Its alliance with Chinese law firm King & Wood provides Gilbert + Tobin with a trump card  into one of the world's fastest growing markets, but the firm still has many hands to play before it can capitalise on its new friendship.

When Gilbert + Tobin (G + T) announced to have formed a strategic alliance with King & Wood, it was congratulated for beating US and UK law firms to tying up with China's largest commercial law firm. It was presented as nothing less than miraculous that a mid-sized Australian firm could pull this off ahead of much larger rivals.
Let's be fair, it is a milestone, but the idea that the firm has beaten international competitors and is now set to conquer China's legal market does need some adjusting.

The alliance between Gilbert + Tobin and King & Wood is in many ways a product from the merger of Arculli and Associates and Fong & Ng in 2005. The paths of the two firms have crossed many times since then and G + T and King & Wood have worked together on telecommunication and competition law projects. The alliance can therefore been seen as a formalisation of an existing relationship.

Although King & Wood has been approached several times by large international firms, the firm always had its own plans for world domination. As a consequence, there were no US or UK firms in the race to team up with King & Wood.

In fact, the reason for partnering with G + T is because the Sydney firm doesn't form a threat. It isn't a full-service firm, or even a national firm for that matter. A fact that hasn't escaped Danny Gilbert, managing partner of G + T: "For them to entertain relationships with one of the major global firms, I think would cause them some tension, because global firms all have their own strategy about establishing the dominance of their own brand."

G + T is also not the first firm with which King & Wood has formed an alliance. The Chinese firm teamed up with Japanese law firm Miyake Yamazaki in 2005 and has since operated its Tokyo office in association with the Japanese firm.

Expectations

Having said this, to be associated with the largest law firm in one of the world's fastest growing markets, a market with potentially over a billion consumers, is not to the firm's disadvantage. But what can we expect from this alliance? G + T is adamant to point out the agreement is not just another 'best-friends arrangement', however, it remains vague about the practical implications.

The alliance is on a non-exclusive basis. In other words, King & Wood is free to work with any other Australian law firm if it chooses to do so. Chances are that they will. King & Wood has a long-standing relationship with both Clayton Utz and Minter Ellison and the expectations are that these ties won't be severed any time soon.

Commenting on how this alliance will affect Minter Ellison's relationship with King & Wood, Sam Farrands, managing partner of the firm's Hong Kong office, said: "We have enjoyed a mutually beneficial working relationship with King & Wood and a number of their partners for many years, and we expect these relationships to continue into the future."

Peter Waters, partner with G + T, spent many years on the ground in Hong Kong with Arculli and still flies in regularly from Sydney. He admitted it will be hard work. "It is going to be revenue focused and client focused, but we have no set targets yet," he said. "There is no guarantee and it will be hard work, but we have a similar view of the world."

Tricks of the trade

G + T's intentions are clear: "We expect to be the referral point for work coming in through them to Australia and expect to see work opportunities jointly with them in China and Asia, particularly where we have some expertise," said Danny Gilbert. The firm wants to get a foothold in the Chinese market and must have thought that a non-exclusive alliance is better than no alliance.

The benefits for King & Wood are less clear; they already have ties with some of the largest Australian firms, but according to G + T, the Chinese firm is interested in learning the secrets of a Western management style. "One of the opportunities going forward is the sharing of knowledge regarding managing law firms, that they are interested in," said Chris Freeland, partner and COO of G + T. "They are interested to know how to manage a Western law firm and we're interested in understanding China better."

The idea is to share corporate information on a high level, added Gilbert. "We will share information about how we run this business and vice versa completely transparently with them."

Susan Ning, senior partner of King & Wood, confirmed this is an important reason for the firm to formalise the ties. "Teaming up with G + T, a well-established western firm, provides us with a valuable opportunity to acquire advanced law firm management know-how."

"We have a lot in common; we both come from a Greenfield start and share similar firm culture and vision," said Ning. "And our strong relationship that grew out of the historical tie with Arculli makes us believe even more that G + T is a well-trusted partner and that they'll generously share their expertise and know-how without any reservation."

Specialist expertise

Peter Leonard, partner with G + T, believes another reason for King & Wood to seek a closer relationship is that G + T's areas of specialisation are also the areas that are on the rise in China. "The work that we've done largely together through Arculli has been in the area of telecommunications and competition law. The areas that we are looking to build out from include information technology, intellectual property, private equity and in essence many of the areas that G + T are recognised as having leading specialist expertise in, in Australia. [They] are areas that currently are underdeveloped in China, but which are growing very quickly."

"There is a natural fit between our areas of specialisation and where King & Wood need to rapidly move their practice in the next few years in order to be fully competitive with the Magic Circle and US firms," he continued. "Today, they are a very good broad practice law firm in China. We're aiming to take them to leading edge on our areas of specialisation as well as assisting them in the further development of management skills."

Good intentions

Despite the warning that the alliance is much more than a best-friends arrangement, it is unclear how much work will be referred to G + T. There are no set revenue targets, only good intentions to work closely together.

The first practical step will be to create a joint partner committee to work for clients in China, develop markets across the Asia Pacific region and share legal and management skills, said the firm. G + T hopes this will lead to the exchange of partners further down the line. "We anticipate having lawyer exchange programs and hopefully some partner exchange programs," said Gilbert.

However, Susan Ning makes clear the firm will take it one step at the time. "We spent two years completing the integration with our Hong Kong associate firm; it could well take us more years to make the Sino-West marriage work efficiently."

The Arculli connection
The relationship between Gilbert + Tobin and King & Wood is in many ways a product from the merger of Arculli and Associates and Fong & Ng in 2005.

Fong & Ng was King & Wood's associate firm in Hong Kong, while Arculli had a similar relationship with G + T. The newly formed firm Arculli Fong & Ng is now King & Wood's affiliate in Hong Kong.

The paths of the two firms have crossed many times since then and G + T and King & Wood have worked together on telecommunication and competition law projects.