In last year’s New Zealand report, ALB ventilated the theory that there could be a “flight to quality” in difficult economic times - a theory which, to the extent that it implied that certain firms were not “quality”, drew a sour response from firms outside the Bell Gully – Chapman Tripp – Russell McVeagh triumvirate. Some, such as Simpson Grierson’s Kevin Jaffe, felt that ALB was demonstrating an entrenched bias. Peter Chemis also delivered his customary broadside at the top tier concept: “It’s part of the myth they like to perpetuate – but we take work off the top tier all the time. They are losing work to all the other majors - “flight to quality “ - it’s self-serving nonsense. The market doesn’t care anymore what you say about yourself - it cares about what you deliver and what you deliver it for.”
Government and infrastructure
Infrastructure projects are offering a measure of certainty in an unpredictable environment. “We’re not as much looking at GDP and the dollar as looking at where the government and business activity is,” says Clayton Kimpton. He says that the infrastructure workflow from the government’s ambitious plans is well underway, with projects requiring extensive and diverse advice covering front end documentation, risk management, property, litigation and even IT. Kensington Swan, Chapman Tripp and Buddle Findlay have recently been appointed to the panel of the newly formed New Zealand Transport Agency and will be in a good position to assist with the many billion dollars worth of road projects on the table. However as Kimpton points out, local government authorities and the contractors themselves will also be major players in this work.
The other big story in the government space is the Auckland Super City project, which will see the amalgamation of several local government bodies, many of whom are significant consumers of legal services. The new Auckland City Council, in its final form, is likely to have an annual legal spend of about NZ$20m. Some rationalisation of legal spend looks to be an inevitable result of the consolidation, but in the meantime the merger process is generating a large amount of work for external advisors. “There is a huge amount of transition work to be done which is way beyond the resource and timeframe that the transition agency has been afforded – for example, integrating huge contractual obligations around the region and integration of technology – those are projects which will be ongoing for a few more years to come,” says Buddle Findlay partner David Thomson.
Trans-Tasman drift
A perennial story in the Australian-New Zealand dynamic is the relocation of work from New Zealand to Australia, either through the movement of head offices across the Tasman or through the acquisition of NZ companies by Australians. Mark Weenink draws a link between these trends and what he says is a shrinking in the overall size of the New Zealand legal services market. However, there is no consensus on what impact, if any, this pattern will have on the business of law. Gary McDiarmid, for example, says that while some impact is likely for lawyers in certain areas, there has not been any impact on his firm: “The move of head offices removes a certain kind of work – not a huge amount of top tier work. It hasn’t had a discernable impact for us.”
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