DLA Phillips Fox would have been better off concentrating on existing strengths rather than pursuing an international merger, according to a former partner. “I think the firm would have been better off focussing on the Australian market and if they’d done that, they would have been a much stronger outfit,” said Fox Tucker managing partner Joe DeRuvo. “Obviously there are a whole lot of partners that see it the same way I do – it’s not the right way to go.” DeRuvo was part of a team of Adelaide-based lawyers that de-integrated from DLA Phillips Fox in 2009 and established a new entity, Fox Tucker Lawyers, through a merger with local firm Rankine Tucker last year.
DeRuvo praised the quality of the DLA Piper global client base and acknowledged the opportunities this would bring to the Australian outfit. “However, you got to weigh up the pros and cons and you’ve got to give up a hell of a lot to get access to that client base,” he said. “I think a lot of partners felt that it’s just not worth it.” DeRuvo cited loss of independence as one of the factors militating against the merger. He stressed that he was not in a position to speak on behalf of any of the defecting or current partners, but says that he can understand the concerns involved.
“It’s an upheaval,” he said. “To go into an international practice is actually very difficult and bigger is not always necessarily better. That’s where a lot of people fall off the wagon – they think bigger is better and clients want us to be bigger. Well what clients want is a good support base in the jurisdiction where they spend most of their time and if they want to do something overseas they want you to [assist with] that. That’s not hard to do.”
DeRuvo can relate to the trials of being a small part of a large partnership and says that concerns over marginalisation was what drove the Adelaide Phillips Fox partners to decide to part company with the firm in 2009. “Phillips Fox was focussing much energy on the eastern states and on the Asia Pacific rim and there was only so much money to go around for investment opportunities,” he recalled. “We would see some great opportunities in Adelaide but the firm didn’t have the funds to do it.” He was also concerned about the level of overheads payable on a national basis: “Our national overheads affected the KPIs of the Adelaide office and our ability to recruit partners and promote staff - we had a whole lot of national overheads and we didn’t have the investment in Adelaide to justify the overhead we were paying,” he said.
It is difficult to estimate revenue growth for a new entity, but DeRuvo says that Fox Tucker is likely to see a 15% increase over what the two firms earned in their previous guise. “Profit growth will be a lot higher,” he added. “We took out a whole lot of overhead we weren’t using and it went straight to the bottom line. Profit margin went up substantially.”