Euro elite: focus Benelux – Perfect triptych

While local firms in the three Benelux countries have had to fight global law firms at one time or another, the independents have successfully held their own.

The Benelux countries – Belgium, the Netherlands and Luxembourg – may be closely-knit neighbouring states in central Europe, but their legal markets are distinctly different. And while historically these countries joined West Germany, France and Italy to form the European Coal and Steel Community – a predecessor to the EU – the rules and regulations for each market have created unique landscapes for law firms.

Geert Potjewijd, managing partner at Amsterdam-headquartered De Brauw Blackstone Westbroek, one of the most established firms in the Netherlands, which posted revenues of €152m in 2015, says: ‘The Dutch market is very open with low barriers in terms of market entrants and that has served us well when it comes to companies setting up shop here, such as US companies coming to the Netherlands for their Dutch headquarters.’

Despite this, Brussels has over the years seen the most significant incursions by international firms from all over Europe, largely because of EU and competition work, representing clients in their dealings with the EU institutions. As such, Belgium comprises two distinct legal markets – an EU-focused collection of UK, US and European firms, and a domestic legal services market. However, Linklaters, Freshfields Bruckhaus Deringer, Allen & Overy (A&O) and Cleary Gottlieb Steen & Hamilton are real challengers for transactional work against established independents Liedekerke Wolters Waelbroeck Kirkpatrick and Eubelius, and as such the domestic Belgian market has suffered as a result of the extensive international presence. ‘The local firms have been pretty much reduced in size and exposure,’ observes Potjewijd.

The Euro Elite: Benelux	Country	Total lawyers	Total partners	No. of offices
Loyens & Loeff	Netherlands	807	101	13
Stibbe	Netherlands	391	79	7
NautaDutilh	Netherlands	367	72	6
De Brauw Blackstone Westbroek	Netherlands	344	62	7
Arendt & Medernach	Luxembourg	275	42	7
Houthoff Buruma	Netherlands	250	50	5
Liedekerke Wolters Waelbroeck Kirkpatrick	Belgium	131	36	3
Elvinger Hoss Prussen	Luxembourg	130	32	2

‘The other reason is that the economy has suffered over the last 20 years and so many of the strong international companies disappeared or were taken over. In terms of high-end work that is generated in the Belgian market, it is probably less than what we see in the Dutch market.’

But, Vincent Busschaert, managing partner of Liedekerke, which saw turnover edge up 1% to €30.7m, is confident that the independent firm model is sustainable. ‘The big domestic firms in Brussels include us, Eubelius and Lydian. Then you have Benelux firms like NautaDutilh, Stibbe and Loyens & Loeff. Those are our competitors. You need to be as responsive and skilful as your competitors in the Belgian market. The model is sustainable – first of all, not everyone wants to work in an international firm and not everyone wants to work for Paris, New York or London. And you have a lot of business coming from Benelux or even Germany where they are looking for price quality.’

The $108bn takeover of British brewery SABMiller by Budweiser owner Anheuser-Busch InBev was the highlight deal of the year for Belgium, and provided plenty of work for both local and international law firms. Freshfields advised AB InBev while Linklaters, along with Liedekerke, represented SABMiller in what will be the biggest corporate takeover in UK history.

In the Netherlands, well-established firms include corporate heavyweights NautaDutilh, Stibbe and Houthoff Buruma. Unlike neighbouring Belgium, where the domestic market has suffered sustained pressure from international firms, the Dutch market has largely recovered after suffering repeated assaults by UK firms in the late 1990s and the turn of the Millennium. However, the UK Magic Circle retains a strong foothold in the country, with A&O, Clifford Chance (CC) and Freshfields regularly instructed in high-stakes, cross-border transactions, where they benefit from broad office networks.

‘You need to be as responsive as your competitors in the Belgian market. The model is sustainable – not everyone wants to work for Paris, New York or London.’
Vincent Busschaert, Liedekerke

Corporate, tax, litigation and banking continue to perform well, with healthcare and financial institutions the two fastest-growing sectors as a result of the combination of regulation and tax. ‘Markets which are either highly regulated, such as financial institutions, or markets which are becoming regulated – real estate for example – that is where we grow fastest,’ says Willem Jarigsma, managing partner of Loyens & Loeff, which posted revenues of €141.3m in 2015.

‘We just got our Q1 results in and they are very strong. 2015 was a really strong year and the first quarter of 2016 is better than the first quarter of 2015. But I am not altogether certain what the rest of the year will bring.’

The Netherlands also experienced a marked increase in M&A activity in 2014 and 2015. The largest deal in the country last year was ABN AMRO Bank’s £2.31bn initial public offering, with De Brauw acting as lead counsel to the bailed-out bank. The bank sold 188 million shares valued at €17.75 in a privatisation that was extremely complex, and attracted much political and public attention.

Likewise, for a small country with a population of just over 500,000, Luxembourg’s legal market continues to perform well.

‘The economy is one of the strongest in Europe with 3% growth last year,’ says Jean-Marc Ueberecken, managing partner of Luxembourg’s biggest law firm, Arendt & Medernach, which saw turnover increase by 5% to €107m last year. ‘This has reflected in a strong legal market. But specific challenges include changes to the Organisation for Economic Co-operation and Development, and wider concerns around Brexit are causing uncertainty.’

The market’s reputation for global financial services means that it is an attractive draw for plenty of international firms, including A&O, CC and Linklaters as well as Benelux law firms Stibbe, Loyens & Loeff and NautaDutilh.

Arendt & Medernach and Elvinger Hoss Prussen are among the stronger domestic firms and compete with the more international players who have set up shop in the market. Recent highlights for Arendt, which counts Microsoft Corporation, The Blackstone Group, ICBC and Invesco as key clients, include advising Rocket Internet Kinnevik and other parties in the creation of and funding round of Global Fashion Group, the largest fashion e-commerce platform in emerging markets, in a deal worth €2.8bn. LB

kathryn.mccann@legalease.co.uk