Situated on Australia's southwest coast and at the edge of the vast outback, Perth has long reveled in its image as the most isolated large city in the world. Yet Australia's fourth-biggest metropolis has lately become one of the hottest destinations for international law firms.
When Magic Circle firm Allen & Overy pushed into Australia at the start of 2010, it opened offices in Perth and Sydney with partners recruited mainly from big domestic firm Clayton Utz. A year later Clifford Chance likewise chose those two cities for its Australia launch, acquiring Perth's 15-lawyer Cochrane Lishman Carson Luscombe as well as Sydney's Chang, Pistilli & Simmons. In August, when Squire, Sanders & Dempsey moved into the country, it opened in Perth alone, acquiring most of the 80-lawyer local office of Australian firm Minter Ellison.
In the past, the few international firms that ventured into Australia stuck to the country's traditional economic centers in Sydney and Melbourne. So why Perth now?
"We like the connectivity between Western Australia and the rest of the Pacific," says Squire Sanders chief executive officer James Maiwurm, who adds that his firm is mainly interested in the energy and resources sectors. These are the areas now being heavily targeted for investment and acquisitions by Chinese, Japanese, Korean and Indian companies. Those deals are overwhelmingly focused in the state of Western Australia. Perth is the capital of the state, which is four times the size of Texas.
Mining is traditionally the chief industry in Western Australia, one of the richest iron-ore producing regions in the world. But it's not just what's in the ground that has made the area attractive to international firms. The mining expertise concentrated in the region has led to Perth-based companies leading metal ore exploration and development efforts around the world, particularly in Africa.
These are not necessarily the big established names, like the Anglo-Australian mining giants Rio Tinto Ltd. and BHP Billiton Ltd. (which are actually based in Melbourne, though they have large operations in Western Australia). Sometimes called the Silicon Valley of mining, Perth is more known for its large number of small and medium-size mining companies, many of which are startups looking to go public or get bought out.
Many of those potential buyers are coming from Asia. Squire Sanders' Perth lawyers have previously advised local mining company Midwest Corp. on dealings with China's Sinosteel Corp., which now owns a majority stake in the Australian company. Squire Sanders also advised another Perth mining company, Kagara Ltd., on a strategic alliance with the Guangdong Foreign Trade Group. Last year, Geoff Simpson, head of Allen & Overy's Perth office, advised the city's Equinox Minerals Ltd. in a competitive bidding situation that saw a $7.8 billion bid from Canada's Barrick Gold Corp. trump a bid by China's Minmetals Resources Ltd.
The strength of those regional trading links became apparent last month when leading Australian firm Mallesons Stephen Jaques confirmed its plan to merge this year with China's King & Wood, to create an Asia-Pacific legal behemoth. Mallesons partner Stuart Fuller, who will be the global managing partner of the merged firm, says natural resources were "a significant part of the discussion" during negotiations. The tie-up will give the Australian firm access to King & Wood's links to Chinese state-owned enterprises that invest heavily in the sector. "It's seen as one of our must-win markets," he says.
In return, the 16 partners in Mallesons' 90-lawyer Perth office can offer specialized knowledge of the industry and of Western Australia's geography -- details that can make or break a pitch in deals such as deep water port construction, says Fuller.
When it comes to Asian investors, Perth is not nearly as isolated as it might seem. Unlike Australia's other major cities, it is in the same time zone as Beijing, Hong Kong and Singapore, while only an hour behind Tokyo and Seoul. Perth is roughly three hours closer to Asia's business capitals by plane than Sydney or Melbourne.
"It has that advantage of proximity," says Maiwurm. "To me, it seems a much more direct link."
Ian Cochrane, whose Perth boutique firm became the local office of Clifford Chance through a merger last year, says that Perth is emerging as an industry hub with exploration and operational expertise gathered in the same place with financial and legal expertise.
And it's not just traditional "hard rock" mining anymore. Chevron Corp. and Royal Dutch Shell PLC have moved into Perth as the base of operations for North West Shelf Venture, one of the largest liquified natural gas projects in the world. Cochrane says the project is expected to receive $180 billion from the two oil majors and other investors over the next five years.
Cochrane says the arrival of big multinationals and other overseas players has been a driving factor in the arrival of international firms in Perth. It's certainly a major reason why his firm merged with Clifford Chance. "A lot of that $180 billion is going to have to come from outside Australia," he notes. "Those people are going to be more comfortable using a brand name they know from elsewhere."
Maiwurm says his firm wouldn't rule out a move into other Australian markets at some point. But the urgency is in Perth for firms seeking to get into the energy and resource sectors and tie an Australian office into a larger Asian network. "From a priority standpoint, given what we want to accomplish in Australia, Perth just made a lot a sense for us," Maiwurm says.
