It was a Perth band, End of Fashion that adapted the lyrics Don’t Delay, Lock Up Your Daughters from the 18^th century London comedy about the naive Hilaret who left the protection of her father’s house to elope with Captain Constant. She charges Ramble, a ladies’ man, with rape and in turn her maid charges Constant with rape. The cases are tried by Justice Squeezum, a corrupt judge. So the story went.

And so also the saga of the globalisation of the Australian legal profession continues with more internationalising law firms rumoured to be arriving, the latest of which–Freehills and Herbert Smith–seems true.

Of course this is not all recent, Baker & McKenzie the world’s first and arguably leading law firm has been in Australia since 1964, followed in the 1980s by Sullivan & Cromwell and Skaddens, also American firms. But it took UK firms Norton Rose, Allen & Overy and Clifford Chance in short order to really stir the pot, preceded in a more sotto voce way by DLA Piper with their initial alliance with Phillips Fox. Now, by latest count by country of origin there are eight American firms, five UK and one each from Malaysia and Canada. Oh, I nearly forgot the game-changing Mallesons – King&Wood tie-up. When does it plateau or end one may well ask?

The appeal of Australia to globalising firms is several-fold, but mainly based on resources and the associated infrastructure and financing. Harvard Business Review has rated Australia as the most favourable destination for foreign direct investment in the eastern hemisphere and according to The Heritage Foundation Australia is the largest single beneficiary of Chinese investment, $34b a year. No wonder law firms are in hot pursuit of the fees that follow these massive projects and the spin-offs. Further, Australia is now regarded as being the southern part of greater Asia increasingly linked to the fortunes of the great economic powerhouses and many countries to our north and in the same time zone.

Let’s take a look at the reasons for the interest and, most recently, the avid willingness of whole firms, offices and groups of partners to jump ship and join global firms, particularly in Sydney which has 14 offices linked to foreign firms. Melbourne and Perth each have seven such offices, Brisbane has two and Canberra one. The attraction is not hard to find: the promise of more consistent flows of top quality clients and work, being part of a globalising firm, expectations of greater security, global mobility and, in some cases, lure of much larger incomes. The givens of being a partner or solicitor in a law firm remain the same, whether it’s Allens Arthur Robinson or Allen & Overy – pressure to perform and conform, nobody expects otherwise.

These rapidly emerging trends are accelerating the divide between winning and losing local law firms. The very largest firms with turnovers in the $400-500 million range face a novel dilemma. They now are the hunted – by both the globalising firms and the mid-size firms – for clients and talent. These predators are being aided and abetted by the clients. In the post-GFC world clients’ buying behaviour has changed substantially and irreversibly as the studies into client buying behaviour conducted by Beaton Research & Consulting since 2003 show. Clients now enjoy much more of the upper hand. They are exercising their power in a range of ways with a willingness to use mid-size firms more readily (and not just because of price) and to buy ‘brands’ i.e. the globalising firms, rather the expertise of specific partners.

For Australian firms looking to internationalise the opportunities lie mostly in Asia. Or do they? Perhaps this conventional wisdom should be challenged.  In the rapidly narrowing window as the much larger USA and UK firms with deep pockets expand, and the emerging Chinese firms, in particular, move to protect their patches speed is of the essence.

Clients are the real winners; both domestic and offshore clients now have a wider range of highly competent firms eager for their business. The combination of clients’ buying sophistication and use of alternative providers such as Advent Lawyers and LPOs like Pangea3, is making life ever tougher for law firms.

And then to add to it all, Australia’s best law firms are running the risk of their ‘daughters’ eloping. The next few years will tell if most firms have delayed their reshaping, repositioning and re-engineering too long.

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