The Acquirer
When we heard the name “Squire Sanders” – the firm that negotiated the defection of almost the entirety of Minter Ellison’s WA partnership – the first thing we thought about was finger-lickin’ deep fried chicken and the mastermind behind it all; Colonel Sanders. 
It turns out that Squire Sanders bears no relation to The Colonel at all and is in fact a thriving global law firm with 36 offices and over 1275 lawyers. Whilst the bulk of those offices are littered throughout the US, it also has a presence in the hotbeds of legal revenue growth: Shanghai, Beijing and Hong Kong. A look at the firm’s historical time-line reveals that it was founded in Cleveland, Ohio, in 1890, 81 years later it opened its second office in Washington DC, before it embarked on a period of rapid expansion in the following 20 years, reaching Europe. Things got particularly interesting for Squire Sanders in the late 90′s/early 00′s when it established its offices in Hong Kong, South America, China and the Middle East, culminating in the firm’s coup d’etat: the acquisition of the 500+ fee-earner UK firm Hammonds LLP earlier this year.
At about the time Squire Sanders was squeezing 500 more fee-earners into its legal offering by acquiring Hammonds, KFC coincidentally launched the Double Down: a “sandwich” containing
bacon, two different kinds of melted cheese, the Colonel’s ‘secret’ sauce… pinched in between two pieces of Original Recipe chicken fillets.
Is this a case of Sanders trying to squeeze too much into its menu?
The Target
What do we know about Minters’ WA practice? Well, we know that it was staffed by approximately 18 partners and, judging by the firm’s broader leverage ratio of 3 (AFR 10/12/10), this means that a total of 72 fee-earners manned the firm’s WA offering. But query their competence – we received the following comments from an anonymous tipster yesterday:
FS,
Did you see the announcement today regarding Minter Ellison Perth becoming part of the American firm Squire Sanders?
An absolutely classic case of poor Due Dilligence on the part of the American Firm, they are taking a second or third rate office with staffing problems (ie they recently had to promote a SA because they had no corporate partners). As a former employee of MEP, I can only say good luck but I think we will see some massive issues arising out of this.
Thanks to a leaked email from Minters CEP John Weber, it looks like Minters may have succeded in quarantining the more successful WA partners from the Squire Sanders assault. Moreover, the following partners appear to be joining as Minters equity partners, rather than in the affiliate capacity under which the Minters WA practice formerly operated:
However, one anonymous tipster made the following observation of the partners remaining under the Minter Elliosn branding:
Interesting that the retention of 4 Minters partners is described as keeping the best … It seems 2 of the 4 are slaves to the national big 4 bank panels and 1 is close to retirement.
Which gets us to the new-look Minter Ellison.
The Minter Ellison Restructure
It looks like it will take Minters a few months to get its Perth office operational. Moreover, in a media release sent to FS by email, the following is noted:
Our expectation is that by October we will have around 10 partners and about 40 lawyers on the ground in Perth. We think that is the right fit for the market.
But there must be something of a question mark over the work to be handled by those 40 lawyers, especially if the media release is any indication:
Q: Are the departing partners taking clients with them?
A: We expect some clients may chose to continue to instruct partners of the Perth firm who aren’t joining us. That is the way in any service business – relationships matter.
Relationships … and secret recipies. It is particularly interesting to note in the media release that Minters apparently asked its Perth office to officially integrate with the broader partnership (it is an “affiliate” office and, we presume, its local profits remain with its local partners – the same goes for the firm’s offices in Adelaide, Darwin, the Gold Coast and New Zealand) but the offer was rejected:
Q: You said you’d suggested full integration to the Perth firm. Why didn’t they take
that up?A: …We saw a need to upgrade in Perth in key areas such as energy & resources, corporate, and
infrastructure. In the end, not all the Perth partners agreed with our views on the way
forward in that market and so the two firms have agreed to end the formal association.
Finally, we were forwarded the following email by an anonymous Minters Spy:
From: John Weber
Sent: Friday 5 August 2011 11:16 am
To: ALLUSERS
Cc: NPART; Leith Ayres; Andrew Thompson; John Prevost; Ben Cockerill; John Witheriff; Mark Weenink; Greg May; Nigel McBride
Subject: Perth office – information for staff
Colleagues,
Today, Minter Ellison is announcing that we are establishing our own office in Perth and have amicably ended our relationship with the firm that has operated under our “Minter Ellison” name in Western Australia.
Our new integrated office in Perth with have around 10 partners. They will include four of the current partners of the Perth firm who are joining the broader Minter Ellison partnership… some East Coast partners and some lateral recruits. A number of senior employed lawyers from the Perth firm are also joining us.
…Through discussions with the Perth firm over the past 12 months it has become clear that our two firms have differing commercial objectives in the Western Australian market…The changing Australian legal environment and increasing Asian investment into Australia mean we need a Tier 1 offering in the Perth market.
We wish our former Perth colleagues well.
Regards
John
John Weber Chief Executive Partner
t +61 2 9921 4500 f +61 2 9921 8117 m +61 417 485 089
Minter Ellison Lawyers Aurora Place • 88 Phillip Street • Sydney • NSW 2000
john.weber@minterellison.com www.minterellison.com
Bucket of chicken and some Wicked Wings to celebrate, anyone?
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Does the KFC angle really add anything to this story? Does it make it more convincing, more interesting, more funny?
Why not just tell the story?
The analogy with fat, hungry Americans is perfect!
Tommy,
That’s how the media operates. Where have you been all these years?
FS is here to entertain, they aren’t drafting pleadings you know.
Agree with Tommy 100%
I agree with Tommy 92.76%
Crikey this is bad for business, I had my client on the phone before 9am today. They wanted to know how this would effect their matter as Minters are the ‘other side’.
I think I will give the ‘other lawyer’ 24 hours to let the dust settle before I call her and gloat.
Fantastic news. Nevermind Square Sanders, hopefully we’ll see the Texan energy firms like Vinson & Elkins, Baker Botts, Fulbright & Jarworski and perhaps some “white shoe firms” that dabble in energy in WA before long. Aussie law firms have paid their employees low by international standards because of the lack of competition from foreign firms (and Aussies returning to the good weather etc) for far too long. More competition on the remuneration front can only be a good thing for the employees. When that happens, some may pick the money (and work the hours), but right now, Aussies don’t have that choice unless they go overseas.
i agree with Tommy 86%
An excellent point made by ‘Good times’. The days of the top-tier salary cartel are numbered…
@good times …… increased pay will only come if increased charge rates can be imposed on the market. That only happens if clients are prepared to pay them. Existing clients won’t pay them to current firms – there is enough competition in the market to keep a bit of a lid on rates. Only new entrants to the market charging higher rates to new clients to the market could afford to pay dramatically increased salaries. There’s a few ‘what ifs ….’ in there. Don’t sign that new leveraged lease just yet kiddo
Industry pays more than private practice in WA. They also make an effort to send in-house lawyers to training courses in specialist resources related law.
Re the comments by ‘Good times’, my understanding was that US firms pay so much more because it costs so much more to do a law degree over there (hundreds of thousands).
Squire Sanders – the Reject Shop of the American legal industry.
@a whole new world .. a new fantastic point of view … – Agreed on many ifs. Though from what I’ve seen happening in HK (one of the few places in the world where UK and US firms compete head to head without real “home court” advantage), when the US boys finally decide to compete, they compete. They can do that because (i) the US legal market (particularly on the litigation front) is generally much more profitable than most non-US legal market, and (ii) these firms tend to have a flatter structure and more merit based internal competition (smaller HR/BD teams, step-up/down equity). In the words of a US partner I recently lunched with: “we probably make the same revenue on a per lawyer basis as [that MC down the road], but we choose to spend it on our associates and give them single offices and real bonuses instead of legions of support staffs who clock off at 5pm.” They obviously also work people harder and lay people off on 5 minute’s notice but that goes for everybody nowadays. At the salaries they are paying, they aren’t hiring you to do 4 billables a day…
@Anon – That is probably true. But market rates is what one firm has to pay to compete with others for talent. I don’t expect to see NY rates in OZ, but “mid-Atlantic” rates (which are by themselves a massive increase on current Aussie market) might not be out of the question given time. It’s also generally bad business for a firm to pay some lawyers significantly better than others when they all do similar work (i.e. some UK firms…).
You compare what aussie lawyers are paid (as reported in the latest Mahlab survey) with salaries in London and you’ll find you probably earn pretty much the same in Sydney as you do in a magic circle firm in London.