Last week (7 April) the partnerships of HWL and Kelly & Co voted unanimously in favour of the deal.

A total of 14 Kelly & Co partners and 44 legal staff will join HWL on or around 1 July 2014, taking the combined firm’s revenue to around $200 million.

HWL managing partner Juan Martinez (pictured right) told Lawyers Weekly that a presence in Adelaide had been a priority for the firm. The acquisition of Kelly & Co will allow HWL to service clients with an interest or presence in SA, he said, and complete the firm’s “national footprint strategy” by “filling the central corridor”.

Martinez also revealed that HWL spoke to a number of firms in Adelaide prior to finalising the deal with Kelly & Co.

“As a matter of due diligence you go into the market and do some reconnaissance,” he said.

“We were looking to go into the Adelaide market at the top of the market ... we would only consider firms that are considered top-tier firms in that market.”

Martinez could not reveal the names of the firms he spoke with, explaining that the talks were confidential. He added, however, that Kelly & Co was a clear frontrunner.

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Following the acquisition, the fully-integrated national firm will have 187 partners and 425 lawyers across offices in Adelaide, Brisbane, Canberra, Melbourne, Norwest (North West Sydney), Perth and Sydney.

The tie-up positions HWL as the third largest Australian partnership after Clayton Utz and Minter Ellison.

The Adelaide office will include the following practices: banking & finance, M&A, energy & resources, infrastructure & construction, insolvency, IP, litigation and workplace relations.

SA market woes

In August, Kelly & Co made eight redundancies in its Adelaide office.

Jamie Restas (pictured left), chairman of partners at Kelly & Co, stressed that the redundancies do not mean the firm is struggling; nor are they connected to Kelly & Co’s decision to join HWL.

Restas, who is stepping down as Kelly & Co chairman to become a partner at HWL, told Lawyers Weeklythat the layoffs were isolated and a response to a softening in the litigation space last year.

“I’m already speaking to Juan about growing certain parts of our offering where we can really beef things up,” he said.

A number of other Adelaide offices have made redundancies in the last 12 months, including Piper Alderman, which laid off seven dispute lawyers in February. SA-based firms Finlaysons and Fox Tucker Lawyers also dropped lawyers last year.

Martinez admitted that redundancies may be a casualty of a contracting legal market in SA, but he maintained that HWL can “thrive” in Adelaide by providing “better value than all the existing firms in that market”.

Compared to other capitals, the success of national firms in Adelaide has been limited.

Minter Ellison and Ashurst have managed to maintain offices in Adelaide, while others have tried and failed.

Restas believes top-tier firms like Clayton Utz and Herbert Smith Freehills have been unsuccessful in establishing a presence in Adelaide because their fees are too high for the SA market.

“You can’t go to a corporate in Adelaide ‘we can do all this work but our charge out rate is $800 an hour’,” he said.

He also echoed Martinez’s comments that HWL’s competitive approach is “consistent with how the Adelaide market operates”.

Strategy shift

In 2014 alone, HWL has poached eight partners from rival firms.

The firm nabbed five corporate partners from Herbert Smith Freehills, Clayton Utz, Cooper Grace Ward and Piper Alderman in February. In the same month, HWL picked up three more corporate partners from Thomsons Lawyers, which merged with Herbert Geer on 31 March.

Lawyers Weekly exclusively revealed earlier this year that Herbert Geer also met with Martinez to discuss options prior to the merger with Thomsons.

Martinez said the firm’s lateral hiring strategy and stunted talks with Herbert Geer should not be interpreted as a sign that he did not want to enter into a merger, indicating that another formal tie-up with a domestic firm could be on the cards.

“Casual observers make the mistake of thinking ... I’ve got this anxiety about doing deals and bolting on things. I absolutely don’t. It’s been a very strategic build in a purposeful pattern,” he said.

When asked whether HWL would enter into a global merger, however, Martinez was quick to dismiss the idea.

From Restas’ perspective, being absorbed by HWL and losing the Kelly & Co name is a small price to pay for access to HWL’s resources on the eastern seaboard and in WA.

Restas added that high-level due diligence had shown that there were no obvious client conflicts between the firms.