Earlier this year when Clifford Chance entered the Perth market, one legal publication helpfully opined that the firm was likely to have been attracted by the mining boom. Subtlety was never a strong point with journalists. But in another way, that generalisation sums up the difficulty in characterising the Perth market. Lawyers know that there is some kind of boom going on and naturally they want to be part of it.

Doing something in Perth – opening an office, pursuing a merger – clearly makes sense. The problem is that the idea has occurred to everyone at the same time. Allen & Overy and Clifford Chance are the most high profile new entrants in Perth, but there have been other important new players such as Gilbert + Tobin and Holman Fenwick Willan and Middletons. Insurance firms Moray & Agnew and Gilchrist Connell have also made the move to Perth this year while Maurice Blackburn and Turner Freeman are both newcomers in the plaintiff space. Local commercial firms are also shoring up their ranks, with Jackson McDonald absorbing boutique practice McKenzie Moncrieff earlier this month.

The most recent development has been a split in the Minter Ellison Perth partnership. The majority of the partnership will be joining Squire Sanders to establish the U.S. firm’s first Australian office while, in a separate move, insurance partner Deborah Templeman has defected to Gilchrist Connell to establish that firm’s first WA office. The remaining Minter Ellison partners will continue to operate under the Minter Ellison banner, however their practice will be financially integrated with the rest of the firm. The Perth Minters office has not previously been integrated with its eastern state  counterparts.

If all of this sounds like a lot to absorb, spare a thought for the Perth lawyers who now have the task of trying to analyse what all this market movement means for their practice. Some of the key trends – the disappearance of Perth boutiques and a revision of the mode of market entry by international firms – are discussed in separate articles in this edition of ALB. What is clear is that this is a substantial and permanent change to the professional landscape. “Every week it seems like there’s some change in the market and these are significant changes as well,” says Jackson McDonald CEO John McLean. “I don’t know the other Australian markets that well but I would say it is probably unprecedented to have this extent of change concentrated in one market.”

Perhaps the only market which comes close is Brisbane, which has had a notable influx of mid-size firms in recent years – however, Queenslanders have been spared the Magic Circle and U.S. invasion for now.

Market reaction
When Magic Circle firms first arrived in Perth, there were some who felt that this could only be a positive development for the WA legal profession and the quest to keep high quality work in Australia. Gilbert + Tobin partner Michael Blakiston maintains this view. “Typically you used to see resource companies using, for example, Herbert Smith in Singapore,” he says. “Why do that when you’ve got the capacity here? If [clients] feel they have to use brand names I’d rather those brand names reside here and the expertise gets developed here rather than offshore.”

But there is also a sense of unease that the market cannot sustain the number of newcomers. “It’s a mature market that’s growing but it’s still fundamentally a mature market,” says Allion Legal managing principal Phil Lucas. “There isn’t a great expansion in the demand for legal services.”

It is also arguable that the supply side of the equation has not dramatically changed and there is a familiar argument that the new firms in Perth are simply existing lawyers operating under a new brand. Lawyers also suggest that the Magic Circle newcomers are yet to make a real impact, although it is far too early to draw any conclusions. “I haven’t seen a massive influx of international partners or partners from the London office starting to work on the ground here,” says Mallesons partner Paul Lingard. “The time may well come for that – maybe the full effects haven’t really rolled through. But at the moment I haven’t noticed too much of a difference to be honest – the same number of people wearing a different badge and a different hat.”

It may also be worth keeping an eye on the Gilbert + Tobin/ King & Wood alliance in light of the recent confirmation by Mallesons CEP Robert Milliner that his firm had discussed the possibility of a strategic alliance with the Chinese firm. Is King & Wood looking for a new Australian partner?

When asked about the alliance, Michael Blakiston said the matter was “very much up in the air.” “We have some fabulous relationships with individuals and that will be longstanding I’m sure – but it’s up to Danny (Gilbert) – he’s the key driver of that relationship,” he says. “I think it’s been a great thing, we see China as being incredibly significant but we’ve also got our own domestic market we’re trying to grow our presence in - so if we can’t meet the King & Wood timetable for what they require, so be it.”

There was also some speculation that Blakiston himself might look to retire after bringing the Blakiston & Crabb/ Gilbert + Tobin merger to a successful conclusion, but Blakiston says this is incorrect. “My hair’s grey but I’ve no intention to let that stop me,” he laughed. “I’m happy here. It’s a new challenge. We have a wonderful group of talented people here and the opportunity to do significant work in Australia – I think we can achieve that with the G+T brand.”

Mixed blessing
Despite some hiccups surrounding some of the big LNG and infrastructure projects, Western Australia remains a beacon of light for the rest of the Australian economy. However, it is impossible for the WA business community to quarantine themselves from the global uncertainty. “You’ve got to be nervous about what’s happening globally,” says McLean.“As much as we’ve got our own little micro-economy, clearly we are not isolated. We are all looking at what’s happening in the United States and Europe with concern - it’s bound to have some knock on effect.”

However, McLean stops short of inferring that any of the major resources projects are in serious jeopardy. “I would be surprised if the big LNG projects are cancelled,” he says. “Clearly they’re securing those projects through the forward sales of LNG so the bulk of it’s locked away. These are 30 year projects - they’re not going to change decisions based on one month of what’s happening on the global front.” Paul Lingard is of the same view: “Some projects are still in the feasibility stages, but you get the feeling that they are moving at a steady and determined pace,” he says.

The phrase “two speed economy” is often used geographically to compare the fortunes of different States, but Lavan Legal managing partner Greg Gaunt points out the concept is just as applicable within Western Australia. He says that the suffering is not limited to the usual suspects such as the retail industry. Even within industries directly related to mining, there are varying degrees of prosperity. “Things are not happening as quick as people thought they would,” he says. “When projects are delayed you’ve got, for example, engineering firms that have already geared up for things to happen – so when things are put on hold, there’s a bit of pain and suffering even at that level.”

It is interesting to see that the argument that the mining boom has not benefited the entire economy is being ventilated even in Western Australia. “There’s a real issue as to whether we’ve got a boom in Western Australia or a boom for Western Australia,” says Gaunt. “Some people are not the seeing benefit of it, but they’re catching the bad side of it – increasing costs and increasing infrastructure pressure.”

Indeed, rising overheads was a topic raised by many firms, although most preferred not to comment on the record. “We would want to pay our top secretaries A$60,000 – well they can get A$85,000 from an engineering firm,” one partner told ALB. “I have a client who’s paying a secretary A$80,000 just to answer the phones – well before, you could get away paying A$40,000.

Another firm told ALB that they had signed a lease for office space in 2007 and that space in the same building was now being offered at double the 2007 rate. So despite the hype, Perth firms have plenty of reason to keep their feet firmly on the ground. Their market has its problems, but they will freely admit that they still feel fortunate. “You wouldn’t want to be anywhere else in world,” concludes Greg Gaunt. ALB