Law firms swamped with distressed clients
Michael Pelly

Australia’s leading law firms are being swamped with crisis advisory work, with refinancing, workforce and contractual issues filling the gap left by the collapse in corporate dealmaking.

At the same time, firms are facing their own challenges in handling a remote workforce and ensuring their staff can stay healthy and motivated if the COVID-19 lockdown endures long term.

Paul Jenkins shut down Ashurst’s offices globally. 

Firms that were still asking staff to come into the office last week have changed tack. The largest of those, HWL Ebsworth, said on Thursday that it had “now provided our professional staff with the option of working remotely if they wish”.

However, most have managed to avoid the redundancies – and positive virus tests – that have plagued other sectors of the economy that rely on face-to-face contact, such as hospitality and tourism.

Ashurst managing partner Paul Jenkins said watching the spread of the disease across the globe had convinced the firm it was best to “pre-empt government guidelines”. Each of the firm’s 28 offices in 16 countries have shut down in turn.

“First it was Beijing and Shanghai, through to Hong Kong and Singapore, then to Milan, Madrid, across the rest of Europe through to the UK, then to the US and now Australia,” Mr Jenkins said.

“Things move so quickly and you want to make sure you are ahead of the curve, and not waiting for the government to say ‘you can no longer work from the office’.”

I think people are finding it very difficult at the moment; it’s just overwhelming trying to digest all the information.

— Amber Matthews, DLA Piper managing partner

He noted that a lot of big transactions have been put on hold. “It’s a very different kind of work we are currently doing. It’s advisory-related work, with the exception of financing work.”

Corrs Chambers Westgarth chief executive Gavin MacLaren said the needs of clients were evolving.

“The initial focus was very much on people, including questions around workforce management, staff safety, and managing privacy and data security in a remote working environment.

“This week, and in response to the deteriorating economic environment, we are seeing clients turn their mind to issues such as emergency funding measures, solvency issues, aggressive cash flow management, and deferral of dividends.”

Clients face economic crisis

Clayton Utz chief executive partner Rob Cutler said it was both a health and economic crisis for many clients.

“A lot of the focus is on advice in relation to managing their workforce needs, business interruption insurance and supply chain issues, and of course, restructuring and debt and/or equity refinancing,” Mr Cutler said.

For Rob Cutler, COVID-19 is both an economic and a health crisis. Wolter Peeters

“Most of our legal teams are extremely busy across the board, which I expect will continue in the short term.”

Gilbert + Tobin chief operating officer Sam Nickless said that “the smart clients are moving quickly on finance issues”. There had also been a lot of enquires around force majeure clauses in contracts.

Gadens CEO Mark Pistilli said refinancing was taking on added importance at a time when revenue was drying up and customers were either delaying the payment of bills or not paying them at all

“If you are running a chain of restaurants or an airline, you might find your revenue has dropped to zero,” Mr Pistilli said. “It doesn’t matter how mean you are on costs, no business is going to survive that.”

DLA Piper managing partner Amber Matthews said “everyone is facing some level of disruption” and that a key problem was information overload.

“There is so much information coming so quickly from all the different governments about different packages of support. What we are trying to do is focus our clients on the key issues … and producing legal updates with links to all the different government sites.

Amber Matthews says there’s an overload of COVID-19 information. Louise Kennerley

“I think people are finding it very difficult at the moment; it’s just overwhelming trying to digest all the information.”

Ms Matthews can see some looming challenges around staff.

“Morale is very good, but we are still in the early days of this new way of working,” she said.

“The main thing is keeping people connected. That’s been relatively easy to do. I think the challenge will be – as this continues for weeks and potentially months on end – to find ways to maintain that momentum and connectivity.”

Maddocks managing partner Michelle Dixon said there was a “consistent up-tick” in business.

“We are asking our clients ‘what do you need from us?’ and are sending out a lot of updates on things they should be dealing with.”

Ms Dixon said the support wasn’t just business-oriented.

“The reason we are lawyers is to look after people,” she said .

“A lot of our clients will be in distress and we are just supporting them at the most human level.”

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Michael Pelly is the Legal Affairs Editor based in our Sydney newsroom. He has been a senior adviser to Federal and State Attorneys General and written two books, one a biography of former High Court Chief Justice Murray Gleeson. Email Michael at michael.pelly@afr.com.au

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