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Published 08 October 2012 13:52, Updated 21 November 2012 08:02
They say a picture tells a thousand words but this picture – charting the revenue of local firms versus the Australian revenue of global firms – needs far fewer words than that.
“It basically shows that the globalisation of the domestic legal landscape has reached a tipping point,” senior analyst at professional services consulting group Beaton CapitalEric Chin says.
Beaton Capital has analysed the 20 largest law firms operating in Australia to determine the extent of globalisation. Until 2009 Baker & McKenzie was the only overseas firm in the top 20 firms ranked by revenue. Now, three years later, there are 21 offshore firms operating in Australia in a variety of shapes and sizes and for the first time those in the top 20 generate more in legal fees from here than the locals.
The graph confirms what anyone involved in commercial legal practice knows well; change has happened and it has happened fast.
“It began in 2010 with Deacons merging with Norton Rose and then DLA Piper but the biggest shift came though this year,” Chin says. “Blake Dawson rebranded as Ashurt, Mallesons Stephen Jacques is now King & Wood Mallesons, Allens announced its alliance with Linklaters and now the Herbert Smith and Freehills have merged.”
Chin says the main driver has been the attractiveness of Australia’s legal market given the flow of foreign investment from China. “This will only continue and the pink line will extend way beyond the blue line,” he says. “Given the rumours around other international firms looking for opportunities to enter it will definitely grow.”
The 20 largest law firms account for 21 per cent of the Australian legal industry’s $23 billion annual revenue.