STATE OF THE MARKET

For Australian and New Zealand law firms active in the insolvency & restructuring space, it seems things have never been better. Not only are all reporting that the quantum and complexity of matters being handled are hitting 10-year highs but also the latest figures put out by those in the financial services sector indicate that there will be plenty more of the same to come in the months ahead, especially as the full effects of the global liquidity crisis and recent legislative change in both jurisdictions still remain to be seen.

ASIC notes that the number of companies entering into external administration this year has risen by 128 on the same period last year, while Ernst & Young research identifies a similar pattern - company profit warnings, (especially those issued by companies in the industrial, consumer discretionary and financial sectors) are at record highs. However, while the current economic climate has, and will continue to, present new opportunities for law firms, it will also give rise to its own unique set of challenges, many of which the newer players in the market have not encountered before.

As ALB's extensive survey of clients and in-house counsel suggest, the extent to which lawyers and firms succeed in the current environment depends on how they respond to these challenges, and not least how they grapple with the changes in client expectations these entail.

SYDNEY

Of all the firms mentioned in ALB's client survey, Henry Davis York came out on top for the consistently high-calibre nature of its work in the area. Clients mentioned both the depth and breadth of HDY's team and the number of high-profile cases that it works on as the firm's core strength. Considered to be 'head and shoulders above the rest' in banking recovery and fraud management, the firm counts a bevy of big banks among its regular clients. Singled out for special mention were ALB leading lawyers Roger Dobson and Philip Crawford. The internationally renowned Dobson was described by in-house counsel as "their first choice for external work", while litigation expert Crawford's advice was valued for his unrivalled experienced in all banking matters. Practice head John Martin was also recognised as "highly respected", with clients citing his track record of insolvency cases spanning Australia, the UK and South Asia. Team-mate Matthew Kersey was also praised for his cross-border experience. John Evans' active "engagement with complex issues" is also praised by clients, especially in finance industry circles.

Hot on the heels of HDY was Kemp Strang. Insolvency, accounting firms, banks and financial institutions alike all praised the firm's expertise in the contentious side of insolvency. Scott Hedge was commended for the "timely qualities" of his work while ALB leading lawyer Alex Linden was lauded for his "determination to get the job done", with one in-house counsel mentioning that he was "always willing to go that extra mile". The firm's key strengths according to ALB's survey rested with the "outstanding commercial utility" of its advice.

Baker & McKenzie was mentioned as being "extremely astute" in all aspects of insolvency & restructuring law. ALB leading lawyer Mark Chapple was singled out for the high-quality advice that he and his team have provided to banks and other financial institutions, liquidators, receivers and creditors and is noted for his advice and litigation in connection with the enforcement of securities, construction contracts, 'junk-bonds' and breach of fiduciary duty and fraud claims. Julianne Cox and Georgie Farrant were also identified by clients as "extremely capable litigators".

Dibbs Abbott Stillman is considered by many clients to be expert in the field. The firm's active industry engagement and "hands-on approach to client liaison" warranted special mention from a company secretary of one Australian-based household name. ALB leading lawyer Mark Addison was praised by peers and clients alike for his "market knowledge", while Emma Hodgman and Justin Kang were thought to be leading the way in advising banks and other financial institutions in recoveries, with the latter acting on one of Australia's most high-profile insolvent administrations - One.Tel "You simply can't go past Websters" for insolvency & restructuring, according to one client. The boutique firm was praised by mid-tier clients for its "proactive" approach to the law and has acted on a number of significant cases on behalf of an Australian-based client against US giant Apple, and on various high-profile insolvency matters in China. Partner Stephen Webster was praised for his "client commitment, cost-effectiveness and attention to detail".

Boutique player Nash O'Neill Tomko Lawyers also polled highly in ALB's extensive survey of clients, lawyers and in-house counsel. The firm's dedicated corporate focus was praised as was its "high level of expertise in all areas of insolvency". Managing partner Michael O'Neill and consultant David Blessington were noted as "valuable to the industry".

Addisons rated highly among clients for the wide array of services they offer in the area, with many noting that they were "experts" in successfully negotiating transactions which attract regulator attention.

ALB leading lawyer Philip Stern was praised for his corporate litigation including shareholder disputation prowess, while newly promoted partner Nicole Tyson was acclaimed for her "superb counsel in litigious matters".

MELBOURNE

Clients of international firm Deacons openly praised the commercial utility of the firm's advice, with their ability to "gauge the cross-jurisdictional" issues that arise in the area noted as a key strength. In-house counsel and company secretaries felt that it was the firm's Melbourne office - lead by ALB leading lawyers Quentin Solomon and Steven Palmer - which was leading the way. Banking & finance specialist Solomon was noted for his "in-depth knowledge of the area", with one client dubbing him "the best practitioner for LBOs in the country". Palmer was singled out for his "close relationships with insolvency practitioners", with one noting that it was an advantage to have "someone like Palmer on your team in an area of law like insolvency". Andrew bruce and Sydney-based John Holmes also warranted special mention from clients as possessing "extremely strong credentials in the field."

Arnold Bloch Leibler received glowing commendations for their "practical and commercial approach to practice". Clients consistently referred to the firm's "core strength" as being partner and ALB leading lawyer Leon Zwier. Zwier, noted as being "among the top two or three practitioners in Melbourne", was praised for the "commercial utility of his advice", with clients keen to emphasise his unrivalled industry credentials. Jane Sheridan was praised for her restructuring work while Sydney-based Andrew Silberberg also came highly recommended for his industry knowledge, with clients seeing his stint as an in-house counsel as a crucial asset.

Maddocks was noted as "offering simply excellent advice" to insolvency practitioners, company secretaries and in-house counsel in the Melbourne market. Partner in charge of the firm's corporate and commercial group Philip Jones was commended for his "wealth of experience in the industry" while Michael Johns' expertise in carrying out insolvency and securities enforcement litigation was also regarded highly.

TressCox's insolvency & restructuring team received kudos from clients for "always getting the job done". In-house counsel mentioned the firm's experience in representing a wide spectrum of clients. Both Philip Watson and Nigel Watson received praise for being "acutely aware of the need for clients to find commercial solutions to problems in the area."

Although a national firm, the "specialism and straight forward manner" of Gadens' Melbourne office was singled out for special mention. David Reichenberg and Robert Hinton both polled strongly, especially for their work with some of Australia's largest banks and ASIC.

BRISBANE

The insolvency & restructuring team at newly-merged HWL Ebsworth received praise from clients and peers alike for the "cost-effective" and "commercially geared" nature of its advice. Offering the whole gamut of services in the area but particularly noted for its work with banks and other financiers on restructuring facilities and workouts, the review and enforcement of securities, loan recovery and the appointment of receivers and managers, clients singled-out Scott butler and Wayne Jenvey for special mention. Both were referred to as "consummate professionals" with the latter acclaimed for his work on the recovery of margin loans by the in-house counsel of a large Australian bank.

When asked about the insolvency & restructuring lawyers in the Brisbane market, one company secretary mentioned that HopgoodGanim was his business' "natural first choice". Partner in charge of the firm's dispute resolution and litigation practice which focuses on insolvency matters, Darrell Jardine, was said to "possess talents across key aspects of the area".

Perennially mentioned by clients in the ALB Guides series, McCullough Robertson once again polled highly. Clients and peers alike spoke highly of the firm's budding insolvency practice, singling out finance head Peter Stewart and Peter Kennedy for special mention.

ADELAIDE

Thomson Playford Cutlers is another newly-merged mid-tier firm which is leading the way in the area according to clients. Noted for its work in the recovery of assets out of commercial trade and finance transactions, the litigation skills of Michael O'Donnell were applauded as were the skills of Stephen voss, who was valued for not only resolving disputes, but "finding strategic alternatives that are so important in doing business in today's environment".

Also counting big banks as regular clients is Finlaysons, which was widely recognised by those in the financial sector as "casting a long shadow in the field of insolvency & restructuring". Head of the firm's Adelaide specialist banking & finance practice area, Michael barrett, was claimed to be "an old hand in this sector who knows his work".

The "commercially minded" practice at Johnson Winter & Slattery has developed a strong relationship with insolvency & restructuring clients in the banking sector. David Proudman comes highly recommended for his work on restructurings and is regarded as one of the most "highly credentialed insolvency practitioners in Adelaide".

NATIONAL FIRMS

Blake Dawson's insolvency & restructuring division was considered one of the firm's core strengths according to clients and peers. The firm has preserved its position as the market leader in the area by both bolstering its team with a number of lateral hires and acting on some of the highest profile matters in Australian corporate history, including the HIH Scheme of arrangement, Sons of Gwalia and Huon Corporation administration. Partner and team leader James Marhsall is lauded for his knowledge and achievements, with one industry associate regarding him as an "utter professional".

While ALB leading lawyer Ray Mainsbridge is noted for his wide ranging expertise, which includes receiverships, liquidations and deeds arrangement of companies, he received highest praise for his "forthright communications skills". Fellow partner and ALB leading lawyer Ross Mclymont was lauded for the "strategically excellent" calibre of his advice, while Tony Ryan was mentioned as being "very very good at getting the impossible done".

Allens Arthur Robinson continues to lure clients with its solid industry knowledge and impressive transactional track record, roundly described by survey respondents as offering "high quality" and "strategically adept" advice. ALB leading lawyer Simon Lynch was mentioned as an "LBO expert", while Brisbane-based Alf Pappalardo was acclaimed for his litigation skills and for his approach to managing difficult insolvency cases, with clients speaking of his "vast knowledge" and "exceptional" communication skills. The "astute and esoteric" Michael Quinlan is considered by colleagues as an expert player in the field, while colleague Clint Hinchen was described as "friendly and practical", with his development of "solid client relationships" often noted.

ALB leading lawyer Michael Hughes of Minter Ellison comes "highly recommended" by industry peers and was consistently referred to as one of the top practitioners when it comes to insolvency, security enforcement and restructuring work. Garry Hamilton was described as "an extremely proficient lawyer", and practice head Ian Walker was hailed as the "top man" for insolvency work, counting big-name insolvency firms as clients. Head of the Minters Adelaide corporate recovery & insolvency practice and ALB leading lawyer, the "professional" Ray Mansueto was recommended by insolvency practitioners and banking clients for his work on securities enforcement.

Clayton Utz has established itself as a "must to consider" for insolvency & restructuring work, according to colleagues. ALB leading lawyer David Cowling was widely acknowledged for his experience in asset recovery and liability issues of lenders with clients also speaking of the team's "all round expertise and depth of talent" as core strengths. Sydney-based duo Brigette Markovich and national coordinator Karen O'Flynn also warranted special mention. The latter's litigation skills were considered to be "very, very comprehensive", while the former's extensive experience and "superior industry knowledge" were cited as core strengths.

Mallesons Stephen Jaques possesses an equally strong national insolvency & restructuring team. ALB leading lawyer Linda Johnson was mentioned by clients as being an "expert" in creditor recoveries and receiverships, possessing a sound ability to "bring parties together", while Tony Troiani and Lindsay Powers were also mentioned as eminent practitioners praised for their ability to "bring people and solutions together".

"Top quality" was how one client described the insolvency & restructuring team at Freehills. The "consistently reliable" practice has a "track record proven by results," said another. Clients and peers singled out ALB leading lawyer, corporate specialist and former Barrister at the English bar Philip Hoser as "particularly brilliant", while Juliana Warner was commended for her work on some notable matters including One.Tel and the collapse of Harris Scarfe.

Head of the Corrs Chambers Westgarth insolvency team, Dominic Emmett, "undoubtedly has to be considered in this field" according to clients. The firm has built a high profile in the industry, having worked on a number of high-profile insolvency transactions including the Sydney Cross City Tunnel sale. Perth-based partner Phillip Wilson also warranted special mention for his "excellent commercial advice".

NEW ZEALAND

Across the Tasman, all the major players have well-established insolvency & restructuring practices. And while it is the largest firms which seem to have cornered the market at present, smaller firms are expected to catch up in the months ahead as the collapse of some of the country's most prominent mid-tier financiers begins to manifest.

DLA Phillips Fox's strengths in the area reside in its Auckland office according to clients and in-house counsel, where ALB leading lawyer Michael bos is said to run a "very proficient practice". The firm's work with corporations on high-level insolvency and debt recovery commercial disputes won it praise, even from clients across the Tasman. Fellow partner Nigel Stranaghan was lauded for his expertise in receivership and workout transactions.

In-house counsel and clients alike held the insolvency & restructuring team at Bell Gully in high regard. Auckland-based Murray Tingey and Wellington-based Mike Colson were both noted as being "excellent" in the area, with clients mentioning of both that their international experience was "invaluable". The most glowing client recommendations, however, were reserved for Wellington-based chairman and ALB leading lawyer Mark O'brien. Various NZ insolvency practitioners referred to O'Brien as one of the "best insolvency litigators in NZ", sentiments echoed by a number of his peers.

Auckland, Wellington and Christchurch-based firm Buddle Findlay's insolvency & restructuring team was lauded for its depth of talent in addition to "delivering good results to deadline". ALB leading lawyer David Perry was singled out for his expertise in advising domestic and foreign banks, insolvency professionals and other organisations on receiverships, liquidations and workouts with clients, maintaining that Perry is "simply excellent at what he does". Graeme Hall was also mentioned by clients for his "tactical approach" to practice in the area.

Chapman Tripp's insolvency & restructuring team was said to be a "professional and knowledgeable outfit", possessing key strengths in acquisitions of distressed corporates and their assets. Auckland-based Michael Harper and colleague Michael Arthur were both recommended by NZ financial services clients for the "consistency of their advice".

Kensington Swan also polled well for the "excellent" nature of their advice and "good client care manner", so much so that even clients in Australia were singing the firm's praises. Bret Gustafson and Wellington-based David Shillson were cited as giving advice that was always "spot on" while Wellington-based Gerald Fitzgerald was commended for his "all-round knowledge" and "business acumen"

SHAKING OFF COMPLACENCY

As ALB's research suggests, while the quantum of work on offer for lawyers in insolvency & restructuring will only increase in the months ahead, it is likely the larger, established players will benefit from the upturn. However, a number of clients noted that smaller to mid-sized firms are quickly catching up. ALB's own deals database indicates that the market share of the eight largest law firms in the market has dropped, albeit slightly, over the past two years - a trend that one in-house counsel believes will only deepen as the legal services market in the area continues to develop. "The smaller, specialist firms will be big winners because in the current climate the three c's (costs and client care) will become big issues and in my opinion that's what companies need now more than ever," he said.

But there are even larger issues looming. As firms struggle for a share in a legal services market that has seemingly materialised overnight, there is always the danger that both uniformity and complacency may set in, as one in-house counsel who was previously a partner with one of New Zealand's firms noted: "Lawyers and firms are asking themselves the wrong question if they say 'how can we take a share of this for ourselves?' They need to be asking 'how can we take more of the market than anyone else?' " It is an issue that lies at the core of much broader issues such as firm management and strategic direction.

According to Chris Campbell, corporate reorganisation group partner at Deloitte, the way forward rests as much with adopting a broader outlook as it does with making the most of legislative changes. The recent introduction of the Cross-Border Insolvency Act in Australia is considered to be the means to this end. "Law firms need to look overseas and this new law makes it even more important... those firms that demonstrate that activity and ability to deliver service to offshore needs are the ones who are going to succeed," said Campbell.

"Firms can't rely on market reputations at the moment," said one in-house counsel. "In-house counsels are under increasing pressure from boards, CEOs and shareholders to deliver results despite the times and we will look to instruct lawyers who can do this irrespective of their market position."

And indeed this was a sentiment echoed by almost every survey respondent. "Private counsel will have to do a lot of hand-holding, but that is par for the course - there is no better time to look at preventative measures and strategic planning than in a downturn," the source concluded.

Leading firms

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