Thoughts on ways to improve the management of professional services firms

Wednesday, February 10, 2010

More on Allen & Overy in Australia

Since yesterday's post, Allen & Overy to open in Australia, I have been mulling over just what the implications might be.

When i wrote yesterday I did not have the names of the people who had left Clutz - Australians like shortening things, so Clayton Utz is commonly called Clutz. Since then I have seen a list provided by ALex Boxsell in the Australian Financial Review. I can't give you a proper link because it's behind the fire wall.

This was quite some people raid. The fourteen who left Clutz included:

  • Geoff Simpson, partner in charge, Perth office
  • Michael Reed, national managing partner corporate
  • David Wilkie, national head of real estate
  • Michael Parshall, joint head of mergers and acquisition.

I must say that I was quite fascinated by the machinations that must have gone on to organise this coup.

There has been something breathless about the reporting on this issue. "British bombshell a shock for local firms" read one headline, "UK raider sparks legal talent war" another. Obviously this type of raid will force all major firms to review their strategies. However, I also think that we need to keep a bit of perspective.

  Allen & Overy is a big firm, with annual gross revenues in 2008-2009 reportedly at $A1.96 billion. However, the current strategy is essentially high end niche, with A&O planning to grow its partners from 17 to a possible 30 in the immediate future.

Depending on the average charge rate achieved and the leverage adopted (A&O is reportedly looking at 50-60 associates for the its starting partners), we are looking at a projected fee base of perhaps $A55-$A60 million in the first instance. Substantial, but still not large in a total legal services marketplace of around a reported $A12 billion, of which the top eight firms control perhaps $A3 billion.      

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