The South Australian market seems to be on the cusp of economic prosperity; according to the managers of local law firms, a resources boom is on its way

The South Australian market has in the last 10 years been associated with contraction or at least limited growth. Local law firms switched their focus towards the Eastern states for expansion, while scaling back operations on their home ground. But the tide has turned, say law firm managers, South Australia is about to experience a resources boom.

 "I've spent a lot of time working in Western Australia and I believe I have seen the set of circumstances that are starting to align here in South Australia before," says Brett Goodridge, CEO of Thomson Playford. "I've seen them about 25 years ago in Perth ... If the exploration dollars continue to pour into this state as they have, then I think we're going to see a resources boom in South Australia."

An important driver behind the boom is the Olympic Dam project, which was acquired by BHP Billiton in 2005 when the mining company took over WMC Resources. BHP considers expanding the mine in a A$5bn extravaganza.

Adelaide's own

Minter Ellison Adelaide
* Numbers - 39 partners and a total of 140 fee-earners
* Managing partner - Nigel McBride

Piper Alderman Adelaide
* Numbers - 21 partners and a total of 65 fee-earners
* Managing Partner - Gordon Grieve

Finlaysons Lawyers
* Numbers - 20 partners and a total of 100 fee-earners
* Chief executive - Bruce Linn

Thomson Playford Adelaide
* Numbers - 20 partners and a total of 73 fee-earners
* Chief executive - Brett Goodridge

Kelly & Co
* Numbers - 14 partners plus 50 fee-earners
* Chief executive - David Abfalter

Johnson Winter & Slattery
* Numbers - 10 partners and 20 lawyers
* Managing partner - Peter Slattery

"Olympic Dam is going to be the biggest mine of its kind," says Nigel McBride, chief executive of Minter Ellison, the only top-tier firm with a significant presence in the state. "That mine has a life of a hundred to two hundred years for resources like copper and uranium. Most of the world's accessible uranium is in Australia and most of Australia's accessible uranium is in South Australia. So there will be a uranium boom."

"They [BHP Billiton] are going to spend in the next five or six years twice as much in developing that mine as has been spent in the first 18 years," says Goodridge. "When BHP arrives in town, my experience has been that things really heat up."

"The project, should it continue to develop, will provide a future economic base on which this state can plan its next 50 years, which has never happened before," says Goodridge. Law firms will benefit from this development as they will provide the full range of legal services, not only in energy & resources, but also in areas like corporate, property and litigation.

Olympic Dam project
Olympic Dam is located about 560km north of Adelaide and has large deposits of copper, uranium, gold and silver. The project includes an underground mine as well as a metallurgical processing plant. The uranium deposit is the largest known single deposit in the world, although it represents only a minority of the mine's total revenue. The copper deposit is the world's fourth largest. Gold and silver are also produced at the mine and are sold to the Perth Mint.

The site comprises a large number of ore zones throughout an area of several square kilometres ranging in depth from 350 metres to approximately one kilometre. In the past, the level of commodity prices did not make it worth while to dig this deep, but a surge in prices in the recent years enables now the realisation of good margins.

BHP Billiton is considering a major expansion of Olympic Dam to more than double its current production capacity. The decision to expand the production rate has not yet been made, but the company has prepared an environmental impact statement in a bid to secure federal and SA government environmental approvals.

Local firm Finlaysons says it is only one of two firms on the list of BHP's general counsel, John Fast, for advice on energy & resources in the state - the other firm is Blake Dawson Waldron. "The footprint of the project is something like the size of Sydney Harbour; it's mind-bogglingly big," says chief executive Bruce Linn. "This project is going to be worth tens of billions of dollars in the next decades."

It's not only the direct work relating to resources that will stimulate the economy, but there is a whole range of spin-off work that comes from the project. "The impact on the economy is measured by simple things like the number of trucks of a certain size they need to order to do the open-cut footprint," says Linn. "I think they need something like two years' supply of truck tyres."

Multiple horses 
The BHP Billiton project is by far the largest and most promising project in the state, but the expectation of an energy & resources boom does not solely rest on its success. There are several other projects being developed, such as Prominent Hill, a mine of Oxiana and a number of prospects south of the town Roxby Downs.

Gordon Grieve, managing partner of Piper Alderman, says the increase of junior explorers has also provided opportunities in the corporate area, such as the flotation of a number of uranium and gold companies. "There has been a lot more interest in resources here in the last year or so. The South Australian economy has come out of the doldrums; it's not doing badly."

"There are opportunities in oil and gas as well; South Australia is still relatively unexplored for oil and gas," adds Nigel McBride.

The increased activity in the energy & resources sector has a positive influence on the broader economy of the state. "The last 18 months have been pretty strong for the resources area," says Grieve, "but there are a lot of sunrise-type industries developing as well. We never used to have a strong property practice and we now have quite a strong practice," says Grieve. "Whenever you've got things turning over, you've got people looking into doing things in property."

The story does not just end with promising prospects. Bruce Linn has already seen a clear increase in revenues coming in from the energy & resources practice. "It's a significant contributor to our revenue growth this year and we expect that to become more so as the [BHP] project develops. Bear in mind that the Olympic Dam project is only in its feasibility stage and BHP has yet to commit to the feasibility phase. Everybody expects that they will, but we are only in one stage of a number of stages to go through."

Recruitment Relief

Adelaide faces strong competition in the legal recruitment market and retaining lawyers is a serious issue for many firms. Not only do the bright lights of Sydney and Melbourne lure, international firms also prey on South Australia's finest.

"There is more interest from overseas in junior lawyers," says consultant Greg Plummer of legal recruitment specialist Dolman. "Adelaide lawyers make use of these opportunities. Even Dubai is an option now, while a few years ago nobody would think of that."

However, as the state's luck is changing retention has become easier. "They [SA lawyers] don't need to leave the state to find good work," says Jon Gill, director of Cicero. He recently travelled to Adelaide to speak with several firms on their recruitment strategies and noticed that fewer lawyers head to the east coast.

David Abfalter, chief executive of local firm Kelly & Co, confirms the picture drawn by these agencies. He says the firm's retention rates are good and attracting new staff has picked up as well. "We have little difficulty in attracting high-quality practitioners. In fact, a large number of practitioners when they come back to Adelaide, be it from overseas or interstate, contact us directly."

"In the crises that you see around Australia, we have been fortunate enough to attract some absolutely top-quality young people," says Minter Ellison chief executive partner, Nigel McBride. He has his own way of reeling in new talent. "We've got some great people from the big London law firms who've married Adelaide girls, so we are now sending out as many pretty Adelaide girls into the world as we can."

A client's perspective

Cathy Oster has been general counsel of Adelaide-headquartered oil and gas corporation Beach Petroleum since July 2005. On her informal but 'fairly known' panel feature, amongst others, Piper Alderman and Adelaide-only firm DMAW Lawyers. What made her choose a South Australian firm?

"We are based in Adelaide, so proximity is one reason," says Oster. "It is important for some of the work we do to have somebody close-by. But it's horses for courses, really; we tend to use firms depending on what the particular need is."
 
The relationship with Piper Alderman goes back many years, says Oster. "Piper Alderman is almost a national firm, so they have a combination of the local knowledge plus a wider base to draw on, which is important as our organisation is growing."

The work she outsources to external counsel includes negotiating and advising on commercial agreements surrounding the company's joint-ventures. Has she noticed an increase in resources-related work? "We are certainly aware of there being more resources work available for the legal profession generally," she says