The winds of change blowing through the Australian legal market are not deterring independent Sydney firms from taking on global rivals in the nation’s biggest city. Justin Whealing reports.

Big is not necessarily best.

That is the selling point of the comparatively small Sydney firms to corporate Australia as they fight the large global and national firms intruding on their patch.

Even though, comparatively speaking, firms like Banki Haddock Fiora (BHF) run on the smell of an oily rag compared to firms that often sit on the other side of the negotiating table, it is a message that is having some success.

“These premises are probably half the price of where Allens is, for example,” says one of the three name partners, Peter Banki, as we casually chat at the firm’s digs on Elizabeth Street.

Even though it is only a 10 to 15 minute walk from BHF’s office to where the cluster of global and national firms are located with panoramic views of Sydney Harbour, the vibe and feel of BHF’s HQ is miles away.

It is clear that Banki’s relaxed demeanour and casual, no frills, no-tie look are perfectly in keeping with the informal nature of the firm’s office.

“We don’t have an office manager and we don’t have a marketing department. We have no formal structures and none of the gruelling requirements big firms can impose.”

While BHF, a leading firm in media defamation and intellectual property, doesn’t have the bells and whistles of many of its larger rivals, they have the expertise.

Its nine partner positions are filled by refugees from large law.

Banki himself left Phillips Fox, now part of the global behemoth DLA Piper, in 1995, to start the firm with his Phillips Fox colleagues Richard Fiora and Kate Haddock.

Recent additions to the partnership include Bruce Burke from Corrs Chambers Westgarth, Leanne Norman from Herbert Smith Freehills and Peter Knight from Clayton Utz.

The firm deliberately targets top-tier partners when making lateral senior appointments.

“As the legal market has changed, there are certain practices that don’t fit well with the big firms,” says Banki.

“Generally speaking, it seems to me that these big firm mergers and global firms coming into Australia present tremendous opportunities for a firm like ours.”

Singing from a similar hymn sheet is Michael Joseph, Kemp Strang’s managing partner.

Like BHF, it is a single Sydney office firm, but it targets vastly different areas, with particular expertise around banking and finance, insolvency, and regulatory and competition work.

Joseph, like Banki, sees the arrival of global firms as no bad thing for smaller, independent practices.

“I think the shedding of staff or personnel [by global firms] is already providing opportunities,” says Joseph. “There are partners out there with practices that are good solid practices that would work very well at Kemp Strang.”

The price is right

Boutique and independent firms have been able to prise work away from global rivals due to their ability to offer vastly cheaper rates.

BHF is unashamedly happy to sell its monetary value proposition to the market, and that has helped it to snare and keep high-profile clients like Fairfax Media, Fremantle Media (producers of The Biggest Loser and Australian Idol), Pfizer and Nestle.

“We have clients that use big firms but are generally happy to use us for specialist work,” says Banki, noting that in specialist areas such as media defamation work, his firm can charge less than top-tier rivals.

“Big firms have a completely different type of cost structure.”

Kemp Strang also charges less than many of its bigger rivals, but in the rarefied air of commercial litigation and insolvency, where Joseph operates, it does not seek to sell itself as a low-cost firm.

“I suspect our price offering is very competitive, but price is not the be all and end all,” says Joseph. “The best businesses are built around relationships and getting the job done properly and satisfying clients’ needs,” he continues, before rounding off with a comment aimed at his larger rivals that “there is only so much your brand will do”.

In the area of finance in particular, Kemp Strang is punching above its weight.

It does work for all of the ‘Big Four’ major domestic banks, as well as global financial institutions such as HSBC, Lloyds International and Rabobank.

“Many corporate and commercial transactions don’t require a global firm,” says Joseph. “They can be very big transactions, and there are many of these sorts of jobs that this firm handles.”

While that might be true, independent national firms like HWL Ebsworth, Gilbert + Tobin and Johnson Winter & Slattery offer top-tier expertise, with multiple offices, in defined areas as well.

HWL, in particular, is also aggressively using price to poach clients and partners.

When the former Corrs Chambers Westgarth partner Andrew Galvin joined HWL in February, the financial services expert commented to Lawyers Weekly that: “Clients in the financial services sector have cost pressures, and I don’t see that changing anytime soon.”

“My rates are lower [at HWL], and if you can’t beat them, join them.”

Both Banki and Joseph said they don’t believe they are being outflanked by national rivals and there is no need to open additional domestic offices to shore up their domestic client base.

Indeed, in the area of financial services, Lawyers Weekly exclusively broke the story this week that Kemp Strang has poached the well-regarded Gadens partner Vicki Grey.

Joseph says standalone Sydney firms such as his can still grow and diversify without the need to plant additional flags.

“Vicki is Australia’s leading lawyer in lending to self-managed super funds,” says Joseph, stating that this is an area the firm has not focused on previously. “With [Grey’s hire] we are able to provide a new level of expertise to our financial services clients.”

Keep your friends close...

With the globalisation of Australia’s legal market, corporate and commercial firms of all sizes would be naive if they didn’t try to tap into some of that work.

When global firms take over or merge with local firms, it immediately cuts off the existing international referral work those domestic firms gained from other sources.

While all independent and boutique firms are in a position to capitalise on this, the strategies they employ to gain a toe-hold in the international market differ greatly.

Domestically, Kemp Strang is one of four one-city-only firms that are part of the Kennedy Strang Legal Group, while internationally it is a member of the International Alliance of Law Firms.

“This is an offering we are able to provide for our clients,” says Joseph. “We can say to them, ‘well look, if you have this transaction, which is global, we can handle it’, and it also provides a referral point for us here.”

BHF has eschewed formally joining international legal associations, preferring to have a series of informal referral arrangements with between 20 and 25 international firms.

“International networks result in a referral or two, sure, but international networks require a lot of time and effort and you need the resources for that,” says Banki. “The idea of joining an association and getting referral work from 20 firms around the world sounds great, and it might be, but in the scheme of things there is only so much you can do and I think it is better to focus on things more likely to bring about an outcome.”

Pull your head in Mr Premier

The man who represents the 26,000 lawyers in New South Wales is John Dobson, the head of the Law Society of NSW.

He says his most important job is to act as a “bulwark” between the Government and the public, and to get the views of the profession across through the media.

“By doing that, we service our members,” says Dobson, who has been a sole practitioner in the southern Sydney suburb of Miranda for more than 40 years.

He nominates surviving in business as the issue of biggest concern to his members, and believes the conservative NSW Government has made this harder for the thousands of small and regional law firms throughout the state.

In particular, Dobson nominates the Government’s plans to introduce a ‘no fault’ scheme for compulsory third party insurance [CTP] as reducing an important source of revenue for small private practices, which make up 70 per cent of the state’s total lawyers.

“No one knows what is going to happen to them until they are injured,” says Dobson, who chastises NSW Premier Barry O’Farrell for seeking to couch the proposed changes as one that will “drive down costs by ensuring the system is focused on those who are injured, not ambulance-chasing lawyers”.

“The use of terms like ‘ambulance chasers’, only doing work for their own benefit to make money, does us lots of harm and defeats our argument, which is that we are really, genuinely concerned for the public,” he says.

“One would think he wouldn’t use such terms if dealing with the medical profession.”

In addition to fighting political battles on behalf of practitioners, Dobson is also trying to help regional practices by encouraging lawyers to stay in rural areas.

A key plank of that strategy is to make it easier for lawyers to access professional online services.

Dobson’s predecessor in the president’s chair, Justin Dowd, launched the small portal for small legal firms and sole practitioners last year. Dobson is seeking to roll out more online continuing professional development courses and to encourage young lawyers to do their practical legal training in country areas.

“It is a different lifestyle in the country, a better lifestyle,” he says with the weariness of a Sydneysider that dreams of a less hectic life.

Despite the Law Society’s digs being firmly ensconced in the pinstripe world of barristers and large law firms,

Dobson, like Banki, realises there is more to being a lawyer in this state than working out of the 53rd floor in a CBD office on an M&A deal.

*Lawyers Weekly has previously engaged Banki Haddock Fiora.