When the government decides to privatise a previously publicly owned entity – as it has done many times in the past few decaded – commercial lawyers are heavily involved
On both sides of the globe, Herbert Smith Freehills is making a name for itself with headline privatisation work. In Australia, it advised the government on the high-profile privatisation of Medibank, formerly a government-owned health insurer. It was sold at the end of 2014 during an IPO worth nearly A$6 billion. Back in the Northern Hemisphere, HSF advised the Royal Mail on the regulatory and competition aspects of its privatisation. The process, described as the most significant instance of privatisation in the UK since the 1990s, eventually left Royal Mail wholly in private hands for the first time in its 500-year history.
In theory, there's a lot to like about privatisation, but it's a highly contentious process. Transfer of the ownership of an enterprise or service from the government to a for-profit organisation sounds like either an efficient exercise in saving money or an irresponsible route to inequality depending on which side of the political spectrum you fall. Those in favour of privatisation argue that market competition improves the quality of services, reduces bureaucracy and takes politics out of industrial concerns. In contrast, opponents of the practice suggest that private companies are not accountable as governments are, that businesses can put profits before the good of customers, and that not all those in need of services will get necessarily get access to them in a private system.
A mere mention of the word privatisation inevitably throws people’s minds back to the days of Margaret Thatcher, who privatised British Airways, BP, British Gas, British Steel and British Telecom. Her successor John Major then capped this off with the privatisation of British Rail. The NHS is one public institution that avoided the trend, but in the 21st century there are growing concerns over perceived privatisation of healthcare. Controversy is not restricted to the UK: over in Australia, privatisation is equally contentious. Former Prime Minister Tony Abbott initiated an ambitious programme of privatisation which has affected medical insurance and electricity provision. For-profit vocational educational programmes have been criticised particularly strongly.
For law firms, however, privatisation means a bonanza of work that straddles corporate, finance, competition, regulatory and IP fields. Firms like HSF – who have a strong track record for advising governments, including those of the UK, Australia, Oman, Nigeria – are more than ready to reap the benefits.