Legal fraternity buoyant amid boom

With Western Australia’s economic boom continuing apace, it comes as no surprise that law firms in Perth are running at full tilt.

Blake Dawson Waldron partner Roger Davies typified the state of the industry when he said: “2005 was the busiest year I can remember, both in mergers and acquisitions and capital raisings”.

Freehills corporate partner Justin Mannolini said his firm was also thriving.

“We are easily the busiest we have been for a very long time,” Mr Mannolini told WA Business News.

The busy activity runs across most practice areas and fundamentally reflects the boom conditions in WA.

In this context, the biggest challenge facing law firms – like many industries in WA – is finding the right people to handle the volume of work presently available.

There has been little growth across Perth’s major law firms, mainly because it is so difficult to recruit experienced lawyers.

Freehills remains by far the biggest law firm in Perth, with 35 partners and 178 legal staff, as detailed in WA Business News’ Book of Lists on page 11.

However, there have been some significant structural moves in the industry, most notably the establishment of Lavan Legal, which combined commercial law firm Bennett & Co with most of the partners and staff from Phillips Fox.

With 20 partners and about 100 legal staff, Lavan Legal has pipped Jackson McDonald as the largest independent law firm based in Perth.

Phillips Fox continues to trade in Perth, with six partners and 27 legal staff, and has vowed to rebuild the practice.

Among the major firms, Mallesons has experienced big changes in the past six months.

Its former partner-in-charge, Robert Cole, has joined Woodside as legal counsel, and corporate partners Ian Cochrane and Michael Lishman (who was originally from Perth but in recent years worked in Melbourne) established boutique practice Cochrane Lishman.

Their firm will compete with the likes of Franklyn Legal, established at the start of last year by former Freehills partner, Rob Franklyn.

His firm has grown with the appointment of Christian Owen and Russell Philip as partners and the recruitment of three lawyers, and is actively looking to recruit more lawyers.

Another ‘new’ competitor in the corporate market is West Perth firm Salter Power, which was effectively a breakaway from Fearis Salter Power Shervington.

“The move has been very positive as far as we are concerned,” said director Stephen Power, whose firm has continued to focus on listed mid-cap mining companies as its core market.

“Our business has moved from strength to strength.”

The strength of the stock market has continued to generate plenty of work for law firms.

There has been a steady flow of new floats – where boutique firms Steinepreis Paganin and Blakiston & Crabb are leading players – as well as capital raisings to fund new projects.

This has included a substantial volume of capital raisings in London and Toronto.

Mergers and acquisitions activity has been another busy area for Perth’s law firms.

Another big driver of legal work has been the large number of mining and resources projects under way in WA, all of which require substantial legal input.

Just last week, Precious Metals Australia announced it had engaged two law firms to support the planned revival of the Windimurra vanadium project: Freehills to handle corporate matters and Hunt & Humphry to handle Native Title and mining law.

An even bigger project getting under way is the $1.8 billion Boddington gold mine development.

Joint owners Newmont and AngloGold have appointed Allens Arthur Robinson to work on the project, including drafting and advising on a long term power purchase agreement, advising on the acquisition of tenure for the mine expansion and the associated construction of facilities and advice on sales arrangements.

Other major assignments for Allens have included advising Rio Tinto Iron Ore on the Hope Downs joint venture, advising Dampier Bunbury Pipeline on the $1.9 billion expansion of its namesake pipeline.

It also worked on some of the big insolvency matters that Perth law firms handled over the past year.

Regulatory issues have created plenty of work for law firms, with the most topical example being the state government’s decision on the Shovelanna iron ore lease.

The ongoing battle between Fortescue Metals Group and BHP Billiton over access to the latter’s Pilbara rail lines is another example.

Lavan Legal managing partner Greg Gaunt believes there has been a sharp increase in regulatory and compliance issues affecting both companies and individuals.

His firm has responded by establishing a compliance and regulation practice that will handle civil and criminal matters, which he said was a first for a major Perth law firm.

Disputes over tax assessments provide yet another growth area for law firms.

Blake Dawson Waldron is handling the largest current matter – Alcoa’s appeal against a $160 million stamp duty assessment by the commissioner of state revenue.

It is also acting for the liquidator of Bell Group, Tony Woodings, in his $1.4 billion action against a syndicate of banks, which are being represented by Freehills.

This trial has been running since July 2003, making it the longest-running civil trail in Australian history.

Other matters handled by Blake over the past year included advising Alinta on the $900 million float of its infrastructure arm and the AGL takeover battle, advising the state government on energy reform and advising Indian company Birla on its planned $300 million initial public offering.

One of the notable trends of the past year has been a “significant increase” in litigation in response to industrial action, particularly in the construction industry, according to Mallesons partner Robert Lilburne.

The enactment of the Building & Construction Industry Improvement Act brought about big changes in the IR field, including stricter rules on industrial action, tougher penalties and the establishment of a powerful industry watchdog.

Mr Lilburne said the new laws had already been tested in several applications for injunctions in the civil courts, including by United Group in relation to work on Alcoa’s Kwinana refinery and Leighton in relation to the rail project.

“Interestingly, the BCII of itself has not prevented the industrial action but has resulted in more litigation,” he said.

“It is likely that these laws will be further tested in the numerous new projects in the resources sector in WA over the next 12 months.”

Mallesons’ major assignments over the past year included advising Chevron Australia on the massive Gorgon project, which is moving towards a final investment decision, and advising Wesfarmers and Genesee and Wyoming on the $1.3 billion sale of their jointly owned Australian Railroad Group.

While Perth is often seen as a provincial outpost, local lawyers have played key roles in large national and international transactions.

A prime example was the $C382 million ($A435 million) acquisition by Canadian company Versacold Holdings of P&O Cold Logistics’ operations in the US, Australia, New Zealand and Argentina.

Clayton Utz partner Will Moncrieff led a team drawn from the firm’s Perth, Sydney, Melbourne and Brisbane offices to advise Versacold on the deal, in conjunction with advisers in other jurisdictions.

“The Perth office of Clayton Utz has had extensive dealings with Canadian companies and advisers on many mining deals in the last few years, and it was pleasing to put our transaction skills to the test on a significant industrial acquisition for a Canadian client,” Mr Moncrieff said.