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Opinion mixed on mega-law firm likelihood

Opinion mixed on mega-law firm likelihood

The merging of two top-tier Australian firms to create a "mega firm" was predicted as an impact of the global financial crisis by law firm consultant George Beaton last week.While Beaton ruled…

The merging of two top-tier Australian firms to create a "mega firm" was predicted as an impact of the global financial crisis by law firm consultant George Beaton last week.

While Beaton ruled out Freehills or Malleson Stephen Jaques as contenders for a possible merger - largely because of their independence and success - he said others could view a merger as a chance to steal market share from competitors.

"The GFC, by and large, has put an end to price increases, which we've experienced for the last five to 10 years, so we're going to see intensification of the battle for market share," he said at the Australian Legal Convention last week.

"That will result in the next decade ... in a substantial change and a true mega-firm may well emerge. The largest law firm we've found is about a half-a-billion dollar enterprise and we see something substantially bigger than that emerging."

But the associate director at EA International, Maciek Motylinski, said discussions with management or partners in the course of business had not given him the sense that a local merger was likely - or desirable -for Australia's top-tier firms.

"It is a relatively small market here in Australia, to begin with ... [and] the idea that two of the firms are going to merge to create some kind of mega firm - it is more speculation than anything real at this stage," he said.

Motylinski said, however, that the implications of the recently announced plans of Deacons and Norton Rose to merge and the Phillips Fox alliance with DLA Piper might sway him to think differently.

"If the local firms get a sense they are going to be losing out in some way, or losing some kind of market share to these tie-ups as they gear up and integrate more closely over the coming years, then they may respond with a view that it may come down to economies of scale and it may be sensible ... to merge," he said.

"Even then, it is a huge task to not only merge two large, very well established, law firms at the top end of the market - not only from a commercial point of view, but also from the cultural and human resources aspects that go along with that. It's a difficult one to say the least."

- Sarah Sharples

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