Nor has it been a challenge just for business. Far from being neatly contained in one legal speciality, the multitude of proposed regulatory reforms call on the skills of lawyers from many different practice areas - banking and finance, corporate, and taxation, to name just a few.

Reforms currently slated are diverse and comprehensive, and cover areas such as consumer credit, unfair contract terms, margin lending, personal property securities, and executive termination payments.

For firms, the challenge has been to break down traditional practice area borders, pool skills, and offer clients a one-stop shop for comprehensive legal services during a particularly volatile time.

State of market

The lawyers that Lawyers Weekly spoke to agreed with general public sentiment that Australia is weathering the downturn somewhat better than its northern hemisphere counterparts, and they believe our comprehensive regulatory regime has been a factor in this outcome.

"The way the three arms (the Reserve Bank of Australia, ASIC and APRA) work together and with treasury has really held up quite well in the crisis," says Clayton Utz banking and finance partner Angela Flannery. "We have weathered the storm very well, at least in part because of the way our existing regulation has worked."

Deacons corporate partner Tim Woodforde agrees, adding that we learned the lessons from the last recession. "Because of the massive stresses that our economy was put under in the last recession, there was an opportunity for Australia to sit back and say 'How did we get this so wrong? How can we get it running better?'.

"So now we have this twin regulatory structure with APRA and ASIC, but in the US they don't have that, so they're really going back to basics and [deciding] what kind of regulatory system they should have. We don't need to do that."

Reasons for reform

Despite our economy's relative vigour, says Deacons finance partner Alison Deitz, an avalanche of regulatory reform in the aftermath of the crisis wasn't unexpected. "I think that whenever you get a massive correction in a market you always have a massive raft of regulation, so I think it was inevitable. Some of these things were slated prior to the global financial crisis, but I think that probably hastened things along," she says.

Clayton Utz's Flannery believes that Australian regulators have also been under pressure to keep pace with changes internationally and ensure that Australian market participants remain on an even playing field.

"It's a question of international competitiveness. To the extent that other jurisdictions introduce reforms that are seen as providing protection to investors, then I think Australia has to get on the same bandwagon so we're not disadvantaged," she says. "That was part of the reason the government guarantee for wholesale debt was put in place - because other governments had put it in place for their banks, and our banks would have been at a competitive disadvantage without it."

While acknowledging that regulatory reform has been fast-paced, Mallesons Stephen Jaques finance partner Scott Farrell believes it hasn't simply been an over-protective, knee-jerk response to the crisis.

"Quite appropriately, it doesn't seem to be just aimed at restricting market activity [for the sake of] restricting market activity. It seems to be aimed at achieving particular policy objectives, which is a rather sophisticated response - and a good response," he says.

Clayton Utz corporate partner Charles Rosedale says that regulators are also taking a more hardline approach to enforcing some existing regulations, and he points to the ASX's crackdown on continuous disclosure requirements as an example. "Both the ASX and ASIC have formally put the markets on notice that they're monitoring [capital raising] activity, with an eye, in particular, on whether there's any pre-leaking of information to the market prior to formal announcement and whether there's any selective trading activity going on," he says.

The law firm response

Meeting client demand for advice on reforms that span a range of legal fields has presented a unique challenge for law firms. Mallesons Stephen Jaques and Clayton Utz have responded by forming multi-disciplinary teams comprising partners from various specialist areas.

Mallesons' market regulation team has about 20 core partners spanning the banking and finance, taxation, competition and M&A practice groups. Farrell explains that the idea for forming the group came from the realisation that this diversity and volume of reform couldn't be properly handled by one team.

"Part of the new reality is that regulation of the financial markets is going to change globally, and ... it's not linked only to one particular discipline or speciality of law. We worked out that this is not a job that any one specialist could do, so the team was established," he says.

Similarly, Clayton Utz has pooled the specialist skills of six partners from the firm's competition, corporate, litigation and tax teams to create its regulatory response team.

Competition partner Joanne Daniels says those partners have been selected on the basis of their longstanding relationship with the relevant regulator in their field. "We noticed that clients were after not just advice on what the law says, but advice on actually how to deal with the regulator, and that includes their culture, their likely approach to something, their prosecutorial discretion - all those things you can only get from longstanding relationships with the regulators," she says.

The intangible touch

In Farrell's view, one key service Mallesons' market regulation group can offer clients is assistance with submissions on proposed regulatory changes, and he believes businesses should be taking full advantage of consultative opportunities.

"In my experience, this is a singular opportunity that has been afforded to industry by the Australian Government and its regulators to participate in discussion as to how policy will be implemented. And it is an opportunity to try and make sure [reform] occurs with the least disruption to ordinary business," he says.

He believes lawyers are well placed to assist with this process, given their relationship with both the regulators and clients affected by the regulation. "It's one of those indefinable services that a law firm, and our group, can offer," he says. "We can be the missing link in the sense that we talk to regulators a lot because we need to know what they want to happen, and we also talk to market participants a lot, because we want to know what kind of business they want to do," he says. "As a result, there is a range of experience we have which is more like 'lore' than 'law' which is effectively what we provide our clients."

Deacon's Woodforde adds that this intermediary role places lawyers in a prime position to identify gaps and ambiguities in regulators' policies.

"We definitely have daily, if not hourly, contact with ASIC ... and we are having daily debates about [their] policy. That does help shape new policy - it causes them to adjust and amend existing policy," he says. "Often that's because when we're asked to advise our clients about issues, we sometimes find problems with existing policies, or we find areas that are not adequately administered by ASIC or other regulators."

He says this debate is generally appreciated by the regulators: "They welcome communication and they generally prefer it from lawyers because we are specialised in the area and we can have a more constructive conversation about it."

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