commercial acumen as well as your technical skills in a multi-faceted legal role in a fantastic company.

1CONTENTS

ResouRces Why there’s plenty of life yet in the resources boom

special pRofile – Toby HewiTT, DaRT eneRgy inTeRnaTionalIn-house perspective on the resources industry from an international player

employmenT lawWhy last year’s hottest practice area can only stay hot

COvEr STOry

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managing paRTneR RounDTable – paRT TwoOur expert panel of managing partners returns to talk about the rise of the in-house profession and their predictions for 2013

“MY GENErAL AdvICE IS NOT TO bE OvErLY AGGrESSIvE IN YOUr vIEWS Of THE LAW. WHILST IT IS OfTEN AdvANTAGEOUS TO bE AT THE CUTTING EdGE Of LEGAL dEvELOPMENTS, CArE NEEdS TO bE TAkEN TO ENSUrE THAT YOU dON’T ENd UP AT THE bLEEdING EdGE.”George forster, coca cola amatil

AustrAlAsiAn legAl BusinessISSUE 11.01

14

TecHnologyThe key areas where firms should be looking to invest in technology.

wHaT asic Really wanTsUnderstanding the lessons from last year’s raft of ASIC litigation

rEgularSDeals

sponsoReD upDaTebuddle findlay

league Tables

acla peRspecTive

news

appoinTmenTs

pRofileGeorge forster, Coca Cola Amatil


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Paul FerrisT (61) 2 8587 7114

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Peter ratcliffT (61) 2 8587 7543

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Harriss Wagner is an independent organisation dedicated to providing business consulting and advisory services to the legal industry.

If it’s getting the strategy right or getting the strategy implemented the right way, you can depend on Harriss Wagner.

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003_ALB11.01_HarrisWagnerAd.indd 1 30/01/2013 10:17:31 AM

4 EDITOrIal

according to insiders, 2012 was the year that Legal Process Outsourcing (LPO) reached a point of critical mass. As the discussion during our Managing Partner roundtable last issue revealed, opinions on LPO in the industry remain divided. Some – perhaps a majority – see it as an inevitable and necessary response to client demand. Others see it as another rip-off of the poor old Aussie worker.

The assessment may depend on what work is being outsourced. No doubt there are some kinds of process work many Australian lawyers would be happy to see disappear offshore permanently. It is hard to see how Australians are being hard done by if the only work going offshore is so-called “low level” work.

firms have often argued that outsourcing allows graduate lawyers to concentrate on the “real” art of lawyering and to leave the more basic parts to the LPO provider. but is this a fair outcome for the young Indian or Irish or South African lawyers who make up a significant part of the workforce of many LPO organisations? If arduous tasks such as discovery are not the best use of the intellectual capital of Australia’s young talent, would it be an appropriate use of the intellectual capital of young talent in other countries?

It is easy to see the counter-argument: a key reason why lawyers in India or South Africa end up in LPO employment is the lack of opportunity to work in legal practice. There might be various reasons for this state of affairs – economic reasons or the structure of private practice in a particular jurisdiction – but these are not problems caused by the LPO provider. Nor are they caused by firms who send work to those providers.

This is a complicated issue which does not lend itself to an easy “developed world versus developing world” paradigm. However, it can only be hoped that young graduates in developing countries who aspire to enter legal practice have the opportunity to do so. Some may well be happy to confine themselves to process work – but this cannot be taken for granted.

renu PrAsAD Australasia editor, Australasian Legal Business,thomson reuters

l’ avocaT manQue


ISSUE 11.01 JANUARY/FEBRUARY 2013



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RY 2013

ISSUE 11.0

1

HAS THE RESOURCES BOOM RUN OUT OF PUFF?

The Coke Side Of Life:IN-HOUSE AT COCA COLA

EMPLOYMENT LAW ASIC LITIGATION TECHNOLOGY

MELBOURNE OFFICE(03) 9225 5250

Suite 3149, 120 Collins StMelbourne VIC 3000

E: [email protected]

DEalS AustrAlAsiAn legAl BusinessISSUE 11.016

yOur mONTh aT a glaNCE

youR monTH aT a glance

deal value Advisor Client Lead Lawyer

Project financing for the Ichthys Project

uS$20 billion

Allen & Overy

INPEX Corporation and Total (sponsors)

Aled davies (Tokyo) Chris Rushton (Sydney)

Project financing for the Ichthys Project

uS$20 billion

Allens INPEX Corporation and Total (sponsors)

Tim Lester, Stephen Spargo, ben farnsworth

ARMZ’s acquisition of uranium One

A$2.7 billion

Ashurst jSC Atomredmetzoloto (ARMZ)

Mark Stanbridge, Tanya denning

Studio City bond issue

uS$825 million

Ashurst Studio City Rob Ritchie

Goodman Australia Industrial fund equity raising

A$624 million

Herbert Smith freehills

Goodman Australia Industrial fund

justin O’farrell

Melco Crown Entertainment bond issue

uS$600 million

Ashurst Melco Crown Entertainment

Rob Ritchie, bill Gray, Rich davis

China Investment Corporation’s sale of Goodman Group stake

A$519.2 million

Gilbert + Tobin

Goldman Sachs Rachael bassil

Newcastle Coal Infrastructure Group’s debut uS Private Placement (uSPP)

A$435 million (approximate)

Ashurst Newcastle Coal Infrastructure Group issuer NCIG Holdings as guarantor

jamie Ng, Paul O’donnell, bill Cannon

DEalSAustrAlAsiAn legAl BusinessISSUE 11.01 7

dEALS rEPOrTEd TO ALb, dECEMbEr 2012/jANUArY2013. is your firm missing from this table? Please assist ALb in making this table as complete as possible by notifying us of your firm’s involvement in deals by emailing [email protected]. ALb will publish all deals in value order and all submitted deals will be published, space allowing.



Starhill REIT’s purchase of Marriott portfolio

A$415 million

baker & McKenzie

Starhill REIT Roy Melick, john Walker, Amrit MacIntyre, Tim O’doherty

Starhill REIT’s purchase of Marriott portfolio

A$415 million

Corrs Chambers Westgarth

Commonwealth Property Hotel fund

bupa Australia Health proposed acquisition of dental Corporation

A$370 million


bupa Australia brad Russell, Andrew Rich

bank of queensland’s capital raising

A$300 million

Clayton utz bank of queensland

Tim Reid, Clayton barrett

brambles’ acquisition of Pallecon

A$168 million

Allens brambles vijay Cugati

brambles’ acquisition of Pallecon

A$168 million

Ashurst CEvA (seller) Mark Sperotto, Murray Wheater, Peter McCullough, barbara Phair, jennie Mansfield, Peter Armitage

Hassall Street’s sale of Eclipse Tower to Retail Employees Superannuation

A$167.5 million

Allens Hassall Street victoria Holthouse

bC Iron increased stake in Nullagine iron ore project

uS$130 million (debt finance)

Allens Commonwealth bank of Australia and Australia and New Zealand banking Group

ben farnsworth

DEalS8 AustrAlAsiAn legAl BusinessISSUE 11.018

yOur mONTh aT a glaNCE





Ashurst bC Iron Nullagine and bC Iron

Gaelan Cooney, Katie Winterbourne, jean bursle



johnson Winter & Slattery

bC Iron

NEXTdC’s initial public offering of the Asia Pacific data Centre Group (APdC)

A$115 million

Clayton utz NEXTdC Tony Lalor, Tim Reid, Michael Richardson

Sale of GPT Group assets to private investors

A$91.7 million

Henry davis York

GPT Group Andrew Steele

Ivanhoe Australia’s entitlement offer

A$80 million


Ivanhoe Australia Tim McEwen

Leighton Holdings acquisition of Macmahon construction

A$80.7 million

Ashurst Macmahon Holdings

Leighton Holdings acquisition of Macmahon construction

A$80.7 million

Gilbert + Tobin

Leighton Holdings

Tony bancroft

Aj Lucas buy-back of shares from Goldman Sachs

A$60 million


Goldman Sachs Philip Podzebenko, bruce Ramsay

dEALS rEPOrTEd TO ALb, dECEMbEr 2012/jANUArY2013. is your firm missing from this table? Please assist ALb in making this table as complete as possible by notifying us of your firm’s involvement in deals by emailing [email protected]. ALb will publish all deals in value order and all submitted deals will be published, space allowing.

Changes have been announced to New Zealand’s central workplace law, the Employment Relations Act 2000 (‘Act’), with a bill expected to be introduced to Parliament imminently. Some of the changes address deficiencies in the Act that were overlooked when the legislation and various amendments to it were implemented, however, several changes are expected to impact noticeably on employment relationships.

CHANGES TO PART 6A Of particular significance are the changes proposed to Part 6A of the Act. Part 6A aims to provide continuity of employment for ‘vulnerable’ employees (those providing cleaning or catering services, or, in certain sectors, orderly, caretaking or laundry services), when a business is restructured or sold, by providing that those employees may elect to continue their employment on the same terms and conditions with the new employer. The proposed changes will exempt small and medium businesses (those with fewer than 20 employees) from the provisions of Part 6A where they take over an existing contract, so that they will not be obliged to continue the employment of the vulnerable employees.

While small and medium employers account for only around 25% of those in the affected sectors, it is predicted that this change may be expanded to cover all businesses after an initial introduction period, as the government has previously done when introducing 90 day trial periods for new employees (which excludes employees dismissed within the trial period from claiming unjustified dismissal).

Other changes to Part 6A are largely administrative and will introduce:· A requirement for the outgoing employer to

forward employees’ information to the new employer, such as employment agreements, tax information, and wage and leave records

· A process to help employers agree on the apportionment of liabilities for accrued service-related entitlements of employees transferring to the new employer

· A requirement that employees must decide to transfer to a new employer within five working days (or a longer timeframe by agreement)

· Additional penalties and compliance orders for non-compliance with Part 6A, and provision for litigation in the District Court.

COLLECTIVE BARGAININGOther proposed amendments include a return to the original position in the Act that the duty of good faith does not require the

parties to conclude a collective agreement, and empowering the Employment Relations Authority to declare in certain circumstances that collective bargaining has ended.

The Act prescribes the way that parties must engage in collective bargaining, and undoubtedly the issue of when collective bargaining has ended will be hotly contested, at least initially. There has also been some suggestion that the tension created by a finite period of collective bargaining will lead parties to rely more heavily on the munitions provided by the Act, such as strikes and lockouts, and at an earlier stage, creating more industrial warfare and related litigation.

Smaller erosions of the Act’s industrial mechanisms include a change to allow employers to opt out of multi-employer bargaining and a removal of the rule that forces non-union members to take union terms and conditions for the first 30 days of their employment. This latter change will be welcomed by employers as new employees in collectivised workplaces will be able to be offered individual terms from the outset, but equally is opposed by unions as undermining their position.

It is also proposed to allow for partial pay reductions in cases of partial strike action, to remedy a contrary judicial interpretation of the Act.

GOOD FAITH AND DISCLOSURE OF INFORMATIONChanges to the duty of good faith relating to the disclosure of personal information have also been proposed to remedy a recent decision of the Employment Court. In that decision, the Court held that the duty of good faith requires employers to disclose extensive information to employees when considering changes that could potentially impact on an employee’s continued employment, including information about other candidates for a position and information within the minds of the decision makers. This has created compliance issues for employers and resulted in significantly slower decision making.

The indication is that the duty of good faith will be amended to clarify that it does not require employers to provide an employee with access to confidential personal information about another person, or evaluative material about the employee concerned. This will align the good faith requirement to provide information more closely with the privacy principles in the Privacy Act 1993. The changes should also provide clarity and certainty about which types of

personal information may be disclosed to third parties and will be welcomed by employers.

BREAKS AND FLEXIBLE WORKING ARRANGEMENTSThe anticipated amendment bill will also incorporate planned changes to rest and meal breaks provisions, which are currently very prescriptive. It is expected that these provisions will be relaxed to provide greater flexibility around how entitlements to rest and meal breaks can be met, and flexible working arrangements. At present, flexible working arrangements may be requested by employees on the basis of responsibilities to particular dependants, and the proposed change is to allow all employees to request flexible working arrangements. The Act currently sets out a list of reasons that a request for flexible working arrangements may be declined, and provides timeframes for making and responding to requests, including a limit of one request per employee every six months.

Anecdotal evidence about both rest and meal breaks and flexible working arrangements is that these matters, while recently legislated, are generally negotiated in the workplace as they always have been. The law as it stands has certainly not created any significant litigation. As such, it is not expected that these changes will have a significant impact.

NEW ZEALAND’S ANTICIPATED WORKPLACE LAW REFORM

NZ Commentary

Firm Profile

KATE ASHCROFT Buddle Findlay

SHERRIDAN COOK Buddle Findlay

This article was written by Sherridan Cook, partner, and Kate Ashcroft, senior associate, both based in the Auckland office of Buddle Findlay, one of New Zealand’s leading law firms. Sherridan and Kate specialise in all aspects of employment law, including industrial relations between employers and unions. Sherridan can be contacted on +64 9 357 1858 or [email protected] and Kate on +64 9 363 1348 or [email protected].

lEaguE TablES10 AustrAlAsiAn legAl BusinessISSUE 10.11

Top m&a fiRms - announceD Deals, full yeaR 2012

Rank legal aDvisoR value ($mil)

mkT. sHaRe Deals

2 Ashurst 13,925.04 18.3 59

3 king & Wood Mallesons 12,216.30 16.1 69

4 Gilbert + Tobin 12,177.10 16.0 37

5 Allens 11,138.00 14.7 64

6 Clayton Utz 7,186.87 9.5 44

7 baker & Mckenzie 5,218.35 6.9 34

8 Minter Ellison 4,785.27 6.3 62

9 Norton rose 3,897.82 5.1 41

10 Latham & Watkins 3,309.12 4.4 1

10* jipyong jisung 3,309.12 4.4 1

12 Allen & Overy 2,991.25 3.9 23

13 Clifford Chance 2,918.63 3.8 9

14 blake Cassels & Graydon 2,513.84 3.3 4

15 Paul, Weiss 2,425.32 3.2 2

16 Corrs Chambers Westgarth 2,398.51 3.2 34

17 Osler Hoskin & Harcourt LLP 2,377.48 3.1 5

18 Skadden 2,291.37 3.0 3

19 dLA Piper 1,989.69 2.6 31

20 johnson Winter & Slattery 1,918.27 2.5 7

21 Middletons Lawyers 1,671.58 2.2 7

22 Squire Sanders LLP 1,524.85 2.0 7

23 Gowling Lafleur Henderson LLP 1,266.26 1.7 3

24 dorsey & Whitney LLP 1,078.75 1.4 3

24* Lawson Lundell Lawson & McIntosh 1,078.75 1.4 1

Subtotal with Legal Advisor 61,737.61 81.3 534

Subtotal without Legal Advisor 14,201.25 18.7 1,245

Industry Total 75,938.86 100.0 1,779

(*tie) based on ranking value inc. Net debt of TargetSource: Thomson financial date: 2013-01-23 08:35:44 EST

no.1 HeRbeRT smiTH fReeHills llp

vALUE ($MIL)

dEALS: 78 MArkET SHArE: 30.3

23,030.84

Top m&a fiRms - compleTeD Deals, full yeaR 2012

Rank legal aDvisoR value ($mil)

mkT. sHaRe Deals

2 king & Wood Mallesons 27,753.66 35.4 60

3 Ashurst 23,824.69 30.4 51

4 Allens 20,232.61 25.8 47

5 Gilbert + Tobin 19,513.04 24.9 34

6 Clayton Utz 18,919.81 24.1 49

7 Corrs Chambers Westgarth 13,292.55 17.0 31

8 Minter Ellison 10,080.36 12.9 58

9 Allen & Overy 8,196.11 10.5 29

10 baker & Mckenzie 7,941.88 10.1 38

11 Norton rose 6,457.69 8.2 32

12 Cravath, Swaine & Moore 4,351.34 5.6 3

13 McCullough robertson 3,661.82 4.7 20

14 Latham & Watkins 3,587.98 4.6 3

15 Clifford Chance 3,321.12 4.2 10

16 jipyong jisung 3,309.12 4.2 2

17 baker botts LLP 2,739.72 3.5 1

18 Orrick Herrington & Sutcliffe LLP 2,554.96 3.3 2

19 Stikeman Elliott 2,514.57 3.2 4

20 Osler Hoskin & Harcourt LLP 2,338.40 3.0 4

21 kirkland & Ellis 2,116.05 2.7 6

22 Linklaters 1,472.04 1.9 3

23 Cassels brock & blackwell LLP 1,410.42 1.8 4

24 Werksmans Attorneys 1,334.61 1.7 1

24* CLS Attorneys 1,334.61 1.7 1

25 davies Ward Phillips & vineberg LLP

1,220.35 2.1 1

Subtotal with Legal Advisor 69,170.36 88.3 462

Subtotal without Legal Advisor 9,191.98 11.7 830

Industry Total 78,362.34 100.0 1,292

(*tie) based on ranking value inc. Net debt of TargetSource: Thomson financial date: 2013-01-23 08:19:37 EST

no.1 HeRbeRT smiTH fReeHills llp

vALUE ($MIL)

dEALS: 79 MArkET SHArE: 40.2

31,468.96

AustrAlAsiAn legAl BusinessISSUE 11.01 IN-hOuSE ObSErvaTIONS 11

as we were busy ringing in the New Year and the nation was distracted by firestorms engulfing the countryside an anti-coal mining activist, 24 year-old jonathan Moylan, was busy cooking up his own storm. On january 7 he embarked

on an elaborate hoax worthy of an episode on the bbC Tv series Hustle (or even Mission Impossible!). I’ll return to Mr Moylan’s prank in a minute.

but first, some readers will recall that in my december column I highlighted the growing use of social media by trolls for the pursuit of individuals and employers by disparaging comment. There now appears to be a broadening trend to use social media, as well as other forms of media, to perpetrate hoaxes. just a couple of days after the Moylan hoax someone masquerading as a just jeans representative confused and offended customers on the store’s facebook page. besides receiving verbal abuse on some of the pages, the store’s customers were being directed to an online “voucher” that showed an offensive picture of controversial ex-AfL player ben Cousins.

This is by no means the first occasion when business has been seriously impacted by hoaxers. In November last year jetstar’s facebook page was also hijacked. The prankster used the airline carrier’s logo as the user name to convince some customers that their flights had been cancelled.

Now back to Mr Moylan and his infamous antics. He and his fellow activists concocted a fake media release which said that the ANZ bank had reversed a decision to provide a $1.2 billion loan to Whitehaven Coal (a company listed on ASX) based on ethical grounds. As soon as it was sent to journalists via email it sparked an immediate share market sell-off as word spread through various media outlets and other internet sites. The company’s share price dropped nearly nine percent wiping $314 million off the value of Whitehaven Coal before ASX moved to put the company into a temporary trading halt. ASX subsequently confirmed that the trades which took place on what was clearly a false market would not be cancelled.

The plan was simplistic in the extreme. The activists simply invested $25 in buying an internet domain name – ANZcorporate.com – which then allowed them to use a fake email address that fooled several major media organisations. The press release was made to look like the real McCoy by the use of a genuine ANZ press release as a template for the fake release. Then, from their bush camp deep in the Leard State forest near Narrabri, NSW and with the use of a laptop computer, mobile phone and somewhat unreliable telecom connections, it was all too easy. Surprisingly, despite a number of red flags, apparently only fairfax Media bothered to call the mobile phone number at the bottom of the dodgy press release to check the veracity of the story (perhaps that says something about the pressures on media to get the story out there first).

HErOES Or HOAxErS – CAN THE LAW COPE?bY Tony De govRik, LEGAL AffAIrS & COMMUNICATIONS dIrECTOr, AUSTrALIAN COrPOrATE LAWYErS ASSOCIATION, THE PrOfESSIONAL bOdY fOr IN-HOUSE LAWYErS.

Moylan and his environment group, front Line Action on Coal, admitted to the hoax. They justified their actions by drawing attention to what they say would be irreparable damage set to be caused by Whitehaven’s Maules Creek project in the Leard State forest – the planned site for the commencement or expansion of three enormous open cut coal mines.

Moylan’s actions are now under investigation by ASIC and, if convicted of disseminating a false or misleading statement in breach of the Corporations Act, he faces criminal penalties of up to $500,000 and 10 years imprisonment. It would seem that the criminal penalties available to the market regulator are more than adequate as a deterrent if heavily publicised.

So did Moylan’s means justify the end? Should he be regarded as a well-intentioned hero or the perpetrator of an ill-conceived hoax? Environmentalists such as former Senator bob brown and the Greens party have hailed him as a hero. However, I’m sure you can guess what the shareholders in Whitehaven Coal who sold near the bottom on the market that fateful day think!

The incident is the third time in just the last six months that trading on the stock exchange has been influenced by a hoax. Readers will recall that david jones (a company rarely out of the news) was drawn into a takeover hoax in july last year. Its share price soared after its board disclosed to the market a fake approach, purported to be from a british private equity firm. Similarly, mining contractor MacMahon Holdings was the target of a hoax in October.

The message from all this for in-house counsel is that they now need to ensure that their employer remains vigilant. Someone in their organisation should be assigned the task of keeping a close watch on the organisation’s social media for fear of someone hijacking it for ulterior purposes.

Tony de govrik

NEwS12 AustrAlAsiAn legAl BusinessISSUE 11.01

Q&A with damian Huondamian Huon is a Legal Technology Strategist and CEO of Huon IT. With over 23 years supporting Australian law firms, Huon IT deliver business-wide outcomes with ‘everything technology’.

how to measure It without knowing It. Whether you are Managing Partner, CfO, Practice Manager or anything in between, IT isn’t your job – but it is to ensure your IT strategy is cost effective, compliant, and delivering what your firm truly needs. Here seasoned strategist, damian Huon, shares his tips on measuring IT – without getting involved in the bits and bytes of your system.

TECHNOLOGY IN PrACTICE>>

Simple. Three reports should land on your desk:1) Monthly ‘Need-to-know’ Report – This is a NO jargon summary

of what’s working, what’s not, project updates, and warnings of future spends.

2) quarterly staff survey – this doesn’t need to be across a big group, but feedback from even a handful of staff will give you a healthy indication of whether your employees are receiving the tools and support they need.

3) Annual Review – an audit or health check should be carried out by an independent party every year. The best time do this is usually before financial year planning.

This means critical information is right at your finger tips - and you can make a quick, informed decision about what needs addressing versus what can be left to your IT team.

It’s not what you know, but who you know.When it comes to big picture planning, understanding what others

are doing is a great benchmark. This can be achieved by engaging with peers at other firms, and calling in an independent advisor who specialises in your industry.

A taste of a few key issues most firms will be locking down this year are mobility and “bring Your Own device” policies, Compliance and disaster Recovery, and obviously the Cloud. Whether or not you are moving into the cloud, you should at least know where it fits in your future strategy.

Only partially. Whilst you certainly don’t need to become a ‘Techie’, leaders do need to change their mindset when it comes to IT.

Technology is now a key driver of your business; on every desk, in every pocket. While its potential is great, its threats are even greater, so give IT the attention it deserves.

Take IT out of the ‘too hard basket’, and keep your finger on the pulse!

Q1

Q2

Q3

how can I keep a gauge on It from an arm’s distance?

how can I validate our overall strategy?

to what extent can I delegate these checks?

Email your questions to [email protected]

In case you missed it…..

EMPLOYMENT MArkETconstruction, workplace relations, property lawyers in demandA report by Hays recruitment has found that construction, workplace relations and property lawyers were among the areas likely to be in demand by firms in early 2013.

The Hays Quarterly Report narrowed down the list of “hot” specialisations and jurisdictions as follows:• Construction and property lawyers were reported to be in

demand particularly in queensland owing to large infrastructure projects and commercial developments coming online;

• Property lawyers were also reported to be in demand in Perth owing to a growing property market;

• Insurance lawyers were reported to be in demand, particularly in queensland owing to the aftermath of natural disasters;

• Insolvency/debt recovery lawyers were in demand because of distressed economic conditions;

• Workplace relations lawyers were in demand because of increased disputes and changing legislation;

• Career paralegals and senior lawyers on temporary contracts were also sought after.

gadens enters growing Singapore marketGadens Lawyers has appointed former Clifford Chance counsel Marc Rathbone as managing partner of its new Singapore office, which opened on january 1. Rathbone is an experienced energy and resources lawyer having been in the Singapore market for the past six years and a lawyer for more than 20 years.

“Gadens, like a lot of Australian firms, sees Asia as a key growth market for our clients,” Rathbone told ALB. “Singapore is a natural extension for the firm in the Australasian region.”

The firm already has an office in Port Moresby, which has been established for more than 40 years. “Our initial focus will be on energy and resources,” said Rathbone of the office. “Asia and Australia are in the prime driving seat for energy and resources worldwide.”

stOrY OF tHe MOntH

ThE mONTh’S TOp hEaDlINES frOm www.legalbusinessonline.com

NEwS 13AustrAlAsiAn legAl BusinessISSUE 11.01

Group Head of LegalCSR Limited

In-house Q&A >>

Melbourne t | +61 3 8102 1900 Sydney t | +61 2 8249 4730

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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?

In your opinion, what do you consider to be the main challenges you will face in 2013 ?

In-house legal teams have, increasingly, become more directly involved in all aspects of an organisation’s operations, initiatives and general strategy, because they’re providing advice and support across all of the different business units. As a result, in-house lawyers are uniquely positioned to obtain a holistic view of their business, which is something that can’t truly be matched by external lawyers. This means that they’re better able to form a view that balances legal risk against the organisation’s various commercial imperatives.

Additionally, the members of an in-house legal team are able to develop a specialist understanding of the organisation’s various business units and their individual commercial objectives and legal requirements. When combined with their understanding of the legal environment governing the organisation’s industry, the in-house lawyer is able to add real value to the business by providing commercially driven, practical and cost effective advice on a timely basis.

It is imperative in today’s fast paced business environment that management has quick and accessible legal advice at a moment’s notice.

Certainly the multi-faceted aspect of the role of General Counsel presents ongoing challenges. In my role at CsR I work closely with the company’s Ceo, CFo and other members of the senior management team and am often involved in making strategic commercial decisions. The challenge facing most General Counsel is to be able to make a meaningful commercial contribution and to be able to switch hats and provide impartial legal advice when required.

Decisions such as in James hardie have certainly resulted in General Counsel’s risk profile increasing in circumstances where they may be considered to be officers of the company.

A key challenge is the ongoing business pressure to “do more with less”. With our business growth targets and a large number of significant projects underway across the CsR group (including strategic “bolt on” acquisitions and joint ventures in both Australia and new Zealand), combined with an ever increasing scope of regulatory and corporate governance requirements, legal demand remains high. unfortunately, this increase in demand does not always go hand in hand with an increase in budget and available resources!

specifically, in 2013, the CsR legal team will be looking to continue our focus on concluding the remaining large-scale “legacy” litigation matters across our group – in both Australia and overseas, as these are costly, backward looking and a distraction to management.

We will also be looking to go out to market with a tender for a revised external legal panel arrangement for the majority of our areas of legal work. The current panel was set in place back in 2008 and there have of course been a number of significant changes to the legal market during that period. As part of this process, we will also be looking to reduce, by approximately half, the number of the external legal panel firms, from the current 15 firms, given the time required to manage those relationships and to also provide greater opportunities for those successful law firms to work more closely with the various CsR businesses.

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

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

sean ventris

INdUSTrY

PrO bONO

QlD merger for gadensThe brisbane office of Gadens Lawyers is to merge with specialist firm MacGillivrays. The two brisbane offices will officially combine in March into the Gadens office and will be known collectively as Gadens Lawyers.

MacGillivrays is one of the largest specialist retail mortgage documentation practices in Australia and also provides services in mortgage recoveries, dispute resolution, property and commercial law. It has an additional two offices in Sydney and Melbourne, the firm is currently in discussions with the corresponding Gadens offices in those locations about combining the approximately 25 staff.

MacGillivrays managing partner Craig Green told ALB that it was important to first bed down the brisbane merger before working on the other offices. unlike Gadens, the firm’s other offices are financially integrated with the brisbane office.

Firms drop pro bono hoursMore than half of the top 30 firms which reported both their fY2011 and fY2012 pro bono figures have seen a fall in the number of pro bono hours worked per lawyer.

According to the Legal Services Expenditure Report 2011-2012, there were 46 Commonwealth legal providers which reported their pro bono hours per lawyer, although of those only 20 had reported in the previous financial year as well. Only 11 of the 46 firms reported hours per lawyer above the aspirational target set by the centre of 38 hours per lawyer in the 2012 financial year.

boutique Sydney firm Lobban McNally reported the highest number of hours per lawyer in fY2011, although of the major firms dLA Piper led the charge on 56.5 hours per lawyer, an increase of 3.5 hours compared to the previous financial year. Gilbert + Tobin came in second, on 51.3 hours, although it did not report figures for the 2010/11 financial year.

QlD and WA societies welcome new leadersThe queensland Law Society has appointed commercial and property lawyer Annette bradfield as its new president.

Currently a partner of fox bradfield Lawyers, bradfield has worked in large and small, rural and city firms throughout her career including Groom & Lavers, Minter Ellison, barwicks Wisewoulds and Porter davies. She is also a lecturer and mentor at queensland university of Technology.

during her time as president bradfield is eager to see the society’s service to members increase. “qLS exists to help members in their practice of law and this year my focus is on resilience, regional practice, women in law and revamping our products and services based on the results of recent member research,” she said. “One of the most important qLS values is that of service.”

The Law Society of Western Australia has also appointed a new president, barrister Craig Slater. He has more than 20 years of legal experience and is a barrister at francis burt Chambers.

Presented by

MANAGING PARTNER, GILbERT + TObIN

MANAGING PARTNER, MILLS OAKLEY

MANAGING PARTNER (AuSTRALIA), ALLEN & OvERY

MANAGING PARTNER (SYdNEY), HERbERT SMITH fREEHILLS

Danny gilbert John nerurkergrant fuzi Juliana warnerMANAGING PARTNER (SYdNEY), CLIffORd CHANCE

MANAGING PARTNER (AuSTRALIA), KING & WOOd MALLESONS

MANAGING PARTNER, HOLdING REdLICH

CHAIR Of bOARd, CORRS CHAMbERS WESTGARTH

mark pistilli Tony o’malley chris lovell Teresa Handicott

ThEpanel AuSTRALASIA EdITOR, ALb MAGAZINEmoderator: Renu prasad


AlB: We have been hearing reports of in-house teams increasing their internal resourcing levels. do you expect in-house teams to continue to grow or has this trend peaked?

DAnnY gIlBERt: I think that’s true for some of the large organisations, like the banks may have topped out. but I think other corporates that have not expanded their in-house much yet will see the efficiencies gained from garnering a tight pot of people whose expertise is not easily replicated in an outside law firm. I don’t expect most in-house legal teams to do anything but grow.

tonY o’mAllEY: We just ran a survey of 220 GCs of major organisations, for

the second year. Last year, 53 percent of them said they were confident that they would add to head count within the following year. This year it was 37 percent. So there’s still, as people are suggesting, in-house appetites growing in some groups, but not at the same rate that we’ve seen previously.

JUlIAnA WARnER: We’re aware of some in-house teams where there are headcount holds, even though the in-house teams are saying they need more resources. The businesses are just telling them to work harder.

mARK pIStIllI: I think that’s the point. We assume that as the in-house capacity grows, it is at the expense of private practice. but I think you’ll find that businesses are under so much cost pressure at the moment, that it’s on the external side as well as the internal side. So the external legal spend is reducing, but the in-house legal spend is also reducing in some circumstances. They’re not mutually exclusive; one doesn’t rise as the other falls.

alb maNagINg parTNEr rOuNDTablE 2013:2013 AND THE BRAVE NEW WORLD IN-HOUSETHIS MONTH, OUr PANEL Of MANAGING PArTNErS rETUrNS TO dISCUSS THE fUTUrE dIrECTION Of THE IN-HOUSE PrOfESSION ANd WHAT THE INdUSTrY CAN ExPECT TO SEE IN 2013.



alb maNagINg parTNEr rOuNDTablE 2013:2013 AND THE BRAVE NEW WORLD IN-HOUSE

chRIS loVEll: I’m not sure it’s just a numbers game, I think it’s also a reach game in terms of what they’re actually doing, as opposed to what they didn’t do five years ago. They’re just doing more and I have to say they are doing it a lot better.

tonY o’mAllEY: I think that’s a very good point, regulatory compliance and risk management are much higher on the corporate agenda than they were even five years ago. In-house [lawyers] have done very well by playing into that position within corporates.

DAnnY gIlBERt: We don’t even get a look at that with private practice, it just stays in-house.

tonY o’mAllEY: Exactly, but it’s good for the profession.

John nERURKER: I think it depends on your client base as well. If your practice mix is peppered with the industry giants of any particular sector, they are likely to be under significant cost pressures, regulatory constraints as well and [capacity is unlikely] to be grown. However if you are more in the mid-market space, you’re dealing with up and coming SMEs, typically growing faster than their industry leaders and that creates opportunities with respect to legal spending.

AlB: Is there a permanent power shift to the in-house side of the profession?

tonY o’mAllEY: I think the power shift is permanent. I did wonder, for a number of years, whether corporates had a good handle on the extent to which they were internalising risk, in terms of building up internal teams. but I think they do and I can’t see any market dynamic that is going to change that.

gRAnt FUZI: I have a slightly different view. I don’t see it as a power shift, I see our in-house teams as our business partners. It comes back to the discussion about the future of our firms. If we’re not adding value to that legal team then we’re not doing the right thing. If I were running a power company [legal team] I would provide much more valuable advice on regulatory or the derivatives in the power industry in-house, but there would be a point where I’d need to go external. So I think this idea of power shift is wrong. I think they’re our clients, they’re our partners, we need to always re-evaluate where we can add value to them.

DAnnY gIlBERt: There is a significant power shift in all of that in that once we were closer to the executive team – now with larger corporates, if we have access at all, because very often you don’t, it is through the in-house counsel. Many in-house counsel jealously hold those relationships and it’s our job to make in-house counsel look good in the eyes of those people. I think that is a structural shift and it is a permanent one.

gRAnt FUZI: That shift I agree with. There is a lot more control with the in-house team.

DAnnY gIlBERt: It’s disappointing for us, because it makes it, in some ways, less interesting.

John nERURKER: I think the context is all incorrect…it comes down to service provision, quality of advice and the relationship you have with your clients. I don’t see it as who’s the dominant party

in the transactions. We’ve always chosen to align ourselves with our clients and provide excellent value.

tERESA hAnDIcott: I think our clients have become far more sophisticated in every aspect of their business; for instance large clients have procurement teams that didn’t exist until not that long ago. We are a part of that, we are another expense line that is looked at more closely than perhaps it was previously. Then how that is managed is much more closely scrutinised. Having said that, when the world economy is building and people are far more active, it could potentially tip the other way again. That’s what we saw in the “glory days” before 2007, when there was so much work around. So I think it will be more slightly cyclical, but our clients, like us, are now far more sophisticated about how they run their businesses.

JUlIAnA WARnER: When the matter is significant enough there is plenty of exposure to the business and the board. In those circumstances you’re not just dealing with in-house counsel. So, when it’s a high-risk piece of litigation, or a really significant transaction, or something of really strategic importance to the organisation, with all of us we build relationships with the in-house counsel and then this is translated through to the executive and the board. So I don’t think we’re completely cut out from access to the business.

DAnnY gIlBERt: That’s the spot that we want to be in and that is a diminishing spot. I agree with you, but for most lawyers, most days, doing what they do, I think the comments I made are generally true. What you say is the sweet spot.

tERESA hAnDIcott: danny might have put it too strongly, but certainly for the 35 years that I’ve been in practice, it has been heading towards the stark way in which danny put it.

chRIS loVEll: It’s sort of like the “trusted advisor” role has been shifting slightly in-house. I think there are two trends. I agree with juliana that business is a factor, when in-house counsel get really busy, they’re going to send a lot more work out. The fact is, at the moment, no one is terribly busy. The other factor I think is that having really strong in-house counsel, you are demystifying the law which is going to make it a bit harder. I mean, lawyers have

AustrAlAsiAn legAl BusinessISSUE 11.01 15

been able to get away with it a bit, I think, because we’re selling something that’s a bit arcane, you need to know a bit about it and only we know, etc. Now having really strong in-house counsel, that demystifies it for management, it makes it easier to price and it does mean that we become a more identifiable and able-to-be valued service, than perhaps we were 10 years ago.

AlB: That’s an interesting point you raise about access to information on the in-house side. do you think increased knowledge sharing within and between in-house teams will see the need for external advice diminish?

tERESA hAnDIcott: I think it goes back to the comment that we made before; really good in-house teams know their business and can give a quality of operational advice that is really hard for external firms to compete with, because they’re doing insurance all day, or banking all day, or power all day and I think they probably do

share all of that to some reasonable degree. but again it comes back to the very complex, the very strategic areas where we, as firms, largely want to be. That is going to be mostly beyond the expertise of an in-house team. businesses couldn’t afford to have an in-house team with all of that expertise. So I don’t think we should be afraid of that at all.

tonY o’mAllEY: I think there are two levels to think about here. One is knowledge and know-how sharing. Every firm sitting around this table gives that away to its clients on a daily basis, we do it as part of relationship management. In fact, my own experience as an in-house counsel was I’d get around 20 emails a day with updates. So, they don’t need to really organise themselves around that, it just happens. but in terms of them organising themselves through things like ACLA and general counsel roundtables, and sharing information about the market and their experiences with law firms, they do that already and they do that in a very sophisticated way. That has shifted the availability of information about the market. There used to be an asymmetry in favour of law firms, that’s been balanced over the last five to 10 years and now the general counsel are as knowledgeable, if not more knowledgeable about the market that they’re dealing with. That transparency about who’s good and who isn’t good, what they offer and what they can’t offer, is creating a more efficient market. They are starting to set the price and


what does that mean? It means that each of us has to be far more innovative in the way that we deliver service and in the products that we offer, if we want to get their attention.

gRAnt FUZI: If I can sort of wrap a ribbon around that, just to bring together what a few people have been saying. If we go back to 2004-2005 let’s say, top banks and top corporates had a very small list of panel [firms] that were so-called top tier. If we look at that list of panels today, the buyers have become far more sophisticated. They don’t have a ferrari to drive to the corner shop, they’ve got way more panels and firms on those panels that match the expertise they need for each type of work. So the days of a small number of firms getting most of the work, I think, are over. Secondly, what we are all saying, is that in-house counsel are excellent at their business-as-usual work. They are the most efficient, they know their business the best and the days of that work coming to a small group of firms is gone. So there’s just a more regimented and segmented way that the legal market interacts with us.

AlB: What practice areas are you expecting to be busy in 2013?

John nERURKER: Well we’re seeing an uplift in our corporate advisory and property practices, which might defy the trends in other people’s firms. but I think that’s representative of foreign investment and perhaps a greater role of private equity players in the Australian property market. So that’s definitely an emerging trend for us.

DAnnY gIlBERt: Our corporate practice is extremely busy. In banking and finance, we actually don’t have enough people to

do the work we have to be done. Our competition practice is very busy, I don’t know why, but I’ve been surprised just how strong it’s been over the first four months of the new financial year.

chRIS loVEll: Well with our firm I agree on property....the other area for us is superannuation, which is going to be very busy over the next 12-18 months.

tERESA hAnDIcott: Property, infrastructure and construction are very strong. They have been strong for some time and that shows no signs of slowing down. Less around the traditional property market, but more around infrastructure. Insolvency work may well continue, in line with the cycle. Workplace relations is

THEY dON’T HAvE A fErrArI TO drIvE TO THE COrNEr SHOP, THEY’vE GOT WAY MOrE PANELS ANd fIrMS ON THOSE PANELS THAT MATCH THE ExPErTISE THEY NEEd fOr EACH TYPE Of WOrk.


incredibly busy and, again, a need for more people to deal with what we have. Energy and resources continues to be strong and I wouldn’t be surprised if we see another uptick in that soon. There may be a very short term view of China’s tremendous growth slowing slightly, but I don’t think anyone anticipates that that is going to last for very long. Litigation practice has also been a powerhouse and I think that is likely to continue into the future as well.

gRAnt FUZI: Like danny, we’ve been fortunate, so I wouldn’t single out any particular practice area, they are all travelling with strong activity. Although if you look at the macro trends, I agree there is likely to be a growth in insolvency and litigation. Whilst there’s talk of a slowdown in the energy & resources sector, there’s still billions of dollars of capital to be invested into that space, whether it’s in projects or

on infrastructure. We also still see a lot of capital raising needs for banks, so I think alternate sources of capital will be an interesting space next year.

JUlIAnA WARnER: Generally [2013 will be] pretty good overall, but I think there are a few highlights. We think some of the private equity guys are going to be more active. definitely the restructuring and the insolvency work, there’s some big ticket items around that, I mean, we’ve just done the Nine restructuring. disputes is always strong and I can’t see that [changing]. And of course ER, our fabulous ER practice.

AlB: do you think [freehills] will have as strong a year in 2013 as you did in 2012?

JUlIAnA WARnER: Oh look it would be really good and I’m not expecting any real decline.

tonY o’mAllEY: I’m smiling because I’m thinking I have to go back and look at that quarterly data, because all the firms that are doing well are here and the ones that aren’t just haven’t turned up [today]. The practice activity just reflects what we are seeing in the market. Where we are seeing activity and growth continues to be inbound investment into Australia, particularly sovereign wealth funds and pension funds. Real estate, after a sluggish couple of years, is showing some really promising signs, particular in the development pipeline, which is starting to build again. food security, which is a much bigger issue than an Australian issue, is creating enormous interest, domestically and overseas, for buyers in agribusiness. Private equity, we all know there’s been this dry powder sitting out there for about two to three years and I think, with probably blackstone leading the way, we’re actually starting to see some real activity for the first time in a while. They’re looking

PrIvATE EQUITY, WE ALL kNOW THErE’S bEEN THIS drY POWdEr SITTING OUT THErE fOr AbOUT TWO TO THrEE YEArS ANd I THINk, WITH PrObAbLY bLACkSTONE LEAdING THE WAY, WE’rE ACTUALLY STArTING TO SEE SOME rEAL ACTIvITY fOr THE fIrST TIME IN A WHILE.


to buy debt where they can and taking long term positions, and that’s creating a lot of interest and activity. On the government side, the government is obviously selling assets and creating private partnerships. So some of us are picking up government roles, some of us are picking up bidder and buyer roles.

tERESA hAnDIcott: I think that also [q1 of fY2013] probably hasn’t been as good a quarter as all firms expected, but I think there is such a focus on M&A, that it can sometimes distort what is actually happening. I mean, we are all quite broad-focused firms and there are other, perhaps less sexy, areas that have continued to do very well through the first quarter.

gRAnt FUZI: I’m happy to qualify that, supporting what you were saying Tony, we were focusing on what we think were the strong practice areas. but I’m not going to sit here and suggest anything other than the fact there is a significant reduction in high-level corporate and financial activity. There is less M&A, the statistics prove that, the private equity dry powder keg, that this year people said was going to explode, has not exploded. So the volume of transactions that keep high-end firms busy is less, so they’re harder to get and that’s the reality of life. I don’t think it would be authentic to sit here and suggest otherwise.

chRIS loVEll: There is one other factor too; there is a pile of money waiting to be invested, but it is very hard to find investments and that is damning activity, it’s as simple as that.

mARK pIStIllI: I think it has probably all been said and I’m in agreement with most people around the table. I think the transactions market will again be stressed in 2013, unless there is a major economic change. The major highlight I think will be real estate. Outside of that I think our practices will be busy in litigation, regulatory compliance and investigations, and, of course, insolvency. If you look outside the practice areas into sectors that will be busy, I think agribusiness and energy and natural resources will be busy. The projects which have been committed to will be developed, there is no way of turning that around, there’s something like 150 billion dollars committed to building them over the next little while and that just can’t stop. but I think the nature of the work will change, unless the commodity cycle shifts back, you

THErE IS A PILE Of MONEY WAITING TO bE INvESTEd, bUT IT IS vErY HArd TO fINd INvESTMENTS ANd THAT IS dAMNING ACTIvITY, IT’S AS SIMPLE AS THAT.


to their in-house counsel and their external advisors to navigate their way through that. but other than that it is business as usual.

JUlIAnA WARnER: As a disputes lawyer I suppose the only thing that leaps out from the various High Court cases [of 2012] is the critical importance of really strong corporate governance, the need for matters to be properly referred to the board, the need for the board to be appropriately scrutinising in a critical fashion, the material that’s put in front of them. Also, of course, the need for a really keen eye about appropriate disclosure, because, if you don’t, that is the area where class actions will just continue to come and bite directors and corporations.

tonY o’mAllEY: Most of our clients are right on top of the regulatory changes and these issues. I think the one issue that they will all be wrestling with is how do they and their businesses engage with all levels of government, to start to get the regulatory reform and the harmonisation that is needed to actually get productivity lifts, to lift other parts of the economy. It’s probably no surprise that that issue was one of the main themes in the white paper for the Asian Century that’s just been released. businesses are very engaged on that and I think general counsel will increasingly be engaged with them.

mARK pIStIllI: I’d just add one thing, that is more and more general counsel are following their businesses out of Australia. 2012 was quite a big year in terms of extra-territorial legislation from other jurisdictions, particularly in anti-bribery and anti-corruption. One of the issues I think they have to grapple with is educating their business, particularly if it is situated off-shore, or it is moving off-shore. How do they comply with those fairly strict requirements, particularly when they move to business cultures and jurisdictions which [may] embrace corruption more than we do in developed western economies.

ALB thanks our managing partners once again for their participation in the Managing Partner Roundtable.

will see mine closures and you will find lots of, particularly explorers and junior miners, significantly stressed.

AlB: There will, presumably, be a federal election this year. do you expect it to affect your firm in any significant way?

DAnnY gIlBERt: Our businesses are so used to it, I can’t see any major change.

mARK pIStIllI: I think the one exception to that is the carbon tax. We’re still seeing a whole series of potential investors into the market waiting for that election to form a view as to how they price assets, essentially. That, I think, is the major uncertainty around the government and the election.

AlB: As we wrap up – are there any final comments or predictions you’d like to make about 2013? Or are there any particular lessons we can take from 2012 which will be especially pertinent this year? Any burning issues for clients to consider?

DAnnY gIlBERt: Everything that’s been mentioned is going to be there. The additional regulation that’s been on us has continued to grow but I don’t think we are going to see a massive amount of re-regulation or new regulation that’s going to change everything in 2013. Of course we’ll have to learn more and advise our clients differently, but I don’t think it is going to change levels of activity or what we’re going to focus on. All the firms around the table are going to have to focus more on their clients.

tERESA hAnDIcott: One takeaway [lesson] probably out of 2012 was Peter Saffron; the indivisible nature of general counsel and company secretary. That’s probably a reasonably big takeaway for them and a very personal thing for in-house counsel – I did note that they were extraordinarily interested at the time, obviously, when the decision was handed down.

John nERURKER: I think there’s an overall trend to perhaps greater personal liability of non-executive directors. They’ll be looking

ONE Of THE ISSUES I THINk THEY HAvE TO GrAPPLE WITH IS EdUCATING THEIr bUSINESS, PArTICULArLY If IT IS SITUATEd Off-SHOrE, Or IT IS MOvING Off-SHOrE.


Thursday 30 may 2013, sydney Town Hall

10 yEar aNNIvErSary Of THe alb ausTRalasian law awaRDs

The ALb Australasian Law Awards is the highlight of the legal industry calendar and provides a spectacular evening of celebration, networking and entertainment. The night is dedicated to recognising and rewarding the achievements and excellence of legal teams and individuals across Australiasia. Come and celebrate our landmark year at this prestigious event. Nominations opening soon.

for sponsorship opportunities and further details please contact Paul ferris on 02 8587 7114

SOME COMMENTATOrS ArE kEEN TO PrEdICT THE ENd Of THE rESOUrCES bOOM – bUT THE EvIdENCE IS fAr frOM CONCLUSIvE. rEPOrT: Renu pRasaD

REPORTS OF MINE DEATH MAY BE PREMATURE…


22 rESOurCES AustrAlAsiAn legAl BusinessISSUE 11.01

back in August last year, federal resources minister Martin ferguson caused a mild stir by declaring that the resources boom was

over. A seasoned politician, ferguson quickly realised the implications of such a statement and hastened to modify it. He was referring to commodity prices and not the boom in general. Petroleum and minerals investment would continue to have a bright future, he assured everyone. This more subtle message was lost in the static of the daily news cycle. “Resources boom is over” read the headlines the next day.

The story illustrates the difficulty in attempting to characterise a phenomenon which is actually comprised of several discrete elements. The mining boom is not a single event; it is a series of related events. There is a commodity price boom. An exploration boom. An investment boom. A construction boom. An infrastructure boom. A terms of trade boom.

None of these elements operates independently of the others and it is possible to use this linear framework as a means of understanding the resources boom in a chronological sense – from cradle to grave, or from investment to first shipment. As with all business activity, the process starts with the crucial question of investment and the drivers behind it. Once this is in place, all else follows.

InVEStmEnt pIpElInEfigures from Australia’s bureau of Resources and Energy Economics (bREE) show that uS$281 billion had been committed to Australian resources projects by december 2012. About two thirds of this figure represented investment in LNG and petroleum projects. The overall investment figure is a record total and demonstrates a sustained increase in investment throughout 2012. However, bREE noted that the increase partly reflected higher project costs and masked a fall in the number of committed projects.

figures from the Australian bureau of Statistics seem to suggest a more cautious approach to scoping new projects. The Mineral and Petroleum Exploration report (publication 8412) of September 2012 found that the trend estimate for total mineral exploration expenditure fell six percent (or -A$58.9 million) to A$921.4 million in the September quarter 2012. This figure does not include petroleum exploration, which



23rESOurCESAustrAlAsiAn legAl BusinessISSUE 11.01

actually moved in the opposite direction. The AbS found that the trend estimate for total petroleum exploration expenditure rose 15 percent (or A$131 million) to A$1002.7 million in the September quarter 2012.

Lawyers feel that the reported drop in exploration activity in the minerals sector accords with what they have observed in their own practice. “This is entirely consistent with our experience,” says baker & McKenzie partner david Ryan. “It can potentially be explained by several factors, including the difficulties being experienced by resources companies in raising development capital – particularly junior miners – the rising costs of exploration as a result of the mining boom in Australia and ongoing difficulties regarding land access, competing land use and the appropriate treatment of environmental and community concerns.”

gIAntS SUBDUED2012 saw some celebrated instances of miners getting cold feet: perhaps most famous of these was bHP’s shelving of its uS$30 billion Olympic dam expansion and the postponement of the A$20 billion Port Hedland outer harbour development. In November, Western Australia Premier Colin barnett revealed that the much anticipated A$5.9 billion Oakajee iron ore port and rail project would be delayed “by two to three years”. Mitsubishi had put on hold plans to develop Oakajee and the A$3.7 billion jack Hills iron ore project as it had difficulty finding a partner to help fund it.

To take a “glass half full” view, these announcements have taken the form of deferrals rather than cancellations. for example, bHP has reportedly asked the South Australian government for a 46 month extension to reconsider the Olympic dam project, which presumably means that the miner is hoping to revisit the matter in the next three or so years.

The corollary is that we perhaps should not expect to see any new major investment commitments from bHP in the immediate future – a position which also seems to be applicable at Rio Tinto. Rio has a number of large projects underway in Australia and abroad, but it also announced in November that it would reduce spending on exploration and evaluation projects by $1 billion in 2013. Rio CEO Tom Albanese said in a recent investor conference that the miner would be looking to “reduce the number of projects…in any one point in time” and controlling costs more vigorously.

Overall, there is a distinctly cautious feel emanating from the two mining giants. Business Spectator’s Stephen bartholomeusz summed up the mood as follows: “The twin themes of costs and capital intensity are reverberating through the industry as the miners try to unwind some of the profligacy of the boom years, when there was a race to get new production into market as quickly as possible and its cost was made a secondary issue by the prices on offer,” he wrote at the end of November. “both the big miners are now in a cautious, capital conservation and cost-reducing mode.”

cApEX: long mAY It REIgnA decline in the number of new projects in the pipeline does not necessarily translate into an immediate decline in resources-related expenditure as it may take some time for committed capital expenditure to translate into actual spend. Even if miners fail to make new commitments, the amount of spend already committed is expected to keep the sector busy for many years yet.

This was a topic explored by bREE chief economist Professor quentin Grafton during a September speech at the 2012 Australian National Conference on Resources and Energy. Grafton concluded

“PEOPLE HAvE TO EITHEr rEfINANCE PrOjECTS IN THE COUrSE Of CONSTrUCTION Or LOOk fOr POTENTIAL PArTNErS. YOU WILL SEE THEM ExITING NON-STrATEGIC INvESTMENTS TO GET CASH IN THE TIN ANd TO rEdIrECT fUNdS TO HIGHEr ANd bETTEr USES.”

rESOurCES AustrAlAsiAn legAl BusinessISSUE 11.0124

that, on the basis of a comparison of mining capex and completed projects, Australia was less than halfway through the investment boom. “Cumulative expenditures on major mining projects over the past five years come to around $100 billion,” he said. “Projects that have passed final approvals and final investment decisions currently amount to about $260 billion. Thus, even if there were to be no new additions to the major mining projects list, Australia is still only about a third of the way, in value terms, through the investment phase of the boom.”

This point helps explain the contradictory statements from commentators as to whether the boom has peaked. Some commentators are referring to new project commitments, while others are pointing to actual expenditure. However, some lawyers also believe that miners are applying the brakes even on projects which have already been approved. This was not a view shared by all lawyers interviewed by ALB and the position presumably varies according to the specific project under consideration.

coSt BloW-oUtSIt is well known that many Australian resources projects are suffering significant cost overruns, with Chevron’s A$9 billion Gorgon blowout the most egregious example. Reports of these kinds of blow-outs not only tarnish Australia’s reputation as a cost-efficient jurisdiction, but also add to the general feeling of malcontent in the industry. Lawyers predict that one result of this state of affairs will be a resurgence of resources M&A in 2013.

“just about every project in the country has suffered from extensive cost overruns,” says King & Wood Mallesons partner Robert jackson. “People have to either refinance projects in the course of construction or look for potential partners. You will see them exiting non-strategic investments to get cash in the tin and to redirect funds to higher and better uses.” jackson notes that this M&A could take the form of miners divesting certain aspects of a project – for example, rail infrastructure or access rights – in order to concentrate on other aspects.

FUnDAmEntAlS The drop off in the number of new committed projects and talk of cost overruns are an odd contrast with a general consensus that the demand for commodities will remain as strong as ever for years to

come. both bHP and Rio Tinto have issued cautiously optimistic growth predictions in relation to China, warning that there would not be any return to double digit growth but suggesting that eight percent would be an appropriate prediction.

It would be easy to focus on the negative headline announcements – project postponements, cancellations, cost curtailment – and infer that the mining industry is running short on optimism. However, beneath the cautious language the industry is evincing a quiet confidence.

The same drivers which brought about the boom investment of the recent past are still very much at play. China continues to have some distance to go on its urbanisation journey and many experts have predicted that Chinese cities will need to accommodate a further 300 million people by 2030. These statistics warrant close analysis and do not necessarily indicate that China’s middle class will grow by 300 million, a point made by Nicholas borst in a recent article available online on the China Economic Watch site. It may be the case that the extent of China’s urban boom has been exaggerated. However, it is still clear that there will be a significant building boom which can only augur well for resources companies. Rio Tinto recently told investors that it expected the growth in Chinese steel demand to peak at around one billion tonnes by about 2030. Add India and a multiple of other growing economies to the mix and there is no reason, in the longer term, to question this optimism.

“There’s no escaping the conclusion that,

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rESOurCESAustrAlAsiAn legAl BusinessISSUE 11.01 25

with the amount of construction as the result of urbanisation in China and India and other countries, I don’t think there really is going to be any long term drop in demand in relation to those commodities [iron ore and coal],” observes Allens’ mining sector head Erin feros.

Thermal coal is arguably in the same category. “There will always be a demand for cheap power in developing countries,” says feros. However, this is one area where the high cost of doing business may catch up with Australia. “The issue with thermal coal is the high cost in Australia to develop and operate thermal coal projects, coupled with the lengthy processes required to obtain development approvals for coal projects,” says Ryan. “Our view is that only very large scale projects, such as those planned for the Galilee basin, will continue to be viable and competitive with other jurisdictions.”

So the headlines from 2012 may not have always made pleasant reading for those who make a livelihood from advising on mining projects. doubts remain over the next generation of projects. However, the key question is not whether projects are being postponed. The key question is whether the fundamental drivers which made them viable in the first place are still there. The evidence appears to point in the affirmative.

RESoURcE pRIcES The drop in resources prices – particularly iron ore – in 2012 has been cited by the media as one reason for concluding that the resources boom is over. In 2011 prices peaked at uS$190 a tonne, the following year prices had slumped to below uS$90.

It is helpful to view these statistics in a 50 year context. In his September 2012 speech, Grafton also made reference to the following diagram. The data appears to cut off before the full extent of the 2012 slump, but it is clear that even a price which is half

of the 2011 peak represents a significant premium over the historical average.

An even more striking example provided by Grafton was the following chart:

Again, the inference is clear: commodity prices and the Chinese export market may well be a very important part of the Australian resources industry and indeed the fortunes of companies such as fortescue are closely tied to them. but a drop in demand or pricing in the short term cannot provide evidence of a sustained downturn when we are dealing with levels of activity which are exponentially higher than they were over the past 40 years.

InVEStmEnt DEStInAtIonSbHP’s 2012 Exploration and Development Report shows that the company is currently developing seven minerals mega- projects (worth over A$1 billion each), five of which were in Australia. Rio Tinto has a similarly high level of commitment to Australia: last year, Australia accounted for 61 percent of Rio Tinto’s capital expenditure.

The activities of these miners in overseas markets has been well documented. Aside from its expensive foray into the united States shale oil market, bHP has committed over uS$2.5 billion in the Escondida copper project in Chile and uS$1.75 billion in iron ore pellet production in brazil. Rio Tinto also has a stake in the Escondida projects, as well as billions tied up in the Oyu Tolgoi copper/gold project in Mongolia, the Simandou iron ore project in Guinea and coal in Mozambique.

This brief sketch provides some context to one of the key mining controversies of 2012: while the mining giants have plenty of “skin in the game” in Australia, they also have plenty of options to pursue overseas in developing markets. There are some who argue that there is a real danger that Australia could miss out on the next generation of mega-projects when the time for investment decisions comes around. “The pipeline of new resources projects has reduced due to the complexity of project approvals in Australia and the time required to obtain those approvals,” says Ryan. “We believe that the mining sector currently regards Australia as presenting significant sovereign risk – witness the proposals regarding the RSPT, the MRRT, the carbon price mechanism, increases in State royalties, removal of the diesel fuel rebate and changing regimes regarding project approvals and land access and use. Mining is not an industry that readily accepts a changing regulatory landscape, particularly with[out] consultation and forewarning.”

by contrast, Toby Hewitt, General Counsel and Company Secretary

HISTORICAL IRON ORE PRICES – 1966 TO 2011

Source: BREE

Source: ABS

Source: Rio Tinto Chartbook 2012

1966 1971 1976 1981 1986 1991 1996 2001 2006 2011

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Index Jun-6 = 100

AUSTRALIAN MERCHANDISE EXPORTS TO CHINA (2010-11)

CHART: RIO TINTO CAPITAL EXPENDITURE 2012 – BY COUNTRY

Mineral Resources Merchandised Goods

1989-90 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11

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A$b

Australia Canada MongoliaUnited States Other

Excludes equity accounted units

61%

5%

12%

7%

15%


Source: BREE

Source: ABS


1966 1971 1976 1981 1986 1991 1996 2001 2006 2011

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1989-90 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11

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61%

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of dart Energy International told ALb that despite some concerns, Australia still enjoyed low “country risk” status and a relatively stable regulatory environment. The full interview with Hewitt can be found directly following this article and provides an interesting international perspective on how Australia is perceived.

Australia, of course, is far from being the only country to attempt to gain more leverage with the resources sector. Indonesia has been toying with a 51 percent local ownership threshold for certain resources projects after 10 years. Zimbabwe seems destined to tread a similar path; many other African nations are eyeing either a “super profits” tax or partial nationalisation of the resources industry. Worker unrest in South Africa is perhaps another form of “resources nationalism”, albeit one driven by popular sentiment rather than government policy. An Ernest & Young study earlier this year found that resources nationalism was the top issue of concern for miners, ahead of old chestnuts such as the skills shortage and access to infrastructure.

jackson concedes that Australia is not alone in its pursuit of increased mining revenue, but he believes that miners are particularly wary of Australia because of a perception that the nation is “a step ahead” of most jurisdictions in implementation. “The view of many companies is that we’ve gone a bit too hard too early and that’s what has created some of this sovereign risk [perception],” he says.

Pursuing projects in emerging jurisdictions can also pose other problems, such as the long lead times sometimes needed to secure approvals and build infrastructure. “The first LNG project I worked on in Nigeria took 26 years to develop – you have to be pretty patient,”

says Allens’ oil & gas head Anthony Patten. “That’s not to say every African project will take 26 years, though.”

Australian gas projects have had well documented problems with delays and cost overruns, but Patten says that in the broader context Australia has a decent record. “The Australian gas market is somewhat premium in the sense you have to pay top dollar for the gas, but you can be pretty certain it will arrive when you expect it to,” he says.

Civil unrest, corruption and unstable governments are unfortunately a fact of life in many resource-rich jurisdictions. despite the obvious advantages enjoyed by Australia, many commentators are adamant that Australia continues to present, in relative terms, a high sovereign

“THE PIPELINE Of NEW rESOUrCES PrOjECTS HAS rEdUCEd dUE TO THE COMPLExITY Of PrOjECT APPrOvALS IN AUSTrALIA ANd THE TIME rEQUIrEd TO ObTAIN THOSE APPrOvALS.”

The resources boom is over.Really?

rESOurCESAustrAlAsiAn legAl BusinessISSUE 11.01 27

risk. The proof of the pudding will be found in the progress of projects such as Simandou and when the majors loosen the purse strings once again and begin looking for their next generation of mega-projects. The flow of investment dollars will tell the full story.

lng AnD thE EpIc ShAlE tAlEAn analysis of the current investment pipeline shows an industry heavily weighted towards LNG. Reuters reported that as at November 2012, LNG plants accounted for A$194.9 billion of the total of committed projects. This compared to A$26.2 billion committed to iron ore, infrastructure at A$24.6 and coal at A$14.3 billion.

This is a market which is expected to be fundamentally transformed by the emergence of shale gas in the united States, although some believe that the extent of the challenge may be overstated. In june, Woodside CEO Peter Coleman told Reuters that the company’s “early mover advantage” in the region and ability to guarantee security of supply would ensure that it could head off any challenge from the States. “I don’t see Henry Hub (gas) fundamentally changing the market at all….we’ve been a reliable supplier for many, many years. We want to continue to do that, we want our buyers to value that,” he said. This comment supports the earlier observation by Allens’ Patten that reliability of supply will be one of the key selling points of Australian gas. However, it will be interesting to see whether the same companies which have been investing in Australian LNG choose to hedge their bets by investing in shale oil and gas too. Woodside has not ruled out such an eventuality.

That does not necessarily mean investing offshore, because Australia has its own shale gas reserves. “There is a lot of gas here, it just hasn’t been commercialised or it is located in places where there is not much infrastructure at the moment. That’s an increasing area of focus,” says Patten.

jackson says that it will be interesting to see how the Australian shale gas industry evolves, given the potential difficulties with developing this resource. “It’s debatable whether shale gas of itself will be sufficient to underpin a whole new industry like coal seam gas. It may well be, but my instinct is that it may be used as a supplementary gas source to underwrite expansions of existing projects,” he says.

Australian shale gas is an important development to watch in

the longer term, but in the shorter term Australia is more likely to feel the effects of the shale gas boom via the united States. “A lot of people who are traditional buyers of Australian gas are investing in shale gas, with a particularly focus on the u.S.,” says Patten. “They’re looking at either buying the actual gas reserve or investing in projects that are being developed.”

Conventional wisdom is that the shale gas phenomenon will not impact Australia’s LNG mega-projects in queensland and Western Australia, to the extent that many of these are already predicated on long term supply contracts with consumers in markets such as China, Korea or japan.

However, it may not be correct to say that these arrangements are entirely insulated from the vagaries of the global market. “One nuance of a number of these contracts is that they are subject to price review,” says Patten. “for example, every five years you might look to benchmark against competing product into japan – so as more u.S. gas comes in that will put downward pressure on pricing.” future contracts may well be priced by some reference to prevailing u.S. prices, even where the gas is sourced from Australia.


Source: BREE

Source: ABS


1966 1971 1976 1981 1986 1991 1996 2001 2006 2011

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1989-90 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11

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A$b



61%

5%

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7%

15%

“THErE IS A LOT Of GAS HErE, IT jUST HASN’T bEEN COMMErCIALISEd Or IT IS LOCATEd IN PLACES WHErE THErE IS NOT MUCH INfrASTrUCTUrE AT THE MOMENT.”


LR ALB Ad E&R 0113_final.indd 1 21/1/13 12:18:50 PM

AlB: What is your perception of Australia as a place to invest and why?

th: In the energy and resources sector, Australia still has a lot going for it as a foreign investment destination. It is still the “lucky country” in terms of the sheer size of its endowment of energy and mineral resources wealth, has good long term supply/demand fundamentals and, by and

TObY HEWITT IS GENErAL COUNSEL ANd COMPANY SECrETArY Of dArT ENErGY INTErNATIONAL. HE SPEAkS WITH ALb AbOUT HOW HE PErCEIvES AUSTrALIA AS A PLACE TO INvEST ANd THE HOT INvESTMENT dESTINATIONS fOr INTErNATIONAL rESOUrCES COMPANIES.

large, does not impose restrictions on exports. despite industry criticisms of increased taxes on the sector, Australia enjoys low “country risk” status and a relatively stable regulatory environment.

However, there are challenges to Australia’s status as a top foreign investment destination. One of the foremost amongst these is rising costs, particularly in the labour market. Also, the time it takes to bring projects online is of increasing concern. One of the main reasons is that the regulatory compliance burden for energy and resources projects is very high. This is sometimes compounded by differences in approach between the Commonwealth Government and State Governments. A case in point is onshore “unconventional gas” projects, particularly those that overlap the more heavily populated areas and prime agricultural land of the Eastern States. Many of these projects have been delayed in the face of intensive political debate on the merits of unconventional gas E&P and increased regulatory oversight as a result.

AlB: What would you say are the “hot” destinations for resource-related investment and why?

th: We still regard China as an investment destination of choice. Of course, investing in China is not without its risks but dart believes the potential to achieve exponential investment growth is there. Elsewhere in Asia, Indonesia is also very important to us for a number of reasons. first, Indonesia has huge reserves of coal and, by extension, the coal bed methane (CbM) resource potential is also very large. dart operates in South Sumatra and East Kalimantan, regions where gas transportation infrastructure to tap into already exists. Whilst being a significant LNG exporter, in part through the

a HeaRT of DaRTness

“dESPITE INdUSTrY CrITICISMS Of INCrEASEd TAxES ON THE SECTOr, AUSTrALIA ENjOYS LOW “COUNTrY rISk” STATUS ANd A rELATIvELY STAbLE rEGULATOrY ENvIrONMENT. “

Toby Hewitt, General Counsel and Company Secretary,

dart Energy International

AustrAlAsiAn legAl BusinessISSUE 11.0130 SpECIal prOfIlE

bontang LNG facility in East Kalimantan, there is great domestic demand for gas from a large population and, in particular, an expanding consumption-oriented middle class. A regulatory framework for CbM exploitation already exists in Indonesia and, in general, foreign investors into the Indonesian upstream oil and gas sector have experienced stability through a well-established production sharing contract scheme. dart was an early participant in the Indonesian CbM sector, establishing critical local partnerships, and continues to be optimistic about its future there.

One destination which is not often described as “hot” is the uK. However, in terms of investment potential into the onshore unconventional gas sector, dart sees the uK as precisely that for largely the same reasons. Energy security concerns make domestically sourced onshore gas to replace declining North Sea production an attractive proposition. There is an extremely well developed gas distribution network in the uK so if CbM and shale gas can be extracted to surface in significant quantities it should, in theory, “sell itself”. Like Australia, the uK is seen as low country risk destination and has a well-developed regulatory regime.

AlB: Much has been written about the alleged China “slow down” – what’s your take on this subject? How will it affect your business?th: There may have been a slow down in the Chinese construction boom with a knock on effect on iron ore prices in particular. However, we believe that energy consumption is unlikely to be affected to the same extent. The Chinese authorities have a record of being able to manage and stimulate chosen sectors of the economy. In some ways, China is still a “command” economy. The central Government has a clear emphasis on boosting domestic gas production to reduce reliance on LNG imports and the burning of coal. The Government estimates that unconventional gas resources in China are larger than their conventional counterpart. Although still a recent phenomenon, coal bed methane (CbM) projects have been open to foreign participants for some time and they are encouraged by state subsidies.

There is a regulatory framework under which CbM exploitation may be conducted and the first Chinese CbM projects are now coming into production. Earlier this year, the National Energy Administration released a five year development plan for shale gas which, amongst other things, will promote the diversification of investors in shale gas projects and accelerate introduction to sector of enterprises with a proven ability to enter into this field (including foreign investors). Onshore oil and gas production has traditionally been the preserve of state-owned enterprises, CNPC and Sinopec. There are signs that the Government intends to loosen their grip, at least in relation to unconventional gas resources. All this can only be a good thing for companies such as dart which has been an early mover in the Chinese unconventional gas space and has already demonstrated

a track record there in partnership with Chinese state-owned interests.

AlB: for external legal advice – do you believe international firms are correct when they argue that transnational companies are after a “one stop shop” for legal advice? What is your own approach – do you have a panel? Who are your trusted advisors, and why?

th: Not necessarily. There will always be an attraction to use the mega international firms for the largest and most complex cross-border transactions, particularly where in-house legal teams are relatively small. However, I’ve always taken a “horses for courses” approach and have never viewed the appointment of one firm or another as automatic. We don’t have a panel as such. Indeed, we try to keep as much legal work as possible in-house. That said, dart operates in multiple jurisdictions and has been very active in corporate deal-making so the taking of specialist external legal advice is inevitable. Whilst it would be easier in an administrative sense to choose the international firm with the best overlap with dart’s own geographical footprint, where we do have a need to brief out, we have opted to use local firms (or selected local offices of international firms) which we believe, in relation to the country and question and the matter at hand, give good advice and value for money. We’ve used uK-centric firm, Pinsent Masons, on a number of uK focused corporate transactions recently and have found them responsive to our needs. Herbert Smith freehills, Singapore office, provided dart with good service in relation to a reserves based lending facility from HSbC. Local beijing firm, jZj International, tends to be our first port of call for PRC law advice.

a HeaRT of DaRTness

“WHILST IT WOULd bE EASIEr IN AN AdMINISTrATIvE SENSE TO CHOOSE THE INTErNATIONAL fIrM WITH THE bEST OvErLAP WITH dArT’S OWN GEOGrAPHICAL fOOTPrINT, WHErE WE dO HAvE A NEEd TO brIEf OUT, WE HAvE OPTEd TO USE LOCAL fIrMS.”

AustrAlAsiAn legAl BusinessISSUE 11.01 31SpECIal prOfIlE

laTeRal paRTneR appoinTmenTs

name practice area coming from going to

andrea beatty regulatory and financial services HWL Ebsworth k&L Gates

Harry cormack banking and finance Gadens Lawyers HWL Ebsworth

Trevor gallienne Planning and environment McCullough robertson McInnes Wilson Lawyers

matthew knox Competition and regulatory law Corrs Chambers Westgarth Minter Ellison

michele kramer Litigation dLA Piper Piper Alderman

Jonathan newby Insurance McCabes Colin biggers & Paisley (CbP)

Dave poddar Competition law Allen & Overy Clifford Chance

Jonathan stafford Construction Clayton Utz Colin biggers & Paisley (CbP)

scott Hedge Insolvency kemp Strang Colin biggers & Paisley (CbP)

appOINTmENTS

clIFFoRD chAncE ADDS DAVE poDDAR Competition law specialist dave Poddar has joined Clifford Chance as a partner. Poddar was most recently at Allen & Overy, but both he and his wife Angela flannery departed the firm in the second half of 2012.

Prior to joining Allen & Overy in early 2011 Poddar was a partner at King & Wood Mallesons (formerly Mallesons Stephen jaques) for 15 years and at the firm for more than 20. flannery was a partner at Clayton utz prior to joining Allen & Overy. It is not yet known where she is now practicing.

during his career, Poddar has worked on many significant competition cases and inquiries in Australia, as well as contributing to local and international competition development. Prior to leaving Allen & Overy Poddar was involved in the SAbMiller acquisition of foster’s Group and advised Emirates on the competition implications of its strategic partnership with qantas.

nEWlY FoRmED K&l gAtES ADDS pARtnER Newly arrived global law firm K&L Gates has appointed its first lateral partner. former HWL Ebsworth partner Andrea beatty has joined the Sydney office of the firm formerly known as Middletons.

beatty focuses her practice in regulatory and financial services matters including corporate advisory, credit regulation, payment systems, retail and privacy and banking law. Prior to HWL Ebsworth, beatty was a partner at Mallesons Stephen jaques (now King & Wood Mallesons).

mIntERS pERth ADDS coRRS tAlEnt AgAIn Minter Ellison has added competition and regulatory specialist Matthew Knox as a partner in the firm’s Perth office. Knox joins from Corrs Chambers Westgarth where he was also a partner.

His practice specialises in front and back end competition (merger clearance and restrictive trade practices) and regulatory (open access, electricity markets) law and energy and resources. He has advised state regulators and private clients on access arrangements for gas pipelines, railways, ports and the wholesale electricity market generally, and private sector clients on infrastructure, oil, mining and electricity projects.

matthew knox - minters

mcInnES WIlSon ADDS mccUlloUgh tAlEnt AgAIn McInnes Wilson Lawyers has appointed Trevor Gallienne as a principal in the firm’s planning and environment practice. Gallienne joins the firm from the planning and environment group at McCullough Robertson where he was a senior associate.

He has extensive experience in the areas of planning and environment law and has established strong relationships with developer, local government and state government clients. He advises on a wide range of planning and environment issues including development applications and regional planning. He has been practicing in planning and environment law since 2005.

hWl ADDS gADEnS pARtnER HWL Ebsworth has appointed Harry Cormack as a partner in the firm’s banking and financial group in Sydney.

Cormack has joined HWL Ebsworth from Gadens Lawyers where he was a partner for seven years. Prior to that, Cormack worked in the banking and finance team of Corrs Chambers Westgarth. He has more than 33 years of experience in advising some of Australia’s prominent banking and financial services institutions. His experience in advising on commercial lending transactions extends from the SME space through to the institutional level with a particular emphasis on the corporate, commercial and business banking spaces.

KRAmER moVES FRom DlA pIpER former dLA Piper partner Michele Kramer has been recruited by Piper Alderman.

A commercial litigator based in Melbourne, Kramer has acted on many significant disputes and high-profile litigation matters over her career. She brings to Piper Alderman experience in large scale commercial disputes, intellectual property disputes and infringements, trade practices, government litigation and insolvency. Her clients are drawn from a wide range of industries including financial services, insolvency practitioners, retail, state and federal Government, health and franchising.

paRTneRsHip pRomoTions

Firm name practice area

colin biggers & paisley (cbp) kemsley brennan Insurance

Melissa fenton Litigation and dispute resolution

Patrick Tuohey Insurance

gilbert + Tobin Crispian Lynch Litigation

Hopgoodganim richard Gardiner Litigation and dispute resolution

jonathan Ivanisevic Litigation and dispute resolution

Hwl ebsworth Stanley drummond Superannuation, wealth management and insurance

Jackson mcDonald Hilary Hunt Corporate finance

FIVE nEW YEAR pARtnERS At cBp Colin biggers & Paisley (CbP) has started the new year with five new partners. Three of the new partners are through internal promotions within the insurance team while the other two are lateral hires. New construction partner jonathan Stafford will be joining the firm from Clayton utz where he was a special counsel in february while insurance partner jonathan Newby has joined from McCabes.

Sydney-based Melissa fenton and Kemsley brennan and Melbourne-based Patrick Tuohey were promoted to the partnership on 1 january 2013.

hopgooDgAnIm pRomotES tWo pARtnERS brisbane and Perth firm HopgoodGanim has promoted nine legal professionals within the firm, including two new partners.

The promotions are part of the firm’s ongoing growth following its merger with Perth firm q Legal in late 2012. The new partners are Richard Gardiner and jonathan Ivanisevic, who both work within the litigation and dispute resolution group of the firm’s brisbane office. Their appointments take the total number of partners in the group to five, making it one of the largest litigation groups in the brisbane market.

cBp BooStS InSolVEncY pRActIcE WIth hEDgEHigh profile insolvency expert Scott Hedge has joined the Sydney office of Colin biggers & Paisley (CbP), boosting the firm’s capabilities in insolvency and corporate restructuring. formerly with Kemp Strang, Hedge specialises in commercial dispute resolution and has conducted substantial commercial litigation across all Australian jurisdictions. His clients include many of the leading insolvency firms in Australia, a number of large Australian and uS-based banks and financial institutions, several multinational manufacturing corporations and major construction and property development companies.

KEnSIngton SWAn BolStERS EmploYmEnt AnD lItIgAtIon tEAmSNew Zealand’s Kensington Swan has promoted Michael O’brien to partner in the employment team, based in Auckland. O’brien has been a senior associate with the firm for the last four years. His appointment as a partner adds considerable weight to the highly experienced employment team across a range of sectors and industries, including aviation, health, retail, finance, transport, manufacturing, and government. Kensington Swan has also appointed Tyrone Cooley as Special Counsel in the litigation team, based in Auckland. Cooley has been practising commercial litigation for 15 years and has also worked in-house in a large telecommunications company.

scott Hedge - cbp

scott Hedgecbp

michael o’brien michael o’brien Tyrone cooleyTyrone cooley

EmplOymENT law AustrAlAsiAn legAl BusinessISSUE 11.0134

WITH AN EvEr ACTIvE UNION MOvEMENT, WAGE NEGOTIATIONS ANd AN UPCOMING ELECTION

2013 IS SET TO SEE dEMANd fOr EMPLOYMENT ANd INdUSTrIAL rELATIONS LAWYErS SkY

HIGH, WrITES olivia collings.

NO ShOrTagE Of DISpuTES

EmploYmEnt lAW:

The Australian employment and workplace relations industry has seen some interesting developments in the past 12

months and plenty of activity. Lawyers in the field have had no shortage

of work, both advisory and litigious to keep them busy throughout the year. While some of the activity is cyclical, other areas of work can be easily attributed to the growing activity of unions and individual employees with a complaint.

“It has continued being very busy,” says K&L Gates partner Alice deboos. “There has been a greater volume of work across

EmplOymENT lawAustrAlAsiAn legAl BusinessISSUE 11.01 35

Hor puts increased activity in this space down to a better awareness of employees’ rights amongst employees as well as traditional economic drivers. “Economic pressure and uncertainty around job security have always played a part in people making complaints in relation to these kinds of claims,” he says. “The ongoing analysis and commentary around some high profile cases in recent times has probably also contributed to the increase in claims.”

This second point is a theory supported by Herbert Smith freehills partner and global head of employment, pensions and incentives, Graeme Smith. “We have seen some very high profile harassment cases, with ridiculous claims for damages, which attract media attention,” he says. “Some of them have had some success in getting high settlements. Once that is achieved it encourages others to follow suit.”

All togEthER noW for the Herbert Smith freehills employment practice, the past six months have seen a number of high profile industrial disputes the firm had been advising on finally came to a conclusion. Smith and his team have been involved in the qantas and Grocon disputes which spread across brisbane, Sydney and Melbourne workplaces. “We have had some big matters that have kept us flat out,” says Smith.

the board in the market in the last little while than I have seen over a number of years.”

Holding Redlich partner Michael Selinger agrees adding: “The level of activity has increased significantly in the past two or so months and over the last 12 months it has been steady.”

While deboos has seen a significant amount of work in the safety area of the practice, Selinger has seen an “explosion of claims” regarding bullying and harassment in the workplace. joydeep Hor, managing principal of People + Culture Strategies, says that he has also witnessed a far greater number of his clients dealing with this issue. “There would be a far greater percentage of organisations around the country in the last six months who have had to deal with a claim of harassment or bullying than what they would have in the past,” he says.

“THErE WOULd bE A fAr GrEATEr PErCENTAGE Of OrGANISATIONS ArOUNd THE COUNTrY IN THE LAST SIx MONTHS WHO HAvE HAd TO dEAL WITH A CLAIM Of HArASSMENT Or bULLYING THAN WHAT THEY WOULd HAvE IN THE PAST.”

Indeed, according to the Australian bureau of Statistics annual working days lost in the September quarter because of industrial action were at their highest level since Labor came to federal power in 2007. Prominent disputes in the construction sector in particular have helped pushed annual working days lost in the quarter to the highest level in eight years. disputes such as the two-week blockade at a Grocon Melbourne building site and action at an Abigroup hospital development by the Construction, forestry, Mining and Energy union accounted for a significant share of days lost in the quarter. Working days lost due to industrial


disputes reached 301,800 in the 12 months to September 30, a 41 percent rise on 2011 figures and the highest level since 2004.

However, despite the increase in working days lost to industrial action since the election of the Labor Government, the highest recorded number of days lost in a 12-month period was in fact in 1996, after former Prime Minister john Howard’s election, with a total of 984,900 days. When Labor come to power in 2007 under Kevin Rudd the annual level of working days lost sat at 49,700.

According to Selinger work associated with wage agreements and their associated industrial action is cyclical. “A lot of those [agreements] were introduced shortly before the Fair Work Act 2009 was introduced, and they are now coming up for renewal,” he says.

both he and deboos add that work resulting from union-led action also tends to be dependent on the industry, not only the timing. “We have a client base that has gone through a significant number of wage bargaining processes in the past few months, for example large construction companies,” says deboos. “We also do a lot of work in the transport sector and mining and resources sector.”

However, Selinger adds that this work is also largely with regards to organisations which have had a long industrial history, for example qantas. “Otherwise I would say generally union activity has been moderate,” he says.

All legal practitioners agree, that in part, the action and work associated with collective agreements can be attributed to the fact that the Fair Work Act gives unions a fair amount of rights in the representation of employees across a number of industries.

According to Maddocks partner Lindy Richardson, since the introduction of the Fair Work Act in 2009 the employment practice at the firm has noticed an increasing amount of work involving industrial disputation and advice work around collective rather than individual issues.

ALL LEGAL PrACTITIONErS AGrEE, THAT IN PArT, THE ACTION ANd WOrk ASSOCIATEd WITH COLLECTIvE AGrEEMENTS CAN bE ATTrIbUTEd TO THE fACT THAT THE Fair Work act GIvES UNIONS A fAIr AMOUNT Of rIGHTS IN THE rEPrESENTATION Of EMPLOYEES ACrOSS A NUMbEr Of INdUSTrIES.


LR ALB WR&S Ad 0113_final.indd 1 21/1/13 3:55:10 PM

SoUth AUStRAlIAOn 1 November 2012, South Australia’s Parliament passed its harmonised Work Health and Safety Act 2012 (SA). This meant South Australia became the seventh jurisdiction to adopt the harmonised work health and safety laws, alongside New South Wales, queensland, the Northern Territory, the

Australian Capital Territory, Tasmania and the Commonwealth jurisdictions. The harmonised laws in South Australia came into effect on 1 january 2013.

The South Australian Work Health and Safety Act is similar to the model laws, however it contains the following key amendments:• it provides clarification that a person must eliminate or

minimise risks to health and safety, so far as is reasonably practicable, “to the extent that they have the capacity to influence and control the matter”;

• it provides clarification that volunteer officers in mixed residential/commercial strata/community titles corporations will not be liable for breach of officer duties under the Act;

• it increases the number of training days for health and safety representatives to five in the first year, three in the second year and two in the third year;

• it reinstates the right to silence;• it contains certain policies and procedures relevant to when

permit holders seek to exercise their right of entry to enquire about suspected breaches of the Act;

• it requires the Small Business Commissioner to be consulted before a model Code of Practice is submitted to the minister for approval;

• it requires the SafeWork SA Advisory Council to make recommendations to the minister regarding approval of any Codes of Practice made under the Act; and

• it makes the Codes of Practice subject to disallowance by parliament.

upDaTE: oh&S hARmonISAtIonANdrEW GrAY ANd STEPHANIE MCGUIGAN Of kING & WOOd MALLESONS rEvIEW THE LATEST dEvELOPMENTS IN THE PUSH TOWArdS NATIONAL OH&S LEGISLATION

QUEEnSlAnDThe queensland Government has delayed the commencement of provisions of the Work Health and Safety Regulations 2011 (qLd) until 1 january 2014, following concerns raised by a roundtable discussion held on 29 August 2012. In August, the Attorney-General and Minister for justice met with stakeholders from 18 employer associations and unions to discuss the harmonised work health and safety laws and to consider potential changes.The key outcomes from the roundtable review include:• consideration of the removal of

‘contractors and subcontractors’ from the definition of ‘workers’;

• further guidance as to the meaning of ‘reasonably practicable’ and how ‘control’ is relevant in determining whether something was ‘reasonably practicable’;

• consideration to changes to the right of entry powers;

• recommendation that some of the second stage model codes of practice not be adopted in queensland (mainly those related to construction); and

• establishment of special working groups to consider asbestos regulations and review the model codes of practice relating to bullying/harassment and fatigue.

tASmAnIAA reminder that the Work Health & Safety Act 2012 (Tas) commenced on 1 january 2013.

Andrew Gray,King & Wood Mallesons




You can rely on Cooper Grace Ward’s specialist workplace relations team to provide strategic advice and representation on the full spectrum of employment, industrial relations and safety matters, including:• enterprise agreements, employment contracts and policies• business restructuring, outsourcing and contractor engagement• safety incident response, investigation and defence• employee discipline, dismissal and redundancy• industrial disputes such as industrial action and right of entry• management of ill and injured employees• anti-discrimination, bullying and harassment

www.cgw.com.au

Belind WinterPartner T 61 7 3231 2498E [email protected]

Expert legal advice for your workplace matters

Annie SmeatonSpecial Counsel T 61 7 3231 2946E [email protected]

Tobey KnightLawyer T 61 7 3231 2933E [email protected]

fellow Maddocks partner Ross jackson adds that since 2009, the firm has witnessed a marked increase in the amount of work involving disputes with unions. “The reasons for this are, in our view, firstly the Fair Work Act 2009 gives unions the capacity to bargain over a greater range of topics, and where these threaten core managerial prerogative issues, employers will need advice on how to protect their capacity to run their own business,” he says.

This is a view supported by deboos who adds that unions are being “very active” in the conditions they are looking to include. Indeed, bargaining over employment conditions, rather than pay was the main cause of disputes in the September quarter, accounting for almost half of the 49 disputes that were resolved.

More recently unions have used the provisions in the Fair Work Act as a means of protecting not only union delegates but members more generally from accountability for conduct, behaviour or

performance, according to Richardson. Smith also sees the Fair Work Act as

being a conduit for increased union activity. “Fair Work Act is one which unions find quite empowering for them and we have a political climate in which they feel encouraged to take action,” he says.

One other key driver for union-led disputes is the growing number of restructures and retrenchments occurring in the Australian market place. “The most visible activity of unions tends to be when there is a significant workforce restructure, not only because they have a large number of members that are immediately affected, but also because those sorts of restructures make the press more regularly, and therefore the involvement of the union becomes more public,” says Selinger.

deboos has also seen this movement in her practice, adding that she has seen an increase in demand for advice on redundancies and dealing with redundancy disputes from the firm’s client base in the past six months. “unions are being very active when employers are restructuring and making people redundant,” she says.

MOrE rECENTLY UNIONS HAvE USEd THE PrOvISIONS IN THE Fair Work act AS A MEANS Of PrOTECTING NOT ONLY UNION dELEGATES bUT MEMbErS MOrE GENErALLY frOM ACCOUNTAbILITY fOr CONdUCT, bEHAvIOUr Or PErfOrMANCE.


Maddocks has also witnessed movement in this area of advice. “We have seen an increased number of disputes requiring advice and sometimes representation, around whether consultation requirements have been met under either or both applicable enterprise agreements, and the Fair Work Act 2009,” says Richardson.

oFF to thE pollS Given Australia is set for a federal election in the next 11 months, there is a lot of concern about what the time before might bring in terms of industrial action.

The Opposition has yet to formally lay down its industrial relations platform, while the Labor minority government continues to tweak its original Fair Work Act. “I don’t know if we have sufficient detail from a Coalition’s point of view to really gauge what they might do if they win at the next election,” says Hor. “There would be a number of people in corporate Australia looking to the Coalition for serious change in this space.”

Selinger agrees that a change in government is likely to lead to some changes to the Fair Work Act, but what those changes are has not yet been announced. “The Coalition has only ever said that when it comes into power it will look to make responsible changes to the Act, whatever that may mean,” he says.

If a change in government does occur, deboos is confident that the Coalition would look to make changes, and rather quickly at that. However, Smith says that what the future may bring, both in

the election and in the industrial relations space is difficult to predict at this point in time, and does not expect a change in government to have an immediate impact on the laws that govern workplaces and industrial relations, “because they would have to draft legalisation and get it through parliament”.

Smith also expected the union activity leading up to an election to be less prominent: “I would expect that unions would be less likely to take industrial action, which would be high profile, leading up to the election,” he says.

pAYIng thE BIll As with many practice areas, workplace relations practitioners are increasingly

GIvEN AUSTrALIA IS SET fOr A fEdErAL ELECTION IN THE NExT 11 MONTHS, THErE IS A LOT Of CONCErN AbOUT WHAT THE TIME bEfOrE MIGHT brING IN TErMS Of INdUSTrIAL ACTION.


www.holdingredlich.comMelbourne . Sydney . Brisbane

Workplace advice that works Human resource and safety management can be a legal minefield, but it doesn’t need to be.

Holding Redlich’s Workplace Relations and Safety Group understands the legal issues you face.

Our people have specialist expertise which translates into sensible guidance and practical business-focused advice.

Our depth of experience across all areas of workplace relations and safety law means you are in safe hands when you work with us.

So for workplace advice that works, contact our team today.

Charles Power | Partner | Melbourne T: +61 3 9321 9942 E: [email protected]

Stephen Trew | Partner | Sydney T: +61 2 8083 0439 E: [email protected]

Paul Hardman | Partner | Brisbane T: +61 7 3135 0675 E: [email protected]

finding their clients wanting more than the standard billable hour. “I think it is increasingly a growing trend to use fixed fees,” says Selinger. fortunately for Selinger and other practitioners, employment relations law is somewhat better suited to fixed fees and retainers than other practice areas, with the exception of workplace disputes. “fixed fees are suited to workplace law. The types of work that some workplace relation lawyers do is related to policies and procedures which are easily quantifiable, whereas some other areas don’t have the luxury of legislation guiding them on what is or is not includable,” adds Selinger.

deboos has also seen a growing number of clients demanding and utilising alternative billing methods such as fixed fees and retainers. “We have a number of fixed fee and retainer arrangements in place, and I see that increasing. A lot of strategy work we are doing is on a retainer basis,” she says.

PCS is also increasing the number of clients on retainer arrangements according to Hor. “We certainly have more clients on retainer than we ever have had,” says Hor. “We have always done a lot of fixed fee work and the plan in 2013 is to do more, particularly in this economic environment where it gives us and our clients’ certainty.”

However, even Hor, who is an advocate of fixed fee arrangements concedes that when it comes to litigation, fixed fees can be problematic. “The problem is that for law firms to fix fee for litigation it is going to be cost prohibitive for a client as it is likely the firm will err on the upper side of costs,” he says.

It is also his experience that sometimes clients prefer the billable

hour as they have become accustomed to scrutinising time based billing. “There are a lot of clients, who appreciate that there are alternatives there, but who feel most comfortable with the time based billing method,” he says.

According to Smith the movement towards fixed fees is more about providing certainty than a fixed price tag. “Corporates are asking for a quote before they appoint you to a job, but even when it is a quote, it is difficult to move the quote once under way,” he says. “What you have quoted on originally might change and giving them certainty on why you have changed the quote is important as part of that process; fixed fee arrangements are not flexible in that way.”

Like others he says much of his and his colleagues work can be difficult to fix fees because of the nature of the work. “A lot of our work is litigation or disputes based, so it arises quickly, happens quickly and you need to respond instantly. In those circumstances it is not practical to give an accurate quote on what the work might cost.”


neveR a Dull momenT

Whenever I am at a barbeque, doctor, hairdresser, you name it, and I get asked in what area of law I practice, the reaction

to my answer is, without fail, words to the effect of “gosh that must be busy”. does the same reaction follow when the lawyer’s answer is tax, real estate or intellectual property? I’d wager not.

This does not mean that other areas of law are not busy, they are of course, perhaps even more so. but there is certainly a perception that the world of workplace relations is an ever-changing and frantic area of practice. So why the reaction? There is no question that if you asked an employer or an employment lawyer whether the past year has been a busy one – all would answer in the affirmative. This is both the perception and the reality.

In terms of perception, workplace relations is always in the news. Not a day will pass without one of the national papers covering an industrial dispute, a high profile employee termination or a debate about wages rates and productivity. In Australia, we have made workplace relations front and centre in our news cycle and our political debate. As it is always in the public discourse, it follows that the perception is that employers and employees are continually making or defending claims, embroiled in disputes or undertaking workplace restructures.

With respect to reality, employers’ experiences of workplace relations differ

greatly. Many, if not most employers, conduct their business without controversy of the type covered in the media. union membership levels are as low as 19 percent across the private sector which means that most employers don’t actually have disputes with unions at all. Indeed most of the union membership is concentrated in large employers in certain industries.

However, despite this variance, there is no doubt that the reality is that employers will all, at some point, require workplace relations legal advice. for those employers who on the whole escape the headlines, the area is so highly regulated that assistance is always required with contracts, compliance with awards and statutory obligations, understanding of discrimination issues and dealing with flexible work practices, managing performance, investigating grievances and the termination of employment process.

Large employers require this and more. There may be executive employment issues, restructuring and outsourcing, acquisitions, enterprise bargaining and industrial action.

The range of needs makes this a busy area. Statistics from the fair Work Commission indicate the increase in activity in claims such as adverse action and unfair dismissal over the last couple of years. General protections (adverse action) claims have grown to around 700 per quarter (up from around 550 two years ago). unfair dismissal applications stood at around 3,500 in each of the first two quarters of 2012, up from around 3,100 per quarter in 2010.

My colleagues and I often get asked whether we think the level of workplace relations work will change during 2013. There is no reason why it should fall. Industrial disputes generally involve enterprise bargaining and are concentrated in industries where agreements expire during the same period of time. for example, leaving aside spontaneous disputes, the construction industry

k&L GATES PArTNEr ALICE dEbOOS rEfLECTS ON THE dYNAMIC NATUrE Of WOrkPLACE rELATIONS PrACTICE, ITS TrIALS ANd ITS rEWArdS

THE rEALITY IS THAT EMPLOYErS WILL ALL, AT SOME POINT, rEQUIrE WOrkPLACE rELATIONS LEGAL AdvICE.


neveR a Dull momenT

should not see an increase in industrial activity this year as virtually all of the industry have agreements which run through to the next year or later. However, there are other areas which continue to cause issues for employers.

The first tranche of changes to the Fair Work Act are now in place. These involve some fairly non-controversial recommendations of the Review Panel. Minister Shorten has indicated that the Government would make further changes to implement the recommendations, but only where consensus could be reached with employers groups and unions. Given the Review Panel report was widely criticised by employers for failing to address perceived fundamental flaws in the legislation, it is hard to see where such areas of consensus could arise. However, it remains possible that the changes to the Act will be introduced.

The proposed new Anti-discrimination laws are also likely to see an increase in claims arising out of the employment relationship. Given the proposed reversal of the onus of proof and the widening of the definition of discrimination, employees will find it is easier to pursue claims of discrimination against employers.

Importantly, this year will see a federal election. federal elections in Australia are guaranteed to lead to legislative change for the workplace. The opposition have been reticent thus far to make any meaningful statements regarding workplace policy. despite this, given their strident criticism of the Fair Work Act and in particular the bargaining system, it is improbable that a coalition government would leave the legislation as it is for any lengthy period. In the event the Government is returned, an increased mandate could certainly signal more sweeping changes to the Fair Work Act and perhaps a full implementation of the Review Panel’s recommendations.

Either way, the next twelve months will remain a busy time for employers, workplace lawyers and commentators.

but it is not all about the politics or particular legislative framework. To my mind, the primary reason why this is an area of law that is dynamic and demanding is that it involves people. All decisions and changes in a workplace involve the management of people in all their guises, warts and all. The emotional investment in workplace matters is high. Not just from employees but managers as well. Liability is created not only through official corporate decisions but failings in communication, misunderstandings and misconceptions. It is not an area of law that can be effectively applied in a black letter or uniform fashion. It ultimately requires a consideration of individual circumstances and personalities weighed up against business needs. At the end of the day, yes it is busy but it is never dull and no matter how long you’ve been in practice, there are still matters which will surprise and challenge.

Alice DeBoos is a Partner with K&L Gates and the Practice Group Coordinator for the Labour, Employment and Workplace Safety Group.

fEdErAL ELECTIONS IN AUSTrALIA ArE GUArANTEEd TO LEAd TO LEGISLATIvE CHANGE fOr THE WOrkPLACE.


The legal industry has undergone a fundamental shift in recent years. New competitive pressures, evolving client demands, and

significant changes in the technology landscape have combined to generate an environment of increased challenge and risk, but also one of significant opportunity for law firms with the right outlook and a strong strategic plan.

As evidenced by the unhealthy decline in the Peer Monitor Economic Index (Thomson Reuters’ legal business benchmarking

service), the environment in which law firms operate today is deteriorating, and if it continues on this trend for another 12 months, we could see the market return to levels not seen since 2008/2009.

What may be more concerning is the fact that some of the financial and business levers that law firms were able to adjust in order to ride out the credit crisis may not be so readily available today. demand continues to slip into negative territory, driving productivity significantly lower and, consequently, relatively higher cost rates on billable resources. Prior to the financial crisis, year-on-year rate growth was between six to eight percent, and firms were more readily able to address reductions in profitability simply by increasing rates. However, today’s rates are continually

TecHnology invesTmenT anD ThE NEw NOrmallucas gaRlepp OUTLINES SOME Of THE kEY ArEAS fOr TECHNOLOGY INvESTMENT – frOM MObILE TECHNOLOGY TO dATA ANd SYSTEMS INTEGrATION TOOLS ANd TIME MANAGEMENT SOLUTIONS – ANd ExPLAINS WHY THEY MATTEr IN THE CUrrENT LEGAL PrACTICE ENvIrONMENT.

TEChNOlOgy AustrAlAsiAn legAl BusinessISSUE 11.0146

under pressure as clients seek to better measure service quality, demand more and increasingly complex billing arrangements, and expect a higher level of certainty in legal spend, culminating in the increasing demand for alternative or fixed fee arrangements. As a result, firms need to look elsewhere to maintain their financial position. unfortunately, in addition, increases in overheads are outstripping revenue growth. As most businesses sought to maintain their position during the credit crisis by rationalising their expense overheads, here too is another business lever that is no longer as effective a means as it once was for business optimisation.

According to a recent legal industry study, almost nine out of 10 law firms currently identify technology investment as the most effective means to maintain or increase competitive position. There are several emerging trends in this technology investment worthy of note:

• Mobile technology• Data and systems integration tools • Time management solutions• Alternative and fixed fee management

moBIlE tEchnologYThe rise of mobile technology has been phenomenal over recent years. Led predominantly by Apple’s® iPad®, the sale of mobile computing devices outstripped that of traditional desktop PCs for the first time in 2011, and the same is true for global internet traffic sources in 2012. The emergence of ‘bring Your Own device’ (bYOd) strategies in business of all types has led to an exponential demand for mobile applications and solutions. Today, software businesses seek to balance their investment in building platform-specific applications for Apple, Android®, and increasingly Windows 8™, Microsoft’s® latest iteration of the Windows operating system which redefines their platform to one that spans both desktop and mobile devices. Still small in numbers today, Microsoft’s mobile offering is set to grow quickly given the reach of their existing platform base, and their market share forecasts may be underestimated. Still, most sources predict Apple will continue to control the tablet space for some years (Gartner Mobile Technology Report, April 2011).

Mobile solutions have been traditionally used mainly as enquiry tools; however, new solutions in this space are continuing to add additional functionality around time capture, detailed client and

matter enquiry, and KPI reporting. Some are going even further and extending desktop functionality, such as billing workflow, directly to the mobile device.

The future of mobile applications, however, lies in technologies such as HTML5, the emerging programming language that allows developers to build applications that will operate on any device large or small, mobile or otherwise, through any standard web browser. Though still an emerging technology, those seeking to invest in new practice management platforms today should look closely at the technology roadmap of their vendor and ensure that 2013/2014 includes the deployment of the first generation of these new entirely Web-based platforms

DAtA AnD SYStEmS IntEgRAtIon toolS A recent ILTA (International Legal Technology Association) survey is a striking demonstration of how the legal business environment has changed over the past 10 years or so. during this time, the number and type of technology solutions required to efficiently and competitively operate a successful law firm has almost tripled—a staggering statistic.

This fundamental increase in systems complexity has brought with it not only new challenges in operating the systems themselves, but in managing the data that they hold. The ability to mine this data and present it in meaningful ways to business decision makers is critical to a firm’s success and should be considered a key component of a firm’s business strategy. There are a number of solutions in the market today

PEER MONITOR ECONOMIC INDEX (PMI)

WORLDWIDE TABLET SHIPMENTS SPLIT BY OSHISTORICAL AND FORECAST* 2011-2016 (UNITS IN MILLIONS)

2011 (actual)

70.9 117.1 165.9 261.4

iOS Android Windows Others

2012 (forecast)* 2013 (forecast)* 2016 (forecast)*

Credit CrisisQ3 PMI Score: 50

The PMI represents the relative rate of change among the major factors influencing law firm performance

Source: IDC Tablet Shipment Forecast September 2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2006 2007 2008 2009 2010 2011 2012

6076706660565046403630

100%

80%

60%

40%

20%

0%

WHAT MAY bE MOrE CONCErNING IS THE

fACT THAT SOME Of THE fINANCIAL ANd bUSINESS

LEvErS THAT LAW fIrMS WErE AbLE TO AdjUST IN OrdEr TO rIdE OUT THE CrEdIT CrISIS MAY

NOT bE SO rEAdILY AvAILAbLE TOdAY

TEChNOlOgyAustrAlAsiAn legAl BusinessISSUE 11.01 47

that address this challenge and many do an admirable job whilst focusing on a specific aspect of this challenge. 2013/2014 will see the emergence of vendors delivering not only better and more effective ways of integrating systems and mining the data within, but delivering this content in new and innovative end-user interfaces. Easy to use, with a personalised end user experience, these new applications will deliver the right information to the right people, in the right formats and at the right time, whether they are at their desk, in a client meeting, or on their daily commute.

The final two trends we are seeing encompass the consideration of new technologies, but are of specific significance in the legal industry as they represent the culmination of dozens of years of ongoing debate and discussion about billing arrangements in law firms, and almost ironically represent a schism in the fabric of the legal community zeitgeist.

tImE mAnAgEmEnt SolUtIonSTime-based measurement for billable legal work evolved during the 1950s and came to be a standard in the 1970s. Prior to this, a range of different billing arrangements were legislated, to the point at which firms were penalised for charging below certain fees. In the mid 1970s, capped or fixed fees were outlawed in some jurisdictions as they were considered price-fixing and since that time the billable hour has been the dominant means of pricing legal services.

Over the past few years there have been two emerging trends in time management that are somewhat at odds with one another. In the first instance, the emergence of new technologies that can passively monitor desktop and device activity have led to a new breed of time capture solutions that track and catalogue lawyer activity. There are varying degrees of functionality across these solutions, but at their best they ensure that all of the activities a lawyer undertakes during a day are accurately tracked, assigned to matters automatically where possible, and presented as an exception list where no link could be found, allowing the operator to

determine whether or not the entry should be processed. Today the least sophisticated of these solutions may be found natively within some practice management solutions; however, the ‘best of breed’ solutions still sit as standalone applications that integrate with your current practice management platform. As is the case with some of the solutions noted above, when looking into new technology platforms in 2013, be sure to consider whether these technologies are right for your business.

AltERnAtIVE AnD FIXED FEE mAnAgEmEntThe final and arguably most prominent trend in the global legal market today is towards alternative fee arrangements. Whether it is a flat fee for a fixed scope, retainer, phase-based billing or a range of other interesting combinations, these new billing arrangements are being driven very strongly by client demand. The demand began in large corporate tenders where more and more often respondents were required to deliver a formal matter plan for the engagement and demonstrate that they not only had a plan in place, but also the tools, the infrastructure, and the people to deliver on that plan. This trend is increasingly being seen across a wider range of legal engagements and indeed today there are a growing number of firms who are restructuring their business around this new

PEER MONITOR ECONOMIC INDEX (PMI)

WORLDWIDE TABLET SHIPMENTS SPLIT BY OSHISTORICAL AND FORECAST* 2011-2016 (UNITS IN MILLIONS)

2011 (actual)

70.9 117.1 165.9 261.4

iOS Android Windows Others

2012 (forecast)* 2013 (forecast)* 2016 (forecast)*

Credit CrisisQ3 PMI Score: 50

The PMI represents the relative rate of change among the major factors influencing law firm performance

Source: IDC Tablet Shipment Forecast September 2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2006 2007 2008 2009 2010 2011 2012

6076706660565046403630

100%

80%

60%

40%

20%

0%

THE EMErGENCE Of NEW TECHNOLOGIES THAT CAN PASSIvELY

MONITOr dESkTOP ANd dEvICE

ACTIvITY HAvE LEd TO A NEW brEEd

Of TIME CAPTUrE SOLUTIONS THAT

TrACk ANd CATALOGUE LAWYEr

ACTIvITY

TEChNOlOgy AustrAlAsiAn legAl BusinessISSUE 11.0148

operational environment, and even more so for clients. This results in better client engagement and retention, and a more competitive and profitable business.

The professional services industry outside of legal has been using these sorts of models successfully for many years and are now starting to adopt the new generation of tools to help them manage what they often do manually today. However, within the legal industry, the emergence of this ‘new normal’ is bringing about not only the need to deploy new technology solutions, but also a need to fundamentally change the way that lawyers have worked and law firms have operated for decades. It’s no small task and it is not surprising that the most challenging part of this evolution of the legal business is the change in culture, operational requirements, and matter management, and especially in the way lawyers think about their working lives.

Lucas Garlepp is a former law firm manager and currently director of Sales Asia Pacific for Thomson Reuters Elite.

paradigm. Indeed, the rationale behind the statement that this trend is at odds with the previous trend towards more sophisticated time capture capabilities is that a growing number of firms are abandoning time entry all together, instead using more traditional business measures to determine the effectiveness of their legal teams.

Within the Asia Pacific region, King & Wood Mallesons is prominent in this space. Since third quarter 2011, they have been developing legal project management skills within their legal staff. Stuart fuller, Global Managing Partner, says “The creation of a fair estimate underpinned by a matter plan enables both proactive tracking and effective client communication. This model ensures our clients are engaged every step of the way, with no surprises. Client feedback has been very positive”. King & Wood Mallesons has adopted Thomson Reuters Elite’s Engage™ legal project management solution as their technology platform.

A different model has been adapted by Moores Legal, a growing Melbourne based firm. Most of the lawyers at Moores Legal no longer enter time. Their targets are based on more traditional business outcomes like revenue and margin targets, and their team structure ensures they can effectively measure productivity and utilisation—two key business metrics that are arguably lost with the removal of accurate time tracking.

Though this schism is apparent, there is of course room to embrace both of these paradigms. Accurate tracking of productivity and utilisation through more advanced time capture capabilities, partnered with new models for developing, managing and billing legal work, is likely to result in a more effective and efficient

Greg Allen - New Partner, Simpson Grierson

TEChNOlOgyAustrAlAsiAn legAl BusinessISSUE 11.01 49

50 prOfIlE AustrAlAsiAn legAl BusinessISSUE 11.01

In-house perspectIve

george forster is what can only be described as a fast mover. Having come out of university and into private practice at freehills,

forster then succeeded in reaching partnership in only four and a half years. Not surprising then that forster is now general counsel and company secretary at one of the country’s largest fast moving consumer goods organisations, Coca-Cola Amatil (CCA).

Having carved out a career as a partner at one of the country’s top firms early in his career, forster then found himself looking for new challenges in the corporate world. “One of the very few disadvantages of becoming a partner so early in your career is that by the time you are say, 40, you have already kicked a significant number of career goals and you are looking for further challenges,” he says.

following 17 years at freehills, including some time on secondment in Hong Kong, forster held various general counsel and company secretarial roles at AIdC, State bank of NSW and Westfield before finally arriving at CCA nearly eight years ago.

“CCA is a very fast moving and pragmatic company operating in a fast moving industry,” he says. “It is not like working for a big financial organisation; here you can see the product, taste the product, and hold the product.”

Having spent a great deal of time as a private practice lawyer advising corporates forster says he found the transition to corporate law fairly straightforward, although, he does acknowledge that there are some significant differences, primarily around responsibility. “One of the things that I found was particularly different was that I was now the decision maker – part of the decision making process – rather than a mere advisor to it,” he says. “After the transaction is over, if you are an external legal advisor you wait for the next instruction. If you are at the company, you live with the consequences of that transaction, or project.”

The urgency of work and being able to touch the product is also very different to being in private practice he says. “If a job comes in you have to deal with it straight away, otherwise the business loses,” he says. “If someone has a dispute, you settle the dispute. You deal with the customer in a positive and conciliatory manner so that you can continue the relationship. Pragmatism and common sense rule.”

The coke side of life CCA is one of the largest bottlers of non-alcoholic ready-to-drink beverages in the Asia-Pacific region and one of the world’s top five Coca-Cola bottlers. It has operations in five countries

A FASt moVIng gcgeorge forster, general counsel and company secretary at coca-cola amatil

IT TAkES A SWITCHEd-ON, fAST-PACEd GENErAL COUNSEL TO kEEP UP WITH THE fAST PACEd WOrLd Of CONSUMEr GOOdS, bUT LUCkILY fOr COCA-COLA AMATIL THEY HAvE fOUNd jUST THAT IN GEOrGE fOrSTEr, rEPOrTS olIVIA collIngS.

51prOfIlEAustrAlAsiAn legAl BusinessISSUE 11.01

52 prOfIlE AustrAlAsiAn legAl BusinessISSUE 11.0152 prOfIlE

across the region where it manufactures, sells and distributes a diversified product portfolio including carbonated soft drinks, water, sports and energy drinks, fruit juice, flavoured milk, coffee and packaged ready-to-eat products. More recently the company has also started distributing the premium spirits portfolio of beam Global Spirits & Wines and will soon also distribute Rekorderlig cider as well as beer.

forster and his small team have been busy assisting the company in the negotiation and formation of the beer joint venture, followed by its termination. “As part of its termination, many complex legal and commercial aspects were dealt with,” says forster. This included the purchase of the Cascade brand for its non-alcoholic beverage portfolio together with the acquisition of nearly 90 percent

of a South Pacific Stock Exchange listed company which had interests in breweries and distilleries in fiji and Samoa.

CCA recently rebranded the foster’s Group Pacific in fiji and Samoa to Paradise beverages (fiji) as part of its new foray into the beer market. during the next two to three years, the company will carry out a major upgrade of the breweries in fiji and Samoa and a distillery in fiji as part of its re-emergence in the Australian premium beer market come december 2013 when its mandatory wait period expires. “A main focus [for us] is getting ready to move back into beer in Australia and continuing to develop our alcohol strategy, including our spirits and alcoholic ready-to-drink beam portfolio,” says forster. “We are constrained from manufacturing and distributing beer in Australia until december 2013, but we are actively making preparations for our re-entry into the Australian beer market.”

CCA is constrained following its sale of a 50 percent stake in Pacific beverages, a joint venture between CCA and SAbMiller, which took over foster’s in december 2011. The deal prohibits CCA from selling, distributing or manufacturing beer in Australia until december 2013.

As part of its preparation to re-enter the market CCA recently announced a A$46 million loan to the Australian beer Company, part of Casella Wines, to invest in a new brewery. The loan will be converted to a joint venture equity stake in Casella once the restraint period expires.

The heavily regulated world of alcoholic beverages is nothing new for forster and his team, which already handles an increasing amount of regulation. “There has been an increase in regulation and there is more and more compliance work; mainly for the lawyers,” says forster. “Many of these regulations are strongly supported by CCA, including those regulations that protect children and minimise irresponsible consumption of certain beverages.”

Although, forster is quick to point out that CCA, in many cases, has been well ahead of the curve when it comes to regulation, as

“ONE Of THE THINGS THAT I fOUNd WAS PArTICULArLY dIffErENT WAS THAT I WAS NOW THE dECISION MAkEr – PArT Of THE dECISION MAkING PrOCESS – rATHEr THAN A MErE AdvISOr TO IT,” HE SAYS. “AfTEr THE TrANSACTION IS OvEr, If YOU ArE AN ExTErNAL LEGAL AdvISOr YOU WAIT fOr THE NExT INSTrUCTION. If YOU ArE AT THE COMPANY, YOU LIvE WITH THE CONSEQUENCES Of THAT TrANSACTION, Or PrOjECT.”

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illustrated by its decision to pull sugared carbonated soft drinks out of school canteens prior to guidelines requiring that to occur. “I like the culture of doing business within an organisation which has a strong focus on corporate social responsibility,” says forster of CCA. “We overwhelmingly support appropriate regulations and restrictions applicable to the various beverages.”

While many companies and their general counsels struggle to have workable relationships with the various regulators, forster says CCA has established over time a “transparent” relationship with all its regulators. “Trust takes a long time to develop and we continually strive to ensure we maintain our good trusting relationship with the regulators, across the whole business,” he says. “My general advice is not to be overly aggressive in your views of the law. Whilst it is often advantageous to be at the cutting edge of legal developments, care needs to be taken to ensure that you don’t end up at the bleeding edge.”

He adds: “Our board is always keen to ensure that we are, and remain, on the right side of the regulatory and corporate social responsibility line… It makes the role of the general counsel a little easier when you have a board that wishes to remain on the right side of the regulatory line.”

Things go better with coke despite having only ever worked at freehills during his private practice year, forster says that when he is in need of external legal advice he regularly turns to Ashurst (formerly blake dawson). “We use Ashurst most often – though if we have a matter that is better dealt with by another, then so be it,” he says. CCA does not have a formal panel arrangement, although it does have an active retainer agreement with one law firm, who look after smaller, quick matters on a regular basis. “This facilitates our legal group focusing on more strategic and significant matters,” explains forster.

As CCA grows across the region the advantage of using a firm such as Ashurst, which has offices across the world, increases for

involved and our external providers know what is involved, and that means we can jointly predict and agree the costs,” he explains. “If it is a big or complex M&A matter, we might jointly try to lock in fixed prices, if only for blocks of work.”

forster is equally pragmatic when it comes to litigation, something CCA generally avoids. “As a general comment, we prefer not to litigate – though we will if appropriate,” says forster. “Where practicable, we adopt a ‘carrot’ rather than a ‘stick’ approach so that we retain the long term relationships with our customers.” Which just goes to show, things really do go better with Coke.

forster. “We do business overseas in Indonesia, PNG, fiji and New Zealand and in those locations the laws may be quite different,” he says. “for a local legal issue, I would typically contact Ashurst and say, ‘We need advice in Indonesia or PNG’ and they would facilitate our obtaining local advice in those locations by recommending someone whom we would then decide (depending on the matter) to brief direct or brief through Ashursts.”

When it comes to paying for legal advice, forster’s focus is not necessarily price, but whether the deal is fair. “It has to be something that is good for our providers and good for us,” he says. “from a CCA perspective, I need to ensure that we get the deal done properly at a fair price.”

Like many general counsels he is eager to move away from time billing, as it rewards inefficiency, but to do so in a structured manner. for example, if undertaking a standard fund raising, as CCA did recently, forster says he would typically lock in up-front how much that work will cost. “That is because we know the documentation

“MY GENErAL AdvICE IS NOT TO bE OvErLY AGGrESSIvE IN YOUr vIEWS Of THE LAW. WHILST IT IS OfTEN AdvANTAGEOUS TO bE AT THE CUTTING EdGE Of LEGAL dEvELOPMENTS, CArE NEEdS TO bE TAkEN TO ENSUrE THAT YOU dON’T ENd UP AT THE bLEEdING EdGE.”

the past year has seen the end of a number of long-running and high profile cases involving directors and company officers from which some

hard lessons can be drawn. These cases include the recent judgments in

james Hardie and fortescue, as well as Centro.However, extracting the key lessons from

these cases is not straightforward due to their complexity, duration, different judicial views and outcomes, and the tendency for each case to turn on its own particular facts and circumstances – which are often exceptional or unusual.

Nevertheless, there are a number of

important lessons that companies, boards, and those who work with them, can take away from these judgments.

contInUoUS DIScloSURE ASIC will closely scrutinise announcements to the market to ensure they are correct and not misleading. Central to the james Hardie and fortescue cases were announcements to the ASX in relation to significant transactions, which ASIC alleged were misleading.

Whether a statement is defined as misleading or deceptive depends on the message being communicated to its intended audience. In fortescue, the High Court considered the audience to be investors and perhaps some wider section of the commercial or business community. In james Hardie, the High Court considered the audience to be a broader group of ‘stakeholders’, including existing and prospective shareholders, asbestos victims’ groups, unions, plaintiffs’ law firms, the government and the media.

In james Hardie, an expert giving evidence as to the likely effect of the ASX announcement differentiated between a “reasonable” or sophisticated investor and other investors, and considered that despite a statement that the foundation established to fund james Hardie’s asbestos liabilities was “fully funded”, the “reasonable” or sophisticated investor may have considered that funding risk remained.

If the audience is a “sophisticated” one, it may be more difficult to prove that they were misled. This factor may well be an important one, for example, in the case of shareholder class actions, where generally the majority of the class will comprise institutional investors. This may have an impact on the success of class actions where the class comprises sophisticated investors.

coRREctIonSIf directors or management become aware that statements already issued to the market, or information contained in financial statements, are incorrect, steps should be immediately taken to correct the mistakes. This may mitigate (although not always remove) the potential consequences for the company and its directors.

In Centro, one of the factors relied on by the court in not imposing bans or fines on the non-executive directors was that they took steps to address the misclassification of liabilities as soon as the errors became apparent.

harD lESSONS lEarNT frOm aSIC CaSESASHUrST PArTNEr angela peaRsall LOOkS AT SOME Of THE kEY POINTS TO NOTE frOM LAST YEAr’S SWATHE Of ASIC LITIGATION.

Angela Pearsall,Ashurst

54 AustrAlAsiAn legAl BusinessISSUE 11.01aSIC

In fortescue, the High Court did not clarify whether continuous disclosure obligations under section 674(2) of the Corporations Act require a company to correct information previously provided to the ASX. Regardless of this, failure to correct any errors once directors become aware of them is likely to contravene laws prohibiting “misleading and deceptive conduct”.

AppRoVAl oF AnnoUncEmEntSboards are not required to approve ASX announcements, and are able to delegate approval to a committee, employee or another person. A director is not liable for the acts of a delegate if the director reasonably believes, in good faith and after making proper enquiries, that the delegate is reliable and competent.

However, if an announcement has significant implications for the future of the company or is integral to its business strategy, it is likely that the board would wish to approve it.

If a draft announcement is prepared and the board decides to deal with it themselves, directors need to consider the content very carefully. directors also should confirm that all proper external and internal signoffs have been given in relation to the announcement, although this doesn’t relieve the directors from scrutinising the announcement themselves.

pRoVISIon oF InFoRmAtIonThe Centro and james Hardie cases illustrate that directors may be under pressure to consider and approve significant matters in a short timeframe.

It is important that management executives and other staff ensure the board has enough time to review and digest information and, if at all possible, avoid providing directors with a significant amount of information as the final approval stage of a transaction approaches.

directors need to be proactive in controlling the information flow, including the timing and the way they are provided with the information. They should ensure that the information they get is complete and take care to understand any assumptions, qualifications or limitations applied to the information given to them. directors also should consider whether information provided to them on other occasions, or in other contexts, is relevant to the current day decisions.

RElIAncEdirectors are entitled to rely on information or advice provided by other people (including management, advisers or other directors) however a lot depends on the individual circumstances of the case and whether a director has acted reasonably and made an independent assessment of the information or advice.

directors cannot rely on the advice of management in place of their own attention and examination of an important matter that falls under their responsibility. directors need to have an inquiring mind and ask the right questions of management and experts.

mInUtESdirectors need to be vigilant in reading and approving minutes and should not rely on others to do so. The james Hardie case demonstrated the difficulties that may be encountered in disproving minutes that have already been approved by the board. draft minutes prepared in advance of a board meeting need to be very carefully checked and updated to reflect the actual meeting.

VotIngA board should consult so that individual views may be formed and

communicated in a clear way. In particular, there should be a process by which each director communicates his or her vote and has it taken into account. An approach whereby the chair says, “I think we are all agreed on that”, may be dangerous unless supplemented by appropriate formality. As silence may amount to voting, a director abstaining from voting should speak up.

REmotE pARtIcIpAtIonjustice barrett in the james Hardie case made some comments about remote participation at meetings (by telephone or video link, for example), which is something that needs to be agreed to by all directors. The consent for this remote participation in a meeting can be a standing one.

The technology used should, at a minimum, enable every participating director to hear and be heard by every other participating director for the duration of the meeting. A director who participates remotely in board meetings should ensure that he or she has all the same information that’s available to other directors attending the meeting in person, and the ability to see each document at the right time during the meeting.

If a document is to be tabled or made available at the meeting, the technology should be available to place the document before every participating director.

These requirements impose a very high standard in relation to remote participation at board meetings which would include, for example, putting in place arrangements so that directors not present in person could view slides and other documents simultaneously with directors physically at the meeting.

pRotEctIonSdirectors and officers should consider whether they have appropriate protections in place, including adequate insurance cover. In determining such protections, factors to consider would include the complexity, duration and costs of potential litigation, the risk of multiple proceedings (including class actions, ASIC investigations and civil penalty proceedings), the multi-party nature of cases, and the need or desirability for defendants to have separate legal representation where interests are not aligned.

Although these recent cases do not give rise to new legal principles, they provide a graphic reminder in relation to a number of important matters commonly arising for Australian directors and officers. There is no doubt this extra clarity is welcome but it does point to directors needing to be very active, diligent and focussed on their duties.

harD lESSONS lEarNT frOm aSIC CaSES

AustrAlAsiAn legAl BusinessISSUE 11.01 55aSIC

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