US-based law firms have been using Australian offices as a hub from which to service American clients interested in accessing the lucrative market Down Under for some time. They are also used to working with Australian companies who need help navigating the thorny issue of US securities law.
Dorsey & Whitney chose to open its Australian office in Sydney earlier this year – becoming the sixth US firm to do so. Few were surprised – the firm had raised the possibility two years ago – but while the opening may not have come as a shock, the role that Dorsey’s Sydney office was to play in its global operations was certainly a break from the norm.

Regional outlook

The firm’s managing partner, John Chrisman, is clear about the role that Dorsey’s new Sydney office will play in the firm’s global strategy, although he concedes it’s not what one would expect of an office in Australia.

“The Sydney office will serve as a base for the Asian market, with a specific focus on India and Greater China and, of course, Australia, where we will be looking to further develop our US capital markets, corporate, M&A and litigation practices. I guess some may say this is a little unusual, but for us it’s natural and makes sense,” he says.

Sydney “makes sense” for Chrisman because, alongside the firm’s offices in Shanghai and Hong Kong, Australia adds balance to the firm’s regional offering. “Australia is a developed country with a robust, stable economy and this is a good counter-balance to what we have elsewhere in the region. Things are a little slow at the moment, but Australia’s a slow-burning market: growth may slow from time-to-time but it will rarely cease,” he says.

Dorsey is aided by what Chrisman feels is one of the most developed and sophisticated legal services markets in the world. “For a relatively small country, the legal market in Australia is amazingly complex and this only helps international firms. I have said before, we will not be practising, nor do we have plans to practise, local law and to have firms of the calibre of some of those here to call on is of immense benefit to clients,” he says. “Lawyers here don’t follow so much as innovate in their advice, particularly in relation to capital markets work. Things have often been done here before we do them in the US and that underlies the sophistication of the market we are in.”

This sophistication is something that Chrisman is keen to tap into as he goes about building Dorsey’s Sydney-based Asia practice. It also makes opening in the downturn worth the risk. “It has certainly been challenging to open an office when we did but the benefits are clear. Not only are business overheads, on average, substantially cheaper than in Hong Kong or Singapore but the talent pool here is also a very exciting prospect,” he says. “Australian lawyers enjoy an excellent reputation for skill, technical knowledge and training around the world, and as the employment market returns to normal – where supply comes back to levels of demand – we will be looking locally to build our Asia practice.”
But just what separates Dorsey from other US-based firms operating in Australia? After all, any US firm can provide Rule 144A advice or counsel clients on the intricacies of New York law. This is true, Chrisman concedes, but Dorsey differs in its approach in that it focuses on the mid-tier.
“Most of the US-firms in Australia target the top-end of town and nothing else,” Chrisman says. “Our bread and butter work is with mid-market, mid-cap companies. This is not to say we don’t have top-end-of-town clients and we aren’t looking to pick more of their work up, but most of our focus is on this segment of the market and we won’t be abandoning that focus.”

Indian expertise

Chrisman is considered something of an expert on the Subcontinent. In his stints at Jones Day, Freshfields and the ill-fated Coudert Brothers he was said to be the man to seek out for advice on India’s capital markets. And, by all accounts, it is a reputation that has followed him to Dorsey. In 2007 and 2008, the firm worked on nearly 20% of all equity share offerings in India, helping Indian companies raise an aggregate of nearly US$2bn. And despite the economic slowdown, Chrisman is confident about the amount of work on offer both on the country’s capital markets and elsewhere.
“The Indian markets are coming back very strongly. It’s probably one of only a few places in the world where the capital markets are still going,” he says, adding he expects this to continue in the coming months. “The election results were immensely positive for business in India and [they are] a big reason behind why the market has soared of late and some deals are back on track.”
Chrisman also believes that liberalisation is likely to have a similar effect – when, and if, it happens. “Liberalisation will no doubt change the fabric of the legal market – it has in markets elsewhere and India will be no different. It will prove to be the spark for the further development of India’s corporate and business sectors,” he says.

But just what effect will this have on law firms? Will international players rush to establish Indian offices and will Dorsey be one of them? Chrisman is reticent about laying out a definitive timetable for Dorsey’s entry into India, believing it is more likely UK firms will enter the market first.
“Entering India as soon as the legal sector liberalises may not fit in the standard US law firm’s model of expansion, which is to set up offices in financial hubs across the globe,” he says. “This is different from the UK approach, which often seeks out more synergies and which would be geared, either over the mid- or long-term towards practising local law, thus meaning they would need to enter sooner rather than later. The type of work that US law firms tend to do for Indian clients or international clients entering India involves advice primarily on capital markets and cross-border transactions, among other things, and can be done just as effectively from Hong Kong, Singapore, London or Sydney.”
However, Chrisman doesn’t rule out the possibility of opening in India if client demand compels Dorsey to do so or its biggest rivals for work in the country – the likes of Jones Day, Gibson Dunn & Crutcher and Baker & McKenzie – all venture down the Indian office path.

“If one US law firm enters India will that open the floodgates for others? It’s too early to tell, but many firms already have relationships, exclusive or otherwise, with domestic firms there,” he says. “We do not have an exclusive relationship in India but chose to work with the top domestic firms. Any decision to open an office in India will depend on what clients are saying we should do. I’d be lying if I said the movements of other law firms would have no effect though.”