Herbert Smith + Freehills: UK, Australian law firms continue to take advantage of reforms

Yesterday, as reported in the New Lawyer’s website out of Australia, partners at London-based Herbert Smith LLP and the Australian firm Freehills agreed to a merger that creates Herbert Smith Freehills, the eighth-largest firm in the world, with 2,800 lawyers.

The global behemoth will be led by joint CEOs and managing partners David Willis and Gavin Bell, who in their press release alluded to the growing importance of global firms, and the advantages of international structures.

“This merger,” said Willis “will therefore put us in a strong position to provide clients with the single global offering they increasingly demand.”

“The merger,” said Bell, “will give Herbert Smith Freehills the platform to become the leading global law firm across Asia Pacific, a region likely to see continued substantial growth and to become an increasingly important part of the global legal services market.

The full-equity continues to exploit reforms in the UK and Australia that allow firms to create alternative business structures (ABSs), raise equity internationally from non-lawyers and (in Australia, at least) list shares for public trading — advancements toward legal corporatization that are prohibited in Canada and the US.

And the Herbert Smith Freehills deal comes quick on the heels of another blockbuster, when the UK Solicitors Regulation Authority approved the takeover by Australia’s Slater & Gordon — the world’s first publicly traded law firm — of the UK firm Russell, Jones & Walker that would make it a wholly owned subsidiary.

In the June issue of Lexpert, ethics columnist Paul Paton explored the reasoning behind reluctance in Canada and the United States to open the doors to non-lawyer ownership structures, which can be viewed as a modest first step towards globalization.

He refers to the April refusal of the American Bar Assocation‘s Ethics 20/20 Commission to propose new rules allowing non-lawyer ownership of firms, citing “extensive outreach, research, consultation and response of the profession …”

The consultation they were alluding to?

“… a series of almost viscerally negative responses to a commission Discussion Draft … The comments ranged from considered opposition and concern to the astounding statement by one lawyer (and I’m not making this up) that in his 27 years of practice ‘non-lawyers routinely fail to respect any ethical guidelines in their business practices.'”

Non-lawyer owners, clearly, are still considered an ethical hazard to the profession, at least in North America.

Is this a prudent stance that upholds the legitimacy of our legal structures? Or an old fashioned bit of snobbery that will leave firms this side of the meridian biting dust?

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