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October 16, 2011 11:40 PM

Reports Suggest Australia, Canada Still Fertile Territory for Law Firm Mergers

Posted by Drew Combs

As merger activity in the legal industry continues at a healthy clip, two countries appear to be commanding extra interest from firms looking to expand their operations: Australia and Canada.

Earlier this month, Squire, Sanders & Dempsey officially launched its Perth, Australia, office, completing the integration of 80 lawyers from the Perth office of Australian firm Minter Ellison. The mass hirings, which The Am Law Daily first reported on in August when they were announced, came less than a year Squire Sanders's merger with U.K.–based firm Hammonds.

Squire Sanders’s Australian play is just the latest in a series of Down Under moves by international and U.K. firms in recent years. The wave began in June 2009 with Norton Rose's acquisition of Australian firm Deacons. Allen Overy followed that in 2010 by establishing offices in Sydney and Perth with 15 partners plucked from from Australia's Clayton Utz.

Others that have either moved into the country or significantly bolstered their presence there include Clifford Chance, which acquired two local firms; DLA Piper, which launched affiliate DLA Phillips Fox; and Holman Fenwick Willan, a U.K. firm which recently opened its third Australian office. Last month, the U.K. firm Ashurst and Blake Dawson, in Australia, announced a combination of their business operations in Asia as the first step toward a possible merger.

Now comes word that more U.S.–based firms are prepared to follow Squire Sanders into Australia. In an interview published Friday, professional services consultant Stephen Moss, who steered Squire Sanders’s foray into Australia, told The Australian newspaper that four unidentified U.S. firms are looking to enter the market.

"Without a doubt, this will continue," said Moss, an Eaton Square partner, referring to the activity in Australia's legal market. Among the sector's main attractions, he said, is the key position the western part of the country plays in the natural resources trade in Asia.

On the other side of the world, the Canadian legal market continues to intrigue large law firms. DLA Piper chairman Frank Burch recently told the Baltimore Business Journal that his firm is actively seeking international acquisitions, and that DLA Piper is likely to pursue an acquisition in Canada within the next 12 months: "If Canada is not the next domino to fall," he said, "it is one of the next couple."

While U.S. firms certainly aren't new to either Australia or Canada, the lack of complete reciprocity—the formal mechanism that allows lawyers credentialed in one country to practice in another—is likely to have stifled the expansion of U.S. firms into those countries in the past, legal industry consultant Ed Wesemann of Edge International said.

One thing that is likely driving the merger activity in those countries now, according to Wesemann, is the increasing popularity of Swiss verein structures, which allow firms to join forces while maintaining separate profit centers.

Another factor, Wesemann says, is the ever-shrinking list of legitimate expansion options.

"I'm not trying to be silly about this," he says, "but some of these firms have run out of places to go."


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