b'Troubling timesMonday 19 October 1987 is known in the US as Black Mondayfor Austotel in what is considered one of Alan Bonds mostwhen the US stock market dropped by more than 20 percontentious transactions. The dispute was settled in 1998.cent. In Australia the effects were felt the following day. It became known as Black Tuesday.Then the firm was taken to court over its involvement in the failed 1994 NRMA demutualisation. Dissident NRMA directors, In the first day of trading after the US stock market crash, theincluding Richard Talbot and Dawn Fraser, vehemently Australian All Ordinaries Index opened 25 per cent down.opposed the division of the insurance and road service arms The largest stocks were hardest hitin that single daysof NRMA and challenged the legality of the prospectus in trade, BHP lost 41 per cent of its market value and Boralorder to stop the demutualisation. Faced with mounting costs, suffered a 60 per cent fall.NRMA took Abbott Tout (NRMAs regular solicitors), Allen Allen & Hemsley (advisers on the float) and Dyson Heydon QC The heady days of the 1980s were over and Australiato the Supreme Court of New South Wales, claiming damages headed towards what treasurer, Paul Keating, famouslyfor negligent advice.described as the recession we had to have. Law firms were somewhat buffered from the immediate effects of theThe dispute originally stemmed from the words free recession, with work on insolvencies and loans replacingshares in the demutualisation prospectus, a term used in corporate and transactional work. Within a couple ofsimilar documents in Europe. In 1999 the Supreme Court years, however, law firms began to feel the effects of theof New South Wales found the three defendants liable on recession, leading to redundancies and freezes on salariesa different point and ordered them to pay $32 million in and recruitment. Allen Allen & Hemsley was not immune. damages to NRMA. The following year a Court of Appeal comprising interstate judges overturned the decision and In addition to these economic challenges, the firm foundfound in favour of the firm.itself attracting unwelcome attention in the media. In 1991 letters written by the firm to Westpac were leaked to theIn 2004 the New South Wales Government commissioned press. The letters, drafted in 1987, discussed foreign currencya Special Commission of Inquiry into certain corporate loans issued by the bank in the mid-1980s and containedtransactions of the James Hardie Group, and the effect of advice on how the bank could resist legal action. The matterthose transactions on the payment of compensation to was reported extensively in the media.asbestos victims. The firm had advised James Hardie on the establishment of a foundation to meet asbestos claims and In 1992, the same year Alan Bond was declared bankrupt,on the subsequent creation of a new Dutch parent company Austotel Trust filed a negligence claim against Allen Allenunder a scheme of arrangement. As a result partners and & Hemsley relating to Austotels $326 million purchase ofstaff of the firm were called to give evidence before the 269 hotels owned by Tooheys (part of Bond Brewing). Thespecial commission and the firm was the subject of some firm had acted for Tooheys in the sale and, indirectly, alsopublic criticism, though it was shown there was no deliberate misconduct or intent to pervert the course of justice.197'