Two years ago, Blake Dawson managing partner John Atkin was described as the man with the most difficult job in the city. But as the firm is set to post its second consecutive year of double digit revenue growth, Atkin’s strategy to direct all efforts to Australia’s strongest performing industries seems to have paid off.
It must have been quite a shock for managing partner John Atkin when, in the financial year 2002–03, revenue growth at Blake Dawson (and then still Blake Dawson Waldron) fell from the comfortable double digits of the previous years to a meagre 1.5%. The drop in fee income triggered a corporate self-analysis in which the firm scrutinised its strengths and weaknesses. The result was the announcement that the law firm would focus on quality work and its core clients, rather than on endless expansion.
What followed was a bumpy ride during which revenues went up and down, and a number of partners left the firm, while others were asked to leave (for instance, the insurance arm was spun off and snapped up by Gadens in 2004). But the firm managed to change its stars. Its decision to direct efforts to the energy and resources and M&A practices paid off and last year the firm posted a solid double digit revenue growth, and the prospect for this year is double digits again.
The re-branding of the firm in November last year, in which ‘Waldron’ was dropped from the firm’s letterhead, could very well be seen as the celebration of an end of a challenging period. Atkin says the re-branding is certainly one of his most memorable moments with the firm:
“We hadn’t done anything on our brand since Blake & Riggall and Dawson Waldron merged in 1988 and the message that we got back from the market was that our brand was becoming a little bit fuzzy,” says Atkin. “And we were getting that a little bit back internally.”
“The launching of the brand brought together a couple of things that we’ve been working on for the last four of five years before that: the culture of the firm, the firm’s client base and getting more aligned with our clients, sharpening the focus of our practice and then in more recent years, the work that we’ve done to underpin this with the remuneration and management structure appropriate for our practice.”
The booming energy and resources industry has certainly helped the firm. Amongst its clients is BHP Billiton and partner David Williamson is advising the mining corporation on the bid for Rio Tinto. “You can imagine that they are quite busy at the moment,” says Atkin.
Revenues
Blake Dawson posted last year a revenue growth of 10% and is on track to post a double digit growth of 12% to A$375m for the current financial year. “We still have six weeks to go to the end of the financial year, but it’s looking very strong. That reflects the strength of our practice in the areas of growth of the Australian economy, particularly around resources and energy.”
Its energy and resources practice is an important driver of the firm’s growth, but as Australia is starting to feel the pressure of the global liquidity squeeze, the insolvency practice has also performed well. A recent example of Blake Dawson’s insolvency work is its advice to the receivers to Beechwood Homes.
“The volatility in the financial market over the last six to nine months has led to a new wave of work for our insolvency and restructuring team. I think a lot of it has flown from the tightening of credit around the world. That has created insolvency or liquidity problems for operators in Australia. You have seen the more prominent ones from Centro onwards. This coupled with the high interest rate in Australia has started to impact on businesses in Australia.”
Incorporation
‘Focus’ is a verb that often appears in Atkin’s speech when he elaborates on his vision for the firm, and it’s also there when he’s asked whether Blakes would consider incorporation and even a stock market listing. “Our focus is on building and sustaining a professional practice and one that is both attractive and rewarding for the people in it and that achieves excellence of service for our clients. We don’t need to incorporate to achieve that and we certainly don’t need a stock market listing to achieve that. I’m not going to rule it out forever, for people who come after me, but I can tell you it’s not high on my priority list.”
Atkin’s main objections to incorporation have their foundations in the high costs it brings along with it. “Because of those, I haven’t given it much thought, to be honest. I can see benefits to incorporation, but it’s not where we are focused at the moment. I don’t think that incorporation is something that will make or break a law firm,” he says. “The quality of your people and client relationships, if you get those two things right most other things will look after themselves.”
Looking East
Although his peers at Allens and Mallsons are rapidly expanding their firm’s presence in Asia, Atkin takes a more conservative approach to the development of international activities. Blakes has offices in Port Moresby, Papua New Guinea, and Shanghai, China, and has found a partner in Indonesian law firm Soebagjo, Jatim, Djarot in Jakarta. But the firm is particularly known for its work for Japanese and Korean clients and Atkin stresses the importance of building an international practice through work for existing clients, rather than setting up an office and starting from scratch.
“We’ve got a very strong client base in Japan and North Korea and we’ve build that up over many years trough the dedicated work of a number of partners, particular the work done by Ian Williams, Bob Seidler, Rupert Lewi and Michael Ryland. That client base definitely gives us a competitive advantage.” Last year, Blakes advised the Japanese brewer Kirin on its A$2.8bn purchase of National Foods. “I think most Japanese companies see Australia as a very safe and secure place for investment because of our relative stability.”
Current legislation makes it difficult to set up a presence in Japan or Korea, but Asian expansion doesn’t seem to be on Atkin’s mind just yet. When talking about Asian expansion, he carefully formulates his sentences. “You would look at a new presence if it would expand your capability to offer service to your clients. I would never rule that out, but what you’ve got to do from the outset is identify your client’s needs and what you need to do to meet those needs.” So we don’t have to expect an aggressive push from Blakes into Asia just yet? “I think you can expect a very targeted push from us that will build on our strengths.”
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PNG: THE OFFSHORE POTENTIAL
Ever since Papua New Guinea (PNG) posted positive real GDP growth in 2003, stories have emerged about a potential boom in economic activity. These stories gained credibility with the prospect of the construction of an A$3.5bn gas pipeline to Australia, but the project never made it off the ground.
New boom stories have now surfaced, fuelled by the plans of two consortia for the construction of multi-billion dollar liquid natural gas facilities. If these projects go ahead, it would create a spike in demand for legal services.
John Atkin, managing partner of Blake Dawson, shares the optimism for PNG’s future and says the firm’s Port Moresby office has seen an increase in activity over the last three years. “It’s not just Australian companies that are investing into PNG, a lot of international companies are looking at investing as well,” he says. “It’s a very strong part of our practice and fits very well with our resources and energy focus.”
Blake Dawson’s PNG office is led by partner Tim Glenn and is supported by Brisbane-based partner Richard Flynn, a former partner in the PNG corporate team. Flynn returned to Australia at the end of 2006 and has advised a number of resources companies, including the Barrick Group, Lihir Gold Limited and Oil Search Limited, on restructuring and M&A transactions.
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