THE USE of juniors to do the “grunt work” on major transactions is essential to the operations of large firms, according to top-tier sources responding to recent claims that assistants are being used unnecessarily in such matters.
Michael Lishman, former national head of M&A at Mallesons Stephen Jaques, raised the issue last week in The Australian Financial Review, claiming that top-tier firms were over-using junior lawyers and that disgruntled clients, surprised on receiving their bills, were “pushing back”.
Lishman and top Mallesons partner Ian Cochrane have left the firm to set up their own boutique M&A firm in Perth.
However, “staffing has obviously got to be appropriate for the matter that you’re talking about,” said David Fagan, chief executive partner of Clayton Utz. “Some smaller matters will not require more than the partner’s own involvement, but there will be other matters — major matters — where it would actually be negligent if you didn’t have far more staff on it, to service it properly and to discharge your obligations as a lawyer.”
“There’s also the flip side, that clients are sophisticated and sometimes they will elect not to have tasks done or not have certain levels of people involved,” Fagan said. “That’s fine — clients can make commercial decisions to do that — but we’ve certainly seen in some circumstances where people limit the role, there can be quite serious consequences. The job is not done to the correct standard, issues aren’t identified. I’ve seen projects where due diligence is very much circumscribed.”
However, a majority of clients know what they are looking for and would not want to cut corners, Fagan added. “I do know that a large bulk of our client base — and I would expect it would be the same for other [large firms] — that when they’re doing major transactions they will want the very best people, and as many as they can get, to be deployed on their matter.”
Many smaller firms find it difficult to take on this type of work, Fagan said, because they lack the necessary resources or sometimes the talent.
David McClune, director of marketing and client services at Allens Arthur Robinson, agreed, adding that Lishman and Cochrane’s new firm faces an interesting challenge: “Two partners and three senior lawyers — well, who’s actually going to do the due diligence on major M&A deals? One assumes that as partners, they’re going to be doing a lot of low level work associated with big transactions and primarily due diligence, so I find that curious. Clients won’t be paying for a partner to do basic due diligence.”
McClune dismissed the idea that there were rumblings among top-tier clients about the over-use of juniors. “To the contrary, if a matter is over-partnered then the client starts to complain because they’re paying higher rates,” he said.