A rush down under

I was pleased to congratulate an old friend at Ashurst on his firm’s recent merger agreement with established Australian firm Blake Dawson. The deal was notable for two reasons. First, it was a part of a trend, and second, it was a smart move given the lacklustre performance of the Eurozone and US economies. Of course, there’s nothing new about UK law firms looking overseas for business: they’ve been doing it since Victorian times (probably earlier but my example goes back only that far). Ashurst, for example, was a real adventurer even in those days. Its three founders were interesting, internationally minded characters. William Henry Ashurst supported all manner of progressive causes around the globe. When not masterminding bank rescues in the 1866 financial crisis, John Morris advised on investment in new rail and infrastructure projects. And Sir Frankie Crisp - a proper eccentric by all accounts - was renowned for company flotations and deals relating to foreign railroads and mines. These guys had their eyes on the far horizon, just as City firms do today.

In signing the deal with Blake Dawson, Ashurst followed in the recent footsteps of the likes of Clifford Chance, Allen & Overy and Norton Rose. So what is so special about the Australian legal market? One simple answer is that the country is sufficiently closely tied to the Asia Pacific economies, both through trade agreements and physical proximity. It has not only avoided recession but been in growth mode. As the West panics while it cedes power and influence to the East, Australia represents one of the West’s opportunities to participate in the boom in the East. Sydney is even being touted as an Asia Pacific financial hub.

As a nation, Australia has plenty of sought-after raw materials. It is the world’s third largest iron ore producer (after China and Brazil); the second-largest gold producer (after China) and the third most important for uranium (after Kazakhstan and Canada). The story is the same for other minerals and metals, such as coal, zinc, opals and, importantly, rare earths, which are vital to the technology sector. Agriculture is another important activity - lucrative too, given high world food prices. Australia has a AAA credit rating and four of the world’s nine AAA-rated banks, and its government debt to GDP ratio is the lowest among OECD countries.

For years, Australia exported young professionals to the UK. In the boom before the financial crisis, many City law firms relied on talent from down under to cope with the volume of deals going through their largest departments. Experience gained in London is doubtless now at a premium in Australia, which has lately privatised various state activities, for example its electricity market and lotteries.

Is law the country’s latest gold rush? Will we see more UK firms pushing into this legal market? That’s difficult to say: it is relatively small and already crowded. As well as the firms I’ve mentioned above, there’s also Baker & McKenzie and DLA Piper, each of them among the world’s biggest legal services providers. Given that several firms have made a timely move to Australia, it will be interesting to see which emerge as the market leaders. In the meantime I expect Ashurst’s UK trainees and qualified lawyers are waiting with baited breath to learn what Australian secondment and travel opportunities emerge from their firm’s tie up with Blake Dawson.