The Adelaide legal services market is hotting up – but local firms tell ALB’s Renu Prasad that they’re not getting their share of the action.
Lawyers will be familiar with the way that names like “Browse” or “Pluto” or “Gladstone” are synonymous with optimism in the states where these resource projects are based. South Australians have their magic words too – perhaps not quite as many as Western Australia or Queensland, but enough to keep locals convinced that their state is set for a resources boom of its own. Spend any amount of time down in Adelaide and you’ll hear the words “Olympic Dam” and “Woomera” a fair few times. BHP’s copper, gold and uranium activities at Olympic Dam are, of course, already well known but the miner is now awaiting approval for an expansion which could be worth up to A$48bn over the next 30 years. The other focal point is a set of projects slated for the Woomera defence zone, previously off limits to miners. The collective value of these potential projects is said to be up to A$35bn over the next decade.
The billion dollar projects are not just confined to resources. Over two thirds of Australia’s defence industry is reported to be Adelaide-based and a number of international defence contractors have also been attracted to the city by the availability of suitable infrastructure. High profile work includes the Australian Submarine Corporation’s contract to build and maintain the Collins class submarines and more recently a A$6bn contract to build the navy’s air warfare destroyers.
Notable though these projects are, national law firms are not exactly in a haste to open offices in Adelaide. As local lawyers sourly point out, a substantial proportion of the big work emanating from South Australia is being done by east coast lawyers anyway. Minter Ellison, which at 45 partners is the largest commercial operation in South Australia, is perhaps the only top tier firm with a serious presence on the ground. Blake Dawson has a small presence and other nationals have opted for a “fly in, fly out” model. That is understandable – while Adelaide is home to several large Australian corporates such as Santos, Elders and Hills Holdings, there is no doubt that the ASX200 is under-represented. “We bat below our weight compared to Perth, which has picked up quite a few new blue chips over the last decade - we’ve struggled to hang onto them,” says Minter Ellison Adelaide managing partner Nigel McBride.
To understand the Adelaide market is to understand the mix of clients. There are no shortage of big players in town, but the economy has something of an SME feel to it. Law firms have adjusted accordingly.
State of the market
Some lawyers believe that the paucity of blue chip companies sheltered Adelaide from the worst effects of the GFC. “The South Australian market certainly hasn’t seen the volatility that other markets around Australia have seen,” says Kelly & Co CEO Stuart Price. “We don’t have same number of large corporates exposed to global markets. Many East Coast operations were affected, not necessarily through their Australian operations but their involvement with offshore enterprise. If you break down the Australian and offshore components, you find yourself with two very different dynamics in place.”
That view is not universal. Nigel McBride’s experience is that Adelaide is no safe haven from broader economic trends – he believes that the ill tidings simply take longer to reach South Australia. “Historically Adelaide has been a market where, whatever the [national] economic conditions are, we tend to get them later and they tend to be a bit tougher,” he says. “ Last financial year when the GFC was about we were fine. What we’ve found this financial year is a delayed effect – a flattening of revenues, transactions are down and there’s price sensitivity out there.”
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