Middletons national managing partner Nick Nichola speaks with ALB’s Renu Prasad about Perth, partnership and the disappearing office tie.

At the Middletons Sydney office, the ties are on standby - just in case Nick Nichola decides to drop by for a surprise visit. “In Melbourne most men would be wearing their ties – in Sydney, I think they put their ties on when I come around!” says Nichola. “These are all generalisations of course, but I noticed that ties are less common in Sydney – Perth’s a bit like that too.”

Melbourne, Sydney and Perth represent the three points of the Middletons compass. Like many others, this firm’s expansion journey is still a work in progress. In December 2008, Middletons entered the Perth
market via a three-way merger with local firms Salter Power and Franklyn Legal.

The arrangement was to prove short-lived for the three Franklyn Legal partners, who defected to Corrs a little over a year later because they felt the scale of the Corrs operation was more suitable for them. “I think the decision they came to was that what they planned for themselves and their clients was better suited to an entity that was considerably larger than what we were and still are,” says Nichola. “It was a question of critical mass.”

Still, Middletons appears to have recovered well from the setback - 2010 calendar year revenues from the Perth office were 235% ahead of the 2009 figures. Middletons has seven partners in Perth at present and would like to expand to 15-20. The use of a merger to enter the Perth market has since become a
well-trodden path for firms such as Gilbert + Tobin, Allen & Overy and Clifford Chance. The conventional
wisdom is that the Perth market is fiercely parochial and would not accept a newcomer without any local roots or affiliations. Nichola is cautious about this stereotype, but admits that there is an element of truth to it.

“Our experience has been that Perth corporates are much more likely to want to know whether you are from the local office or from one of the interstate offices,” he says. “Anecdotally you hear lots of stories about someone being instructed and that is one of the first questions a client will ask. And what they’re really asking is not which office are you situated in, but are you a Perth person or are you a fly-in? I don’t get a sense that that occurs in Melbourne or Sydney. It doesn’t seem to be as relevant.”

#

In addition to a desire to support the local economy, Nichola says that there are also practical reasons for this preference for Perth lawyers. “If I am a junior miner in West Perth, I want to know that my lawyer is actually on the ground here and will be available when I  want them to be available,” he says. “You
don’t want your lawyer telling you they’re about to book a flight and will be there tomorrow or in a couple of days time.”

The traditional Melbourne method of expansion is what is jovially known as the Mexican method – advancing north across the border into Sydney and Brisbane. Middletons boasts a rather different geographical spread: Melbourne, Sydney and Perth. Brisbane perhaps would have been a more logical choice for the firm’s third office, a point which is conceded by Nichola. However, he explains that
client demand drove the firm west.

“The impetus for Perth was client driven,” he says. “Prior to Perth, if you had to pick where to expand it
would logically have been Brisbane so we’d be up and down the east coast but it was because of a client need we went into Perth.”

However, the firm is anxious to establish a presence in Brisbane. “Brisbane for us is very much on the
agenda,” declares Nichola. However, he preferred not to comment on whether the firm was currently in any negotiations.

History
When the Perth-based partners of Franklyn Legal defected from Middletons, they may have been
upholding one of the firm’s less hallowed traditions - broken partnerships and a  flirtation with Corrs figure prominently in the history of the firm. In the late 80s, it was known as Westgarth Middletons,
the result of a merger with a partnership which subsequently departed to join Corrs. Middletons then entered a federation with Sydney-based Moore and Bevan, an arrangement which lasted until 2001. “The Sydney part was rebadged as Acuity Legal and Melbourne went back to being just Middletons,” says Nichola. “We had to rebuild Sydney because we were suddenly left with only a couple of partners there. It took us a few years to get back to having some critical mass in Sydney.”

All of this is now history, but it explains why Nichola prefers the firm not to be described simply as
a Melbourne firm. “It’s not quite accurate to say we’re a Melbourne firm which grew into Sydney - we were a Melbourne-Sydney federation that split,” he says.

The dynamics surrounding the evolution of the modern Middletons may have seemed remarkable at the
time, but Nichola says that they pale in comparison to the tectonic shifts which are occurring at the moment. “The whole market is in a state of flux,” he says. “Everyone is thinking about their position in the market and their strategy. I have never seen so much thought or discussion or activity at that level across the entire industry – I can’t ever recall it.”

Nichola describes the changes wrought by the GFC as “significant, irreversible and permanent.” “My view is that the GFC, for the legal industry worldwide, has been a game changer and a permanent game changer,” he says. “This is not like the past where there is a recession that the law firms ride along with the business community and things go back to normal. There is no normal anymore.”

Partnership
As firms re-evaluate their long term strategy, it is only natural that partners should do the same on a
personal level. In many cases partners are voting with their feet and moving to firms which they believe are a better fit for their career aspirations. Nichola says this is a phenomenon which would have seemed remarkable 15 or 20 years ago. “Historically, people became partners and remained at one firm, but the world has changed,” he says. “What has changed is people’s willingness and propensity to move. I would say in last two to three years this certainly seems to have accelerated.”

The Middletons partnership contains a mix of salaried and equity partners and Nichola says that there are no plans to change this system. He preferred not to discuss the firm’s policies in detail, but made some general comments about the approach taken: “For us it is simply a business case scenario,” he says. “You become a partner if you meet all the criteria for partner and, like most firms, we have a detailed matrix of capabilities which should be demonstrated over a period of time. The difference between being a fixed draw partner and an equity partner is purely a business case decision - it’s not a question of attributes. Sometimes there will not be a business case for another equity partner in that
particular practice group.”