Despite the ongoing Covid-19 crisis, Ireland’s independent legal market has reason for optimism: the Irish economy is expected to be one of the most resilient in the EU, according to November 2020 forecasts by the EU Commission, with GDP expected to return to growth in 2021. This is largely thanks to the country’s thriving life sciences and technology sectors and the presence of numerous major multinationals – among them Apple, Facebook, Google, Microsoft, GlaxoSmithKline and Pfizer – which have their European headquarters in Dublin and in the south and west of Ireland. As a result, production and exports, particularly of medicinal products and computer services, have remained strong.
‘Client activity has remained robust during this time, despite the uncertainty,’ explains Owen O’Sullivan, recently appointed managing partner at William Fry. ‘While it’s true that most sectors are facing challenges, especially those directly impacted by physical-distancing measures, such as tourism, travel, retail, hospitality and live events, other sectors are enjoying significant demand and growth at this time – for example, healthcare, retail grocery, and online entertainment and communications.’
As Barry Devereux, managing partner of McCann FitzGerald, told Legal Business back in September last year, the mood in Ireland and among independent firms is optimistic: ‘In March/April time the consensus forecasts for the world and domestic economies were just terrifyingly awful, the likes of which we were warned the world had never seen before. But here we are mid-September and things aren’t anywhere near as bad as they looked in March/April; there has been a contraction in business all right but we have been surprised at how resilient business levels have been from early summer. If you gave me this position four months ago, I’d have gladly taken it.’
‘There has been a contraction in business but we have been surprised at how resilient business levels have been from early summer.’ Barry Devereux, McCann FitzGerald
The strength of Ireland’s hi-tech and pharmaceutical sectors – as well as the recent growth of private equity activity – is evidenced by some of the largest M&A deals in the Irish market in 2020: Qorvo’s €363m acquisition of computer chip maker Decawave, which represented an exit for many venture capital funds, and the €299m acquisition of medical equipment manufacturer Medtronic MiniMed by Blackstone.
Although M&A deals in Ireland have been affected in both volume and value by the Covid-19 crisis, the market has remained buoyant. As O’Sullivan says, ‘Ireland’s M&A market has displayed remarkable robustness despite the headwinds faced across the year, with total deal value rising to 14% year on year in 2020.’ This, he explains, is ‘testament to Ireland’s open economy, which continued to attract international interest from major global players throughout the year.’
Ireland’s full-service domestic firms are also well placed to handle work in the booming real estate sector. The ongoing housing crisis was a key issue in the 2020 general election – which resulted in a historic coalition between Fianna Fáil, Fine Gael and the Green Party – and although work involving the financing and construction of retail, hotel and, to a certain extent, office properties has seen a severe downturn as a result of the pandemic, social housing and private rental schemes have remained very active. The presence of the Green Party in government has also driven an increase in work involving sustainable finance and renewable energy, as the government has committed to reducing Ireland’s greenhouse gas emissions by an average of 7% each year, in addition to adopting EU-wide policies to combat climate change and increase investment into sustainable financial products.
There has also been an increase in corporate restructuring work – including in the aviation sector, for which Ireland was a major hub, pre-pandemic – and in non-contentious employment work, including advising on redundancies, access to government aid and return-to-work protocols, while issues such as temperature checks and testing for employees have also given rise to advice on the GDPR implications.
O’Sullivan believes Ireland’s ‘larger full-service law firms are best positioned to weather the challenges, with counter-cyclical practice areas like tax, investment funds, employment and restructuring’. Smaller, more sector-focused firms, especially those with domestic clients in the hard-hit retail, hospitality and tourism industries, are more likely to struggle.
Ireland has historically had a strong independent legal market and the big players continue to be full-service domestic firms, many of which have expanded their presence to other jurisdictions, with offices in Belfast, London, New York, San Francisco and Brussels among other locations, to strengthen their international offerings.
However, the last few years have seen a number of international firms launch offices in Dublin, including Simmons & Simmons, Pinsent Masons, DLA Piper, Dechert and, most recently, the IP practice of Burges Salmon, to name but a few. Many of the new entrants are seeking to take advantage of the increased work likely to be available post-Brexit, particularly in the financial services sector. With its easy access to mainland Europe, Ireland is ideally located as an EU hub for international companies, and more than 35 global financial institutions relocated to Ireland in anticipation of Brexit, more than to any other EU member state.
The entry of these firms into the market has created significant competition for talent, and while they may struggle initially to establish themselves in the current difficult climate, it is likely they will form an increasingly important part of the Irish legal landscape in the future, particularly in taking up work that was previously referred to domestic firms by UK and US firms without a presence in Ireland. LB