Down, but not out

Australian firms must adopt a more aggressive strategy in Asia or risk being shut out by UK and US rivals, writes Ewen Crouch

Every year Australian law firms crisscross the country on a travelling university roadshow aimed at enticing the brightest law students.
This year they have been joined by UK firms Herbert Smith, Freshfields Bruckhaus Deringer and Linklaters, which like some modern day Marco Polo, are wooing wide-eyed students with tales of Asian riches.
The arrival of large UK law firms at Australian university careers fairs is just the latest move in their increasingly aggressive growth strategies in the Asia-Pacific region.
Both UK and US law firms need lawyers in Asia and the major magic circle firms have been extensively advertising for Australian recruits during the past 12 months.
Traditionally, young Australian lawyers have seen London or New York as their main choice when looking overseas. Now UK firms are trying to divert them into their offices in Hong Kong, Singapore or Bangkok.
Yet while UK firms seek to grow their operations in Asia, they increasingly question whether they need to do this via a full merger with an Australian law firm. Australian firms, say the critics, are too big and given the weakness of the Australian dollar to the pound their partnerships cannot be integrated successfully.
Whatever the reason, Australian firms have a problem. Their domestic market is highly competitive and the potentially lucrative Asian market is being dominated by UK and US firms which, somewhat ironically, are now looking to Australian lawyers to staff their offices.
So if Australian firms are to continue recruiting the brightest graduates, they need to succeed not just locally, but also regionally. To do this they must look at why they failed in the past.
In the late 1980s and early 1990s, most of Australia’s top firms had a strategy of Asian growth. Most failed to fulfil their vision. Many firms opened offices in anticipation of servicing Australian clients moving into Asia. When some of these ventures evaporated there had been no investment in establishing a local client base.
In their defence, Australian law firms did not have the luxury of following a much larger pool of UK- and US-based financial clients into the region. However, on the downside, many Australian firms have not been prepared to invest in their offices during the longer term.
For Allens Arthur Robinson, which opened its first office in Singapore in 1981 followed by six subsequent Asian offices, operating in the region has not always been easy. Investment costs are high and it has taken a long time to build a network and reputation in the region.
Our Asian offices are now winning more work than ever and they have taken on more lateral hires from foreign firms in the Asian region in the past 18 months than have been taken from them. The reason we have been able to do this is by building on our core strengths at home and ‘exporting’ them to Asia.
We have targeted areas such as energy and resources, project finance, restructuring and privatisation. In these practice areas, the much vaunted myth that Australian firms will never succeed in Asia because UK and US law reigns supreme starts to crumble.
What matters here is experience and expertise, not jurisdiction, but we also benefit from a weak Australian dollar that makes us far more competitive on costs. One of our key rivals in the Australian market – Freehills – appears to be following a similar Asian strategy of using its local experience to sell its skill regionally and, as a result, is also enjoying similar success.
Succeeding in Asia is vital for the future growth of the major Australian law firms if only to ensure that next time a brilliant young law student turns up at a careers fair in Sydney or Perth, UK firms are not the only ones offering them the opportunity to succeed in Asia.
Ewen Crouch is executive partner, Asia Pacific offices, for Allens Arthur Robinson.