John Quinn, managing partner of US law firm Quinn Emanuel, tells Chris Merritt why the company has just opened an office in Sydney. Quinn Emanuel Urquhart & Sullivan partner Michelle Fox, managing partner John Quinn and co-managing partner Michael Mills have set up shop in Sydney. Australia has a relatively litigious culture - almost certainly not as litigious as the US but more litigious than the UK or the European continent. His Australian practice, which opened on Monday, will apply the firm's highly successful formula of focusing only on litigation - mainly defence work for corporate clients, but also plaintiff work on behalf of companies involved in complex commercial disputes. It has a success rate in court of about 90 per cent. According to The American Lawyer, Quinn Emanuel is the world's largest litigation firm. It has gross revenue of $US852.5 million ($921m) and profits per equity partner of $US4.4m, a figure exceeded by just one other firm, New York's Wachtell, Lipton, Rosen & Katz. Mr Quinn, a former editor of the Harvard Law Review, co-founded the firm in 1986 in Los Angeles. It now has about 600 lawyers working from offices throughout the US and Europe as well as Tokyo and Hong Kong. Its arrival in Australia comes at a time when the financial threat to business from class actions is gathering pace. Australian companies outlaid $480m last year to settle claims based on changes in the value of their securities. This was the highest annual payout from securities class actions and boosted the aggregate cost to business from 20 years of this form of litigation to more than $1 billion, according to King & Wood Mallesons. In the US, Quinn Emanuel regularly works for business clients who are defending - and prosecuting - class actions. But Mr Quinn said he was surprised to learn that plaintiff lawyers in this country could bring class actions without first satisfying a court that the proposed claim fell within the class action rules. "There are a lot of countries in the world now that have adopted class actions but I know of no other country where you do not have to get a class action certified by the court - that is even more liberal than in the US," he said. I cannot comment generally on whether Australian class actions are more friendly to plaintiffs but that feature alone certainly eliminates a huge hurdle that exists in the US for a class action representative - really, the plaintiffs' lawyer who is behind these things. Mr Quinn also believes Australia might follow the US and Britain by allowing lawyers to charge contingency fees. As of this spring, lawyers in the UK can now do contingent fee arrangements. You can do it in the US and you can do it in the UK," he said. What are the odds that you are going to be able to do it in the near future in Australia? I would guess they are pretty high. The firm's Australian practice will be led by co-managing partners Michael Mills, formerly of Herbert Smith Freehills, and James Webster, a long-time Quinn Emanuel partner who has moved back to his native Australia from Los Angeles. Along with Michelle Fox, also formerly at Herbert Smith Freehills, they form the foundation partners of the Australian practice. Mr Mills said he expected the practice to grow fairly quickly to five or six partners and about 30 lawyers. Two junior lawyers had been hired and the firm, currently in temporary premises, was close to finalising a lease on offices near Sydney's court precinct. Mr Mills said the arrival of specialist firms such as Quinn Emanuel coincided with structural changes in the market for legal services that were breaking down the dominance of the large national firms. "People from other countries are always struck by the enormous concentration at the top end of a few firms," Mr Mills said. That is changing. I suspect the Australian market is starting to fracture and the Australian legal market will look like the New York or London legal markets where there are many more specialists and clients can differentiate. While corporate Australia will be the target market for the practice, Mr Mills said he eventually expected to see a flow of referral work from other law firms. "The experience of Quinn Emanuel everywhere else in the world is that the corporate law firms, after a while, you become sort of a trusted partner because you can do work they cannot do," he said. They mainly act for banks so they cannot be seen to be acting against a bank so they might refer that off to Quinn Emanuel. In order to encourage that referral business, the firm said there would be no poaching of clients. "You deal with the matter and pass the client back," Mr Mills said. While the firm will be targeting large, complex commercial disputes, some of its competitors had already raised doubts about whether its relatively small staff would be able to cope with such labour-intensive matters. Mr Mills said large teams were frequently needed for the process of discovery. But many large firms were now using contract lawyers or outsourcing companies for this part of the litigation process - and Quinn Emanuel would do the same. Even in major cases the high-end legal work was usually restricted to about four or five partners, he said. Unlike several other international firms, Quinn Emanuel consists of one global partnership with a single remuneration system that applies to all parts of the firm. Mr Quinn determined remuneration for individual partners quarterly based on their contribution to the success of the firm. The remuneration structure was intended to encourage partners to share work and use the expertise of other partners. In the US, the firm made extensive use of alternative fee arrangements. But Mr Quinn said most of its work was still based "in one way or another" on hourly rates with "various contingent components." These days in the US there really are not very many clients that you can simply say 'Here is my hourly rate, here is the bill and we look forward to receiving your remittance in the next 60 days'. That just doesn't happen any more. In most of our work, there is still some hourly component but an awful lot of it - maybe half of the cases we work on - there is some alternative fee arrangement in it as well, whether it is a success fee, a flat fee for phases or a flat fee per month with or without the potential to get a bonus if we get rid of the case within a certain period. He believed negotiated fee agreements were part of "good client service." If it is done right it can be attractive to clients, it can be attractive to law firms. We tend to forget as a profession that this mechanism of billing by the hour was not the way it was always done. It really started, as I understand it - I wasn't practising then - in the 1950s. Before that it was basically flat fees.