At around 9.30pm on Saturday 9 March, surrounded by hundreds of half-empty pizza boxes and a sea of blue and white balloons, victorious WA Premier Colin Barnett took to the stage to greet a roaring home crowd at the Sea View Golf Club in his heartland of Cottesloe.

“This is the moment to enjoy,” a weary Barnett told supporters as the news filtered through that the Liberal-National alliance had secured a landslide victory in the WA election.

“And I promise you a good government for another four years,” said Barnett, adding that the Coalition deserved re-election chiefly on the basis that it had been strong on the economy.

The natives were restless, said the Liberals, tired of the wealth being dug out of the ground in WA being redistributed elsewhere by Julia Gillard’s Labor Government.

Barnett reckoned the election was won on state issues, but admitted West Australians voted against what they perceived as Federal Labor’s aggressiveness when dealing with WA.

This sentiment was echoed by the Federal Opposition’s deputy leader, Julie Bishop, who said that under Julia Gillard the Labor brand had become “toxic” in WA.

“West Australians felt she’d declared war on this state with a mining tax, a carbon tax,” Bishop told the ABC.

“The border protection issue is felt very strongly here, and also this recent declaration of war on overseas workers - 457 visa holders are very important to the West Australian economy,” she added, referring to Gillard’s politically-motivated crackdown on 457 visa rorts.

Liberal frontbencher Christopher Payne weighed in, deeming anyone who tried to deny the WA result’s federal implications was “living in a bubble”.

“Labor’s brand is toxic whether Julia Gillard leads them, Kevin Rudd leads them or Bill Shorten leads them,” he said.

In Australia at the moment, almost everything is being viewed through the prism of politics.
 

Bennett may be promising “good government for another four years” but he’d probably do well to heed the maxim of former party luminary and prime minister Malcolm Fraser, who once famously remarked, paraphrasing a line from George Bernard Shaw’s play Back to Methuselah: “Life was not meant to be easy”.

Perception versus reality

Although WA remains Australia’s economic powerhouse, it is still a funny place, not without its own problems.

The most recent CommSec State of the States report finds WA leading the way on construction work, retail trade, population growth and equipment investment - hinting that things are still pretty good in the resources heartland.

“Western Australia remains Australia’s best-performing economy, ahead of the Northern Territory, and both economies are likely to hold their top positions over 2013, underpinned by rising population growth,” the report said.

Despite the massive debt the WA Liberals continue to rack up, business in WA, law firms included, want to hear that the resources boom will continue indefinitely and that the state can still afford all the flashy new things it promised.

Perth’s tradies, contractors and self-employed are pretty well-off compared to workers on the east coast. The widespread belief is that life is best in the west.

But Greg Gaunt, on the ground in Perth as managing partner of Lavan Legal, isn’t having any of it.

He says the opinion in the east that life is better in the west is a fallacy, saying a number of practice areas at his firm are struggling.

“It’s not a perfect picture at all out here,” he says. “Retail is very poor; property is picking up but was dead for the second half of last year. Property developers are struggling badly, and so much of our economy, mining excluded, is based around this sector,” says Gaunt. 

The Lavan chief, who says WA’s already small manufacturing sector continues to shrink, believes people look at the WA figures, compare them to those in the east of the country, and conclude that everybody in WA must be doing really well.

“It’s not that way at all,” he says. “Some people have done superbly well, but for most people all they’ve seen are the roads clogged up, the cost of living skyrocketing … a lot of people are asking, ‘what exactly is the benefit of this to me?’ and ‘where is this all going?’”

The Liberals, who ran their campaign on the argument that they have no money, will be limited in what they can do. With money tight, both state and federal governments have serious issues about how they’re going to raise money in the next few years to build essential infrastructure.

This is a genuine worry for law firms in Perth.

“We are in that period where we are going to have to invest an awful lot of money in infrastructure. We need to get it right. Perth has increased in size very quickly, and will continue to do so, which puts real stress and strain on the place … so the ability of government to be able to deal with that is a real issue,” says Gaunt.

Cost blowouts

Michael Blakiston, an energy & resources partner at Gilbert + Tobin, says that, although the firm’s Perth office is currently “exceptionally busy” in the resources space, government legislation continues to be a headache for both lawyers and clients.

Blakiston says the cost issue of doing business in WA is significant, pointing to Chevron and Woodside, who both suffered significant cost blowouts due to the cost of doing business in the state.

“An enormous amount of time is being spent advising companies on how to take account of the carbon and mining taxes, making business that more complex in the state,” says Blakiston, who believes there could be a very real impact on foreign companies looking to invest in WA.

“If you were Chinese investor, you’d be wondering what sort of place is this to invest in,” he warns.

Blakiston says it’s appalling that companies that have invested billions of dollars into WA - “parties that had a choice whether to invest here or elsewhere, and whom we invited in” - have had the goalposts changed part way through their investment. 

“What G&T do in Africa is try to protect companies from changes by government regimes, but I guess we don’t have to look any further than our own backyard to see what government tries to do to investors,” he says.

“We’ve already started to see that China has become more mature in its approach to investing here. They must now be looking at Australia and asking questions about these changes.”

Propped up

The recent Lawyers Weekly Managing Partner Survey 2013 revealed that 30 per cent of managing partners in Australia believe property will be the hardest hit practice area in 2013, while just five per cent expect their Perth office to achieve most growth this year.

Minter Ellison’s national head of real estate, Cameron Charlton, says law firms whose property and corporate practices in WA are strongly linked will find property work hard to come by this year in WA.

Charlton says, however, that Perth had a fundamentally healthy economy and would see growth in the real estate sector this year.

“I attended the Property Council Congress in October, and universally they felt that Perth was a growth market in all asset classes for 2013,” he says

“The city-building projects underway there are the most exciting in Australia.”

These projects include a million dollar mixed-use water bank project and the city-link project, which is building over the railway line to provide a natural connection between the CBD and the suburb of Northbridge.

“Then they’re going to build 340,000 square metres … which almost would replicate the Perth CBD commercial office and retail stock, and they’ve got $450 million worth of Federal Government funding to sync the railway line, and the State Government’s looking for a private sector partner to master-plan that development and bring it to market over a 10-year period.”

Minters is currently acting for the Metropolitan Redevelopment Authority on the Elizabeth Quay project, which will excavate a 2.8 hectare inlet surrounded by building pads on Perth’s Swan River to make “like a Melbourne Docklands”, says Charlton.

Any work?

So with firms in WA describing the economy out west as two-speed, or even three-speed, and uncertainty abounding due to the impending federal election, what does it all mean for lawyers on the ground in WA?

After several years of buoyancy, it seems the Perth legal market has deflated.

“We’ve been spoilt in Perth for a long time, but the last eight months or so has been a bit of a rude awakening,” says Doron Paluch, director at Burgess Paluch Legal Recruitment.

“We enjoyed the massive boom times, but we’re certainly not in that environment right now.”

Paluch believes most firms in Perth accept the boom has passed, but added there certainly is no panic or extreme negativity.

“It has quietened, but definitely not fallen of a cliff.”

Paluch says corporate and E&R are subdued, but still ticking along, while litigation, employment and insurance practices are most busy right now.

“We’re not seeing a flow of lawyers leaving WA, frankly because there’s really nowhere else to go,” says Paluch. “There’s no suggestion they’re abandoning a sinking ship or anything; Perth remains one of the better markets in the country.”

Meanwhile, Ashurst recently rubbished media reports claiming it is secretly planning to cull up to 50 of its 189 partners in Australia, with the firm’s E&R practice in Perth being particularly badly hit.

The firm says that there is absolutely no substance to a recent frontpage story in The Australian Financial Review claiming the firm has decided to radically reshape its partnership in Australia.

“The article was ludicrous,” Geoff Gishubl, Ashurst Australia’s head of energy & resources says, adding that there has been no structured redundancy program at the firm.

“If it wasn’t such a serious slur on this firm it would have been extremely funny,” said Gishubl, who also leads Ashurst’s land access, native title and environment team in Perth. 

Gishubl confirms that there have been redundancies, but says that the energy & resources practice in Perth has not been especially hard hit.

“Yes, we probably have less people then last year, but we’re only talking about a single digit decline,” he says, adding that the majority were down to “natural attrition”.

“We didn’t rush around making a whole lot of people redundant as has been reported.”

Gishubl revealed that the firm’s energy & resources practice is not as buoyant as 12 months ago, but said it remains one of the firm’s core areas.

Ashurst confirmed the firm’s revenue year-on-year is within two per cent of last year, “notwithstanding difficult trading conditions for some areas of its practice”.

 “Our Perth office is still pretty busy, it’s still strong; our revenue has moderated very modestly from last year, in the single digits,” says Gishubl.

G&T, with nine partners and 26 professional staff, is intent on growing its Perth practice this year, with Blakiston confirming it is actively recruiting.

“We’re in the marketplace looking for people,” he says. “The lawyers we’ve interviewed have acknowledged the fact that we seem to be not running with the main pack, because I don’t think there’s many firms out there looking to strengthen their position, but we most definitely are.”

Against the grain

Perth has quickly become a major battleground in the demolition derby between global and national law firms in Australia.

Squire Sanders pinched 14 of the 19 partners from Minter Ellison’s Perth office, as well as an additional 40-odd lawyers, while Allen & Overy took 14 partners from Clayton Utz when establishing its offices in Sydney and Perth.

So how has this battleground in WA bedded down recently? And how are the Australian national and regional firms coping with competition from the global firms?

“In the beginning we chuckled about it,” says Gaunt, “because we’ve always needed a point of differentiation from the nationals, without that we’re not going to do well anyway, so that point will naturally have to be even bigger against the international firms.”

He says the major differences a regional firm like Lavan can offer the client is the “ability to be more flexible, more personable, and do all the things the big firms can’t”.

“They’re seen as arrogant, distant and expensive, so that’s our opportunity,” says Gaunt.

He also feels the arrival of the international players has led to bit of price cutting, something he didn’t anticipate.

“We thought the international firms coming in would want to jack up their rates up in Perth, which we thought would great, we thought we’d just tuck in underneath, but its actually led to some price cutting,” says Gaunt.

Independents’ Day

Both G+T and Lavan Legal are seemingly intent on maintaining their independence, with both confirming they have no immediate plans for any sort of international tie-up.

“We do keep an eye on what the globals are doing because that’s our competition,” says Blakiston. “People come through and knock on the door, we try to be polite, but we don’t have strategy for that.

Gaunt says he can’t see any benefit for the firm in linking up with an international firm.

“We get approaches with people saying ‘we’ve looked at you and think your culture is a good fit’, and I really wonder how can that can be, because we’re very different. The value proposition … we struggle to see it.”