find the latest legal job
Corporate/Commercial Lawyers (2-5 years PAE)
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Specialist commercial law firm · Long-term career progression
View details
Graduate Lawyer / Up to 1.5 yr PAE Lawyer
Category: Personal Injury Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Mentoring Opportunity in Regional QLD · Personal Injury Law
View details
Corporate and Commercial Partner
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Full time · Join a leading Adelaide commercial law firm
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Sydney NSW
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Melbourne VIC
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
Merger mixed bag

Merger mixed bag

A Lawyers Weekly poll on ‘global’ firms in the Australian market found most voters believe there is still plenty of scope for further mergers.

A Lawyers Weekly poll on ‘global’ firms in the Australian market found most voters believe there is still plenty of scope for further mergers.

The poll closed this week with 248 votes. Most of those voters, 70 or 28 per cent, indicated there is more room for mergers involving international firms.

Conversely, 67 voters (27%) said the market for global firms here is now saturated.

A total of 59 voters (24%) said it depends on the strength of the brand trying to enter the market and 52 (21%) said there is ‘very limited scope remaining for mergers’.

Ted Dwyer, a former lawyer turned consultant, believes more international firms will enter the Australian market, despite the decreasing scope for mergers due to a declining number of merger partners on offer.

As merger partners run out, international firms will use different methods to set up in Australia: direct entry like Clifford Chance or Holman Fenwick Willan or lateral hires and poaching of teams like Allen & Overy and Squire Sanders.

“International firms will increasingly need to come to Australia, but if merger partners run out they tend to have very big pockets,” said Dwyer.

With China’s GDP estimated to exceed US$18 trillion by 2050, the Asia-Pacific region is a highly attractive market.

“If you wanted to come here to set up bricks and mortar, you can exploit all the flows in and out of Asia but also try and capitalise on the local market,” said Dwyer, adding that Australia is also an important place to be to demonstrate to major international clients that the firm has capability across the region, and that includes Australia.

North American and European markets are “really in the doldrums”, said Dwyer, which is further attracting firms to the region.

“Banks are willing to lend to each other, which of course is not happening in Europe and therefore [banks] are willing to lend to business, which is what law firms rely on to keep corporate deals and corporate departments going,” he said, adding that Japanese banks in particular have high levels of cash assets and are willing to lend.

“On the transaction side, it’s a very attractive market and will continue to be … major international companies require a lot of legal servicing in different markets of the region and there’s a lot of multi-jurisdictional work available, so it’s a good market to get in here.”

Risky business

While Dwyer believes international firms are a positive for the Australian market because they’re “making our firms more responsive to clients, more commercial and more strategic in their thinking”, they’re also increasing the risk for the mid-tier space, he said.

Mid-tier firms have touted the opportunities presented to them in the local market through the linking up of top-tier firms, but Dwyer warned that the mid-tier space will only get more and more crowded.

“The population of mid-tier firms is going to increase pretty dramatically in the next five to 10 years but I’m not sure that the value of the work they’re competing for within Australia is going to increase at the same rate, so if you’re going to stay in Australia you have to have enough scale to avoid being sucked down into a price war between any number of mid-sized firms,” he said.

There are more than 5000 law firms in NSW and 87 per cent of them are sole practitioners. That’s more sole practitioners in NSW than in all of England and Wales, which has around 9,800 law firms.

“It’s a structural oddity in our profession and they all tend to offer the same services,” said Dwyer, explaining that many will disappear and a lot of the good ones will get together and push up underneath mid-tier firms.

As smaller firms consolidate, especially in NSW and Victoria, Dwyer said more 10 to 20 partner firms will emerge and take up their place in the mid-tier space.

 “The major Australian firms and major international firms don’t have much brand awareness in China – but then again it’s the beginning of the story, it’s a long-term strategy succeeding in Asia.

“If you decide to avoid that market it’s a big risk.”

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Merger mixed bag
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Scales of Justice
Dec 15 2017
Timing ‘critical’ in unusual contempt of court ruling
A recent case could have interesting implications for contempt of court rulings, according to a Ferr...
Dec 14 2017
International arbitration and business culture
Promoted by Maxwell Chambers. This article discusses the impact of international arbitration on t...
Papua New Guinea flag
Dec 14 2017
World-first mining case launched in PNG
Citizens of Papua New Guinea have launched landmark legal proceedings against the country’s govern...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...