January 27, 2011 1:13 PM

With Down Under Merger, DLA to Employ More Lawyers Than Any Other Firm

Posted by Anthony Lin

DLA Piper announced Thursday that it plans to fully merge with Australian alliance partner DLA Phillips Fox in a move aimed at giving the firm a much larger footprint in the Asia Pacific region--and positioning it as the largest firm in the world in terms of number of lawyers.

Partners at both firms are expected to overwhelmingly approve the merger next month, with integration of the 700-lawyer Australian firm set for May 1, according to a DLA Piper press release announcing the merger. The merger will give DLA Piper offices throughout Australia. A New Zealand arm will not be included in the merger but will continue to operate as an affiliate.

By at least one measure, the combination makes DLA Piper the largest law firm in the world. The firm will now have more than 4,000 lawyers, though the U.S. and international partnerships--while operating under the same management--are technically separate and run under a Swiss verein structure. Largest in the world or not, DLA Piper will undeniably be one of the largest firms operating in Australia and, the firm hopes, in an expanded Asia Pacific market.

The belief that Australia offers an attractive path into Asia has motivated a number of major moves Down Under by international firms in the past year or so. At the beginning of 2010, British firm Norton Rose completed a tie-up with Australia’s Deacons, a combination the firm said was targeted at Asia.

Allen & Overy also launched two Australian offices last year, with the stated goal of capturing work on cross-border Asia-Australia deals. Clifford Chance explored a merger with Australian legal giant Mallesons Stephen Jaques in 2008 and, according to Legal Week and others, has more recently talked to boutique firms in Sydney and Perth.

DLA Piper’s Asia managing director Alastair Da Costa, who will also oversee the Australian contingent, says his firm, which already has offices in Hong Kong, Beijing, Shanghai, and Tokyo, definitely had Asia in sight with its Australia move. “This will be a real push and boost to what we want to achieve in Asia,” he says.

The American Lawyer looked at the Australia-Asia connection and its impact on the Australian legal market in this October 2009 feature. There is little doubt that the Australian economy has become increasingly intertwined with the economies of other Asian nations, especially China.

While the rest of the world is still awaiting large-scale “outbound” investment from China, the Australian mining and energy sectors have seen massive acquisitions by resource-hungry, state-owned Chinese enterprises. Major international law firms have been eager to handle more of these transactions.

International firms are also drawn to Australia as a source of legal talent to be deployed across the region. Da Costa says his firm has already rotated some lawyers from Australia to Hong Kong and is looking at moving a number of partners around in the coming months.

Enthusiasm for cross-border possibilities aside, Australian firms are still largely populated by lower-yielding domestic practices in areas like litigation and real estate. Allen & Overy sidestepped some of these practices by cherry-picking a group of top transactional lawyers, mostly from Australian firm Clayton Utz.

But Da Costa says that DLA Piper's approach differs from those of some global firms. “We didn’t want to do what A&O did,” he says. “We want to be strong locally as well as globally.”

DLA Piper inked its exclusive alliance with Phillips Fox in 2006. Da Costa says the firms began discussing a merger about two years ago and have been moving steadily toward full financial integration since. In that regard, the combination also differs from the one between Norton Rose and Deacons, which deferred full financial integration due to the generally lower billing rates and partner compensation of Australian lawyers.

“Fortunately," says Da Costa, "we are a firm that can accept different levels of profitability in different markets."

 

 

 

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