CITY OF London firm Maxwell Winward LLP is canvassing the prospect of opening an Australian arm for its building and construction practice.
Partner James Bremen was in Australia last week to consult with potential Australian clients. “Obviously we need to establish a business case that there is sufficient business available to support the venture,” he said.
“Initial feedback has been very positive and our clients recognise the need for services such as those we are offering.”
The proposal has drawn comparisons with US firm Skadden, which operates in Australia out of a Sydney office. However, Skadden exclusively handles US matters, while Maxwell Winward will consider taking on a limited number of domestic matters.
“It would be similar to the model that Skadden are using in Australia, however with some domestic work also being serviced,” Bremen said. “We would not be competing for commoditised work, but rather for more novel, larger and more complex work where there may be some resource shortage in the leading Australian firms.”
Michael Wilkinson, principal counsel for Bechtel’s mining and metals global business unit, agreed that there is a gap in the Australian market.
“A lot of the big mining companies are doing global work out of Brisbane, but the private lawyers aren’t up to it. They just don’t have the experience, they don’t have the knowledge and they seem to be a less willing to just give it a go,” he said.
“I mean, we mainly use the big firms like Lovells and the Clifford Chance in London. There are lawyers in Australia who can do it — we use Clayton Utz a lot here, and they can certainly handle the international matters — but its just a question of resourcing because everyone’s so busy in Australia.”
According to Wilkinson, conflict of interest can also make it difficult to obtain top quality legal advice in the Australian building and construction market. “A lot of Bechtel’s clients are people like BHP Billiton and Rio Tinto, and the law firms here are all chasing the same honey pot. Sometimes it’s hard to get someone who knows what they’re doing to pay you any attention,” he said.
Clayton Utz partner Doug Jones welcomed the prospect of more competition. “It depends what space they’re in and what work they’re doing, but [construction has] become an increasingly attractive area for lawyers,” he said. “I take the view that the more competition there is, the more likely it is that clients will see the sense of having lawyers helping them with their project work.”
David Simpson, general counsel and company secretary of United Group Ltd was more sceptical. He suggested that a “middle man” arrangement could simply increase the time and cost involved in international transactions.
“We talked about it a little bit, and I wasn’t necessarily sure that it would work. Because if I’m doing a deal in the Middle East, for example, I want to have a Middle East lawyer who is face-to-face with the people he’s negotiating with,” Simpson said.
“So I suggested to [Bremen] that maybe not just focus on being the liaison office, but also try and hit that niche market of being slightly under the prices of the top-tier firms in front-end and back in construction, and deliver a really good service,” he said.
Bremen believes his firm can deliver the requisite level of service and cost savings. “Our rates are more affordable for Australian companies, who may not generally be used to the very healthy rates charged by the leading international US and magic circle practices, but who need a similar service,” he said.
“At the top end of the international legal market, firms like White & Case are developing very rapidly and are assuming dominant positions. These firms do have the burden of very high infrastructure costs and are also faced with very high staff costs due to the current tight market for quality lawyers. That translates into them being very expensive for clients.”
The prospect of an economic downturn following the US mortgage crisis will increase pressure on larger firms to deliver services at competitive prices. “The challenge for [international law firms] will be to remain price competitive when the international projects market is less buoyant than it currently is,” Bremen said.
Bremen, an expat Australian lawyer, began his legal career with Brisbane firm McCullough Robertson. He is keen to conduct more business in Australia, partially as a response to client demand, but also to allow him to spend more time in the country.
“Being an Australian I do miss the weather and the people. I have family here too and it would be personally satisfying to see them more often than my current schedule permits.
“Ultimately I hope we can become a provider of choice for Australian corporates involved in the construction, projects and resources sectors for their international businesses,” he said.
The firm would focus on three main service areas in the region: advising Australian companies who are involved in international projects in the construction, projects and resources areas either as sponsors, contractors or investors/lenders; representing Australian companies involved in international disputes; and responding to the reported shortage of good Australian projects and construction lawyers in larger, more complex projects transactions (not PPP/PFI) to assist clients with projects in Australia.
A final decision on whether to establish a presence in Australia is likely to be made later this year.