Linklaters has joined the ranks of its Magic Circle peers by moving into the Australian market via an alliance with Allens Arthur Robinson (AAR).
The alliance, which went through on 1 May, was planned over a year ago, according to a source close to the firm. AAR, which had operated an exclusive relationship with Slaughter and May, is viewed by many as one of the best in the region.
It ranked in the top tier for banking, capital markets, corporate, M&A, dispute resolution and energy in the The Legal 500 Asia Pacific last year, while the firm has obtained second tier ranking in a number of other areas.
Paul Quinn, executive partner at AAR, told LB why the firms were a good fit: ‘When we began talking about a closer relationship it quickly became apparent that we also shared a highly complementary client base. In fact both firms share over 80 clients in common. As part of the alliance we are combining resources in Asia so we can leverage off our respective strengths.’
The move by AAR could be seen as a blow to Slaughters as the two firms operated an alliance for roughly a decade prior to the Linklaters deal. In a statement, Slaughters said: ‘We have no plans to enter the Australian market and will, in Australia as elsewhere, work with the leading independent firms there.’
Linklaters confirmed that it had no plans to fully merge with AAR as, according to the firm, a merger would have taken too long and required too many resources to establish.
‘As part of the alliance we are combining resources in Asia so we can leverage off our respective strengths.’
Paul Quinn, AAR
Simon Davies, managing partner of Linklaters, told LB: ‘We’ve focused on creating an integrated alliance where clients will benefit from one point of contact, a unified team drawn from the best resources of each firm, and advice and support provided in a consistent manner and style. We favoured an integrated alliance over a merger or other type of relationship because the focus is on our clients’ needs rather than the distraction and disruption of internal issues. Similarly, it would have been very difficult to build anything ourselves with the quality and capability that Allens brings to the market.’
While the deal is just an alliance, it does gift the Magic Circle firm access to AAR’s lucrative Asian business, including its Singapore practice and Indonesian joint venture partner.
At the end of 2011, Linklaters ended its joint venture with Singapore firm Allen & Gledhill after the Asian firm was courted by Allen & Overy (A&O). However, the talks between A&O and the Singaporean firm ended in March.
Meanwhile, Linklaters is already eyeing up a deal with Indonesian firm Widyawan & Partners. The firm confirmed that a three-way joint venture with Widyawan is to go through on 1 July.
‘Widyawan is one of the leading firms in Indonesia, with whom AAR has had a longstanding association. That association will now also include Linklaters,’ said Quinn. ‘The Indonesian economy is predicted to be among the top ten in the world in the next 20 years and AAR and Linklaters see significant opportunities to work with clients through our association with Widyawan & Partners.’
Mark Pistilli, managing partner of Clifford Chance (CC)’s Sydney office, told LB that UK firms have taken an interest in Australia because of its importance to the Asia Pacific region.
‘It is a major driver of the regional economy. The sizes of the mining, resources and infrastructure deals are also significant in their own right nowadays given the current commodities super cycle,’ he said.
However, the Linklaters and AAR alliance is in stark contrast to the chosen route taken by many of the firm’s rivals.
CC entered the Australian market through a merger after tying the knot last year with boutique firms Chang, Pistilli & Simmons in Sydney and Cochrane Lishman Carson Luscombe in Perth, creating a 14-partner presence in the market.
In 2010, A&O took 14 partners from local outfit Clayton Utz. Despite the loss of partners, Clayton Utz remains one of the dominant players in Australia.
Norton Rose was the first UK firm to fully enter the Australian market after it merged with Deacons’ Australian business at the start of 2010. The deal secured an extra 146 partners across Sydney, Brisbane, Melbourne, Canberra and Perth.
‘Australia is important in the context of having a leading Asia Pacific position for two reasons: the high number of quality lawyers who tend to be quite mobile around the region and the link that it has between natural resource buyer China and the natural resources in Australia and in a number of African countries,’ said Stephen Parish, chairman of Norton Rose.
He added: ‘Both factors made it very attractive for Norton Rose Australia in 2010.’
Another firm that used a Swiss Verein in Australia was DLA Piper, when it merged with longstanding alliance firm DLA Phillips Fox on 1 May 2011. The merger created the largest Australian operation for a global law firm.
This trend of UK firms moving into the Australian market continued this year when Ashurst joined forces with Blake Dawson on 1 March.
Meanwhile, Herbert Smith appears to be making great strides into the Australian market. The firm is voting on its proposed merger with Freehills in mid-June. If the merger goes ahead it could help to re-establish Herbert Smith as a true international player.
Freshfields Bruckhaus Deringer, meanwhile, is still without an Australian offering. The firm has already made it clear that it does not want to move into Australia yet. A spokesperson said: ‘We have no current plans to open in Australia, but are keeping an eye on the situation in the country.’