Australia's reputation for producing high-quality lawyers has tempted Magic Circle firm Allen & Overy into the Australian legal market. The firm will have 17 partners in offices in Sydney and Perth - 14 of whom were poached from Clayton Utz.

Allen & Overy's will open its offices 1 March - just two months after the Norton Rose-Deacons merger and the rationale seems to be similar. Norton Rose Australia chief Don Boyd said that a major driver for the merger was the ability to resource Norton Rose's Asia offices with high-quality, low-cost lawyers from Australia.

Allen & Overy's Asia-Pacific managing partner Thomas Brown agreed that the abundance of well-educated lawyers makes Australia an attractive market. "This move improves access to the deep pool of high quality lawyers that exists in the Australian legal market, making this the logical next step in our plans to expand our global network," he said.

In a recent interview, Boyd said it was unlikely that any of the major UK or US firms would set up shop in Australia without plans to transfer Australian lawyers to Asia.  “To just set up in Australia to tap into the Australian market doesn’t really on the face of it make a business case because this is a massively competitive environment,” he said.

Allen & Overy senior partner David Morley said the move reflected the importance of Australia in the Asia-Pacific market. "Our decision to launch in Australia underlines the increasing importance of Australia in the global and Asia-Pacific economies," he said. "We see significant opportunities for high-end, cross-border M&A and finance work in the private and public sectors, particularly in the energy, mining and natural resources sectors."

An analysis of the local market conducted by Allen & Overy convinced the firm that there is space in the Australian legal sector for a smaller high-end law firm that is integrated into a broad global network. Allen & Overy's core practices will be in energy, mining and natural resources; finance; infrastructure; investment funds; M&A; private equity; tax; and telecoms, media and technology (TMT).

Clayton Utz CEP David Fagan said the Australian legal market is one of the most competitive in the world and backed his firm to maintain its competitiveness despite the loss of the defecting partners. “Partner movements such as this occur in the lifecycle of a firm,” he said. “Clayton Utz is in excellent shape and continues to be one of the strongest performing firms in the market.”

The move by Allen & Overy probably took Fagan by surprise since he had previously said that the depth of the Australian legal market would probably make it more likely that a smaller global firm would be interested in cracking the domestic market rather than one of the majors. “I query as to the amount of global style legal work that would be available in the Australian market that would support a global firm,” he said, commenting on the Lovells-Hogan & Hartson merger.

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