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ISS
UE
7.1 Employment law
More regulatory change, more work for lawyers
Mid-tier mergers revisitedHow are they faring now?
Rudds infrastructure boostHow it will affect legal work
Still shining... for now brisbane 09
www.legalbusinessonline.com
n DEALS ROUNDUP n LATERAL MOVES n UK, US REPORTS n NEwS REViEw n
REgULATORy UPDATES
cover.indd 1 28/01/2009 4:42:33 PM
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ifc.indd 1 27/01/2009 1:48:06 PM
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1
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2
EDITORIAL >>
Australasian Legal Business ISSUE 6.1222
IN THE FIRST PERSON
Withdrawn M&A deals: not a product of financial turmoil
According to figures released by Thomson Reuters, turmoil in the
financial markets is the cause of Australia seeing the highest
volume of M&A deals being withdrawn in the Asia-Pacific region.
This would amount to a rapid fall from grace, considering that,
according to figures
released for January to August 2008, Australian companies were
the most favoured M&A targets, with 1,146 deals worth US$84bn.
So, the question is: What has changed?
According to Allens Arthur Robinson partner Cameron Price, the
answer is: absolutely nothing. Over the past six months, we have
been flat out, he said, and, it appears the AAR M&A team are
not the only ones. M&A partners right across the top end of
town are reportedly very busy working on deals.
So, what do these latest figures really tell us?Apart from the
failed Rio TintoBHP deal that the Thompson Reuters survey
excluded, it appears that none of the failed deals listed below
were directly affected by the financial turmoil, if at all. The top
five Australian M&A deals withdrawn, presented as evidence of
the negative effects the financial uncertainty has had on M&A
activity are: Origin Energy and BG, Orica and investor group
(private equity), Insurance Australia and QBE, Consolidated Media
Holdings and investor group (private equity), and Midwest and
Murchison.
In the case of Origin Energy and BG, the directors of Origin
Energy rejected BGs offer purely on commercial grounds. During the
course of the BG takeover bid, they simply received a better offer
from US oil major Conoco Phillips. The reluctance of BG to amend
its offer did not have anything to do with the financial crisis. In
fact, the coal price during this period remained largely unaffected
by it, which is one of the key reasons the deal was particularly
attractive to both BG and Conoco Phillips.
In the case of private equity approaching Orica, the bid was
rejected by the board in April 2007, long before the current
financial crisis began. Similarly the Board of Insurance Australia
Group rejected the offer by QBE.
The Midwest and Murchison scenario was similar to the case of
Origin Energy and another matter in which the bidder, Murchison
Metals, was outbid by a more determined rival Chinese steel maker
Sinosteel and most certainly had nothing to do with the crisis.
Indeed, the only deal on the list that may actually have been
affected by it is Consolidated Media Holdings, which did not go
ahead as a result of Lachlan Murdochs failure to get the private
equity financing together.
These are some of the reasons that, in spite of the financial
crisis, ALB is not quite ready to write off the Australian M&A
market just yet.
Apart from the failed Rio TintoBHP deal, it appears that none of
the failed deals were directly affected by the financial turmoil,
if at all
ISS
UE
7.1 Employment law
More regulatory change, more work for lawyers
Mid-tier mergers revisitedHow are they faring now?
Rudds infrastructure boostHow it will affect legal work
Still shining... for now BRISBANE 09
www.legalbusinessonline.com
DEALS ROUNDUP LATERAL MOVES UK, US REPORTS NEWS REVIEW
REGULATORY UPDATES
cover.indd 1 28/01/2009 4:42:33 PM
Generation Y lawyers attitude to employers was what are you
going to do for me? Now law firms are turning the tables with what
are you going to do for us? Signature Recruitment consultant Steve
Cole describing the shift in the recruitment landscape
If unfair dismissal is regarded as a matter of sufficient
importance that it should attract a legal remedy, youve got to have
a procedure for adjudicating that remedy Deacon IR partner David
Cross lamenting the exclusion of lawyers from Fair Work
Australia
We havent had any projects put on hold the merger puts us in a
good position to handle any hits betterCridland MB partner Tony
Morgan on the power of merger
02-03 - editors.indd 2 28/01/2009 4:48:56 PM
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www.albawards.com 21 mAy 2009
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direct mail Extensive brand exposure on the night to over 600 of
Australias leading lawyers and in-house counsel Sponsorship and
naming rights of an award category Complimentary seats at the
awards Company representative to present your company-engraved
award to winner(s) on the night Exclusive networking opportunities
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4
CONTENTS >>
australasian legal business ISSUE 7.1
contents
Copyright is reserved throughout. No part of this publication
can be reproduced in whole or part without the express permission
of the editor. Contributions are invited, but copies of work should
be kept, as Australasian Legal Business can accept no
responsibility for loss.
ANALYSIS
10 Infrastructure a winner for 2009Infrastructure projects
appear to be high on the Federal governments agenda, and so law
firms are expecting a major increase in work
12 Kiwi climate change freeze expectedThe Key governments
decision to suspend the carbon emissions trading scheme may be good
for business but how will it affect work flows for climate change
lawyers?
14 Mid-tier mergers the story so farThree recently merged firms
provide some perspective on how to make a law firm merger work in
the long term
FEATURES
30 Job marke power swingstThe tables are turned: Generation Y
lawyers are now being asked to prove themselves
40 Marketing report ALB investigates how firms need to adjust
marketing strategies during a market downturn
42 ALB guide: private equity 09A comprehensive overview of the
private equity sector market conditions, major deals and the
leading lawyers and firms in the field.
54 Industrial relationsALB speaks to the leading IR lawyers
about how the new IR bill will impact clients and employment law
practices
60 In-house perspective: Felicity McDowellALB gains insight into
Johnson & Johnsons in-house legal department
REGULARS
10 NEWS South Australia: the new frontierAllens, Freehills get
slice of Westpac capital raisingCredit crunches BHP-Rio Tinto
merger, lawyers still optimisticDust settles on Mallesons, Clifford
Chance talksAllens, Mallesons, Blakes all quiet on BA-Qantas merger
proposalTrimming the fat: firms review staffing in a slow
marketSustainable enterprises: a new type of lawyer
Middletons expands to Perth, merges with two firms
COLUMNS
19 UK report
21 US report
64 Sign off
COMMENTARY
22 NZ update: Buddle Findlay
PROFILES
35 Macdonnells Lawyers
39 Mills Oakley
49 Kemp Strang
ALB ISSUE 7.1
COVER STORY
32
60
10
40
32 ALB Special Report: Brisbane 09 Brisbane is still the land of
opportunity for firms with long-term plans.
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NEWS | deals >>
Australasian Legal Business ISSUE 7.1
| AustrAliA |
Goodman Group equity raisinGa$955m
Firm: Allens Arthur RobinsonLead lawyer: Stuart McCullochClient:
Goodman Group
difficult conditions in the commercial property sector required
parties to move quickly
second major capital raising in property sector since GPTs
A$1.6bn capital raising in October 2008
Stockland, CFS Retail and FKP tapped into the real estate
investment trust market to raise a combined A$525mAllens acted on
five of the top equity raisings, including GPTs A$1.6bn accelerated
non-renounceable entitlement offer; Wesfarmers A$2.5bn entitlement
offer and CSLs A$1.6bn institutional placement, among others
| AustrAliA |
ChaLLenGer FinanCiaL aXa annuity aCquisitiona$1.25bn
Firm: FreehillsLead lawyer: Michael VrisakisClient: Challenger
Financial Services Group
Firm: Minter EllisonLead lawyers: Mark Standen, Ken
WatsonClient: AXA Australia
Firm: SJ BerwinLead lawyer: Rob DayClient: Qantas Airways
merger negotiations failed after parties were unable to agree on
key terms
merger was to take place via a dual-listed company structure;
lawyers did receive some due diligence and compliance work
British Airways was limited to acquiring 49% stake in Qantas
Qantas would have remained a majority Australian-owned company
merger talks also occurred between BA and Spanish airline
Iberia, which would have seen merger create worlds biggest
airline
BA previously acquired 25% stake in Qantas during 1993 when
Australian carrier began to privatise
terminated mid-December 2008
Firm: Challenger LegalLead lawyer: Blair BeatonClient:
Challenger Financial Services Group
Challengers acquisition of AXAs immediate annuity business
required the coordination of a large number of work streams,
principally M&A, regulatory, actuarial, tax, stamp duty,
competition and dispute resolution
because the vendor and purchaser were joint applicants to the
proceedings, passage of the scheme called for a high degree of
cooperation, coordination and task sharing between the commercial
parties and their advisors
scheme was approved on 24 November 2008
| AustrAliA |
nationaL austraLia Bank CapitaL raisinGa$3bn
Firm: Mallesons Stephen JaquesLead lawyers: Craig Semple, Diana
NicholsonClient: National Australia Bank (NAB)
NABs A$3bn capital raising was reportedly one of the largest
and
| AustrAliA, uK |
terminated Ba qantas merGer proposaLa$10bn
Firm: Allens Arthur RobinsonLead lawyers: Andrew Finch, Fiona
CrosbieClient: Qantas Airways
Firm: Mallesons Stephen JaquesLead lawyer: David
FriedlanderClient: British Airways
Firm: Blake DawsonLead lawyer: John Field, Matt StottClient:
Qantas Airways
Firm: Sullivan & CromwellLead lawyers: Daryl Libow, Andrew
Solomon, Frank AquilaClient: British Airways
Firm: Slaughter & MayLead lawyers: Steven Cook, David
WhitmanClient: British Airways
deals in brief
Andrew Finch, AAR
David Friedlander, Mallesons
John Field, Blake Dawson
Diana Nicholson, Mallesons
Stuart McCulloch, AAR
Mark Standen, Minter Ellison
most successful in recent times
NAB initially intended to raise A$2bn, but due to significant
oversubscription this was increased to A$3bn
conducted through fully underwritten placement, followed by a
share purchase plan
[The Goodman Groups] capital raising is the largest
non-traditional rights issue that has proceeded in accordance with
the disclosure exemptions introduced earlier this year to
facilitate such equity raisings without the preparation of a
prospectus or product disclosure statement Stuart Mcculloch, allenS
arthur robinSon
6-9 - deals.indd 6 28/01/2009 2:28:58 PM
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NEWS | deals >>
7www.legalbusinessonline.com
your month at a GLanCe Firm Jurisdiction Deal name A$m
Practice
Addleshaw Goddard Australia, UK Employment Services Pertemps
People Development Group acquisition
110 M&A
AGL Legal Australia BO Auscom stake acquisition 221 M&A
Allens Arthur Robinson New Zealand, Australia Babcock &
Brown Communities price discovery 370 Securitisation, M&A
Australia, UK British Airways Qantas merger proposal 10,000
M&A
Australia Goodman Group equity raising 955 Equity
Australia New Hope Resource Pacific takeover bid 591 Energy
& resources
Baker & McKenzie Australia New Hope Resource Pacific
takeover bid 591 Energy & resources
Blake Dawson Australia, South Africa Aflease Gold BMA Gold
merger 100 Resources, M&A
New Zealand, Australia Babcock & Brown Communities price
discovery 370 Securitisation, M&A
Australia, UK British Airways Qantas merger proposal 10,000
M&A
Australia, UK Employment Services Pertemps People Development
Group acquisition
110 M&A
Challenger Legal Australia Challenger Financial AXA annuity
acquisition 1250 Finance, M&A
Debevoise & Plimpton Australia, US QBE Insurance ZC Sterling
acquisition 825 M&A
Deneys Reitz Australia, South Africa Aflease Gold BMA Gold
merger 100 Resources, M&A
Dibbs Abbott Stillman Australia Marubeni Resource Pacific stake
acquisition 230 Equity
DLA Phillips Fox Australia BOC Auscom stake acquisition 221
Equity, M&A
New Zealand Foodstuffs Liquorland acquisition N/A M&A
Australia Stemcor Pellets Savage River mine stake disposal 72
Equity
Edwards Angell Palmer & Dodge
Australia, US QBE Insurance ZC Sterling acquisition 825
M&A
Freehills Australia Challenger Financial AXA annuity acquisition
1,250 Finance, M&A
Australia Stemcor Pellets Savage River mine stake disposal 72
Equity
Australia Transfield capital raising 204 Equity
Gateley Wareing Australia, UK Employment Services-Pertemps
People Development Group acquisition
110 M&A
Gilbert + Tobin Australia BOC Auscom stake acquisition 221
Equity, M&A
Mallesons Stephen Jaques Australia, UK British Airways Qantas
merger proposal 10,000 M&A
Australia CSR capital raising 482 Equity
Australia Marubeni Resource Pacific stake acquisition 230
Equity
Australia Minara Resources rights issue 210 Equity
Australia National Australia Bank capital raising 3,000
Equity
Minter Ellison Australia Challenger Financial AXA annuity
acquisition 1,250 Finance, M&A
Australia, UK Employment Services Pertemps People Development
Group acquisition
110 M&A
Australia FKP Property Group placement 179 Equity, property
Moody Rossi & Co. Australia, Singapore Independent Pub Group
hotel acquisitions 92 M&A
Mullins Lawyers Australia, Singapore Independent Pub Group hotel
acquisitions 92 M&A
QBE Legal Australia, US QBE Insurance ZC Sterling acquisition
825 M&A
Simpson Grierson New Zealand, Australia Babcock & Brown
Communities price discovery 370 Securitisation, M&A
New Zealand Foodstuffs Liquorland acquisition N/A M&A
SJ Berwin Australia, UK British Airways Qantas merger proposal
10,000 M&A
Slaughter & May Australia, UK British Airways Qantas merger
proposal 10,000 M&A
Sullivan & Cromwell Australia, UK British Airways Qantas
merger proposal 10,000 M&A
Does your firms deal information appear in this table? Please
contact [email protected] 61 2 8437 4700
| AustrAliA, uK |
qBe insuranCe ZC sterLinG aCquisitiona$825.3m
Firm: Debevoise & PlimptonLead lawyer: Robert
QuaintanceClient: Stone Point Capital
Firm: Edwards Angell Palmer & DodgeLead lawyer: Charles
Welsh, Bruce RaphaelClient: QBE Insurance Group
Firm: QBE Insurance LegalLead lawyers: Duncan Ramsay, Peter
MaloneyClient: QBE Insurance Group
QBE Insurances US$575m acquisition of ZC Sterling was announced
at the same time that QBE said it would buy two US underwriting
agencies and one in EuropeZC Sterling is owned by private equity
firm Stone Point Capital, which invests in financial services and
insurance companies
| AustrAliA |
stemCor peLLets savaGe river mine stake disposaLa$72m
Firm: DLA Phillips FoxLead lawyer: Robert TobiasClient: Stemcor
Pellets
Firm: FreehillsLead lawyer: Simon ReedClient: Consortium led by
Jiangsu Shagang, Pacific Minerals, RGL Group
Stemcor Pellets sold its 10% stake in Savage River mine,
operated by Australian Bulk Minerals (ABM)
deal involved exchange for shares in Grange Resources, which
agreed to merge with ABM
Grange will acquire holding companies of ABM from Shagang
International Holdings, RGL Holdings, Pacific International and
Stemcor Pellets by issuing them about 380m shares
DLA Phillips Fox previously acted for Stemcor on its acquisition
of Savage River mine in 2005 and its 90% stake sale to the Shangang
interests in 2007
Savage River mine has an implied value of A$720m and the merger
will create a listed entity worth approximately A$1bn
transaction subject to government and shareholder approval
6-9 - deals.indd 7 28/01/2009 2:28:59 PM
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NEWS | deals >>
Australasian Legal Business ISSUE 7.1
other companies in Stone Point Capitals portfolio include
Atlantic Capital Bank of Atlanta and insurance agency Lane
McVicker
BBC acquired Retirement by Design business comprising seven
retirement villages and one aged care facility from Lend Lease for
A$133.4m
BOC, part of Linde Group, acquired the remaining 50% stake of
Auscom, owned by Elgas, from its joint venture partner AGL
Energy.
deal involved due diligence review, obtaining regulatory
consents, preparing and negotiating share purchase agreement
transaction faced environmental, property, competition and
workplace issues
G+T previously advised AGL on asset disposals in 2007 including
sale of Chilean gas distribution business GasValpo to Australian
superannuation fund consortium (US$90m) and a 33% stake in
AlintaAGL to Babcock & Brown and Singapore Power (A$500m)
Marubeni acquired a 22.22% stake (US$130m) in Resource Pacifics
Ravensworth coal mine from Xstrata
Marubenis stake will double from 10.24%
Deal completed on 21 October 2008
| AustrAliA, uK |
empLoyment serviCes pertemps peopLe deveLopment
aCquisitiona$110m
Firm: Blake DawsonLead lawyer: Arthur Apos, Julia Hammon, Sarah
GallowayClient: Network Group Holdings
Nick Pappas, Mallesons
Jason Watts, Mallesons
| AustrAliA |
BoC aCquisition oF stake in ausComa$221m
Firm: DLA Phillips FoxLead lawyers: David Morris, Adrian
SmithClient: BOC
Firm: Gilbert + TobinLead lawyer: Philip BredenClient: AGL
Energy
Firm: AGL LegalLead lawyer: Monique GilbertsonClient: AGL
Energy
| AustrAliA |
minara resourCes riGhts issuea$210m
Firm: Mallesons Stephen JaquesLead lawyer: Nick PappasClient:
Glencore International
despite volatile commodity markets Minara Resources rights issue
hoped to raise approx A$210m by selling 700m ordinary shares at 30c
each
raising underwritten by Minaras major shareholder Glencore,
which will increase its stake from 56.1% to more than 70% due to
shortfall
A$73m will be used to repay short-term funding arrangement by
Glencore, A$23m for capital expenditure, A$106m for working capital
and A$8m for issue costs
Glencore expected to receive an underwriting fee of A$7.3m
| AustrAliA |
maruBeni resourCe paCiFiC stake aCquisitiona$203.3m
Firm: Mallesons Stephen JaquesLead lawyer: Nick Pappas, Robert
GibsonClient: Xstrata
Firm: Dibbs Abbott StillmanLead lawyer: Peter BurdenClient:
Marubeni Corporation
[Advising on the sale to Marubeni] demonstrates the strength of
our relationship with Xstrata and our ongoing commitment to the
resources sector, regardless of the phase in the economic cycle
nicholaS PaPPaS, MalleSonS StePhen JaqueS
| AustrAliA |
transFieLd CapitaL raisinG a$204m
Firm: FreehillsLead lawyer: Philippa Stone, Tony SparksClient:
Transfield Holdings
equity raising includes A$204m institutional component through a
A$58.9m placement and 1-1 rights issue at A$1.25 per share 60% less
than its last trading price
raising includes a A$102.2m rights issue for retail
investors
Macquarie Capital and ABN Amro to share fee of A$5.61m and may
also receive an incentive fee of A$1m
Freehills expected to receive A$350,000 and
PricewaterhouseCoopers A$850,000 in fees
| AustrAliA |
Fkp property Group pLaCementa$179m
Firm: Minter EllisonLead lawyer: Bruce Cowley, Gary
GoldmanClient: FKP Property Group
FKP Property Group announced partially underwritten
non-renounceable entitlement offer of stapled securities to raise
A$151m
funds being raised to provide funding capacity for FKPs
development and land pipelines
Stockland Corporation will acquire a 5% stake in FKP for a total
consideration of about A$28m
| New ZeAlANd, AustrAliA |
BaBCoCk & Brown Communities priCe disCoverya$370.5m
Firm: Blake DawsonLead lawyers: Sarah Dulhunty, Stephen Menzies,
Peter StirlingClient: Babcock & Brown Communities Group
Firm: Allens Arthur Robinson Lead lawyer: Tom Story, Stuart
McCullochClient: Lend Lease Corporation
Firm: Simpson GriersonLead lawyer: Michael PollardClient:
Babcock & Brown Communities
ASX-listed retirement village operator Babcock & Brown
Communities (BBC) undertook a strategic review and price discovery
process
included cash injection of A$195m in the form of subscription
for new stapled securities in BBC and the issue of convertible
notes by BBC
Lend Lease acquired management rights of BBC from Babcock &
Brown (B&B) for A$17.5m and acquired B&Bs stake in BBC for
A$24.6m
| AustrAliA |
Csr CapitaL raisinG a$482m
Firm: Mallesons Stephen JaquesLead lawyer: Jason WattsClient:
CSR Group
CSR Group is raising A$482m of capital
raising includes A$125m in institutional placements, A$179m in a
one-for-four rights issue to institutions and retail offer also
pitched at a one-to-four ratio to raise A$179m
dividend reinvestment plan will not be underwritten
UBS, ABN Amro and Mallesons are expected to share in A$9.1m of
fees, depending on how well retail offer is received
6-9 - deals.indd 8 28/01/2009 2:29:01 PM
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NEWS | deals >>
9www.legalbusinessonline.com
| AustrAliA, south AfricA |
aFLease GoLd Bma GoLd merGera$100m
Firm: Blake DawsonLead lawyers: Roger Davies, Antonella Pacitti,
Lisa Le FaucheurClient: BMA Gold
Firm: Deneys ReitzLead lawyer: Theuns SteynClient: Aflease
Gold
BMA Golds merger with Aflease Gold will create dual-listed (ASX
and JSE) entity called Gold One International
involves inward listing of BMA on JSE and subsequent acquisition
of Aflease via scheme of arrangement
transaction approved by shareholders on 21 January 2009
also subject to regulatory approval
Firm: Minter EllisonLead lawyer: Callen OBrien, Ricky
CasaliClient: Employment Services Holdings
Firm: Addleshaw GoddardLead lawyer: Clare ThomasClient:
Employment Services Holdings
Firm: Gateley WareingLead lawyer: Paul Cliff, Katie Silvester,
Andrew CowanClient: Pertemps People Development Group
43m consideration to be paid by Employment Services Holdings
(ESH) to Pertemps People Development Groups shareholders comprises
18.16m in cash and 24.84m in shares
ESH required Minter Ellison to conduct due diligence, advise on
drafting and negotiation of the transaction documentation, and
obtain FIRB approval
| AustrAliA, siNgApore |
independent puB Group hoteL aCquisitionsa$92m
Firm: Mullins LawyersLead lawyer: Curt SchatzClient: Independent
Pub Group
Firm: Moody Rossi & Co.Lead lawyer: Bill MoodyClient:
Lasseters International Holdings
despite economic downturn Independent Pub Group (IPG) acquired
12 hotels Singapore-listed Lasseters International Holdings
hotels in Queensland, NSW and South Australia were acquired via
freehold and share purchase
largest transaction of Australian hotels sold in a row for past
year
| New ZeAlANd |
FoodstuFFs LiquorLand aCquisition
Firm: Simpson GriersonLead lawyer: Mike SageClient: DB
Breweries
Firm: DLA Phillips FoxLead lawyers: Martin Wiseman, Sarah
SmithClient: Foodstuffs
grocery co-op Foodstuffs acquired Liquorland from DB
Breweries
after a competitive bidding process Foodstuffs was selected as
preferred bidder due to it being most suitable to support and grow
national chain
change of ownership took effect on 31 October 2008
DLA Phillips Fox acted for all three of Foodstuffs co-operatives
on significant strategic matters
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Brisbane, London and Kula Lumpur.
We have experience in placing lawyers in Singapore, Hong Kong,
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If you are interested in having an informal but
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6-9 - deals.indd 9 28/01/2009 2:29:15 PM
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10
NEWS | analysis >>
Australasian Legal Business ISSUE 7.1
interest from China and India. It is something often pursued,
although most mineral reserves have many types of ore. The deciding
factor will be the projected price of that ore for the next 1015
years. If it drops, production of that commodity could be
unfeasible, Mitchell says.
Due to the ongoing drought in most parts of the country, there
could also be water projects, including grey water and desalination
plants, and dams.
Cash injection boosts hospital workWood believes there could
very well be hospital and other health infrastructure work,
pointing to his recent work on the Royal North Shore Hospital.
There is no doubt that this could go ahead. However, a difficulty
remains that road and PPP projects are required to gain 100%
Infrastructure and projects appear to be high on the Rudd
governments agenda and law firms can soon expect a major increase
in work.
Government body Infrastructure Australia has allocated A$20bn in
funds for major projects starting from February 2009.
Submissions are still being considered, but Mallesons Stephen
Jaques partner Geoff Wood believes upcoming projects are likely to
include social infrastructure and a freight railway line to
transport coal from the Hunter region.
Blake Dawson partner Chris Mitchell agrees that rail links
between natural resources and the sea are likely to be upcoming
projects. He says they could also occur in Western Australia and
Queensland, particularly the Gladstone region.
There is likely to be uranium mining work, since there is
acquisition
Geoff Wood, Mallesons
ANALYSIS
Although some large firms were not turned on by the first round
of the federal governments infrastructure spending spree, major
infrastructure projects on the way for 2009 may lift their spirits.
Richard Szabo finds out what type of work will be in demand
Show me the money Infrastructure Australia will allocate A$20bn
in funds for major projects starting from February 2009, with some
capital projects lasting 1824 months
Federal government recently agreed to provide public hospitals
with A$6.5bn in funding over the next five years
Proposed projects announced include Sydneys West Metro (A$8bn),
M5 motorway widening (A$3bn) and North Strathfield to Hornsby
railway quadruplication (A$1.8bn)
Firms specialising in construction, financing, planning,
corporate commercial, property and government likely to observe
increased work flows
Infrastructure work: A winner for 2009
10-17 - news analysis.indd 10 28/01/2009 11:49:10 AM
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NEWS | analysis >>
11www.legalbusinessonline.com
Some indigenous projects are likely to be longer jobs, involving
construction of health facilities and clinics for Aboriginal
communities, and also longer-running programs, he says.
The government has budgeted for a A$1bn increase in funding for
a range of agreements, including hospitals, housing and
disabilities. The increase would boost confidence in the health
sector, according to Boyce, and this could see reconsideration of
major projects that had previously not proceeded due to a lack of
funding.
There could also be an increase in privately financed
infrastructure, he says, and, some public infrastructure projects
may need additional private capital, so we will probably see public
and private partnerships forming.
Law firms that specialise in construction, corporate commercial,
property and government are likely to observe increased work flows.
Projects could begin in early 2009 and some capital projects might
last up to two years, he states.
Dwindling funds bring mixed reactionAlthough the global
financial crisis has shrunk the federal governments Building
Australia fund from the A$20bn expected initially to just A$12.6bn,
firms still believe it will bring more work.
Allens Arthur Robinsons Emma Warren is one partner who feels the
outlook is positive for infrastructure work. Even though the
dollars have decreased, they are big projects. It certainly shows
an incredible commitment, she says.
Some of the projects announced include the completion of Sydneys
West Metro (A$8bn), the widening of the M5 motorway (A$3bn) and the
quadruplication of the North Strathfield to Hornsby railway line
(A$1.8bn).
Freehills partner Bill Napier believes each of these projects
would provide lawyers with work for about six to 18 months.
However, although these proposals could offer good work for
PoSSible ProjectS Social infrastructure and freight railway
lines to transport coal from the Hunter region, Western Australia
and Queensland
Uranium mining work due to acquisition interest from China and
India
Water projects due to the ongoing drought, including dams, grey
water and desalination plants
Hospital projects with special focus on indigenous health
centres
financial commitment from institutions this is quite difficult
at the moment and the government will need to look into it, he
added.
He was spot-on. The federal government recently agreed to
provide public hospitals with A$6.5bn in funding over the next five
years, including A$1.7bn in payments for meeting performance
standards. Another A$800m will be allocated for indigenous
health.
Thomson Playford Cutlers partner Tom Boyce says indigenous
health projects would possibly involve setting up structures in the
countryside.
two receNt INfrAStructure hIghLIghtS
briSbAne AirPort linK PPP Project Value: A$4.8bn
Firm: Corrs Chambers Westgarthlead lawyer: David Warrenclient:
BrisConnections Consortium
Firm: Clayton Utzlead lawyers: Doug Jones, Alan Macguire, David
Lesterclient: BrisConnections Consortium
Firm: Freehillslead lawyer: David Templemanclient: Northconnect
Motorway Consortium
Firm: Mallesons Stephen Jaqueslead lawyer: David Storrclient:
Northern Motorway Consortium
Reportedly largest PPP project undertaken to date in
Australia
Project includes seven kilometre toll road linking Brisbanes
northern suburbs to airport, with fly-over road and section for
Northern Busway
Financial close was expected in August 2008, construction due to
complete mid-2012
newcAStle coAl inFrAStrUctUre FinAnceValue: A$1.55bn
Firm: Allens Arthur Robinsonlead lawyers: Rob Watt, Phillip
Cornwell, Thomas Millerclient: SMBC, Suncorp-Metway, OCBC Capital
Investment Private, KBC, DZ Bank, Dexia, ANZ
Firm: Blake Dawsonlead lawyers: David Mason, Matthew
Stottclient: Newcastle Coal Infrastructure
Firm: Clayton Utzlead lawyer: Sergio Capelliclient: Newcastle
Coal Infrastructure
Financing involved A$1.3bn senior debt and A$250m junior debt,
senior funding was provided by ANZ Bank, Dexia, KBC,
Suncorp-Metway, DZ Bank, OCBC and SMBC
Debt funded through a variety of instruments, including a
construction facility converting to term facility, cost overrun
facility, liquidity facility, working capital facility, letter of
credit facility and junior notes
Sponsors of project were coal companies in the Hunter Valley
forming the Newcastle Coal Infrastructure Group
Sought government approval and reached financial completion in a
relatively short time, by April 2007
Transaction required innovative structure and complexity since
were multiple layers of debt and equity as well as off-take
involvement
Bill Napier, Freehills
Emma Warren, AAR
10-17 - news analysis.indd 11 28/01/2009 11:49:12 AM
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12
NEWS | analysis >>
Australasian Legal Business ISSUE 7.1
The Kiwi legal community has been in lengthy discussions over
the new John Key governments decision to postpone the
emissions trading scheme. But what exactly would this mean for
lawyers and their work flows?
Kensington Swan partner Bryan Gundersen says the review lasting
until September 2009 will be a setback for environment and
commercial lawyers, if clients delay external legal
expenditure.
While its a setback, its not a disaster, he said. I remain very
positive for work flow in the area as there are risks to be managed
and opportunities to pursue. Well still end up with an emission
trading scheme, perhaps modified with agriculture carved out and a
carbon tax.
Forestry work provides shelterWhile there is a slow-down in
climate change work, areas of forestry are still in demand. Craig
Nelson of Simpson Grierson says the pause in climate change work
should not prevent clients participating in emissions trading.
Its only natural that there will be a pause. Whether they are an
emitter or a forester, NZ is still party to the Kyoto Protocol and
needs to meet its obligations, he says.
Nelson points to a niche area of forestry involving the
Permanent Forests Sink Initiative (PFSI) that is increasing in
popularity. He says there
is no suggestion that the New Zealand government would postpone
it.
Historically PFSI has not received a large following due to
commercial interests of timber production; however, the firm has
begun to see some interest.
We began working on PFSI deals even before the initiative was
passed by parliament, he says. There is the first-mover advantage,
when clients take opportunities and secure deals while other
players wait for the is to be dotted and ts to be crossed. Namely,
the best land and forests will be snapped up by those who move
first.
Emissions lobbying brings more workBell Gully partner Simon Watt
says some of the firms clients have shown increasing interest in
shaping the Climate Change Response (Emissions Trading) Amendment
Act 2008.
Some clients could ask for the policy to be dropped, some might
want a carbon tax and others want it tweaked, he says. The scheme
is going to keep the same framework, more likely than not, but it
will be made more business-friendly.
Watt believes carbon and emissions trading work flows will
remain steady. Its business as usual and our carbon trading work is
certainly most likely to continue next year, he states.
Chris Bougen of Chapman Tripp agrees that the policy development
and submission process for the scheme would create work for firms.
He expects
Most lawyers are pleased with the outcome of New Zealands
general election; however, some climate change practices are
concerned that the National governments move to postpone and review
the Climate Change Response (Emissions Trading) Amendment Act 2008
could hit work flows
How lawyers can turn Kiwi climate change freeze into a
positive
Craig Nelson, Simpson Grierson
Simon Watt, Bell Gully
construction lawyers, banking lawyers would not have much
involvement as little bank or private equity debt funding is
anticipated.
It isnt much relief for banking lawyers in light of the credit
crunch, he says. We always expected the fund to bring in some work,
but were modest in our expectation of its volume.
Napier said that because the West Metro might be financed only
by public funding, external law firms may miss out on a significant
amount of PPP work. Now that the government has taken it from
becoming a PPP and made it a public project, it will involve some
external legal advice. But its a smaller slice of the pie and
likely to go to government-side legal advisers, he says.
To this end, Allens, a member of various government panels,
believes the outlook is positive. Warren says construction, project
and finance lawyers alike will benefit from a mix of publicly and
privately funded projects.
Full speed aheadSince the government has shown interest in
fast-tracking projects, it is likely that lawyers will need to work
more productively. If the government wants projects done quickly,
its good as long as lawyers can handle them. It usually sets
realistic and achievable timeframes, says Mitchell.
He believes areas of legal expertise such as construction,
financing, planning and environment will be in greatest demand.
ALB
There could also be an increase in privately financed
infrastructure, and some public infrastructure projects may need
additional private capital, so we will probably see public and
private partnerships forming
Tom Boyce, Thomson Playford cuTlers
ANALYSIS
10-17 - news analysis.indd 12 28/01/2009 11:49:12 AM
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NEWS | analysis >>
13www.legalbusinessonline.com
to work closely with clients to engage with the government on
the scheme.
There is a sense that policy debate has been opened for a
principle review of the scheme and carbon tax. At the end of the
process there will be some form of policy response and that means
work for firms, he says.
Voluntary emissions bring paid workThere has also been a
substantial increase in voluntary emissions scheme work for firms.
Bougen says they have realised that clients are increasingly
interested in green credentials, carbon neutrality and
sustainability. This has led to an increase in work flow over the
past few years.
Work in the voluntary carbon markets is likely to continue,
although the focus may shift away from emission-reduction projects
to mechanisms that businesses can use to demonstrate their green
credentials voluntarily, he says.
However, compliance required by the emissions trading scheme may
ultimately lead to a drop in voluntary emissions work, once the
scheme is enacted. Nevertheless, Bougen is relaxed about work
flows.
There is still going to be trading activity going on in the
voluntary markets. There will still be international organisations
measuring client emissions and issuing some with carbon credits
there is a market for them. We are also seeing trading of existing
credits, he explains.
Chris Bougen, Chapman Tripp
Keeping in touchGunderson believes Kiwi firms could play a more
active role in encouraging clients to give more careful
consideration to the scheme. We tell clients not to use this as an
excuse to slack off, but instead to be even better informed about
how its going to affect their business. It is still possible to do
transactions, because there are always means of allocating risk to
protect both parties given the current regulatory uncertainty, he
said.
To this end, climate change seminars have helped the firm. We
held a client update on where things are at on a weekly basis, he
said. We also went to see them to find out how their business would
be affected by emissions trading and other climate change issues.
He added that lawyers can also provide
broader legal advice, including both technical and strategic
expertise for submissions, legal technical changes required for the
scheme, opportunities for brand enhancement and work on procurement
or supply contracts, to ensure carbon costs are recovered and
passed through.
Bougen says his firm has sent regular alerts to clients and this
has been effective in helping them recognise the impact of the
legislation. They are also keen to know how the Select Committee
process will unfold and how to participate.
Watt suggests firms could encourage clients to participate in
the review by communicating with them regularly about how it would
affect them. Nelson, on the other hand, says law firms could
increase their work flow by publishing articles and running
workshops about how clients would need to adapt to the emissions
scheme. ALB
Bryan Gundersen, Kensington Swan
10-17 - news analysis.indd 13 28/01/2009 11:49:13 AM
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14
NEWS | analysis >>
Australasian Legal Business ISSUE 7.1
Back in July 2008, the mid-tier was on a roll. Four major firm
mergers in the space of a month seemed to herald a new era of
consolidation and they all went into them with optimism, aiming
for that elusive point of critical mass. So, how are they faring
six months down the track? And what lessons can they offer to other
merger-aspirants?
Business modelUnlike listed companies, the traditional law firm
partnership is a rather private affair and it is precisely this
lack of transparency that can put a merger in dangerous territory.
Margaret Fitzsimons, general manager of Thynne & Macartney,
says that her firm would not have been in a position to even
consider it, had it operated according to a traditional legal
business model. She attributes the success of the merger to the
firms strong corporate approach, which means the business is run by
a team of specialist managers.
The firms equity partner remuneration system has also stood the
test of the process. We are prepared to make challenging business
decisions if we need to because we
have comprehensive management information at hand to assist us,
said Fitzsimons. Our business is based on meritocracy. There are no
free rides at Thynne & Macartney conversely, everything is fair
here and that culture encourages us all to achieve to the highest
level we can in accordance with our lifestyle decisions.
Same firm, different name?Some mergers start with a bang, with
new lawyers and their support staff arriving on the doorstep of
their adoptive firm and a flurry of activity as they settle in. The
disruption sends a useful signal to all involved that a new world
order is here, and that an adjustment needs to be made.
But the challenge was different when Herbert Geer merged with
NRH in Brisbane. The original Herbert Geer lawyers left to form
their own boutique insurance firm and the NRH team became Herbert
Geers Brisbane presence. The NRH team had a new name, but hardly
any other physical
evidence of the merger. Managing partner Bill Fazios task was to
foster a sense that the merger was more than just a change of name
and logo.
You cant ram change down peoples throats, said Fazio. You need
to help it along and encourage it to happen naturally. That means
giving people the chance to get to know each other and thats a
process that doesnt happen overnight.
There are two keys to facilitating it, however technology and
travel. In the current climate, people are more cautious about
spending money on travel, said Fazio. Thats why weve allocated
partners a travel budget so that they can meet their colleagues in
other cities. And we want them to use that budget not save it.
Herbert Geer has also invested in new technology to afford easier
communication between offices.
At Cridlands MB, technology was also a key part of fostering a
united firm culture. With Morgan Buckley lawyers predominant in the
Alice Springs office and Cridlands lawyers likewise in the Darwin
premises, there
Three firms that merged recently provide some perspective on how
to make a law firm merger work in the long term
Now the honeymoons over.
ANALYSIS
Tony Morgan, Cridlands
Bill Fazio, Herbert Geer
10-17 - news analysis.indd 14 28/01/2009 11:49:15 AM
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NEWS | analysis >>
15www.legalbusinessonline.com
recent mid-tier mergerS Firms: Cridlands, Morgan BuckleyNew
name: Cridlands MBTerritory: Northern TerritoryDate: August
2008
Firms: Herbert Geer , Nicol Robinson HallettsNew name: Herbert
GeerState: Queensland Date: July 2008
Firms: Middletons, Salter Power, Franklyn LegalNew name:
MiddletonsState: Western AustraliaDate: December 2008
Firms: Thomson Playford, Cutler Hughes & HarrisNew name:
Thomson Playford CutlersState: NSWDate: August 2008
Firm: Thynne & Macartney and Biggs & BiggsNew name:
Thynne & MacartneyState: BrisbaneDate: August 2008
Note: Location denotes state where merger took place, not firm
headquarters.
Economic downturnNo-one could have predicted Septembers dramatic
events in the world economy least of all the firms that had merged
only months earlier. High-targeted growth strategies are
particularly vulnerable, as the right time to enter a market often
dictates the ventures success or failure. But a broad growth
strategy is a different matter far from making a firm more
vulnerable, a merger can strengthen it.
Herbert Geer is a case in point. It gave us that extra depth and
talent that helped attract clients and retain them, says Fazio. His
ambitions extend beyond simply weathering the storm, however he
sees the current climate as an opportunity to grow. Were still
looking at adding partners in Sydney and Brisbane and it will be
easier to recruit, he adds.
Tony Morgan says that hes noticed a higher calibre of lawyer
applying to join his firm since the merger a change that he
attributes to its increased attractiveness. The other possible
explanation could be a loosening of the employment market, but
Morgan points out that his observation preceded the present
economic turmoil. He says the effects of the downturn are yet to be
felt in the Northern Territory and they certainly have not led to
any lawyer dislocation.
We havent had any projects put on hold and the NT market is
still strong, he states. In any event, the merger puts it in a good
position to handle any potential hits better. ALB
THRee-qUARTeRS oF US LAW FiRMS To CHANGe BiLLiNG PRACTiCeSMost
large US firms believe they will change their billing practices
over the next decade, a recent survey revealed.
The annual Am Law 200 survey received about 140 responses, 84 of
which were from firms with revenues of US$1bn or more.
When asked whether firms would change their billing practices,
about 75% of them said they would over the next 10 years, and 66%
of them agreed that fixed-fee deals are likely.
A similar survey prepared by social networking website Legal
OnRamp revealed that 84% of lawyers, working for firms with
revenues of at least US$1bn, thought there would be more value
billing.
When quizzed, respondents were divided about whether fees would
represent more than 10% of total transaction costs; however, they
agreed collectively that billable hours would be diminished.
CLieNTS DiSSATiSFieD WiTH FiRMS, SURvey ReveALSMore than 60% of
Australian clients are dissatisfied with their legal adviser, a
recent sample survey revealed.
Consulting firm Julian Midwinter & Associates conducted a
series of focus groups and one-on-one interviews with in-house
lawyers and business executives. It revealed that 65% of clients
felt that at least some of their legal work should be serviced at
lower cost, while only 25% believed their lawyer actively tried to
reduce legal expenses.
Consultant Linda Julian suggested that firms should make better
use of technology and document creation systems to reduce costs.
She pointed out that partners in some firms have created templates
and automatic information exchanges that paralegals can use to
minimise senior-level involvement and fees in some work.
news in brief >>
was a danger of them both operating at a metaphorical distance
from each other. The unifying point turned out to be technology.
Morgan Buckley had superior systems to Cridlands, so we ended up
adopting the Morgan Buckley ones, says partner Tony Morgan. He says
that integrating those systems technology, software and quality
assurance proved to be the most challenging part of the merger.
10-17 - news analysis.indd 15 28/01/2009 11:49:16 AM
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16 Australasian Legal Business ISSUE 7.1
The epicentre of Australias resources boom might have been
Western Australia but, according to Blake Dawson partner Simon
Fraser, South Australia is the new frontier.
We are firm believers in the future of the South Australian
economy. We think there will be a mining boom. Although its been in
the doldrums for a while and the current economic crisis has slowed
the pace of it a little bit, we believe it will happen, Fraser
said.
Fraser, who specialises in energy & resources, has led Blake
Dawsons expansion into South Australia. He said commitment by the
state government to infrastructure development combined with a
streamlining of the approvals process has helped to make South
Australia an attractive destination for junior miners, even more so
than WA.
The government and bureaucracy in WA have become tired and they
are not that interested in new projects because they have so much
going on, he said. However, in SA the government have their ears
pulled back. There is quite a lot of focus on junior miners, and
the sentiment is that junior miners are currently getting more bang
for their buck in SA then they are in WA.
The state is very keen to realise the wealth that it has in the
ground. So from
a lawyers perspective that means more work, he added.
Although Fraser noted the lack of available funds necessary for
drilling may stall some mining projects, the current slump in
commodity prices will not be a long-term deterrent.
Most exploration work in SA is in its early stages it takes
years to develop a project. They need to find the ore, develop the
resources, get all the approvals then build the project most
projects are at least five to 10 years away from production thats
outside the current commodity cycle. I would expect commodities to
resume their more normal trajectory within the next two to three
years. So, current commodities are not impacting peoples views
about how they should spend money on developing projects, Fraser
explained.
There is a strong feeling that a number of those exploration
tenements will yield world-class resources of some description, so
the prevailing feeling is that in the next 10 years or so there is
going to be number of large projects developed in SA, he continued.
ALB
THRee-qUARTeRS oF US LAW FiRMS To CHANGe BiLLiNG PRACTiCeSMost
large US firms believe they will change their billing practices
over the next 10 years, a recent survey revealed.
The annual Am Law 200 survey received about 140 responses, 84 of
which were from firms with revenues of US$1bn or more.
When asked whether firms would change their billing practices,
about 75% of them said they would over the next 10 years, and 66%
of them agreed that fixed-fee deals are likely.
A similar survey prepared by social networking web site Legal
OnRamp revealed that 84% of lawyers, working for firms with
revenues of at least US$1bn, thought there would be more value
billing.
Respondents were divided when quizzed about whether fees would
represent more than 10% of total transaction costs. However, they
collectively agreed that billable hours would diminish.
CLieNTS DiSSATiSFieD WiTH FiRMS, SURvey ReveALSMore than 60% of
Australian clients are dissatisfied with their legal advisor, a
recent sample survey revealed.
Consulting firm Julian Midwinter & Associates conducted a
series of focus groups and one-on-one interviews with in-house
lawyers and business executives. It revealed that 65% of clients
felt that at least some of their legal work should be serviced at
lower cost, while only 25% believed their lawyer actively tried to
reduce legal expenses.
Consultant Linda Julian suggested that firms should make better
use of technology and document creation systems to reduce costs.
She pointed out that partners in some firms have created templates
and automatic information exchanges that paralegals can use to
minimise senior-level involvement and fees in some work.
MACDoNNeLLS LAW GoeS GLoBAL WiTH MeRiTASQueensland firm
MacDonnells Law has joined global business law firm alliance
Meritas.
The alliance aims to provide clients with a simple, localised
and comprehensive search service for firms. It has a membership of
about 170 law firms and 5,700 lawyers located in 60 countries. In
Australia member firms are including Madgwicks, Snedden Hall &
Gallop, Downings Legal and Rudkin Hitchcock.
The alliance is expected to allow the Queensland firm to expand
its client base, legal talent pool and scope. MacDonnells Law
partner Terry Karydas said the opportunities created in such an
alliance include sharing information and expertise with other
lawyers within the group.
news in brief >>
Terry Karydas, Macdonnels Law
Simon Fraser, Buddle Findlay
AuStrALIA
South Australia: the new frontier
NEWS >>
10-17 - news analysis.indd 16 28/01/2009 11:49:17 AM
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17www.legalbusinessonline.com
Amid global economic turmoil and dwindling workflows, US lawyers
are showing good spirit and using their spare time to do more pro
bono work.
According to Dechert chairman Barton Winokur, at least seven of
that firms associates are expected do full-time pro bono work for
about three to six months.
The associates have extra capacity due to a slowdown in
structured finance work.
Cadwalader, Wickersham and Taft has similarly increased pro bono
hours, while Akin Gump partner Steven Schulman said his firms
annual pro bono hours rose from 69 to 85 hours per attorney in
200708.
In most parts of Asia, international firms chose to leave their
pro bono work to their US headquarters. One of the few exceptions
was Tokyo-based Paul Hastings partner Alexander Jampel, who said
that there had been a steady
flow of pro bono work.It has been consistent with previous
years. We dont plan to make staff work solely on pro bono; we
just want all attorneys to work on some matters. About half of our
lawyers work on pro bono and most of the partners do it, too, he
said.
The move has been welcomed by the Pro Bono Institute in
Washington, DC, whose president, Esther Lardent, said the increase
is a change from how some firms tended to discourage pro bono
before the 2001 recession. Apparently, some firms stopped giving
equal credit for pro bono time and increased billable hour
quotas.
The Association of the Bar of the City of New York observed
increased attendance for a pro bono training session in October.
Instead of an expected attendance of 80, there were 245 guests.
ALB
uS, AuStrALIA, MIddLe eASt, ASIA
Pro bono popularity holds steadyAuStrALIA
Melbourne: law firm space race settles down
There may be a light at the end of the tunnel for AARs deal to
secure office space at the 567 Collins St Melbourne development,
which was subject to speculation earlier this year that it would be
shelved owing to low levels of precommitment from tenants.
Unconfirmed reports now indicate that BP is set to sign up as a
tenant in the development, finally putting to rest doubts as to the
future of the project.
Other firms have also been making plans for their Melbourne
offices. Last month Mills Oakley signed on for premium space at 530
Collins St, to be occupied late next year, while Minter Ellison has
renewed its lease at the Rialto office building. ALB
NEWS >>
10-17 - news analysis.indd 17 28/01/2009 11:49:18 AM
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18
NEWS >>
Australasian Legal Business ISSUE 7.1
Geothermal investment rocks, says Dla PhilliPs FoxAustralian
geothermal power developer Geodynamics completed three successful
capital raisings in 2008 A$37.5m (May), A$33.5m (June) and A$44.1m
(September). This came after a successful joint venture with Origin
Energy in late 2007 that raised A$115m for Geodynamics flagship
Cooper Basin hot dry rock project.
DLA Phillips Fox partner Eugene Fung advised on the joint
venture and capital raisings. He said that the investment showed
that despite a difficult market, there was still capital available
for quality renewable energy projects.
A report recently released by professional advisory firm Ernst
& Young tipped investment in the sector to soar to A$2.3bn per
year by 2020.
Uk comPany revamPs Panel, eliminates time-baseD billinGMajor UK
company ITV has announced a new panel and, according to a report in
Legal Week, is claiming to be the very first UK company to
eliminate time-based billing by its panel firms.
General counsel have always encouraged alternative billing
structures. Now that work flow is starting to tighten up for firms,
that gentle encouragement might begin to take a more strident note,
as GCs look to gain some leverage from their improved bargaining
positioning.
Firms on ITVs panel are Slaughter and May, Lovells, Addleshaw
Goddard, DLA Piper, Olswang, Charles Russell and Goodman Derrick.
Erstwhile advisor Freshfields, however, missed out on a seat.
blasteD: lawyer accUseD oF UsinG mUmbai traGeDy to Promote FirmA
partner of a European firm who was caught in the Mumbai cross-fire
is still ducking for cover even after returning to the UK. The
partner, who was interviewed by The Lawyer and UK mainstream media,
attracted the ire of readers by reportedly namedropping his firm
and its India practice and allegedly boasting that the siege had
not prevented him from participating in a teleconference board
meeting from his hotel room.
The reports drew protest from readers on The Lawyers reader
forum, who accused the partner of shameless self-promotion and
being an embarrassment to the legal profession. One reader, who
claimed to be a former employee working under the partner, wrote in
to express amusement at the thought of the partner cowering behind
closed doors.
news in brief >>
Right in the thick of the global financial crisis and after
months of decline in the capital markets, Allens Arthur Robinson,
Freehills and Sullivan & Cromwell have successfully pulled off
a A$2.5bn capital raising for Westpac. Could this be an early sign
that other banks may follow suit?
Allens Stuart McCulloch, Freehills Philippa Stone and the
Sullivan & Cromwell team successfully placed the A$2.5bn
through an institutional book build, with a further A$500m to
retail investors through a non-underwritten share purchase
plan.
The bank undertook the raising taking into consideration a
number of factors, including the slowing economy and the expected
further deterioration of the credit market.
Freehills partner Philippa Stone said a number of issuers,
including banks, are strengthening their balance sheets through
capital raisings. Westpac has done it. And Commonwealth Bank
recently announced a A$750m raising to redeem its PERLS II
securities and of course there are other non-bank issuers currently
in the market for capital, she said.
At the moment it is unlikely that banks would consider
undertaking a
capital Markets
Allens, Freehills get slice of Westpac capital raising
hybrid capital raising, since Westpac has indicated its
reluctance to replace St.Georges hybrids. The bank felt that the
hybrid equity markets were becoming increasingly challenging and
because of this success was uncertain in the present economic
conditions.
However, Stone is still positive about hybrid work: Banks are
very scientific in managing their capital and I am sure they will
continue to look at the hybrid market, she said. ALB
CorreCtion Please note that incorrect information regarding the
Oakajee Port & Rail Project appeared on p47 of ALB issue 6.12
within the ALB Guide: infrastructure 2008 section. The correct
information is as follows:
During 2008 the Western Australian government ran a competitive
process to select the developer of the new deep water iron ore
export at Oakajee, north of Geraldton. Oakajee Port and Rail Pty
Ltd (OPR) (as agent for a joint venture comprising Mitsubishi
Development Pty Ltd, Crosslands Resources Pty Ltd and Murchison
Ports Pty Ltd) and Yilgarn Infrastructure (Yilgarn) both lodged
bids to become the developer and operator of the port. OPR (as
agent for the Joint Venture) was selected as the preferred
developer. Yilgarns bid was rejected. OPRs bid was considered by
the Western Australian Government to be superior to that of Yilgarn
in every respect. The Western Australian government has declined to
appoint Yilgarn as a reserve proponent and Yilgarn currently has no
right to build any part of the Port Infrastructure and no right to
build any Rail Infrastructure. There is no continuing competitive
process for the right to build the port. It follows that the
project will not be partly funded by the five Chinese companies
named in the article and there is no current proposal for the
Chinese EXIM bank and China Development Bank to provide debt
financing for the project. OPR is currently finalising the
development agreement with the Western Australian Government
confirming its selection as the preferred developer of the project.
That agreement is expected to be finalised shortly. The primary
legal advisors involved in the project are: DLA Phillips Fox (lead
lawyer: Robert Edel (client: Oakajee Port and Rail Joint Ventures);
State Solicitors Office of Western Australia (lead lawyer: Geoffrey
Grice) (client: State of Western Australia); Mallesons Stephen
Jaques (lead lawyer: Geoff Rogers) (client: Mitsubishi Development
Pty Ltd); and Freehills (lead lawyer: Rob Merrick) (client:
Murchison Metals Limited)
18-25 - news.indd 18 28/01/2009 3:58:09 PM
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19www.legalbusinessonline.com
uk report
of its departments to move to a four-day week and put the entire
corporate team on two weeks unpaid leave in the run-up to
Christmas.
no new staff for cadwaladerCadwalader Wickersham & Taft will
have to break its impressive 100% trainee retention rate, which has
remained steady for the last two-and-a-half years, due to worsening
market conditions. The firm recently announced that it will not be
offering jobs to any of its City trainees due to qualify in March
2009. The intake freeze will affect three trainee solicitors and
makes Cadwalader one of the first leading firms in the City to make
this move.
Deloitte survey reveals slow growth for firms It may not come as
a surprise, but recent research from Deloitte reveals that UK firms
are struggling with growth in light of the economic crisis. The
report noted that fee income across the countrys 100 largest firms
had increased by only 5.8% during the second quarter of 200809
compared with the same period the previous year. Firms in the top
10 are faring slightly better than their smaller rivals, reporting
an average rise in fee income of 11.1% for Q2, but large firms have
still been affected, posting only modest increases in revenue.
hey big spender norton flashes the cash While most UK firms are
having to cut corners in most cost centres, it seems Norton Rose is
sailing along just fine having just spent more than 8m on
improvements to its offices. According to the firms 200708 annual
report, 8.6m was spent on additions to its offices worldwide and a
further 1.5m has been set aside for IT in the new year.
roUnDUPDavid Harris will start his second four-year term as
Lovells managing partner in May. He was recently re-elected,
despite stiff competition from European head Harald Seisler Bryan
Cave recently launched its Paris office, with former Dechert
partners Kathie Claret, Jilali Maazouz and Joseph Smallhoover and
five other associates on boardAustrian firm Schoenherr is set to
take over Herbert Smith ally firm Gleiss Lutz in the New Year.
Schoenherr will obtain Gleiss Lutzs Prague and Warsaw branches
while simultaneously launching its own office in Bratislava,
SlovakiaEversheds, Allen & Overy and Ashurst are just a few of
the top-tier firms to receive gongs for their work and employees at
the recent 2008 British Legal Awards. Eversheds won firm of the
year and lawyers from Allen & Overy and Ashurst picked up the
lifetime achievement and senior partner awards respectively
london lay-offs rifeIt has been a bad few months for lawyers in
London and beyond. Firms in the UK have been hit hard by the credit
crunch, triggering a number of layoffs in quick succession.
Among the firms to dismiss City staff in recent months are
Eversheds, Orrick, Mayer Brown, Reed Smith, DLA Piper, Taylor
Wessing and Squire Sanders.
Eversheds is up to its second redundancy consultation, with the
latest round tipped to include 45 lawyers and related support
staff.
Fresh from making cuts across its US network, White & Case
has now turned its focus on to its UK offices, where it is
reportedly aiming to reduce its legal and non-legal headcount by
about 3%.
Meanwhile 40 associates across the real estate, structured
finance and corporate practices of Orrick Herrington &
Sutcliffe are said to be facing redundancy.
Mayer Brown recently launched a redundancy consultation for 11
lawyers working in its London office, while DLA Piper has launched
a redundancy consultation likely to result in up to 40 job losses
across its UK offices. Partners have been told they will be out of
the firing line.
And the latest bombshelll? Linklaters is looking to cut no fewer
than 70 partners from its worldwide operation.
crisis turns focus to strategy While many firms are taking to
redundancy consultations to balance the financial fallout from the
economic downturn, a few UK establishments are also initiating
other tactics to stay afloat. Following a June redundancy
consultation, Milton Keynes firm Kimbells recently told lawyers in
three
singaporeBlakes Singapore office off to a good start
The Singapore legal market became a little more crowded after
Blake Dawson commenced operations in the Lion nation, a move
designed to strengthen its Asia presence.
The Singapore office, headed by partner Rhonda Hare and staffed
by lawyers Rhiannon Barnard and Ari Fox, will focus on hotel,
tourism and gaming-related issues. The move makes Blakes only the
fifth Australian law firm and the 86th foreign law firm to enter
the saturated Singapore legal market.
In 2008, as part of its commitment to liberalising its legal
market to support its financial services sectors, Singapores
Ministry of Law announced the introduction of a Qualifying Foreign
Law Firm (QFLF) licence, whereby six selected foreign law practices
would be allowed to practise Singapore law in permitted areas and
employ Singapore-qualified lawyers.
After applications were processed, the Singapore authorities
named the successful firms as Allen & Overy, Clifford Chance,
Herbert Smith, Latham & Watkins, Norton Rose and White &
Case.
Until recently, foreign law firms were allowed to practise
Singapore law only through a joint law venture (JLV) with a
domestic firm.
While Blakes may have missed out on a QFLF licence, watch for
the firm to look to lateral hires and maybe even its own JLV to
shore up its market position in 2009. ALB
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Australasian Legal Business ISSUE 7.1
What merger talks? we hear you ask. Rumours of a major top tier
merger have been circulating since July, but for the first time
Mallesons and Clifford Chance have been identified as the firms in
question.
Talks never reached a formal stage, and the firms mutually
agreed to put the discussion on hold following Septembers dramatic
events in the world economy.
However, it is understood that the firms remain interested in
reopening the dialogue when more felicitous conditions return,
although the
continuing economic uncertainty makes it difficult to predict a
specific timeframe.
The implications of such a merger will be food for thought for
rival top-tier firms: the combined strength of a Magic Circle firm
with Mallesons large Australasia footprint would have created a
formidable regional presence. But this is not the first time such
as union has been mooted merger talks between the two firms were
first broached back in 1999. Its a fair bet that it wont be another
10 years before talks resume. ALB
Dla PiPer asks salarieD Partners to contribUte caPitalUS
salaried partners of DLA Piper will contribute capital to the firm
under a proposal to be voted upon by partners next month, according
to the US National Law Journal.
The firm said that it is aiming to reduce its credit exposure by
30%, with joint chief executive officer Frank Burch commenting that
the firm thought it would be prudent to finance more of its
operations with its own money instead of lines of credit.
The proposal, which will give salaried partners a limited stake
in the firms profits, is also intended to encourage an ownership
culture rather than an employee culture for salaried partners.
DLA Piper operations outside the US will not be affected by the
proposal, with the status quo to be maintained.
aPPle to DraG anD Delete Us law Firms From PreFerreD listThe
in-house legal team at Apple is currently compiling a newer and
leaner list of preferred legal advisors. The move follows similar
moves by competing IT companies to shape up their legal
departments.
According to Apples general counsel, Daniel Cooperman, the
company has historically used a large number of firms since it has
been difficult for any single firm to have an adequate
understanding of its technology, markets and culture to perform at
peak efficiency.
It is currently unclear which firms will end up on the
shortlist. However, they are likely to include previous advisors
such as Orrick, Morrison & Foerster, OMelveny & Myers and
Howrey Wilson who helped Apple go public in 1980.
The list is expected to be finalised by early 2009.
Dla PhilliPs Fox aDDs another Deal to the basketDLA Phillips Fox
has advised NZ supermarket group Foodstuffs on its successful
purchase of the Liquorland retail liquor chain. Foodstuffs outbid
some stiff competition including Australian supermarket giant
Woolworths to close the deal.
The DLA Phillips Fox team was led by partner Martin Wiseman and
included senior associate Reuben Woods and senior solicitor Julie
Harper.
The transaction involved the purchase of all of the shares in
Liquorland from DB Breweries. Wiseman said the transaction went
smoothly due to Foodstuffs deep understanding of the needs of
owner-operators and DBs desire to look after the long-term needs of
the Liquorland franchisees.
news in brief >>
industryDust settles over Mallesons, Clifford Chance talks
After 18 months of tirelessly acting on the failed BHP Billiton
and Rio Tinto merger, Allens Arthur Robinson partner Ewen Crouch is
still optimistic.
It was a terrific effort our team has been working incredibly
hard for the past 12 months. We are optimistic about M&A and
capital markets work in 2009 that should get underway from around
February, he said.
The two mining giants decided to call off the deal most recently
valued at US$66bn, after the fall in metal prices and global
financial crisis was feared to have created too much risk for the
deal to proceed.
Crouch believes the BHP-Rio takeover bid was unique partly due
to the number of jurisdictions involved and nature of the
proposal.
This was a unique deal. There are few dual-listed companies and
this was the first proposal to acquire a dual-listed company by way
of takeover, he said.
Complexities included Rios repeated rejection of BHPs offer and
reportedly little interaction between parties. The European Unions
antitrust authority also demanded that BHP divest several assets,
while both Japan and China were against the deal due to their
reliance on both parties iron ore and other raw materials.
On a brighter note some firms are likely to benefit from the
cancelled merger, since Chinalco has recently shown interest in
increasing its stake in Rio by at least 9% (US$14bn). This could
mean more work for Mallesons Stephen Jaques, Simpson Thacher,
Clifford Chance and Sullivan & Cromwell, which formerly acted
on Chinalcos initial 12% (US$14bn) stake acquisition in Rio.
Other firms that worked on the BHP-Rio merger include
Linklaters, Slaughter & May, and Skadden, Arps, Slate, Meagher
& Flom. ALB
australia
Lawyers optimistic in wake of aborted BHPRio deal
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21www.legalbusinessonline.com
us report
roUnDUPKirkland & Ellis has promoted 67 of its lawyers to
partner across its US and London offices. In the US, the corporate
practice alone saw 23 promotions, while litigation had 20Cleary
Gottlieb has promoted 10 lawyers to partner recently six in the New
York office, two in Rome and one in BrusselsNew York-based
corporate head Tim Goodell has left troubled White & Case to
join US oil company Hess Corporation as general counsel King &
Spalding is close to reaching an agreement with Thacher Proffitt
regarding the acquisition of around 100 of the latters 195 lawyers
White & Case chairman Hugh Verrier has voiced his commitment to
expanding and further developing the firms existing international
network, in the wake of a management shake-up that saw firm power
split among 14 regional groups and a 16-member global practice
council set up. Verrier confirmed Latin America and Asia as prime
targets for investment
among the firms whose US associates are receiving reduced
bonuses at the end of the year.
At Cravath, year-end bonuses for 2008 will range from $17,500 to
$30,000, and the firm has canned the special bonus element of its
2008 payments. Simpson Thacher has also cancelled the additional
special bonus for its associates, which last year ranged from
$10,000 to $50,000, and junior lawyers will receive $17,500 a
severe drop from last years payout of $35,000.
Clifford Chance associates will receive between $17,500 and
$32,500 a far cry from last years $32,000 to $65,000. The story is
similarly austere at Davis Polk, and Cleary Gottlieb and Dewey
& LeBoeuf are two more firms to have slashed associates
bonuses.
Skadden Arps, however, has decided to go against the grain and
has actually matched 2007 figures minus supplemental bonuses.
Partners at Dla Piper share financial load Partners at DLA Piper
have been asked to contribute capital to the firm from next year.
The strategy a bid by the firm to reduce its reliance on bank
credit and simplify its compensation structure will only affect the
275 salaried partners at the international firms US offices who now
receive an income rather than hold an equity stake at the firm. The
amount to be contributed will depend on seniority and will give the
partners a stake in the firms profits less than that of full equity
partners.
Firms slash staff to battle credit crunch UK firms arent the
only ones turning to redundancy to counter the effects of the
economic downturn. US firms across the board including Squire
Sanders & Dempsey, Proskauer Rose and Reed Smith have also been
engaging in some pruning of the payroll.
Squire Sanders dismissed a total of 30 associate and support
staff following its annual employment reviews, citing current and
projected business conditions as the major reason. Proskauer Rose,
meanwhile, made 35 associates and 25 support staff redundant in its
US offices, despite major advances in developing its international
network. But perhaps the most dramatic culler of staff has been
Reed Smith, who made 115 redundancies across its US offices.
Other firms to have cut staff include: Buchanan Ingersoll &
Rooney (25 secretarial and administrative staff); Duane Morris (22
marketing and administrative staff); Ballard Spahr Andrews &
Ingersoll (13 support staff); boutique IP firm Synnestvedt &
Lechner (seven staff has since disbanded); and Blank Rome (nine
associates).
christmas bonuses hit by downturnFirms are increasingly having
to display Scrooge-like tactics in a bid to soften the blow of the
credit crunch on their finances. Cravath Swaine, Simpson Thacher,
Clifford Chance and Davis Polk are
industryDust settles over Mallesons, Clifford Chance talks
australia
Lawyers optimistic in wake of aborted BHPRio deal
M&a
Firms quiet on BA-Qantas merger
Law firms that previously acted on British Airways (BA) failed
proposal to merge with Qantas Airways (A$10bn) appear to be at a
loss for words.
Allens Arthur Robinson, Blake Dawson, Mallesons Stephen Jaques,
Slaughter & May, SJ Berwin and Sullivan & Cromwell
confirmed they were acting on the merger. But none of them
commented on whether talks could have developed into any concrete
agreement.
If the merger had been successful, it would most likely have
proceeded via a dual-listed company structure and involved an
additional merger.
However, the deal still faced a range of complications and
regulatory concerns, when Australian federal transport minister
Anthony Albanese announced that Qantas would remain a majority
Australian-owned company. This limited BA to acquiring no more than
a 49% stake in Qantas.
Allens partner Andrew Finch, Blakes John Field, Mallesons David
Friedlander and Sullivan & Cromwells Daryl Libow have at the
very least received some due diligence and compliance work.
BA acquired a 25% stake in Qantas during the Australian carriers
1993 privatisation. ALB
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Australasian Legal Business ISSUE 7.1
Firm Profile Buddle Findlay
The National government took office in November 2008 on the back
of promises to make New Zealand globally competitive, reduce
taxes
and improve productivity. One of its key policy planks, and to
be started as part of its first 100 days programme, was commencing
significant reforms of the Resource Management Act (RMA).
Faced with a gravely wounded economy, the timely delivery of
infrastructure projects to deliver fiscal life-blood and save New
Zealand from recession has taken on new significance.
Prior to its election National claimed its first phase of
amendments to the RMA would:
Simplify the Act by reducing the number of consent categories,
getting rid of vexatious and frivolous objections, making it easier
for Councils to update plans, clarifying Treaty of Waitangi
references, and scrapping the Ministerial veto over coastal
consentsAddress perceived frustrations over minor consenting issues
by establishing a new complaints mechanism with the power to
discount or waive fees where statutory timeframes are breached
Establish an Environmental Protection Authority (EPA) responsible
for more effectively propagating National Policy Statements (NPS)
and National Environmental Standards (NES) designed to increase
national consistency and reduce duplication of work by local
authorities. It also suggested that an EPA would be responsible for
initiating a priority consenting process for major consents.
National also promised a second tranche of more wide-ranging
reforms further into its term to address more complicated issues,
such as the interaction between the Resource Management Act and the
outmoded Public Works Act, water allocation, urban design and
address issues around infrastructure.
RMA advisory groupIn December the new government appointed a
multi-disciplinary advisory group, with members from local
government, legal, planning and business professions. The group
has
been tasked with formulating RMA amendments that largely
correspond with what was promised prior to the election and has
been asked to provide its advice in sufficient time to facilitate
the introduction of a RMA reform bill by the end of February 2009.
Unsurprisingly the establishment of an EPA has been considered to
be too large a task to complete within this tight timeframe, and
has been deferred.
Notwithstanding the EPAs deferral, the advisory group has still
been asked to provide provisions for priority consenting for major
projects. What is meant by priority consenting or major projects is
unclear, but it is these changes that, at least in the short-term,
are most likely to provide for reduced time required to deliver
large infrastructure projects. The government has confirmed that it
will continue to work towards a set of wide-ranging reforms to
further address more complex issues, including addressing deeper
issues around the delivery of infrastructure projects.
Will there be real change? While these changes may result in
practical measures to speed up the decision making process for
large infrastructure projects, and indeed run of the mill consents,
they do not represent a radical departure from the many rounds of
reforms to the RMA that have been implemented by every new
government since 1991. For example, for a number of years a
proliferation of NPS and NES has been promised, but little has been
delivered. Implementation of policy rather than new policy is what
is required.
An area which is to be reformed is the issue of allocation of
resources where resources are approaching or are at full
allocation. This issue has been particularly pressing with space
for aquaculture and fresh water allocation. The RMAs environmental
effects focus does not comfortably address the competing economic
claims of different sector groups.
These reforms could result, for example, in a question of
allocation of water resources being assessed by a central agency
better able to directly assess and
balance the competing and strategic economic claims for these
resources, rather than being solely assessed on environmental
grounds.
To deliver the radical change the new government has intimated
it will deliver, will require fundamental changes to the
participation focused approach of the RMA. The ability to
participate in resource consent applications and to have almost
complete judicial oversight of the process, is far more extensive
than the equivalent processes in other jurisdictions such as
Australia and the UK. Had the benign economic conditions of the
last 15 years continued for the new government, one suspects it
would have had little political impetus to radically recalibrate
the balance between timely development and public participation.
However, now that the prospect of economic collapse looms, the
value of extensive public participation is more likely to be
critically examined. One only has to recall Think Big to conclude
that, in times of economic crisis, decision-making in regard to
large infrastructure projects can quickly become a great deal less
inclusive.
This article was written by Patrick Mulligan, a partner
in the Auckland office of Buddle Findlay, one of New
Zealands leading law firms.
Patrick specialises in environmental and local
government law. Patrick can be contacted by phone:
+64 9 357 9396 or email:
[email protected].
RMA Reforms will economic crisis lead to major reforms?
Patrick Mulligan, Buddle Findlay
NZ COMMENTARY
Australasian Legal Business ISSUE 7.122
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23www.legalbusinessonline.com
Deacons, allens on hUnGry monsters JvUS-based recruitment firm
Monster Worldwide and media corporation News Limited have engaged
Deacons and Allens Arthur Robinson as advisors on their 50/50 joint
venture deal, which will see the global component of Monster
combine with News print and online recruitment subsidiary,
CareerOne.
Monster was advised by Deacons corporate partner Tim
Flahvin.
The Allens team advising News Limited included M&A partner
Kylie Brown assisted by la