Staff are busy polishing the nameplates on the Henry Davis York building as ALB arrives to meet managing partner Sharon Cook. Yes, this is one of the few Sydney firms to have a CBD building devoted for its exclusive use. The moderately sized but elegant HDY  building sits at the top of Martin Place, directly opposite a 67  floor tower which happens to be home to Freehills.

That tower, with the HDY building standing doggedly below it, is a neat metaphor for the lofty prestige of the top tier keeping a watchful eye over HDY: a firm which has, at its own pace and in its own way, earned a notable prestige of its own.

Cook is proud of the building and particularly for what it symbolises: this is home for a firm which sees its single city, single office status as an essential part of its culture.

“When you get into the lift here, you know that anyone else you encounter will also be from HDY or visiting someone here,” says Cook.

“It’s part of what makes HDY a uniquely friendly, nurturing place to work. It’s what we’re known for in the market.”

And Cook can back her claims with evidence: HDY is one of only two Australian law firms to be listed in the Corporate Responsibility Index – the other firm is Minter Ellison. The firm has released an independently audited report on its performance against sustainable business practices.

Revenues

Last financial year, HDY earned about A$85m  in revenue, which represented nearly 16% growth on the previous year. The result was assisted by the firm’s involvement in some high-profile insolvency and restructuring matters, including ABC Learning, Allco, Babcock & Brown and Commander Communications.

The firm’s ten-partner insolvency and restructuring team has grown by 20% in the same period and other areas have also been solid. “We’ve also seen work which initially comes into the insolvency team and then cascades through to other areas, such as corporate, employment and property,” says Cook.

“This means that those teams haven’t experienced the same drop-off that they may have in other firms.”

The countercycle

Cook is cautiously optimistic about Australia’s economic prognosis and says that more corporate casualties at the top end are unlikely. “I think the top end is mostly played out,” she says.

“However, what we haven’t seen is how the GFC will ultimately play out for small to medium size business (SMEs). The big challenge will be access to credit and also the possibility of government discontinuing the stimulus packages – this may yet cause some distress for SMEs.”

The other aspect of the global crisis which is yet to really unfold is large-scale litigation arising from corporate collapses. “There is a lag period involved, but I think we will certainly see [the Australian Securities and Investments Commission litigation pick up – at the moment ASIC seems to be looking very actively into what has happened with these corporate collapses,” says Cook.

“That particular wave of litigation has not hit yet, and when it does the recovery is likely to have already started.

Litigation is a big part of HDY’s practice – half of the firm’s partners are litigation partners. This strong collective expertise in insolvency, restructuring and litigation might invite the conclusion that Henry Davis York is fundamentally a counter-cyclical practice.

Yet this is a characterisation which Cook challenges on more than one front. “I wouldn’t say that litigation is countercyclical. I would say that it’s generally steady – it sees you through good and bad economic times. For example, the corporate regulatory litigation that comes out of ASIC pays no heed to the economy at all.”

Cook also points to HDY’s strengths in other areas, such as advising the NSW public sector on a wide variety of legal matters dealing with property, employment and corporate issues. The firm has an impressive stable of clients in the public sector, including the Roads and Traffic Authority, Sydney Ports and the NSW Police.

Nonetheless, Cook acknowledges the importance of HDY’s countercyclical practices and notes that the firm’s revenues in the boom years were “modest” in comparison to the most recent result.

“We don’t take pleasure in the fact that there’s a downturn, but the firm generally does better in difficult economic times,” she says.

She is in the process of implementing a strategy which will improve the firm’s offerings in areas away from its traditional insolvency and restructuring base. This will see HDY step up its expertise in litigation, financial services and other types of work for the NSW public sector.

Cook says the firm is “incubating” other practice areas such as funds and superannuation and corporate insurance advisory. “That is our strategy of ensuring we have a strong business when the good times return.”

Partnership

HDY works on a lock-step model, with all partners with equivalent experience earning the same remuneration, or pro rata for the firm’s part-time partners. “We encourage a team culture – not ‘eat what you kill.’ It’s a nurturing culture which encourages partners to act in a collegiate way,” Cook says.

This is a firm where the partners enjoy each other’s company – partners actually look forward to the annual partners’ retreat,” she adds.

Cook has reduced the number of partners who are involved in firm management. She runs the firm with a board of directors, three of whom are partners. These partners, together with the six practice group leaders, are the only ones who are involved in the firm’s management.

“This system makes it clear who is running the firm and how it is being run. It makes us nimble and responsive in a way that the big firms cannot be,” she says.