Photo: Diego M. Radzinschi/ALM

Despite a spate of departures in recent years, Magic Circle firm Clifford Chance expects to grow in Australia as it focuses on international clients and expands its disputes and private equity practices.

In an interview with Law.com, Clifford Chance Australia managing partner Richard Gordon said the firm is "having an incredibly successful year" and is looking to hire and promote lawyers in its two Australian offices in Sydney and Perth.

Like many foreign entrants into the Australian market, Clifford Chance is not a full-service firm. Instead, it is seeking to be "a premium international legal services provider", Gordon said.

The firm focuses primarily on three areas: large-scale disputes, particularly class actions and regulatory investigations; acting for domestic and international financial institutions in large-scale financing transaction needs; and private equity and private markets, particularly working for alternative asset managers, private equity funds and hedge funds.

Gordon said the global disputes and arbitration practice is "a huge area of growth" thanks to an upswing in regulatory investigations, including Australia's Banking Royal Commission, which is leading to more class action work.

Richard Gordon

The private markets and private equity practice is also growing, as more investors and corporations look to private markets over share markets.

"In Australia, there's been a huge amount of focus put upon the behaviour of ASX-listed companies, and there's a real dearth of capital markets issuances and IPOs," said Gordon, who specialises in financing transactions and spent 16 years at local firm Allens before joining Clifford Chance in 2015 and becoming managing partner two years ago.

"A lot of financial investors are putting money to work in private equity and private markets rather than the public market," he said. "Those firms that look after financial investors – whether it's in equity or in credit – are exceptionally busy, whereas those that focus on public M&A and equity capital markets are probably slightly less busy."

The firm was first established in Australia in 2011 by merging with small local firms Chang, Pistilli & Simmons in Sydney and Cochrane Lishman Carson Luscombe in Perth. Since then, several of the original partners have left, including Mark Pistilli and Danny Simmons who formed their own boutique firm in Sydney.

Despite Gordon's optimistic outlook, the Perth office has seen significant turnover. In June, partner Jennifer Hill and counsel Sean Houthuysen left; in May, global oil and gas group co-head Tracey Renshaw departed for DLA Piper's London office; and last October, former office head Paul Lingard joined Norton Rose Fulbright.

One partner who left the firm after the merger said there was a feeling among some lawyers that their local clients were no longer valued.

Gordon disagreed.

"I think we still retain a great blend of global and local clients," he said. "But what we are resolutely focused on is only working on the premium end of the market."

He noted that the local arm of the firm has become more international in focus since it first arrived in Australia, with partners and senior associates spending a lot more time in other offices of Clifford Chance.

"For example, I have a team of 15 people here, a number of whom are constantly working on matters that have got nothing to do with Australia and they might be working with a partner based in Singapore or Hong Kong," Gordon said.

Since the merger, some partners have decided that other platforms might be more suitable for them, but this would be the case at any global firm, Gordon said. "Yes, we have had some departures over the years, but the Perth practice as it's currently configured is doing exceptionally well."

The firm currently has two partners and 29 other fee-earners in Perth and 10 partners and 45 fee-earners in Sydney. Gordon said he plans to expand both offices with hires and promotions, but doesn't ever plan to be as large as King & Wood Mallesons, which has about 180 partners in Australia, or as big as Linklaters-aligned Allens, which has 139.

Overall, he said the firm is "having an incredibly successful year" and its Asia-Pacific region, which includes Australia, has seen 50% revenue growth during the past four years, compared with 25% for the global firm.

The market for legal services is "incredibly competitive", he said, and sophisticated clients are picking and choosing firms based on the individuals in the firms and their areas of expertise, rather than relying on a single firm.

"We're seeing an increasing level of sophistication and disaggregation of teams," Gordon explained. "Where we're going to be getting to over the course of the next few years is really a best-of-breed virtual team for a particular transaction that a client might want.

He added: "They're so discerning now that they might say: 'I don't want to use you for the real estate aspects of this transaction because I can get that done more cost-effectively by a terrific domestic firm. But what I do want from you is your cross-border M&A capability because what we're seeking to achieve on this transaction actually might have a financing requirement in Europe.'"

For instance, a transaction might have a tax aspect in Luxembourg that Clifford Chance could handle, but the bulk of the assets might be Australian real estate, which a local firm could oversee.

Gordon noted that of what was traditionally known as Australia's Big Six law firms – Allens Arthur Robinson; Blake Dawson; Clayton Utz; Freehills; Mallesons Stephen Jaques; and Minter Ellison – two have merged with international firms. One merged with a Chinese firm and the other has an alliance with a U.S. firm, leaving only two independent firms.

Very large domestic firms will likely be challenged by further disaggregation of legal services by clients, he said, culminating in a few and smaller "peak local" firms.

"There's certainly room for a few peak local firms here – real premium independent firms in Australia – but certainly not the size that I think some of the firms are at this point in time," he said.

 

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