IN AN ACT that seemingly defies gravity, evidence is emerging in New Zealand that the country’s top corporate law firms are among a select few enterprises feeling pressured and scratching around for work in an otherwise booming economy.
While Australia can look on with a level of traditional trans-Tasman smugness, the chilling effects of globalisation currently forcing some of New Zealand’s blue chip firms into taking drastic measures serve as something of a warning to all antipodeans.
Many of the largest organisations with a presence in New Zealand, including Cadbury and the ANZ Bank, have shifted the vast majority of their corporate legal work out of New Zealand and into Australia. While few of the country’s top-tier firms were willing to go on the record, spokespeople for the firms confirmed that they feared the situation was only going to get worse.
This downturn in highly complex legal work is at odds with the rest of the nation’s economy, which is by all measures booming. It has just recorded its 16th consecutive quarter of economic growth and is experiencing record low levels of unemployment. The reigning government is stable and recent polls indicate that it is coming around in the popularity stakes. This means it can get down to the serious business of framing legislation and bringing about reform, usually a marker of good times for the practice of corporate law.
However, the global downturn in M&A activity has been keenly felt in New Zealand and now combined with the drift across the Tasman of high-end work, the top-three firms — Belly Gully, Russell McVeagh and Chapman Tripp — have all tightened their belts considerably. Russell McVeagh in particular is reported to have dropped its partner numbers in recent years from 60 to 35, while at the same time adding an additional 50 fee earners to its ranks, thus maximising profit leverage for the partners.
Many of the partners have moved into their own boutique firms, with the most recent and high profile being Laurie Mayne and Dave Wetherell who established a boutique finance law firm, Mayne Wetherell, taking seven former Russell McVeagh lawyers and an administrative staff member with them.
Ironically, the two firms that have embraced the ANZAC spirit, Phillips Fox and Minter Ellison Rudd Watts, are best placed to deal with the movement of business to Australia.
However, while the blue chip firm partners struggle to keep the second Porsche on the road, smaller firms are doing relatively well. Compliance law has been flagged as one of the biggest growth areas while the ageing population and the subsequent construction boom in retirement housing is presenting ongoing opportunities.
Meanwhile the Lawyers and Conveyancers Bill currently before the New Zealand parliament threatens the monopoly New Zealand lawyers currently enjoy over the conveyancing market.
Watch out for a full report on the New Zealand legal market in the next issue of Lawyers Weekly.