Our friends at ALB delivered a huge scoop yesterday, reporting that the Adelaide office  of DLAPF would merge with specialist Adelaide tax firm Rankine Tucker.  The firm will be called Fox Tucker and will open its doors on September 6.*** For the dyslexics in the room, that’s “Tox F*cker”. This development follows from an exclusive report we published earlier in the year that the Adelaide office of DLA Phillips Fox had become financially independent of the rest of DLA Phillips Fox.

DLA Piper profit map

Both developments, we believe, form part of a carefully calibrated plan to lure DLAPF’s international affiliate DLA Piper into a full merger with DLA Phillips Fox. This would entitle Australian-based partners to a share of DLA Piper’s global equity pool and is something profitable Aussie partners are understandable eager to facilitate. This includes, of course, DLAPF’s Chief Executive Partner Tony Holland, who left Mallesons in 2008 in preference for a stint DLA Piper’s Dubai office, presumably in search of huge tax-free dollars. However, Mr Holland arrived only to watch the Dubai office fall to pieces when a few months later its major client Nakheel Corp fell on hard times. This ill-timed move has likely come at significant personal cost to Mr Holland; he now finds himself in a considerably less lucrative partnership, not to mention that income tax is payable in Australia. Profits in 2008/2009 were estimated at the following levels between the two firms:

• Mallesons - $1.6m (approx); and
• DLA Phillips Fox - 1.2m (approx).

If those figures are correct (we don’t know if they are), it should come as no surprise that he is championing the idea of a full DLA Piper integration (if the A&O triple jump is anything to go by). Earlier in the year, we published the rumour that Mr Holland was chasing this end with considerable zeal:

Tony Holland wants to get rid of a heap of partners who are not in corporate or finance - ie turn Phillips Fox into another MSJ. Then, and only then, will Sir Nigel at DLA [Piper] give the nod to the full merger.

So what does Firm Spy know about the merger?

Following from the scoop yeasterday, we received the following comments from an anonymous DLAPH spy:

Dearest FS,

For showing your warmth of heart yesterday by removing your post regarding our lovely firm spokeswoman, I thought I would send you some news at the emotions around the firm on the news that we are completely severing DLAPF Adelaide from the broader firm. Everyone I have privately spoken with about this development regards it as the most significant step in the integration by DLA Piper into Australia. We’re all expecting something official to be announced before year’s end.

From what I have heard from DLAPF partners, DLA Piper regards our transactional groups as being attractive enough to formalise an alliance, but a major stumbling block was the Adelaide office which is/was constituted primarily by smaller groups like insurance and DR…

We also received these no-nonsense comments from another anonymous DLAPF spy:

DLA Piper to announce formal merger in a few weeks, with actual merged entity to commence 1 January 2011.

Here is a brief overview of how the firm has changed in the last few months:

• In August DLA Phillips Fox severed ties with its Adelaide office, cutting loose several litigation, employment and insurance partners;
• In May, DLA Phillips Fox appointed Greg Clifton as special counsel in its corporate team and Michelle Gaze as a senior associate in its project finance team;
• In May a a global DLA Piper partner’s conference in May was held which “could lead to a more definitive time frame” as to the timing of the merger;
• In March, the entire “media and entertainment” team defected from DLA Phillips Fox for Tresscox;
• In February, DLA Phillips Fox construction partner Alex Harmann left the firm to join Baker & McKenzie;
• In November last year John Hutchison and Tony Macafee joined DLA Phillips Fox as corporate partners
  
• In October last year, environment and planning senior associate Kim Piskuric left DLA Phillips Fox for Maddocks;
• In August last year, veteran DLA Phillips Fox construction partner Chris Edquist left the firm to join Holding Redlich; and
  
• In late May 2009 environmental law specialist Daniel Clay left DLA Phillips Fox for Minter Ellison,

From what has been reported, therefore, we have seen the loss of the “media” team, the shrinking of the construction team, the withering of the environment, litigation, employment and insurance groups, and a corresponding strengthening of the corporate and banking groups.

Does this sound like music to Sir Nigel’s ears?

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*** As soon as we read the name ‘Fox Tucker’, we immediately pondered “what is a fox’s tucker?”. We typed “what do foxes eat” and discovered that:

Foxes eat small rodents, such as mice and rats.

We hope Fox Tucker makes a few bigger kills as it fights for market share.

We spent a reasonable chunk of the last 48 hours researching the difference between journalism and communications/public relations.  No, we’re not “communications professionals”, so a bit of research was necessary.

For thoe unitiated, communications/PR staff are employed by many professional services firms primarily to shape public perceptions of their firm in positive ways. Part of this role involves regular interaction with journalists: Comms/PR staff are experts in dealing with journalists. They often provide journalists with an “official” comment from the firm on a particular news item which invariably results in the firm being positively perceived in any subsequent news article.

Websites like Lawyers Weekly, ALB and The New Lawyer are industry paragons in this regard. These sites regularly show how competent communications professionals can shape journalist reportage in ways that are positive for the firm in question (by the way, a big congrats to Lawyers Weekly on its 500th edition - click here to check it out!).

Such is the tremendous importance of PR that Bill Gates once said:

If I only had two dollars left I would spent one dollar on PR.

And Bill knows a thing or two about how to spend cash!

Although it is one thing for a communications professional to competently fulfil their job description by dealing with journalists, it is entirely a different thing for comms staff to comment on the relevance of our site from the perspective of the firm’s employees and to dictate to those employees what is “worthy of their attention”. Neither PR staff nor partners in firms have any business dictating to their staff what they should read and what they should not. They do not possess the professional competence even to provide guidance in this regard because it is purely a matter of opinion.

As unprofessional communicators, we understand that the communications professional previously forming the subject matter of this post was probably either acting according to the instructions of her superiors, or simply indulging in a frolic outside the scope of her professional competence.

We think 2 tough days was enough.

No doubt this information will soon be worthy enough to come to her attention!

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Earlier this year, we reported the news that DLA Phillips Fox was chasing a full-merger with its offshore affiliate DLA Piper. The AFR broke the story in August 2009 that DLA Phillips Fox was seeking a formal merger with its international affiliate DLA Piper. Since that story, we published an exclusive report on how the Adelaide office of DLA Phillips Fox had become financially independent of the firm.

DLA Piper partner on porns front line

We then published another exclusive story on rumours that incoming DLA Phillips Fox Chief Executive Partner Tony Holland was essentially intending to slim the firm down to encourage the international integration with DLA Piper. In that post, the following was written:

Tony Holland wants to get rid of a heap of partners who are not in corporate or finance - ie turn Phillips Fox into another MSJ. Then, and only then, will Sir Nigel at DLA [Piper] give the nod to the full merger.

However, we now wonder whether DLAPH will still persist with a merger even if given the Piper’s approval, after the hilarious allegation on Friday that a Netherlands-based DLA Piper partner has such an appetite for hardcore interracial pornography, that he apparently carries a USB-stick of it on his person to the office.

According to our UK-based pals Roll on Friday:

The [DLA Piper] partner was giving a presentation at the office of Orangefield Trust, a major Dutch company. Unfortunately when he put his USB stick, which contained his presentation, into the laptop that Orangefield had provided, he discovered that it had an “autoplay” function. And the room was treated to an unstoppable slideshow of hardcore interracial porn.

The Firm Spy the received the following rumour from an anonymous tip from a DLA Piper spy on the weekend:

Re DLA Piper porn scandal reported by RoF, the interracial actress in question was apparently none other than actor Laurence Fishburne’s 19yo daughter, Montana, who recently announced her intention to embark on a “career” in porn.

Incredibly, it appears that the teenage daughter of the star of the Matrix Trilogy, Laurence Fishburn, is indeed throwing herself into the adult industry. But according to E-Online, Montana Fishburne’s debut feature film isn’t set for release until 18 August 2010. So if the rumour is true that the interracial porn forming part of the DLA Piper porn slideshow featured Montana Fishburne, the partner in question has certainly been doing his errr… homework.

On the topic of homework, we have since checked out the website for the Orangefield Trust (the company that was unwittingly forced to endure the porno show) and it contains the following cryptic message in a large font on the homepage:

Your Business
Our Care.

Perhaps the DLA Piper partner in question did his homework and thought that because his private “business” involved hardcore interracial porn, the Orangefield Trust might “care” to know about it?

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In late August 2009, the AFR broke the story that DLA Phillips Fox was seeking a formal merger with its international affiliate DLA Piper. Since that story, we published an exclusive report (later picked up by our friends at ALB) on how the Adelaide office of DLA Phillips Fox had become financially independent of the firm.

DLAPH management hard at work yesterday

We then published another exclusive story on rumours that incoming DLA Phillips Fox Chief Executive Partner Tony Holland was essentially intending to slim the firm down to encourage the international integration with DLA Piper. In that post, the following was written:

Tony Holland wants to get rid of a heap of partners who are not in corporate or finance - ie turn Phillips Fox into another MSJ. Then, and only then, will Sir Nigel at DLA [Piper] give the nod to the full merger.

Last week, ALB speculated (in a great scoop) that DLA Phillips Fox might be preparing to sever ties with its New Zealand office, but not merely in the “financial independence” sense that it has with its Adelaide office.

Perhaps now, then, amidst this merger hype, we should pause for a moment to have a quick look at what has recently been reported about the Fox in ALB and Lawyers Weekly:

• Last week, DLA Phillips Fox appointed Greg Clifton as special counsel in its corporate team and Michelle Gaze as a senior associate in its project finance team;
• In March, the entire “media and entertainment” team defected from DLA Phillips Fox for Tresscox;
• In February, DLA Phillips Fox construction partner Alex Harmann left the firm to join Baker & McKenzie;
• In November last year John Hutchison and Tony Macafee joined DLA Phillips Fox as corporate partners
  
• In October last year, environment and planning senior associate Kim Piskuric left DLA Phillips Fox for Maddocks;
• In August last year, veteran DLA Phillips Fox construction partner Chris Edquist left the firm to join Holding Redlich; and
  
• In late May 2009 environmental law specialist Daniel Clay left DLA Phillips Fox for Minter Ellison,
  

From what has been reported, therefore, we have seen the loss of the “media” team, the shrinking of the construction team, the withering of the environment group, and a corresponding strengthening of the corporate and banking groups. We thus probably didn’t need the following anonymous comments, sent to us on the weekend from a DLAPH spy, to draw the logical inference:

The latest talk around the DLAPH corridors which I heard a few different times last week is that the banking team will soon be increasing its office floor space. This might sound like small news to FS but here in the office it has added to the fear that management is trying to push smaller and less profitable teams out the door to enhance our appeal to DLA Piper as an Australian merger target.

Do you think management is consciously trimming the DLA Phillips Fat?

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DLA Piper weilds the knife, er, chainsaw

The NZ DLA Phillips Fox offices have now also gone the way of Adelaide - they are now also a ’ financially separate business from the Australian partnership’. This has been explained on the basis of getting closer to DLA Piper, but it seems suspiciously like shedding the unprofitable areas.

Preparing to enter the DLA fold or just another case of trimming the fat?  We’re inclined towards the former.

The emergence of key international firms in the domestic market has been a key development in 2010. We’ve seen the merger of Deacons with UK silver circle firm Norton Rose and the arrival of Allen & Overy in Sydney & Perth. Although most commentators are characterising the arrival of A&O as nothing more than Clayton Utz in disguise (ie without the thoroughly negative connotations being levelled at the firm, based a host of reasons), it is hard to not to reflect on how these two key developments in the domestic market will influence the shape of things to come.

To this end, we reported mid last year the rumour that DLA Phillips Fox would be seeking a full integration with its international affiliate at some stage in 2010. Despite being given the opportunity the opportunity recently in BRW to dispense with the rumours new Chief Executive Partner Tony Holland chose not to. Tony, a project finance partner, had ironically not had a chance to “go over the financials” of the intergration.

In that post we also reported on the major influx of Middle Eastern DLA partners to DLAPH. It is against this backdrop that the following rumour was sent to us from an anonymous DLAPH spy. If it is true, it would amount to a peculiar and reprehensible episode of “biting the hand that feeds you”:

Jump Jump!

Tony Holland was enticed from his position as deputy chairman at MSJ in 2008 by DLA Dubai (and ex-MSJ) partners. He was paid a fortune. Problem was, DLA Dubai had one client in Nakheel and was a sinking ship. The partners who brought Tony across have been sacked by DLA now. Tony saw the writing on the wall and got himself a plush job back in Melb as the new Phillips Fox Chairman. His game plan is to sever all ties with all Phillips Fox firms in Australia & New Zealand except Melbourne, Sydney and Brisbane. The rest can go jump!

After this, he wants to get rid of a heap of partners who are not in corporate or finance - ie turn Phillips Fox into another MSJ. Then, and only then, will Sir Nigel at DLA give the nod to the full merger. There are some very dodgey ex MSJ partners in Dubai and Abu Dhabi who have no clients or practice and have been given notice. They are nervously waiting for Tony to proceeed with his plans and to get jobs with Phillips Fox pre-merger, so they can be a part of his plans.

Hmmm… it is all starting to become a bit clearer (if the spy above is to be believed). First Tony returned to Oz. Then the DLAPH Adelaide office gained its financial independence… what next?

If you know more, tell the FIrm Spy first.

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We reported last week that full merger talks between Australian law firm DLA Phillips Fox and its international affiliate DLA Piper had been thwarted. That is, the incoming Phillips Fox Chief Executive Partner Tony Holland hadn’t yet had an opportunity to get across “the financials” of the merger.

Tony’s task of getting across these mysterious “financials”, apparently just got a little easier. If our anonymous DLAPF spy is to be believed, he ought to consign the figures coming from his Adelaide office to the bin:

DLAPF/DLA Piper merger? DLAPF Adelaide is now financially independent of the wider firm. It happened a couple of months ago, very quietly.

Very quietly indeed! We certainly haven’t read anything in the press. This news is at odds with the firm’s Australian website which proudly boasts of its presence in the city of churches. On the “About Us” page of its website, DLAPH proclaims:

DLA Phillips Fox is one of the largest legal firms in Australasia with offices in Adelaide, Auckland, Brisbane, Canberra, Melbourne, Perth, Sydney and Wellington.

But if the Adelaide office and the wider firm are financially independent, and indeed the firm is on the record as having financial independence from the DLA Piper network (instead having an “exclusive reliance” only - for referrals), in what sense are DLA Phillips Fox offices interconnected?

Like the naming rights to a stadium, can an office just pay a fee and get a “DLA Phillips Fox“ moniker?

Meanwhile, the caustic barbs being leveled at the firm are stacking up on the website of our friends The Lawyer:

This really raises serious qustions about the management decisions of DLA - How could they let the so called “Aussie Mafia situation” continue unchecked for so long? They should have nipped the sitution in the bud long ago by firing these partners rather than “seconding’ back to Oz. I’d have also thought the Phillips Fox is taking a big risk in terms of their reputation own by employing these “damaged goods” - Word travels fast.

I think this situation has done DLA ME irreparable damage and, as previously commented, who in their right mind would instruct DLA ME again!!

And this:

The fact remains, that the comments on here are true that a minority of very poor quality Australians ruined what had become a very good platform for DLA, and they didn’t just stop at shipping in second rate lawyers. DLA [Dubai] is now a third rate provisional Aussie practice, which unfortunately is where it has now slid from what promised to become an excellent practice, much to the annoyance of the other firms here, hence why everyone is delighting in the DLA debacle.

And most recently:

A practice built on cronyism can never succeed.

Ouch! A far cry from the claims on the DLAPH website:

we enjoy our work and our clients like working with us. We are known for our down-to-earth, practical and open approach to building relationships with our clients and with each other. We focus on teamwork – across our network of eight offices in Australia and New Zealand and globally, as part of our exclusive alliance with DLA Piper, one of the largest legal services organisations in the world.

Teamwork, or a fractured financial (t)rot back to Australia?

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We reported in August 2009, in a post entitled “DLA Phillips Fox(t)rot; Formal Merger DLA Piper Sought”, that national mid-tier firm DLA Phillips Fox was seeking an early 2010 formal financial integration with DLA Piper.

In the current edition of BRW, incoming DLA Phillips Fox Chief Executive Partner Tony Holland sheds some light on the prospects of a full merger:

After just three weeks in the role, most recently managing partner of DLA Piper’s Dubai office, has been forced to defend the Australian firm’s merger talks with his former firm… Holland said negotiations were going well but stops short of offering a time line for completion. However. a global DLA Piper partner’s conference in May could lead to a more definitive time frame… “All I can say is our relationship with DLA Piper is continuing to strengthen and we’re looking at financial integration as one option,” he said.

How Mr Holland, himself a Banking & Finance partner, hopes to achieve “financial integration” remains unclear however given that, according to the BRW, he

“hasn’t had a chance to get across all of the financials.”

Banking and Finance financial FAIL?

More troubling still is the flock of lawyers and compatriots Holland has apparently brought back to DLA Phillips Fox with him from the troubled Dubai office of DLA Piper. Moreover, as reported by The Lawyer:

Regional [Middle Eastern] finance capability will be led by finance and projects co-head and Nakheel relationship holder Damian McNair, who is ­currently on secondment with corporate partner Peter Monk to DLA Phillips Fox.

This revelation gave rise to the following comments, written below the post:

Are we sure that McNair and Monk are really seconded to Oz? I reckon they lost their jobs because let’s face it, McNair only had one client (Nakheel) which are not instructing anyone and Monk didn’t have any big name loyal clients

Then this:

DLA Piper Middle East have proven to have had a flawed Middle East strategy. They have made some horrible hiring decisions and now are paying the price! By the way, wati and see…more partners to go. If you look at their regional offices some are still seriously underperforming.

And this:

The great thing about the recession is that the people that only came to Dubai during the end of the boom years or at the beginning of the recession (because they lost their jobs in their home countries) will be got rid of and sent packing. The likes of Monk and McNair never had any real interest in the Gulf and only came to Dubai to get on the band wagon. They were paid far too much for doing next to nothing. They are now back in Oz and will never will return to the Gulf - thank God!

Then this:

Correct me if I’m wrong but Damian McNair is a construction lawyer (whose professional gems include the drafting of Nakheel’s standard form contracts). God knows how he can possibly lead a finance department when he can’t even get his specialism right- but wait - DLA haven’t actually got a finance department!! What a disaster!! Close up shop!!

And then, most discouragingly, this:

The term Aussie Mafia just shows how inept, ill-informed and ignorant some people are. The Aussies were specifically sought out and encouraged to come to the region especially during the boom as most of the people there at the time could not deliver and did not have the necessary skills. Many worked 16 hour days 7 days a week both at DLAs and at Nakheel and many national projects such Palm Jumeirah simply would not have been delivered without them. With attitudes such as these the region will only ever attract D grade talent.

So, if these above commentators are to be believed, Mr Holland jumped on the bandwagon, made horrible hiring decisions and presided over an outfit that has been referred to in Dubai as the “Aussie Mafia”?

It is certainly difficult to see how Tony will convince DLA Piper to consider a full merger with DLAPH, but hey, if the financials are in order, who knows? Has anyone seen the financials, by the way?

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DLA PHillips Fox Performance is performance managing instead of making people redudant to avoid paying packages. I alone know of 2 people who are being targeted by management. One is a lawyer and one is in the business development function. Apparently the firm has decided on a new structure and is trying to managing all of the “extras” out without paying redundancies so that the press doesnt find out how badly they are doing. It is utterly dispicable and people need to know!

Thanks to the AFR for the following profile:

Partner Remuneration System

Performance-based system partnership.

Partner Pay For 2008/09

The lowest level equity partners pull in $400,000.00, while the top level receive $1,200,000.00. A bonus takes the top performers to $1,400,000.00. Fixed share partners earn between $200,000.00 and $400,000.00.

Pay

Estimated Profit Margin = 35%

Estimated Profit = $78,000,000.00

a good year for the fox

Estimated Profit Per Lawyer = $140,000.00

Estimated Profit Per Equity Partner = $820,000.00

Revenue

Revenue 2008/09 = $224,000,000.00

Revenue Change = +2.8%

Revenue Per Lawyer = $410,000.00

Revenue Per Partner = $1,460,000.00

Revenue Per Equity Partner = $2,350,000.00

The Verdict

In his last year at the helm, chief executive Tony Crawford says the firm’s restructuring has created a strong platform for recovery and that revenue grew in litigation, workplace, infrastructure, competition and intellectual property. The amount generated from referrals from its international network grew.

Comment

DLA Phillips Fox recorded the third highest revenue growth of the top 10 firms. Margins were relatively low but held steady, with spending cuts offset by costs from the reconfiguration of the Brisbane office and new premises in Canberra. The dire state of the legal market in the US and UK put pressure on international referrals last year but the firm’s vision is still a global one.

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