Dog eat dog

This article originally appeared in Lawyers Weekly on 5 March 2012.

In Adelaide, law firms exist in an environment where word of mouth is sacred, competition is fierce and the future holds the promise of renewed prosperity. Claire Chaffey reports.

Australia’s second-smallest state capital is an intriguing place.

With a population of around one million, it is more akin to a country town than a major city, with an economy that has been reluctant to pick up the pace and retain the corporate giants.

For the 3,700-odd lawyers that practise there, it is remarkably different to its eastern seaboard counterparts.

Peppered with top-quality boutique firms and historically unkind to national law firms, Adelaide’s legal services market is one in which success is hard-fought and longevity boils down to one crucial factor: relationships.

Friends in high places

Fox Tucker managing partner Joe DeRuvo knows all too well the importance of relationships to the success of law firms in Adelaide.

Having split from DLA Philips Fox (now DLA Piper) in 2010, DeRuvo has gone from being the head of a state branch of a national firm to being the head of a well-respected boutique firm in a market flooded with like entities.

“The Adelaide market has always been a pretty tough market. It is fairly parochial and is very much relationship driven,” he says. “It’s very hard for new players to break into the market by just coming and setting up.”

John Kain, the managing partner of corporate and commercial boutique Kain C+C, agrees that sinking or swimming depends on how well you treat your client.

“It is very much about relationships, and that is a feature of a pretty thin institutional presence here,” he says. “Absent that which would otherwise drive more of a panel-type arrangement, it is very much about your individual relationships.”

According to DeRuvo, the nature of Adelaide’s legal services market changed about 20 years ago, when many of the big corporate clients turned their backs on what they saw as slow economic growth and headed for the greener pastures of the eastern seaboard.

This tightening of the market meant firms had to ramp up their efforts to snare those corporate clients who did stay behind and, in some cases, look further afield.

“It has caused the Adelaide firms to be far more aggressive in approaching work,” he says. “For example, probably half of my work would come from clients who are interstate.

Firms are more aggressive in the way they go about marketing, who their targets are and who their clients are, and are not shy about stepping into other markets and trying to get work in other markets.”

For Kelly & Co chief executive officer Stuart Price, competition is something on which the firm is thriving, and an aggressive approach to landing clients has resulted in record growth over the last few years.

“It is competitive. We have a combination of local, national and international firms here. Like every legal market, the legal spend has decreased, which is reflective of the economic challenges that are occurring at present,” he says.

“We are going out to our clients and asking what we can do better and what other people are doing better than us. We are not resting on our laurels. We are hungry, and we are hungry for success.”

Branching out

Relative to other state capitals, the success of national firms in Adelaide has been limited.

Minter Ellison is one firm which has managed to maintain an Adelaide office, as has Blake Dawson, which, on 1 March morphed into a global firm via its merger with UK firm Ashurst.

The absence of other top-tier firms in the state is perhaps testament to many things: a slow growth economy, an over-lawyered market and a perceived lack of serious commercial viability.