The chalk board on the cobblestone footpath reads “Happy Hour 8pm – 10pm, Cocktails $13” and hoards of partygoers have clearly indulged in tonight’s special, clinking their glasses loudly underneath a sheltered deck, of sorts. It’s Friday night and everyone has logged off (not for the weekend, mind you). “Hurrah!”, they yell, as the bouncer lifts the rope and grants entry to a stunningly dapper young man. He wears a pinstriped designer suit, underneath it a perfectly pressed light blue shirt with a white collar and cuffs complemented by a dark red, double Windsor-knotted tie. The bespecled young fellow, whose hair evokes Mad Men’s Don Draper, has chosen a pair of psuedo-intellectual square frames, rounding out his image as a wanker an upwardly mobile young lawyer.
Not yet a minute has passed when, jostling for a position at the bar to order his first libation, it becomes clear that the young lawyer has won the affections of an even younger female. Unbeknownst to the lawyer, this young damsel is on a mission: legal secretary by day, minx in search of a professional beau by night. Sensing the young man before her might be the potential breadwinner for whom her heart yearns, she seductively catches his gaze, seemingly Head Over Heels and asks:
“Surprising to see a suit in here at 8:30pm, has the deal fallen over?”
The lawyer, pausing for a moment to stiffen his back to accentuate stature, responds with familiar self-assurance:
“The deals I work on don’t “fall over”, honey, I work at a top-tier law firm.”
The she-cat, showing a slight grimace that conveys the frustration of a fruitless serenade, offers the retort:
“Well, let’s call this the first “deal” you’ve watched fall over – I’m looking for a global lawyer, not a top tier.”
Fears for Tiers
Argh … the vicissitudes of corporate life; there’s always someone better, someone more important. But now, the lines between the best and most important in Australia and their international equivalent, or the “Top Tier”, the “Magic Circle” and “BigLaw”, are being blurred in our own backyard. Australia is apparently the battlefront in a race for global legal supremacy and it feels like Everybody Wants To Rule The World!
Okay, it isn’t the Middle Eastern Spring, but clearly something major is changing in Australian legal circles and it is happening very quickly. By now, most of us are well and truly apprised of the arrivals. We wont regurgitate what we’ve already written elsewhere, save to say that Australia is now home to DLA Piper, Allen & Overy, Norton Rose, Clifford Chance, Squire Sanders, Ashurst and soon, King & Wood. Interestingly, for a much longer period, we’ve also been home to offices of several other oft-overlooked major international firms; firms that feature in the world’s Top 100 by revenue. According to our research, which is based on FY2010 revenue statistics, the following Top 100 global law firms now have a presence in Australia (with the firm’s position within the Top 100 in brackets):
- Baker & McKenzie (#1)
- Skadden Arps (#2)
- Clifford Chance (#3)
- Allen & Overy (#7)
- Jones Day (#8)
- Sidley Austin (#10)
- Sullivan Cromwell (#18)
- DLA Piper (#24)
- Squire Sanders (#61)
- Norton Rose (#67)
- Ashurst (#72)
- Minter Ellison (#83)
- Mallesons (#87)
- Allens Arthur Robinson (#90)
- Freehills (#91)
- Clayton Utz (#97)
- Dorsey & Whitney (#100)
That’s right, despite the hyperbole attending recent domestic market arrivals, there’s still only a piddling 17 of the World’s Top 100 firms located in Australia. Less than half of those are within the Top 50. We’re still not that important. Not by a long shot. In fact, the Australian Legal Services Industry is “only” worth about $20 billion each year and informed analysts recently predicted modest growth of about 5% per annum for the next few years. It is certainly a far cry from the enormous revenues earned in various jurisdictions to Australia’s north. So who cares?
Well, we do, and we still haven’t read any commentary which adequately describes what is happening in Australia. So we thought we would try to work it out ourselves and jot down some musings.
Our first conclusion is that whatever the importance of Australia’s homogenous legal firms may be, it is shrinking each day. Our second, but correlated, conclusion is that the phrase “Top Tier” is no longer a reliable characterisation that people can use to classify law firms in Australia. Crucially, for our swashbuckling corporate lawyer looking dapper at the bar, our third conclusion is that the days of doe-eyed “I work in the Top Tier” one-liners are over (if, cough, they ever started).
Clearing The Tiering
Quite remarkably (to our minds, at least), we’ve never really opined on the phenomenon of the “Top Tier”. Sure, we’ve written plenty about the firms in and about the Top Tier, but we’ve never really dissected what Top Tier status means, who can claim it, and who cannot. Until very recently, most legal commentators have constituted Australia’s “Top Tier” with the following 6 law firms:
- Minter Ellison
- Freehills
- Mallesons
- AAR
- Clayton Utz
- Blake Dawson
Before our readers bombard our inbox with complaints about the ordering we’ve given to the Top Tier, we should note that we have been guided by the FY2011 revenue statistics, which, we always thought, was how informed analysts interpolated the “Top Tier” and the “Mid Tier”. Indeed, there is a deep revenue fissure between the last-placed Top Tier firm Blake Dawson ($380m) and the first-placed Mid-Tier firm Corrs Chambers Westgarth ($252million, closely follwed by Norton Rose on $241million). However, almost all industry commentators would regard Minter Ellison as much less of a certifiable “Top Tier” firm than, for example, Gilbert + Tobin or Corrs Chambers Westgarth (or even Arnold Bloch Leibler). This naturally raises the conundrum of whether we can rely on revenue as an appropriate integer to sort the Tops from the Mids, and the Mids from the Boutiques. But whatever your thoughts on the appropriateness of the Top Tier as we’ve framed it, we think one thing is certain, it is no longer correct or even relevant.
The Gears of Tiers
There are any number of ways to review the law firms operating in Australia (we certainly invite your views in the comments below). For the most part, we think the distinction between Top Tier and Mid Tier firms has existed for the benefit of outsiders looking in, rather than for those inside looking out (with the exception of the occasional big-noting Friday night wanker). There are university students, graduates, laterals, recruiters, new clients, defecting clients and prospective employers all looking for a metric to categorise the quality or “prestige” of a law firm and this has, until now, more or less been achievable through the convenient state of the revenue ledger. We’ve had six firms that are clearly “ahead of the rest” in terms of revenue, followed by another 10 or so that are clearly ahead of another batch of firms, together the Top and Mid Tiers.
However, those days are over. Slowly, but inexorably, firms with global profit pools that are headquartered abroad are moving into Australia. Of the 17 firms within the Top 100 Global Firms we’ve listed above with offices in Australia, several have access to the firm’s global profit pool (if any). Our unverified Songs views From The Big Chair are as follows:
- Baker & McKenzie (Australian profit pool)
- Skadden Arps (Global profit pool)
- Clifford Chance (Australian profit pool until 2013, global profit pool thereafter if CPs met)
- Allen & Overy (Global profit pool)
- Jones Day (Global profit pool)
- Sidley Austin (Global profit pool)
- Sullivan Cromwell (Global profit pool)
- DLA Piper (Asian profit pool)
- Squire Sanders (Global profit pool)
- Norton Rose (Australian profit pool)
- Ashurst (Australian profit pool until 2014, global profit pool thereafter if CPs met)
- Minter Ellison (Federated Australian profit pool)
- Mallesons (Australian profit pool)
- Allens Arthur Robinson (Australian profit pool)
- Freehills (Australian profit pool)
- Clayton Utz (Australian profit pool)
- Dorsey & Whitney (Global profit pool)
If our speculation is correct, students/graduates/laterals need to cumulatively re-gear their attitudes toward the “tiers”. Skadden Arps, for example, is almost incontrovertibly New York’s most prestigious law firm, yet it barely musters a whimper in university corridors. Clifford Chance and particularly Allen & Overy are now emerging is dire competitive threats to Top Tier law firms in terms of recruitment. We have already reported that Jones Day is turning its Sydney office into a “full service offering” and we expect this means that it will be substantially increasing the size of its workforce; something we expect to be replicated at Sidley Austin, Sullivan Cromwell, Dorsey & Whitney, and other smaller (but still large by Australian standards) global firms like Holman Fenwick, which opened a Perth office in September.
The Global Lawyer
All of this, we think, means a drammatic re-gearing of the tiering and what it means to be an elite lawyer in Australia. Assuming it hasn’t already occurred, before too long, we think Clifford Chance, Allen & Overy and Jones Day (possibly also Skadden Arps if it embarks on a period of expansion) will replace Mallesons, Freehills and AAR as La Nouvelle Vague for all those “outsiders looking in”. The university students, the graduates, the laterals, the recruiters, the new clients, the defecting clients and the prospective employers – all of them – will soon be recalibrating their perceptions of the “best” law firm in Australia, and, eventually, where the “best” lawyers can be found.
Which gets us back to Friday night drinks, on the artificial cobblestone of Perth, where a slightly taller vision of professional perfection looks at a chalk board and realises he’s missed tonight’s drinks special. He’s slowly closing an umbrella emblazoned with A&O signage when his eyes meet the sultry, purposeful gaze of a minx on a mission, sewing The Seeds of Love…
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Rumour has it the Mallesons merger isn’t a popular one with partners bickering over how the newly merged firm will be named.
From all reports, it is hostile enough to stop the merger, dead.
One of the best articles on FS for a long time.
As someone who’s just gone through the summer clerkship process, I have a couple of things to say – one is that firms like A&O and CC are struggling to recruit the best quality clerks/grads in Sydney because people aren’t convinced about the quality of their training – AND most 4th year law students don’t know for sure that they want to be M&A/Banking & Finance lawyers, and A&O is pretty upfront with students that those areas are the only practice groups they’re interested in.
The other is that there’s still a definite perception in parts of the Sydney legal community that if you have the chance to work for Allens/Freehills/Mallesons as a summer clerk/grad and you turn that down to work somewhere else – even if it is A&O or Jones Day etc, then you’re making a pretty big mistake. The typical thing you hear is “go to work for one of the Big Three for a couple of years, get some really good training under your belt and then go work for whoever you want”. Not saying that this is true, necessarily, but that you definitely hear this being said a lot.
Guys, check out Lavan Legal – a prominent sandgroper. Anyone who reads the news in WA would know of the aggressive advertising campaign Lavan is undertaking.
The image they are projecting is: we are deliberately staying local because that’s what our clients want, and apparently, they are winning plenty of business.
The tiering is generally unhelpful except in a very broad brush sense – probably for grads for whom it’s useful to rotate through a number of practice areas in firms large enough to have choices.
What actually matters is the quality of a particular practice area in a particular firm in a particular state. Doyle’s Guide seems a pretty good measure for that, but it can be a bit hit and miss.
And unfortunately it doesn’t look like they’re too interested in updating the online version, which would probably be the most useful place for it as a resource. Some practice areas are still marked as “Work in Progres” from 18 months ago with nothing published online at all.
Hmmm … Sidley, Skadden and S&C aren’t well known to Australian university grads because (a) these firms don’t market to Aussie grads and (b) they generally don’t practice Australian law or have the programs and facilities needed to train and develop Australian lawyers in their tiny satellite offices.
For instance, S&C’s website says it has 19 lawyers in Sydney and Melbourne combined. Not all of them are here on a full-time basis and ONLY ONE is Australian-qualified. Skadden have less than 10 lawyers on the ground and only a couple hold Aussie admissions.
Sorry, but I can’t see Jones Day becoming the next big global firm. I’m currently working in London (at a Magic Circle firm who has said publicly it has no interest in entering the over-crowded legal market in Australia) and J-Day don’t have a very strong brand presence in Europe.
I do agree though that CC and A&O will be well-primed to deprive the current leading firms of deal-flow over the coming years and that in response, the top tier will begin to refocus and trim away fat (be warned IP/IT and employment lawyers). We have already seen this with Freehills’ leading practice review.
As for Skadden being the most prestigious NY law firm? I’d expect the folk at Wachtell and Cravath would have something to say about that as well as the researchers at Vault.com: http://www.vault.com/wps/portal/usa/rankings/landing?rankingId=1®ionId=0
Without wading too deep into the “top tier” debate, Baker McKenzie is a good example of a firm having the greatest number of staff and offices globally, but failing to translate this into it being considered one of the leading firms in Australia, the US or in the UK. I can’t speak for its position in Asia and other minor regions. Minters is the Australian equivalent of B-Mac.
Size isn’t everything – you just have to look at the mandates won and esteem held by smaller firms like Slaughters, Cravath and G&T.
If the top tier lawyer from your story is seeking real cobblestones and drink specials, there are still opportunities around to work for global firms in London …
I can second Kate’s comments on Sidleys, Skaddens and S&C. The company I work for has dealt with these guys on SEC regulatory work and they are usually Americans here for a 2-3 year rotation. They also have big disclaimers at the bottom of their emails saying they cannot practice Australian law. Unless a grad has their heart set on moving to the US (or wants to pick up a goldigger on a Friday night), I doubt this is the best environment to start a legal career in Australia.
“What actually matters is the quality of a particular practice area in a particular firm in a particular state. Doyle’s Guide seems a pretty good measure for that, but it can be a bit hit and miss.”
Don’t bother trying to find any information in Doyle’s Guide because they seem to have gone bankrupt. None of the law librarians that I have asked have received the copies that they’ve paid for, and the publisher doesn’t answer his phone or respond to any messages.
I agree with Kate… and would add that I have always considered Minters to be the McDonalds of Australian law firms… they have offices everywhere and may well be the biggest (revenue, lawyers, partners) but that doesn’t equate to quality.
I think Slater & Gordon would be the McDonalds of Australian law firms…
As for the comment that it is “..as much less of a certifiable “Top Tier” firm than, for example, Gilbert + Tobin or Corrs Chambers Westgarth (or even Arnold Bloch Leibler)”
Would probably agree with G&T, maybe re: corrs, and definitely not re: ABL…
Someone cites Doyle’s above with approval.
I LOL’d. Some of the Doyle’s rankings are batsh!t insane. Taking the Melbourne M&A market (the one i know the best) I note that Hunt & Hunt and Herbert Geer are both recommended for M&A over $250m (and I’d kill to see the list of the work that those firms had done in that space) and that they are ranked equally with Corrs.
I don’t want to name names, but there’s some equally laughable FUBARs in the “notable individuals” lists. Especially the equivalence of multi-billion regulated M&A lawyers with guys who do private owner repeat work. Just sayin’.
Dammit, where are all the male minxes looking for upwardly mobile she-lawyers?
Great comments. Stimulating.
FS, you’ve hit the nail on the head. Thought provoking.
Don Draper’s good but there’s also someone better. The market’s big. It’s global. It’s cross-jurisdictional, especially when working with multi-nationals. It’s not for everyone. Be known as the best. Create strategic alliances – domestic and global.
There are economies of scale in being big but only if it’s well managed. Profitability and sustainability are crucial metrics of success. Not size.
That you could even suggest that Skadden is more prestigious than S&C / Cravath / Wachtell is just evidence that you don’t know what you’re talking about when it comes to the US.
As for US expansion locally, those firms tend to really just focus on s144a debt offerings. This isn’t to say that I’d leave my current SA role at a “top tier” firm for a fat US salary, but it is 100% guaranteed that the work will be less interesting / varied than an equivalent role at a prestigious Australian firm. Also, chances of making partner of a US firm from a local platform are very, very low (it will require some serious brown-nosing in the US) and it is far more lucrative to be a partner at a local big firm than a 8th+ year at Skadden taking home US$350 or thereabouts.
“Sidley, Skadden and S&C aren’t well known to Australian university grads because (a) these firms don’t market to Aussie grads and (b) they generally don’t practice Australian law…”
I’m not disagreeing with you but ultimately – apart from Aussie uni grads, who cares what Aussie uni grads think? They’re not clients with money to spend, they don’t have any experience of the industry so they don’t have any insight, and they’re not media/analysts who produce rankings (whatever they’re worth).
Great article. Great comments.
Having jumped through the clerkship hoops in the past few years, it’s pretty well accepted amongst students that Minters is the biggest, but by no means the best of the top tiers. I definately agree with the McMinters comparisons above – and firms like Corrs, Middletons and G&T won out over them amongst people fortunate enough to be able to make choices back in my cohort.
I wouldn’t agree with the comments on B&M – they are the only settled global law firm in Australia that has a chance at offering decent training. People placed quite a bit of prestige to them at a clerkship/grad application level – and importantly they seem to operate in a different market in students minds when all the other law firms are easily placed into their top/mid tier brackets.
Keep up the great work FS.
It’s already been picked up in Kate’s (and several other) comments but I will still join the chorus to call you on the comment that Skadden is “almost incontrovertibly New York’s most prestigious law firm”.
As another poster said, that comment just suggests that you know absolutely nothing about the New York legal market.
I’m an Australian magic circle lawyer (London-based, at a firm with no interest in entering the Australian market). I deal with the NYC firms all the time. Here are a few names that are “almost incontrovertibly” more prestigious than Skadden: Cravath, Cadwalader, Davis Polk, Debevoise, Shearman & Sterling, Simpson Thacher. So, there’s six firms just there.
Tread carefully in commenting on the US legal scene. In my experience, most Australians have zero experience in dealing with (the truly prestigious) US firms and little idea of what’s going on the US market – a market that is immeasurably larger and more complex than anything most Australian lawyers have ever encountered.
Interesting how many have exactly a 0 rating. Law firms’ marketing departments at maximum effort?