We went looking for some news on Mallesons last night and stumbled onto an interesting piece. A cursory search on Google news revealed no less than three articles featuring a jubilant Mallesons boasting that it had lured Clifford Chance litigation expert Denis Brock.

a draft cross referral agreement

We immediately thought two things:

1. attracting Mr Brock to the firm will give Mallesons an excellent chance to save some face in the wake of ex-Mallesons partner Dave Poddar’s recent defection to A&O (and our subsequent article considering why it would make great sense for many other Mallesons partners to follow him in the “triple jump”); and
2. there is something awfully fishy about a Clifford Chance partner “defecting” to Mallesons when virtually the whole legal world is waiting for an official announcement that Clifford Chance and Mallesons are merging.

We then thought that perhaps it was possible that these two issues are related: the Mallesons board conjured a way to strengthen its apparently vulnerable brand by contriving that it had “lured” a Clifford Chance expert, while at the same time giving that expert an opportunity to witness the nuances of Mallesons before reporting back to his old Magic Circle firm.

Tellingly, Mt Broc’sprofile still appears on the Clifford Chance website. Perhaps the firm will leave it there? His profile reveals that Mr Brock has been with Clifford Chance for 24 years and has been a partner for 15 years. In our view, there is every chance he is the kind of emissary who Clifford Chance would entrust with such an important reconnaissance mission.

Let’s recount the current state of intelligence on the Clifford Chance & Mallesons merger:

• In 1999, Mallesons & Clifford Chance first met to discuss merger plans;
• In late 2008, renewed merger talks broke down as a consequence of the GFC;
• In October 2009 we received a credible report that an in principle agreement on a merger had been reached between Mallesons & Clifford Chance and that a formal announcement would soon thereafter be made;
• Also in October 2009 we saw Mallesons CEP Robert Milliner comment that his firm would likely follow the lead of major UK firms in its remuneration structure of employees;
• In May 2010, the AFR published a report that Mallesons and Clifford Chance were again in advanced stages of merging, but this report was discounted by an anonymous comment we received that appears to have been authored by a Mallesons partner;
• In June 2010 we received our most logical report on the Clifford Chance plans in Australia: that it would do so on its own terms to the exclusion of Mallesons; and
• Also in June, our great friends at Rollonfriday delivered a very interesting scoop on the Mallesons/Clifford Chance tie-up; namely that Clifford Chance intends to open on its own terms in Australia but under the auspices of a “best friends” relationship with Mallesons under a formal “cross-referral agreement”.

In our view, these updates and all of the general intelligence we have gathered is at odds with Mallesons’ claim that a highly respected Clifford Chance partner “defected” to Mallesons.

Mallesons and Clifford Chance are “best friends”!

We think the more sensible view is that Denis Brock is relocating to Mallesons to help prosecute the rumoured merger or formal “cross-referral agreement” and the Mallesons board has seized on it as an opportunity to rebuff the much publicised (and very worrying) defection of Dave Poddar to A&O.

What do you think?

Send the Firm Spy your news and views!

At various times in the last year we have reported rumours that Clifford Chance and Mallesons have been toying with the idea of a major international merger. As recently as May we reported the rumour that Mallesons was in renewed discussions with Clifford Chance, following the breakdown of merger talks in late 2008 by reason of the then emerging GFC.

Today, we can report the most compelling (and in our opinion most logical) rumour yet - that Clifford Chance will open shop in Sydney later this year, on its own terms.  And yes folks, the bidding war for profitable Australian partners is set to begin.

We received the following anonymous comments from a Clifford Chance spy a couple of days ago:

‘which magic circle firm is now well past the due diligence phase of orchestrating it’s very own Aussie assault? Allen & Overy? Wrong. As an employee working very closely with the project, I can tell you that Clifford Chance is coming to Australia, sooner rather than later.”

We then received the following comments from another anonymous Clifford Chance spy yesterday:

Rumours wildly circulating London offices this week that Clifford Chance will soon go public with its plans to make a foray Down Under. Investigate.

The Firm Spy’s immediate gut reaction to this news was, well, wouldn’t a magic circle firm considering an assault at least wait for further clarity on the RSPT? Sovereign risk in Australia is being blamed for a recent weakening in domestic markets, so wouldn’t they wait to see if the “Mad Monk”, Tony Abbott, has the mettle to take out the election and reverse Krudd mining tax policy?

Perhaps not, if the European economy is facing a prtotracted economic struggle and Australia is seen - at least by one of it’s major competitors - as a profitable destination (albeit a conclusion reached pre-RSPT).The rumour is also buttressed by the very credible report penned by our friends at RoF.

So where will the Clifford Chance partners come from? RoF speculates that Corrs will be targeted. We beg to differ.

As early as February we have heard credible reports that Clifford Chance is targetting young, dynamic Mallesons partners to head up it’s Australian office. Given the close affiliation existing between the firms, this is not hard to believe.

But the primary hurdle to getting these partners across, in our view, is the likelihood that access to the Clifford Chance equity pool will not represent a major economic windfall in the same way A&O did to the defecting Clutz partners (the weakening Euro doesn’t help either). However, this “hurdle” is tempered by the fact (we think, at least)that the Mallesons lock step model is exasperatingly long and populated by regular “performance reviews”.

So if Clifford Chance either promised prospective Mallesons defectors a set wage for, say, three years, or guaranteed quicker ascension (compared with that at Mallesons) up the equity pile, it might suddenly become an attractive bargain.

The appeal of Australia to magic circle firms is a topic which has been overwrought by commentators (including us) in 2010. But now, more than at any other stage in this year or during the GFC, the urgency is clear. And if you’ve already exhaustively considered the prospect, got ready access to the top talent who’ll be enticed by the right bargain, then why not?

Send the Firm Spy your news and views!

On Friday, the AFR published yet another article speculating on an imminent announcement of a merger between Mallesons & Clifford Chance. This follows articles we published in mid and late October 2009 which also speculated that Cliffords would finally take a chance in Australia.

Mallesons partners in a CC video hook-up

In Friday’s article, the following things were noted:

Mallesons is … in discussions with international counterparts over [a] potential merger or strategic alliance… Beaton Research & Consulting confirmed [it] was involved in advising on merger talks between some of Australia’s leading firms and “magic circle” firms in the UK… Mallesons‘… Robert Milliner said [the firm] “maintains an ongoing dialogue with a range of firms on both sides of the atlantic and regionally… we’ll move if and when the time is right in terms of our strategic objectives”… A … merger would force Mallesons into further cuts to staff numbers, having already completed a redundancy program last year to shed some 110 staff.

We received the following comments from an anonymous Mallesons spy on Friday (our comments appear in square brackets):

Mr Milliner sent us the following email this morning –

“A story appears in today’s Australian Financial Review that speculates on merger activity involving leading Australian law firms [FS: note, this is not a denial]. Contrary to the excitable tone of the story and the focus on Mallesons, a merger is not imminent [FS: so it’s going to happen, just not next week?]. The story is irresponsible for suggesting otherwise.

Like some other firms referenced in the article, we maintain an on-going dialogue with a range of firms globally [FS: note, this is not a denial that merger talks are afoot] but it is as simple as that [FS: as simple as what?]. Additional speculation in the article about staffing levels in the event of a merger is ill informed [FS: but not incorrect?].”

I would ask the Firm Spy to place the following question on your website – why should we prefer Mr Milliner’s email to the article published by the Financial Review when the authors who wrote the article were part of the same legal affairs team that Mallesons advised of the voluntary redundancy program before any staff had been informed of it? Is this just another case of the Financial Review being tipped off ahead of any of us?

The language chosen by Milliner, which calls to mind the anomalously transparent mud review, plus the revelation that the firm allegedly tipped the AFR off to its voluntary redundancy program ahead of its own staff, would ordinarily compel us to agree that perhaps there is more to this overwrought story than first thought. However, we received the following compelling comments on the weekend from another anonymous Mallesons partner spy:

Firm Spy, as our last reasonably objective editorial, can you please do your bit to set the collective minds of Mallesons staff at ease. There is no merger currently contemplated with Clifford Chance or with any other international firm. Neither Robert Milliner, nor the board has the power to unilaterally declare that a merger will take place. Rather, a long period of consultation must take place, over which period partners might be invited to consider expert, independent views and reports on the merger. A a partnership vote must then be taken. This consultation process was in operation in 2008, when it was last reported that a merger would take place. I was a part of it then. I am not a part of it now. This is because the consultation process has not yet begun. Nor is there any suggestion that it will begin any time soon.

So if it is true that Beaton Consulting has been involved in advising on an international merger, and that merger doesn’t involve Mallesons & Clifford Chance, then who is it? Do you know? Tell the Firm Spy first!

Send the Firm Spy your news and views!

If you’re still doubting the imminent prospect of a Mallesons/Clifford Chance global merger, take one look at the Run of the Milliner.

Our favourite Chief Executive Partner, who a remarkable 58 of you think is a part-time warlock (see poll, to the right), featured in an article earlier today in The Australian about changes to lawyer remuneration in which the following was said:

Mr Milliner said the speed at which Australian firms abandoned “lock-step” salaries for all employed lawyers with the same years of service would be strongly influenced by international practice.

He said the use of lock-step salary setting had been declining at major British law firms before the global financial crisis and there was no reason why this trend should not continue once the global recovery became entrenched.

“Over time I think you will see movement (in Australia) away from lock-step towards greater degrees of performance-based salary-setting,” Mr Milliner said.

Hmmm… a remuneration change to please an international suitor, perhaps?

Since our article a couple of weeks ago in which we published a rumour suggesting a merger is set to take flight within weeks, the Firm Spy has been literally inundated with emails and tips from readers corroborating various parts of the anonymous quote we published. We have chosen not to publish these additional quotes because they add little value to what is already known. Of course we appreciate you sending them through.

The eurocentric, British slant informing Milliner’s comments above, however, must surely be the clearest sign yet that Mallesons Clifford Chance will set the legal world alight at some point in 2009.

Watch This Space.

Send the Firm Spy your news and views!

News just to hand.  Clifford Chance has become the first Magic Circle firm to announce a formal redundancy scheme for ‘a number of lawyers’.  An initial round of ‘70-80’ layoffs will be undertaken through a ‘collective consultation process’. According to the Spy’s sources, the following email was sent by the firm’s London managing partner on Thursday:

This note is to tell you that we are proposing to make a number of lawyers redundant in the London office.

Clifford Chance Taking No Chances

Jeremy

Interestingly, while ‘trainees will not be affected’ by the redundancies, they are still invited to a briefing session.  This bodes ill for associates at all London firms, and one wonders if it will set a precedent elsewhere.  Is your firm laying off?  Put the heat on: tell the Spy.

A top-secret merger proposal between Clifford Chance and Mallesons Stephen Jaques, which was unknown to many

A Clifford Chance lawyer says no to Mallesons merger proposal

A new merger proposal, coming after the failed bid in 1999, was shelved as a result of the market downturn.

The talks did not extend as far as the partnership as a whole and were confined only to partners involved in management. A Mallesons Firm Spy remarked that:

‘several older members of the partnership must surely fear that if the merger went ahead, the sleaker international outfit might not have involved them’

Meanwhile, one Clifford Chance insider told Legal Week the discussions had been aborted because the Magic Circle firm wants to concentrate on its existing business in the current market conditions.