As the world shifts its focus towards Asia, Mallesons Stephen Jaques has chosen to merge with China’s King & Wood on 1 March 2012. However, not all of Australia’s remaining national firms plan to follow suit.
Discussing the strategic direction of Australian firms during the Asian Century following the news of Mallesons’ merger, the CEO of Corrs Chambers Westgarth, John Denton, said Corrs does not see itself as “some kind of branch office or large global law firm”.
“You can see some division [in the market] between those firms that are offering what’s called client-driven strategies and those that are operating on firm-driven strategies. One of the most important elements of business formation in the 21st century is how close you get to your clients and understanding what drives their success … and that’s the strategy we’ve adopted,” he told Lawyers Weekly.
“There are other [firms] that clearly operate under firm-driven strategies, which are a bit more like the power politics of the 19th century, where it’s all about the firm, what the firm’s going to do, who the firm’s going to merge with and what benefits there will be for the partners.”
As to whether Corrs will merge with a global firm in the future, Denton said while the firm plans to grow in scale, its strategy is to “drive Australia’s competitiveness and its engagement with Australia”.
“We actually want to be deeply involved in the issues that affect business and business formation in Australia. We don’t want to be a service line player. We don’t want to have our decisions about what we do driven offshore, because that is not the best way we can serve our clients.”
After months of speculation, Mallesons announced in December last year that it would merge with King & Wood in China and Hong Kong. The two firms will merge under a verein structure to become King & Wood Mallesons, while the Hong Kong branches of both firms will merge into one new partnership, creating the fourth largest partnership in Hong Kong.
"We think it creates a firm for 'The Asian Century', with a significant focus and benefit for clients and people in the firm," King & Wood Mallesons global managing partner Stuart Fuller told Lawyers Weekly in December.
For Denton, success in the Asian Century is not necessarily based on tying up with a global firm, but is instead based on having an understanding of how the Asian region operates, and an understanding of the “economic architecture”.
“We think that one of the most important elements for being able to successfully serve your clients in the [Asia-Pacific] area is understanding how the region operates and what the key drivers for success are,” he said.
“Even though we’re bricks and mortar based in Australia, we’re an international firm and we actually have a very strong global reach through our virtual network and the strong relationships we have.”
With respect to the Australian firms which have already undergone global firm mergers, as well as those that are expected to do so in 2012 and after, Denton said their success will depend on the quality of the transactions and the ambitions of their partnerships.
“If the ambition of the partnership is to be a service line, rather than a driver of reform and opportunity for clients in the local market, then there will be different tests as to what success actually means,” he said.
For Clayton Utz’s chief executive partner Darryl McDonough, Mallesons’ decision to merge with a China-based international firm is “intriguing”.
“I’m rather intrigued by the announced arrangement … I think the most interesting aspect of it, from my perspective, would be to see how clients react to it over time,” he told Lawyers Weekly.
“The arrangement between King & Wood and Mallesons creates what I would have thought an extremely large organisation that has two different cultures. I’d hate to think of how many [people] they’d be dealing with in an organisation of that sort of nature or size.”
Echoing the “client-driven” focus of Denton, McDonough said whether Clayton Utz will merge with an overseas firm in the future depends on what the firm’s clients need.
“We have our options open. There are a range of people that we’ve spoken to at different times or that have spoken with us. As to whether or not we eventually merge at any stage of the game would be dependent upon what our clients need or what the markets are dictating to us,” he said.
“We’re not necessarily looking to travel down the same path as Mallesons, but nonetheless, we appreciate the importance of Asia and also India for that matter, and the opportunities that lie there. We’ll obviously seek to capitalise on those at the appropriate time.”