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Resisting merger ‘herd mentality’ paid off for Clayton Utz

Resisting merger ‘herd mentality’ paid off for Clayton Utz

Rob Cutler

Top-tier boss Robert Cutler has reflected on the wisdom of not being swept away in the rush to merge with a global entity, a popular choice among the national firm’s market rivals over a decade ago.

Robert Cutler (pictured) is the head of independent law firm Clayton Utz. A recipient of excellence award for the Australian Law Awards 2016, Lawyers Weekly asked the national chief executive partner for his perspectives on the current legal services market and the strategy adopted by his firm to succeed in this climate.

“I’m not going to go through our strategy and advertise it to the marketplace. We’re doing too well for that,” Mr Cutler quipped.

Last year was a record year for the national law firm, with Clayton Utz reporting its overseas referrals are up 20 per cent year-on-year over the last five years. Mr Cutler said this was in terms of both revenue and the number of clients recommended to the firm from a foreign law firm.

He suggested that the confidence a top-tier independent law firm offered to clients is deeply connected with the understanding that the partners responsible for their matter have a domestic focus.

On the other hand, foreign clients seeking “best in market talent and capability” were regularly referred to Clayton Utz by global heavy-hitters looking to send their clients to a trusted top-tier, which is not a competitor in their core legal markets.

“The decision makers are in this country, are in this room, are on this telephone call, and we don’t report to some black box management in London, in Pittsburg, in New York or wherever,” Mr Cutler said.

When local firms in Australia began merging with major international businesses over 10 years ago to become known today as some of the prominent market leaders, such as Herbert Smith Freehills, King & Wood Mallesons and Ashurst, Mr Cutler said that consultations with Clayton Utz clients led the partnership to decide against following suit. It is a decision that he believes has placed one of the few remaining top-tier independent Australian firms in good stead.

“Clayton Utz has placed primary emphasis on what our clients have been saying to us,” Mr Cutler said.

“We have always taken the view, particularly in relation to the past decade, where change has been dramatic within Australia’s legal services marketplace – that emphasis should be placed on communications with our clients and our talent.”

“Indeed, when there was a rush to the merger gate by many of our competitors, when there was a herd mentality around merger, we went and spoke to our clients and they weren’t telling us to do it.

“As that has played out, we made a strategic decision not to merge, and we have benefited significantly through that decision,” he said.

Mr Cutler noted that more recently the market has seen competition increased, not only from international law firms and the commoditisation of services offered by NewLaw providers but also the emerging threat of the big four accounting firms’ legal teams.

In this climate, Clayton Utz has turned its attention to improving core capabilities. Mr Cutler identified what he said were apparently obvious metrics, but this did not diminish the importance they should be given as part of a firm’s strategy.

“In light of that increase in competition, I think the challenges for Clayton Utz include building a differentiator and attractive brand for clients and talent.

“This includes achieving productivity gains, being more efficient, dealing with the pricing pressures that a competitive market impose (not only on external legal service providers but also on in house),” Mr Cutler said.

Today Clayton Utz remains steadfast in the certainty of its decision not to merge and, according to Mr Cutler, is looking to build all of its practice areas. Whatever challenges the market throws up, he stressed the firm would not contemplate merging with a larger entity.

“Of course, we have challenges but no we would not contemplate merger at this junction,” Mr Cutler said.

“All of our practice areas are constantly under attention because we want to be the best in each of those areas in which we operate,” he added.

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