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Lawyers in tentative moves to new model

JUST two years ago most legal firms were very much enamoured with the multidisciplinary model.

But steps in this direction in WA have been tentative at best, with many firms holding back altogether.

Multi-disciplinary firms have proved successful in Europe and the US but there are concerns that the Australian market is too small to support such operations.

Yet several practices have made moves along the multi-disciplinary pathway.

Accountancy giant PricewaterhouseCoopers, for example, is a player in the management and IT consulting arenas.

Even beleaguered accountant Andersen had a consulting arm. Indeed, that part of the business became so successful it split away from its parent and became Accenture.

Law firms such as Freehills, Allens Arthur Robinson, Jackson McDonald and Deacons have their own management consulting arms.

Many of the consultancies already run by law firms are at the fringes of their operations and have key synergies with their core operations.

For example, Freehills’ Main Sheet specialises in financial raising.

Jackson McDonald’s consulting area specialises in taxation issues. To this end it made current CPA Australia WA president and former Australian Tax Office deputy commissioner Graham Harrison its tax consultant.

Deacons has two consulting arms, DGJ Projects run out of Melbourne and International Projects which is being run out of its Perth office by Gitte Heig and Joan Melville.

International Projects has won its first contract to provide a market analysis of the energy industries in Vietnam, Thailand, Malaysia and Saudi Arabia.

Some law firms, such as Minter Ellison, Phillips Fox and Blake Dawson Waldron, have decided that the multi-disciplinary route is not for them.

They prefer to stick to their core legal specialties.

Blake Dawson Waldron managing partner John Carrington said he was concentrating on growing the firm’s WA business, particularly in its energy and resources areas.

Phillips Fox marketing partner Dean Healy believes most law firms will stick to law.

“In theory law firms going into other areas of disciplines is good. But in reality its hard to make it work,” Mr Healy said.

“There are huge conflict issues, particularly in Australia where the market is too small.”

One of the key things preventing law firms from becoming major multi-disciplinary practices is the rule that prevents legal practitioners sharing profits with non-legal practitioners.

Because of this Jackson McDonald, for example, cannot make Graham Harrison a partner.

The WA Government is considering legislation that will allow law firms to incorporate – something they can already do in New South Wales and the Northern Territory.

With this incorporation would come the ability for a lawyer to share profits with another professional services provider, such as an accountant or an IT specialist.

It will also have the benefit of limiting the liability of partners and will offer law firms greater scope to raise capital. However, even if the WA laws – which are due to be considered in the middle of the year – are passed, it appears not many of the State’s top law firms will pursue it. One of the main considerations is that WA’s top law firms are largely national players and incorporation will only help if it becomes a national regime.

Of the top 10 law firms, according to the WA Business News List of WA Law Firms, only one – Jackson McDonald – is WA based. However, Jackson McDonald is keen to consider any options offered by incorporation.

Its chief executive officer John McLean said he would be interested in the outcome of any incorporation legislation.

“In New South Wales the take up of incorporation has been poor,” Me McLean said.

“But it does open up some opportunities for capital raising. We, like any other profession, have to invest in things like IT and incorporation would allow us to access more cost effective means of finance.”

He said he would consider the multi-disciplinary model but would prefer to keep the firm focused on law.

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