Much of the narrative of Legal Business for the past 300 issues has involved the internationalisation – and the failed internationalisation – of the UK-based global firms. When I started out in legal journalism in the late ‘90s, the activity of the major Anglo-Saxon firms in mainland Europe was at its peak. Many, like White & Case and Weil, Gotshal & Manges and CMS, had cut a swathe through Central and Eastern Europe, positioning themselves to take advantage of the wave of privatisations in new independent nations such as the Czech Republic and Romania following the collapse of the Berlin Wall. But the really bloody battles (in a law firm context) were taking place in some of the key markets of France, Germany, Benelux and Italy, where the Magic Circle firms were regularly putting noses out of joint at an alarming rate by either trying to take over leading firms or just hire as many of their key corporate partners as they could.
I witnessed first hand some shockingly arrogant behaviour from senior individuals towards what are now Euro Elite firms. Once, at the launch of a new initiative combining a number of key European firms, I saw one UK management figure sniggering as his German counterpart gave a speech in English. In an interview in Madrid with the fabulously charismatic founding partner of Uría & Menéndez, Rodrigo Uría González, he recalled having to get armed guards to eject from his office a particularly truculent London-based partner trying far too hard to get Uría on board in another hare-brained European alliance.
And while there have been undoubted pockets of success and good to have come out of bad, these have often come from UK or US firms cooperating with a market, rather than trying to take it over. For example, Cleary Gottlieb Steen & Hamilton has been in Paris since 1949 and is described as ‘the most American of French law firms’ – a nod to the fact that in order to succeed, Cleary had to operate like a cabinet d’avocats, not a brash American. Similarly, much of Latham & Watkins’ success in France and Germany in particular can be attributed to a softly, softly approach. As Christoph von Teichman, managing partner of its German offices, told Legal Business in 2005: ‘When the firm came into Germany, one of the most impressive things about Latham was they didn’t tell us what they wanted to do in Germany. They said, “You tell us what you think we need to do.” They saw we had the local knowledge.’
A Swedish managing partner said they did not stay at the Hilton in every destination they travelled to: they stayed at the best local hotel. He argued that law firms and hotels were no different in that regard.
There have been other successes too: Freshfields’ merger with German leaders Deringer Tessin Herrmann & Sedemund and Bruckhaus Westrick Heller Löber in 2000 was truly a milestone for a globalising legal industry. And while Allen & Overy’s raid on the Dutch heavyweight Loeff Claeys Verbeke largely contributed to its dismantling, one of those corporate partners it took – Wim Dejonghe – went on to become global senior partner.
But despite the considerable pressure applied by the international forces in their quest to build a polycentric global dream, one comment – made to me by a Swedish managing partner around the turn of the Millennium – has stuck with me. He said that unless you were completely lacking in imagination, you did not stay at the Hilton in every destination you travelled to: you stayed at the best local hotel. He argued that law firms and hotels were no different in that regard.
And that observation has rung true for me over the years. Looking at many European markets now (Paris being one noteworthy exception), independent firms dominate the landscape. And in many cases, they come in threes. Italy has Chiomenti, Gianni & Origoni and BonelliErede; the Netherlands has De Brauw Blackstone Westbroek, NautaDutilh and Stibbe; while Spain has Cuatrecasas, Garrigues and Uría Menéndez. In Germany, while Freshfields is a major force and up there with the best, Hengeler Mueller, Gleiss Lutz and Noerr are equal or superior to the international firm in many respects. In 2021, the independent, high-functioning law firm is alive and kicking. And, in the new landscape we find ourselves in, the logic behind being a single firm with a multitude of physical offices in jurisdictions all over the world is being questioned.
Looking at many European markets now (Paris being one noteworthy exception), independent firms dominate the landscape.
Cautious optimism
Now the threat to the Euro Elite is a global pandemic, not globalisation. It would appear that our average Euro Elite firm, which has around 260 lawyers and 60 partners, is coping well despite the obvious pressures of the coronavirus pandemic.
A major factor likely to affect large international firms more than independent domestic firms, regardless of the pandemic, is Brexit. Being independent shields them from the knock-on effects of trying to make a global network function. However, for many firms a no-deal Brexit was superseded by Covid-19 as the most threatening beast on the horizon. In our 2019 report, there was an understandable nervousness about Brexit as well as the anticipation that opportunities would present themselves. That issue has, understandably, taken a back seat.
‘Our firm succeeded in adapting to the ever-changing circumstances and continued to grow at a tremendous pace.’ Bram Linnartz, Loyens & Loeff
A read of our individual market reports (See the Euro Elite 2021 menu for market reports), written by The Legal 500 EMEA with direct access to the key firms from Amsterdam to Zagreb, the tone of resilience coming from partners is familiar. The term ‘cautious optimism’ has become something of a cliché when speaking to managing partners all around the world and the term was sprinkled liberally through the narratives of many Euro Elite leaders in compiling this report but there was also some more robust language, such as Loyens & Loeff Netherlands managing partner, Bram Linnartz: ‘Our firm succeeded in adapting to the ever-changing circumstances and continued to grow at a tremendous pace’ and this, from Alexander Ritvay, managing director at Noerr: ‘The model of independent firms proved very resilient in the pandemic and we are confident to be able to continue on that trajectory.’
Even in countries where GDP suffered tremendously over the course of 2020, firms are reporting positive results. Take Spain’s Gómez-Acebo & Pombo for example. Coming off the back of a 14% revenue hike in 2019 with banking, corporate, and litigation all contributing to the healthy uptick, managing partner Carlos Rueda told Legal Business in November that despite 2020 being almost entirely dominated by the Covid-19 crisis, Gómez-Acebo was outperforming last year’s growth track.
However, Mason Hayes & Curran’s less-than-catastrophic 6% dip in turnover for a financial year defined by Covid-19 is a bellwether for Irish and European independents alike.
Neither accident nor fortune is responsible for the continued resilience of the Euro Elite. The region has shown sophistication and ambition, which is why firms are well placed to endure what lies ahead.
Revenues at the full-service Irish firm fell to €80m as it acknowledged a substantial hit to both transactional and contentious workflows. However, managing partner Declan Black said he was ‘satisfied’ with the results and noted ‘professional services were comparatively insulated from the worst effects of the pandemic’.
Historically the only major independent Irish firm to publicise its financial results, Mason Hayes’ announcement acts as an important barometer for the overall financial resilience of the country’s legal market.
Neither accident nor fortune is responsible for the continued resilience of the Euro Elite. The region – like its constituent legal markets – has shown sophistication and ambition, which is why firms are well placed to endure what lies ahead. But the mood is far from complacent.
Whatever the challenges, the 100 firms that make up our Euro Elite seem well positioned to meet them with a mix of gritty determination and operational élan. Salvador Sánchez-Terán, managing partner of Uría Menéndez sums up the mood: ‘The Covid-19 pandemic has been yet another challenge that we have learnt to deal with. We will come out the other side stronger and more united than ever.’ LB
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