International law firms such as Herbert Smith, Ashurst, K&L Gates and China’s King & Wood flocked to Australia during the commodities boom, just as the Australian dollar reached historic highs, peaking at $1.10 in 2011. But the past two years have seen the Australian dollar devalued significantly.
The shift in the value of the Australian currency has been dramatic. For instance, on Jan. 1, 2013, when K&L Gates acquired Australia’s Middletons, the Australian dollar traded at $1.05, according to the U.S. Federal Reserve. That rate dropped to 73 cents this month. Similarly, the Australian dollar traded at 64 pence sterling on Oct. 1, 2012, when Herbert Smith merged with Australia’s Freehills, and at 59 pence on Nov. 1, 2013, as Ashurst completed its financial integration with the former Blake Dawson. Now it trades at 47 pence. For international law firms, that means Australian revenues are worth 20-30 percent less in dollars or sterling. On top of that, the Australian economy is slowing down as worldwide demand for natural resources drops.
