Allen & Overy (A&O) is set to enter Australia after hiring 17 new partners to open new offices in Sydney and Perth.

Fourteen of the partners join from Australian firm Clayton Utz, which announced today (8 February) that the partners had tendered their resignation with the intention of joining the magic circle firm (for full details, see list below).

The launch is due to go live on 1 March, with the remaining three partners comprising Freehills banking partner Chris Robertson, former Freehills corporate partner Aaron Kenavan, who joins from JP Morgan, and ex-Clayton Utz banking partner Grant Fuzi. All three join A&O's new Sydney operation.

The two offices will cover energy, mining and natural resources; finance; infrastructure; investment funds; M&A and private equity; tax; and telecoms, media and technology.

A&O senior partner David Morley told Legal Week that the firm made the decision to enter the market after spotting increasing amounts of inbound and outbound investment activity. The firm intends to target high-end M&A and finance work.

He said: "The Australian market has become much more linked to the Asian and global economy. We see much more inbound and outbound work and that creates an opportunity for a global firm like us that can provide advice seamlessly.

"We are not envisaging a huge presence in Australia. We think this is the right strategy for us because we are targeting the high-end work and especially the cross-border work."

He added: "This move also improves access to the deep pool of high quality lawyers that exists in the Australian legal market, making this the logical next step in our plans to expand our global network."

Clayton Utz chief executive partner David Fagan said he was disappointed at the departures but maintained that the firm was in great shape.

He said: "Partner movements such as this occur in the lifecycle of a firm. Clayton Utz is in excellent shape and continues to be one of the strongest performing firms in the market."

The hires take A&O's Asia-Pacific lawyer count to 360 across eight offices. Outside Australia the firm already has a presence in Beijing, Shanghai, Hong Kong, Tokyo, Singapore and Thailand.

Earlier this year Norton Rose became the first top 10 City firm to formally launch in Australia, when its merger with local firm Deacons went live on 1 January.

The senior partner of one top 10 firm said: "We have all been looking at it, but it is more difficult than any other market to break into. If it did not have so many top quality law firms we would have all been there long ago."

For more analysis, see Editor's blog: A&O in Oz – on the cards, sort of

Click here for an analysis of UK-Australia mergers from The American Lawyer.

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Market reaction to A&O's Australia launch

"The news surprised me but the fact of it did not. We expected that other law firms would analyse what we did and see the benefits. Anyone can see that Australia is an interesting economy which links itself close to Asia and has some very highly-qualified lawyers. I would be surprised if we don't see more big UK-based firms entering, and maybe even the odd US firm.

"Maybe the model that A&O has gone for is one that they feel more comfortable with. They are starting out with a fairly big team and will no doubt compete in the areas they are targeting. I certainly intend to compete on that level – we compete with A&O everywhere. Competition is a good thing. We knew that this was an important economy and foresaw this happening. I think every big firm will look at opportunities in Australia.

"Perhaps raiding another firm will make you slightly less popular but there are not many options for going in. I don't think we would have done it that way, partly because we had the opportunity to do it another way. The benefit of our strategy is that it did not cause a strain in terms of management. We are working with a well-known and well-managed team with a good existing footprint in the market."
Peter Martyr, chief executive, Norton Rose

"Our depth of talent and full service capability is what underpins our market leadership and this announcement does not change that value proposition. Competition is a good thing and Mallesons thrives on it, so we will always be keen rivals for any player in the market, existing or new.

"Even though A&O is a strong brand with a global footprint, any new competitor in the Australian market faces the same challenges as existing firms around delivering the right mix of legal expertise, cross-practice capabilities, pricing and management of conflicts and alignments.

"In terms of the regional market, we have a strong track record of cross-border transactional experience and I believe the two decades that we have invested in building our practice in Asia will stand us in good stead. Unlike a number of our Australian competitors, Mallesons has been directly competing with A&O in offshore markets for many years.
Robert Milliner, chief executive, Mallesons Stephen Jaques

"I am not surprised that A&O is interested in the Australian market. You can look at the Asia-Pacific region as a whole for the explanation. China is a huge market and Australia, by comparison, is much closer to China. Australia has a good legal market with some very good lawyers, many of which are of Asian origin. I expect that we will see more interest from the UK, US and Europe.

"Australia already has a very competitive legal market, led by the big six Australian firms. There will now be around 10 firms competing for the high-end M&A and finance work in Australia, including A&O, Norton Rose and DLA Piper."
Nigel Clark, London finance head, Minter Ellison

"There have been a number of US firms such as Baker & McKenzie and Jones Day operating offices in Australia for some time. This is the first magic circle firm to establish it will be interesting to see how it evolves in a very competitive market. Freehills works with a number of magic circle firms and will continue to do so. We don't expect the new A&O start-up to have a substantial impact on a competitive top-end corporate legal market in Australia, or on Freehills business.

"Australia is well positioned to service the rapidly growing Asia-Pacific markets and along with its resource sector is an attractive proposition for all sorts of international investment."
Gavin Bell, CEO, Freehills

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Full list of A&O's Clayton Utz hires

Sydney

Jason Denisenko, corporate/funds and financial products
Angela Flannery, banking
Sonia Goumenis, banking/structured capital markets
Jason Huinink, banking
Barry Irwin, corporate/energy & resources
Grant Koch, corporate/private equity
Michael Parshall, corporate/M&A
Karolina Popic, banking/structured capital markets
Michael Reede, corporate/private equity
Andrew Stals, corporate/tax
David Wilkie, corporate/funds and infrastructure

Perth

Meredith Campion, corporate/energy & resources
Geoff Simpson, corporate/energy & resources
Peter Wilkes, corporate/energy & resources, banking

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