While the advance of global law firms has stalled in recent years, high-quality independents have regained their purpose. Welcome to the Euro Elite, our first study of the advisers redefining the Continent’s legal market.
‘There’s economic value in the culture of a firm,’ says João Vieira de Almeida, managing partner of Portuguese firm Vieira de Almeida & Associados (VdA). If that culture is driven by independence, his sentiments are echoed by managing partners from Paris to Prague.
Across a continent of disparate economies, our inaugural Euro Elite report identifies 100 leading law firms across more than 40 European jurisdictions. These firms have been selected using a methodology that blends size, reach and quality in key product lines.
What cements their success, which cannot be measured by numbers alone, is a distinct culture of independence. Whether their reputation is earned through challenging Global 100 firms head on in their own backyards, or by thriving in challenging markets largely untouched by international behemoths, the most successful Euro Elite firms preserve a unique identity.
Small is beautiful
Taking the Euro Elite in its entirety, independent firms in the larger, more established jurisdictions do not dominate the landscape. Nearly a quarter of listed firms are Scandinavian; five from the Baltic states, five Greek, six Swiss, seven Irish and eight Benelux firms also make the cut. Overall, 55 of the top 100 firms come from 13 European countries with a combined population of 81 million – the exact equivalent of Germany.
By contrast the big four economies – Germany (81 million population, nine firms in the Euro Elite), France (65 million, four firms), Italy (60 million, five firms) and Spain (46 million, five firms) – have a combined population of 252 million, yet are represented by only 23 firms. Often the greatest variable between jurisdictions is the strength and depth of competition: it is rarely viable for most international firms to operate in smaller countries. Competing only with each other, local independents can flourish. The big four European jurisdictions have a significant UK and US firm presence. Paris has around 40 resident US firms. Oslo has DLA Piper.
Co-publishing feature
Spain: A changing legal landscape – Fernando Vives, Garrigues
Headcount is another critical factor. There are 24,007 Euro Elite lawyers – an average of 240 per firm. Headcount ranges from 40 at FORT in the Baltics to 1,410 at Garrigues in Spain, leading to a wide variation in average lawyer numbers: 58 in the average Greek firm in the Euro Elite compared to 660 for their five Spanish counterparts (see box, ‘The Euro elite average lawyers/partners per region’).
By most yardsticks – headcount, geographic diversity, directory rankings and financial power – Spain is the independent firms’ success story. Garrigues, Cuatrecasas, Gonçalves Pereira and Uría Menéndez are all in the top ten by size, staying well ahead of the international competition (see case studies). The sustained Spanish bounce from a deep economic low saw a divergent response in revenues last year – up 1% at Garrigues, 4% at Cuatrecasas, and 9% at Uría.
However, their growth potential in Spain is limited. Having successfully established themselves in the Portuguese market over more than a decade, Latin America is the new battleground. Uría and Garrigues are most active so far with offices and local tie-ups across several markets.
‘Developing our international practice is a key strategy,’ says Fernando Vives, managing partner at Garrigues, which is ranked first among the top 25 firms in the Euro Elite.
FOCUS: WOLF THEISS
Lawyer headcount 307
Partners 66
Revenue €78m (+7%)
Offices 13 – Belgrade, Bratislava, Bucharest, Budapest, Kiev, Ljubljana, Prague, Sarajevo, Sofia, Tirana, Vienna, Warsaw, Zagreb
Key clients Advent International Corporation, Erste Group Bank, OBI Group Holding, PORR, Raiffeisen Zentralbank Österreich
Managing partners Erik Steger, Richard Wolf, Nikolaus Paul
Recent work highlights Advising OBI as sole transaction counsel on the acquisition of a majority of the business of bauMax; representing private equity fund Advent International on the €8.4bn acquisition of Hypo Group Alpe Adria’s SEE network; advising on the spin-off of OSRAM in nine Central and Eastern European (CEE) countries.
Between 1998 and 2009, Vienna-headquartered Wolf Theiss expanded rapidly across the CEE region. Today, roughly 60% of its 307 lawyers are based outside Austria. The firm’s only new launch since then has been in Warsaw, which opened in 2013 when it assumed the entire local office of Germany’s Beiten Burkhardt.
Similar to Schoenherr, its closest regional competitor, Wolf Theiss is highly leveraged with only 29 of its 66 partners being full equity. After a protracted post-crisis slump, last year saw its revenues increase by a healthy 7% to €78m. ‘Rates have recovered in the past two years,’ says the firm’s co-managing partner, Erik Steger. ‘The trend is upward in the average chargeout rate.’
Steger anticipates most revenue growth for his firm in Poland, the Czech Republic, Hungary, Slovenia and Romania, as well as in ‘countries that have come out of difficult times and gained some momentum: Slovakia has elections this year; afterwards, it will pick up pace again’. Politics, rather than economics, is often the key driver, he suggests. In terms of foreign direct investment, he sees ‘an increasing flow from China, but not a tsunami’.
Bribery and corruption are perennial challenges across several CEE markets. In response to client demand, Wolf Theiss established a new subsidiary last September, RBS Responsible Business Solutions. This includes an online-based whistleblowing platform to support businesses in monitoring compliance, allowing whistleblowers to notify their company of internal irregularities and breaches of regulations.
Less affected by the much-diminished international competition in the CEE, Steger identifies ‘excellent firms that are purely local; there’s no point in competing against them on fees really’. By contrast, more than 80% of what Wolf Theiss does involves representing international clients cross-border.
‘Where we are most capable and most sought after by clients is projects, larger transactions and, of course, cross-border, multi-jurisdictional type work,’ he says. ‘The region will remain very diverse in economic performance and in the reaction of governments to domestic events,’ he adds.
Meanwhile, Steger believes Vienna’s traditional status as the CEE’s regional hub is also under threat. ‘Some regional headquarters are still in Vienna because people prefer to live here rather than Warsaw. But given the size of Austria, and the tax regime, more of our large multinational clients would rather go to Prague, Warsaw, even as far as Bucharest, to have their regional headquarters. There are three issues to consider: tax, the cost of doing business and the skill levels.’
But if domestic economies are critical to success, then Germany has weathered the crisis better than most. The same applies to the country’s independent firms where last year’s revenues grew between 5% and 7% at Gleiss Lutz, Hengeler Mueller and Noerr. ‘We are privileged to have so much work, the likes of which we haven’t had since 2007,’ says Georg Seyfarth, Hengeler’s managing partner.
International firms, an established force in Germany, have plateaued and in many cases are outright retrenching. Some have scaled back while others have been targeting work in non-transactional areas such as public and administrative law. Although lateral moves continue, few global firms are growing in Germany. Instead, a new equilibrium has emerged, where despite intense price competition, independent and international firms co-exist somewhat warily in Europe’s largest economy.
FOCUS: CUATRECASAS, GONÇALVES PEREIRA
Lawyer headcount 970
Partners 213
Revenue €265.7m (+4%)
Offices 25
Spain: Alicante, Barcelona, Bilbao, Girona, Lleida, Madrid, Málaga, Palma de Mallorca, San Sebastián, Seville, Valencia, Vigo, Vitoria, Zaragoza
Portugal: Lisbon, Porto
International: Brussels, Casablanca, London, Luanda, Maputo, Mexico City, New York, São Paulo, Shanghai
Key clients Deutsche Bank, FC Barcelona, Fomento de Construcciones y Contratas, Goldman Sachs, SEAT
Managing partner Rafael Fontana
Recent work highlights Advised Petróleos Mexicanos (Pemex) on assorted energy projects; advised SEAT – Grupo Volkswagen Espana on the VW emissions scandal; advised DGN on the €347m privatisation of TAP (Transportes Aéreos Portugueses).
‘It is a test for us,’ says Cuatrecasas, Gonçalves Pereira managing partner Rafael Fontana. ‘Working in a different way to offer our clients the best service: sharing information; using the latest technology in an open space.’
In time for its centenary next year, Cuatrecasas is moving in December – to a new 20,000 sq m office in Barcelona, the city where the firm is also principal adviser to the world-renowned football team.
The firm is planning a big celebration of the move and the centenary next April, inviting partners from its European alliance members: Chiomenti, Gide Loyrette Nouel and Gleiss Lutz. ‘We have no merger plans at all,’ says Fontana. ‘We want to keep independent, but to strengthen our relationship working together, pitching together.’
The relationship between the quartet is currently ‘being consolidated in business terms’, according to Fontana. Last November, the alliance announced the launch of a joint regulatory hub centred in Frankfurt. This will allow them to deal with the increasing role of the European Central Bank and the challenges generated by the launch of the Single Supervisory Mechanism.
Across Iberia, the twin pillars of the firm’s core practice are corporate (36% of firm revenues) and tax (33%), followed by litigation (22%) and labour (9%). Cuatrecasas’ 4% growth last year, to €265.7m, was its highest since the 2008/09 crisis. Spain’s recent economic recovery has boosted its tax practice and enabled corporate ‘to keep growing, advising Spanish and foreign investors on a significant number of transactions’.
Of the firm’s 213 partners, 15 are non-equity, based predominantly in Portugal, where it has 150 lawyers, the largest number of any Spanish law firm. Salaried partnership had been a stepping stone to full equity, says Fontana, but the firm now plans to standardise everyone in a full-equity partnership. Until this year it was not possible to have the same legal structure in Portugal as in Spain and this is also being harmonised.
Like its main competitors, Garrigues and Uría Menéndez, Cuatrecasas has succumbed to the lure of Latin America, although it is not yet as well represented locally. In April 2016, it opened a Mexico office, ‘driven by our relationship with Pemex’, according to Fontana.
Cuatrecasas has advised the state-owned Mexican energy giant on its potential privatisation and, more recently, on several projects relating to energy reforms by the Mexican government. As part of an increasingly international strategy, Cuatrecasas also opened a Beijing office this year, relocating a partner from its existing Shanghai office.
In contrast, French independents ceded much of their supremacy long ago to big international players. Even though very successful local firms still thrive, most profitable boutiques are too small to make our list. Transaction-driven powerhouse Bredin Prat is an exception. And, since the sizeable FIDAL is almost exclusively tax-focused, Gide Loyrette Nouel stands alone as a full-service French giant.
‘All the big UK and US firms are here. We’re the only surviving French law firm of that size,’ says Stéphane Puel, Gide’s managing partner. ‘I don’t think firms are seeing an increase in profitability and the top line. Last year [was] difficult for most big firms.’ Gide’s revenues rose by 1% last year whereas Bredin had its best performance since the crisis, according to senior partner Didier Martin.
Italy is stereotypically mercurial. After much squabbling among themselves, combined with invading Anglo-Saxons in the late 1990s and at the turn of the Millennium, Italian independents have had their best post-crisis year. It follows a flat decade when international competition failed to develop. In a market characterised by dominant personalities and eternal schisms, the lack of pressure asserted by the Global Elite has produced an unusual stability with the leading triumvirate of BonelliErede, Chiomenti and Gianni, Origoni, Grippo, Cappelli & Partners consolidating their position. Chiomenti had a strong 2015, Gianni Origoni is having a strong 2016 and an equally buoyant BonelliErede is looking to expand internationally.
FOCUS: HENGELER MUELLER
Lawyer headcount 255
Partners 88
Revenue €243m (+5%)
Offices 7 – Berlin, Brussels, Düsseldorf, Frankfurt, London, Munich, Shanghai
Key clients 22 of the DAX 30 companies
Managing partners Dirk Bliesener, Georg Seyfarth
Recent work highlights Advised Onex, the Canadian private equity group, on the sale of its $1bn sake in plastics machinery company KraussMaffei to a China National Chemical Corporation-led consortium; acted for energy company RWE on its corporate reorganisation and scheduled IPO; advised KKR on its $1.1bn acquisition of Airbus’ Defence Electronics Business.
A perennial problem faces any firm at the top: how to stay there. If this worries Hengeler Mueller then the stress is not apparent. Last year saw its best financial performance since before the crisis. ‘2007 is surely a benchmark for every European law firm,’ says co-managing partner, Georg Seyfarth.
Comparable in size to New York’s Wachtell, Lipton, Rosen & Katz, another transactional powerhouse, Hengeler is not large. In headcount terms it does not even make the German top ten. But like its longstanding best friend, Slaughter and May, it punches above its weight. Fifty years on from advising Texaco on Germany’s first-ever public takeover – of DEA – cross-border transactions continue to be Hengeler’s raison d’être. ‘We are a very strong inbound jurisdiction in Europe,’ suggests Seyfarth.
Although significant deals are what it does best, Hengeler has a broader practice. ‘We have a traditional focus on corporate/M&A and finance work, with a growing amount of litigation, regulatory and antitrust,’ says Seyfarth. ‘But the work in itself is only one parameter, fees is another. In certain areas, rates here can be substantially different from London or New York.’ By comparison, average German rates are roughly half. But Hengeler is well above average, notwithstanding the strong competition from international players, most notably Freshfields Bruckhaus Deringer.
Despite advising 22 of the DAX 30, its client focus has changed. ‘Hengeler has the chance to increase its growth and will further internationalise its business,’ says Seyfarth. ‘We continue to be the prime law firm for DAX companies and German bluechips but at the same time, we focus on foreign clients and increasingly serve Asian clients.’ Hengeler’s Shanghai office, which opened in late 2014 with two local partners, is a key part of that strategy.
In the 15 years since Hengeler hired its first lateral partner, very few have followed. But this year, the unthinkable happened: three lawyers, including respected partner Achim Herfs, departed for the Munich office of Kirkland & Ellis — the first time that Hengeler has lost a partner to a rival.
‘Some US firms are trying to penetrate the market; some of our superstars have been approached by US firms,’ says Seyfarth, adding: ‘We will see how the idea of amortisation comes into play.’
Sometimes the unthinkable happens. In 2014, tax partner Graham Iversen left Slaughters to join Greenberg Traurig Maher, while executive compensation partner Jeremy Goldstein left Wachtell to start his own boutique. But in common with those heavyweight players, Hengeler’s brand seems likely to endure.
Together with Bredin Prat, De Brauw Blackstone Westbroek, Hengeler and Uría, BonelliErede has been part of the (Slaughter and May) best friends group for 15 years. A comparable alliance between Chiomenti, Cuatrecasas, Gide and Gleiss is now in its fourth year of operation. All nine firms feature in the Euro Elite – a testament to their enduring pre-eminence in their respective markets.
‘We will also devote more time to what we think is an answer to the global firms or at least to the UK firms – which is the international network we have set up,’ says Puel. ‘We are really working on deepening our relationship.’
However, close to a third of the Euro Elite have an alternative solution – independent global law firm networks, the likes of which were dismissed by London or New York-headquartered firms running amok in Europe in the late 1990s (see box, ‘United we stand: the rebirth of global networks’).
FOCUS: GARRIGUES
Partners 285
Revenue €339m (+1%)
Offices 34 –
Spain: A Coruña, Alicante, Barcelona, Bilbao, Las Palmas, Logroño, Madrid, Málaga, Murcia, Oviedo, Palma de Mallorca, Pamplona, San Sebastián, Santa Cruz de Tenerife, Seville, Valencia, Valladolid, Vigo, Vitoria, Zaragoza
Portugal: Lisbon, Porto
International: Beijing, Bogotá, Brussels, Casablanca, London, Lima, Mexico City, New York, Santiago de Chile, São Paulo, Shanghai, Warsaw
Key clients BBVA, Carrefour, Iberdrola, Santander, Telefónica
Managing partner Fernando Vives
Recent work highlights Advising Coca-Cola on the €20bn formation of Coca-Cola European Partners; acting for Enel Green Power on its €9.4bn partial non-proportional de-merger; representing BBVA on $1bn issue of NYSE-listed fixed-rate bonds maturing in 2020.
Garrigues is the largest firm by headcount in continental Europe, let alone Spain. Because of its size, managing partner Fernando Vives recognises the need to keep expanding elsewhere. After opening a Lisbon arm in 2004, Garrigues has spent the last few years forging a much stronger local presence in Latin America. ‘Our strategy is to develop and consolidate our international practice,’ he says.
The firm has also profited from a long-awaited recovery in Iberia. Vives points to an increase in general commercial law and labour law in particular. Last year, tax was the biggest revenue generator for the firm at 31% of turnover just ahead of corporate at 30%, followed by dispute resolution (13%), labour (11%) and public law (6%).
Arbitration is another target area of development. In March, the firm hired its first English-qualified partner in London – Joe Tirado, formerly co-head of international arbitration at Winston & Strawn. ‘Our intention is not to do English law in our London office, but we need experts in international arbitration,’ says Vives.
Among the firm’s major deals, the €20bn formation of Coca-Cola European Partners was one of the largest M&A transactions last year. The €9.4bn partial de-merger of Enel Green Power was a first of its kind in the Spanish market, and the BBVA $1bn issue of NYSE-listed, fixed-rate bonds maturing in 2020, was the first such dollar-denominated deal undertaken by a major Spanish company since 2012.
Although Vives believes that the main Iberian practice is well-positioned to grow as the region continues to recover, his strategic energy is focused internationally: ‘Latin America is the main focus now for us,’ he says.
Garrigues has targeted countries of the Pacific Alliance, the Latin American trade bloc of Chile, Colombia, Mexico and Peru that was formed in 2012. With more than a quarter of the firm’s clients based in Latin America, Vives anticipates a similar proportion of the firm’s revenues within a few years.
In recent months, Garrigues absorbed two local firms: De la Calle, Londoño, López y Posada Abogados (DLP) in Colombia and Avendaño Merino in Chile, adding to its existing Peruvian operation. Meanwhile, two new partners, Gerardo Lemus and Santiago Chacón, were appointed in its Mexico office, supplementing its commercial and tax practices.
‘We have completed the first phase of our plan in Latin America,’ says Vives. As Garrigues lawyers in the region reach 120, expect that number to increase significantly by 2020.
Fighting adversity
Also surprising is the number of Scandinavian firms that feature in our list: five Swedes, five Finns, six Danes, and eight Norwegians. The latter, in a country of five million, comes in spite of local law firms’ reduced turnover reflecting the depressed price of oil upon which Norway depends. Haavind, for example, saw revenues fall by 7% to €34.2m.
The Swedish and Finnish legal markets are in better shape: Mannheimer Swartling, the largest Scandinavian firm with 400 lawyers, had a good year in line with the Swedish economy, which grew 4%. Finland’s Roschier, where revenues increased by 6% to €75.9m, also has 80 lawyers in Stockholm. Notwithstanding Bech-Bruun’s 6% revenue growth, the firm’s managing partner, Simon Evers Kalsmose-Hjelmborg, believes that overall turnover in the Danish legal market declined by 1.5% last year.
According to Willem Jarigsma, managing partner of Loyens & Loeff, ‘2015 was a really strong year’, as his firm’s revenues passed the €300m mark. The Benelux firm’s 807 lawyers make it the fourth-largest in the Euro Elite. This contrasts with Belgian firm, Liedekerke Wolters Waelbroeck Kirkpatrick, which saw turnover edge up by only 1% to €30.7m. Belgian firms, operating in a relatively small market, have endured particularly strong international competition.
United we stand: the rebirth of global networks
More than a third of the 100 firms that make up the Euro Elite are members of a legal network. The most popular groupings are Lex Mundi (19 firms from the 100) and World Services Group (WSG) (12 firms). Two firms – Luxembourg’s Arendt & Medernach and Nestor Nestor Diculescu Kingston Petersen in Romania – belong to both networks.
‘One of the main reasons firms belong to Lex Mundi is the enhanced ability to serve clients through privileged access to very high-quality member firms around the world,’ says Carl Anduri, president of Lex Mundi. ‘European member firms benefit from referrals from other member firms. The value of referrals among all our member firms increased by 92% from 2005 to 2013.’
Stephen McGarry, who founded Lex Mundi in 1989 and WSG in 2002, adds: ‘Networks are not just about referrals. They are also about quality client services and market share. This is how networks are evaluated in the accounting profession.’
Arendt & Medernach is also a member of TerraLex, a network of 154 law firms in over 100 countries and 45 US states. Fellow members from the Euro Elite include Portugal’s Vieira de Almeida & Associados, Turkey’s Pekin & Pekin, the Czech Republic’s Peterka & Partners, Sweden’s Lindahl and Denmark’s Bech-Bruun.
Meanwhile, Spain’s Gómez-Acebo & Pombo, Norway’s Haavind and Austria’s Binder Grösswang are members of Interlaw, which has run for over 30 years comprising 77 ‘reliable, quality-monitored, corporate, commercial, independent law firms’ in 62 countries, ‘selected after a significant due diligence process’, according to its website. There are 30 European Interlaw members across 22 jurisdictions. Most are exclusive to that country, although Germany is represented by three firms while the US has multiple member firms.
In a sharp response to recent developments, McGarry suggests that the established networks listed above benefit from ‘many years of vetted long-term personal relationships to best serve the clients, unlike the non-existent, unvetted online relationships by the Dentons’ network’.
Recently launched, the Nextlaw Global Referral Network is Dentons’ free referral technology platform that allows members ‘to search for firms with differing strengths in any city so clients can get the best lawyers for their needs’. With an initial aim of attracting 1,000 law firm members this year, membership will not be territorially exclusive. Lex Mundi, WSG and TerraLex, however, are territorially exclusive: one firm per jurisdiction. Membership costs vary depending upon the size of firm and jurisdiction.
The largest law firm network, Lex Mundi provides ‘access to over 21,000 top-tier lawyers from 160 member firms in more than 100 countries. Each is a leader in its local jurisdiction, delivering the on-the-ground market expertise’, according to its website. ‘A key component of our international strategy is, without a doubt, our membership in Lex Mundi,’ says Luis de Carlos, managing partner of Uría Menéndez, which is a member of this official group in addition to its ‘best friends’ referral system with elite European players Slaughter and May, BonelliErede, Bredin Prat, Hengeler Mueller and De Brauw Blackstone Westbroek.
While fewer than 150 firms are listed on the Lex Mundi site, coverage is comprehensive: 41 out of 51 US states have designated members, as do most Canadian provinces. In Europe, there are 31 listed firms. By comparison, WSG has nearly 140 listed members (a handful of which offer investment banking and accounting rather than legal services), providing access to 19,000 lawyers. Its European spread is slightly broader: 41 law firms.
In giving their perspective on network membership, two firms in the same jurisdiction, Portugal, offer their take on the respective benefits.
‘The firm is very proud to have been chosen to be part of WSG, which works as a true network that benefits not only the member firms and companies, but also all their clients,’ says Luís Miguel Pais Antunes, managing partner of PLMJ. ‘Above all, WSG allows us to identify excellent companies and lawyers to work with, and we can be confident they share the same goals and culture.’
His counterpart at Morais Leitão, Galvão Teles, Soares da Silva & Associados, Nuno Galvão Teles, is equally enthusiastic: ‘Our position as the exclusive member firm of Lex Mundi for Portugal means that we can, for the benefit of our clients, count on an international network of leading law firms in more than 160 jurisdictions, which gives us a global reach of unmatched breadth and depth.’
‘A proud member of WSG for many years,’ Francesco Gianni at Gianni, Origoni, Grippo, Cappelli & Partners puts the advantages of network membership simply: ‘At the end of the day, our clients benefit from our professional relationships as we are able to offer them the best and most-efficient legal advice in all their cross-border activities.’
Michael Siebold, chair of Interlaw, believes that Interlaw differentiates itself ‘as one of the oldest networks, not dominated by the UK or the US, and extremely lean with no headquarters – it is very good value’. But, he adds: ‘We’ll see a concentration of networks – there are definitely too many. A consolidation is necessary.’
The Euro Elite top 25 averages
The Euro Elite top 25 totals
Three other smaller but sophisticated markets are well represented: Ireland, Switzerland and Portugal. The only Irish Euro Elite firm to make its accounts public, Mason Hayes & Curran, saw revenues swell by 20% to €72m last year following a 25% increase in 2014. Fuelled by phenomenal GDP growth of 7.8%, Dublin’s elite has benefited from a resurgence in real estate and a flood of inversion-style corporate deals.
Switzerland’s growth was less dramatic, although the major M&A players – Bär & Karrer, Homburger and Lenz & Staehelin – enjoyed a similar cluster of large cross-border deals. Driven by lateral hiring and expansion, Walder Wyss reported annual revenues of €62m, an 18% increase.
Portugal also had a robust year, with the big three showing strong revenue growth: Morais Leitão, Galvão Teles, Soares da Silva & Associados up 7% to €42.8m, PLMJ up 9% to €39.2m and VdA up 20% to €43.8m. All have profited from their own international expansion, particularly in Lusophone Africa.
In a number of jurisdictions, firms are finding ways to assert the value of independence in congested markets. Take Turkey, beset by social, economic and political instability in the region, but still having three strong firms featured in the Euro Elite. At one of those firms, Hergüner Bilgen Özeke, senior partner Ümit Hergüner says independents have been challenged by the local legs of the global or international firms established in Turkey, but the challenge has diminished as those firms demonstrate less appetite for operating in the region because of geopolitics.
‘This is an opportunity for the local elite firms to pull themselves together and perhaps consolidate their practices and be more competitive again,’ he says.
FOCUS: URÍA MENÉNDEZ
Lawyer headcount 555
Partners 128
Revenue €210m (+9%)
Offices 17 – Barcelona, Beijing, Bilbao, Bogotá, Brussels, Buenos Aires, Frankfurt, Lima, Lisbon, London, Madrid, Mexico City, New York, Porto, Santiago, São Paulo, Valencia
Key clients Altice, Bankinter, Banco Santander, Iberdrola, Lone Star Funds
Managing partner Luis de Carlos
Recent work highlights Advised Coca-Cola Iberian Partners on the formation of Coca-Cola European Partners, valued at $28bn including debt; advised Grupo FerroAtlántica on its €2.7bn merger with Globe Specialty Metals; advised Banco Santander Totta on a €1.8bn litigation against the Portuguese government and four publicly-owned transport companies.
Uría Menéndez remains a dominant force in corporate, transactional and finance work, despite being Spain’s third-largest firm and only half the size of Garrigues. Following Iberia’s belated recovery, Uría has benefited from an uptick in M&A and a resurgence in real estate, across both the Spanish and Portuguese markets. The firm does not make lateral hires in Spain, but has done so in Portugal, which contributed half of last year’s 9% revenue increase overall. Managing partner Luis de Carlos describes it as ‘the real growth engine’.
Enthusiastic about his firm’s best financial performance since before the crisis, de Carlos points to increased activity in capital markets – corporate work accounts for half of the firm’s revenue. In addition to the Coca-Cola reorganisation and Grupo FerroAtlántica’s merger with Globe Specialty Metals, Uría also advised Cellnex Telecom and Aena on two of Europe’s largest initial public offerings last year.
‘Diversification has been critical,’ he says. ‘Originally the firm was Madrid-based and corporate law-focused. We’ve since developed strong litigation, tax and labour groups. These three combined now provide 50% of our revenues.’
Uría advises not only in Iberia, but increasingly in Latin America, a region that is now ‘central to the firm’s strategy’, according to de Carlos. Like his fellow Spanish independents, he acknowledges that, notwithstanding an improved economy, ‘the domestic market has limited capacity for growth’. De Carlos therefore plans to become ‘an Ibero-American firm’, because Latin America’s interconnection with Spain ‘provides a two-way flow of investment’.
This strategy centres on the Pacific Alliance economies: Chile, Colombia, Peru and Mexico. In January 2015, Uría took a 30% stake in Philippi (Chile) and Prietocarrizosa (Colombia), two of its existing Latin American best friends that merged to form Philippi Prietocarrizosa Ferrero DU & Uría (PPU), which is managed locally. Combined PPU revenues grew by an impressive 15% in its first full year of operation. Iberian rival Garrigues is following a parallel path in the same jurisdictions, but via its own local offices.
Further expansion followed this January when PPU opened an office in Peru by incorporating Ferrero Abogados and Delmar Ugarte, creating an aggregate offering of 44 partners and 319 lawyers across three jurisdictions. Mexico is next on the agenda, although an office there is ‘harder to achieve in the short term’, says de Carlos. Uría seems likely to increase its stake in PPU over time.
None of this detracts from the European ‘best friends’ relationships, a clearly-defined network, now in its 16th year. ‘We’ve benefited a lot from the relationship with Slaughter and May and the rest of the best friends,’ says de Carlos.
The upper quartile
As outlined in our methodology, the firms listed in the Euro Elite 100 have earned their place through an evaluation of their size, jurisdictional reach and rankings in The Legal 500 EMEA – in some cases, across several markets. However, the firms are not centrally ranked – with the exception of those in the top 25 (see table). These are the firms with the highest aggregate scores for headcount and directory rankings.
Inevitably, this means that a number of firms that are strong in their local market do not appear in this top group because their areas of specialism and geographical reach are more limited (Bredin Prat being a case in point, as well as De Brauw Blackstone Westbroek in the Netherlands).
However, smaller legal markets are as well represented in the upper quartile as they are in the entire 100. Five of the seven Irish firms in the Euro Elite feature; Benelux has three firms in the top 25; while the Nordic region and Baltic states have two each. Therefore, 12 of the 25 firms are based in jurisdictions with a combined population of only 65 million – the same as France.
The primary reason for this representation of smaller markets is that international firms do not operate in many of them. Conversely, among the large European economies, France is increasingly monopolised by Global 100 firms – hence only Gide Loyrette Nouel making the upper quartile.
The 1-2-3 position of Garrigues, Uría and Cuatrecasas is a fair reflection of their size, quality and breadth of expertise, both in Spain, where they have multiple offices, and in Portugal, where they also feature prominently alongside local and international competition, providing them with additional directory rankings.
FOCUS: NOERR
Lawyer headcount 427
Partners 87
Revenue €207.6m (+5%)
Offices 15 – Alicante, Berlin, Bratislava, Brussels, Bucharest, Budapest, Dresden, Düsseldorf, Frankfurt, London, Moscow, Munich, New York, Prague, Warsaw
Key clients Daimler, Deutsche Bank, Deutsche Telekom, Fresenius Medical Care, Rocket Internet
Managing partners Tobias Bürgers, Alexander Ritvay
Recent work highlights Advising Air Liquide, Daimler, The Linde Group, OMV, Royal Dutch Shell and Total on the joint venture H2Mobility; advising Deutsche Telekom on the sale of its online platform t-online.de and of digital marketer InteractiveMedia CCSP to Ströer SE & Co; advising Vonovia on its €1.9bn takeover of SÜDEWO.
Noerr is manifestly proud of its performance in 2015, as evidenced by the headline on its website: ‘Noerr increases turnover to more than €207m.’ An explanation follows: ‘The firm was particularly successful in strategic growth areas, corporate/M&A, and advice to companies from regulated sectors.’ At Germany’s largest independent firm, co-managing partner Tobias Bürgers is ebullient: ‘We have won market share, we have strong growth and a continuously improving position.’ He highlights 70% revenue growth in the last eight years.
However, beneath last year’s aggregate growth of 5% lies a clear divergence in Noerr’s regional performance. Across its cluster of offices in Central and Eastern Europe (CEE), 2015 turnover fell by 9% to €17.5m. The CEE markets are more volatile, comments Bürgers. Although the decline in regional revenue contrasts with the strong growth experienced by Noerr’s two closest regional competitors, Schoenherr (5%) and Wolf Theiss (7%), splitting its regional performance also serves to amplify the strength of Noerr’s domestic performance.
In critiquing his firm’s domestic success, Bürgers is objective: ‘We did not suffer that much from the financial crisis compared to others in Europe. The German economy was robust and is still among the strongest in Europe, and obviously this reflects in the market for legal services as well.’ Specifically, he points to media, IT and product liability as areas of strength.
‘The strongest practice is corporate and transactional business, about 35% of our work,’ he adds. ‘The others are also strong, but not dominating. This is one reason why we are attractive for people coming out of the Anglo-Saxon firms: we have strong growth and good career potential in various practices.’
The list of Noerr’s partner hires in 2015 tells its own story. Across a spread of practice areas – capital markets, corporate litigation, intellectual property, private equity, real estate, and tax – 11 new partners arrived from a spectrum of international firms: Allen & Overy, Ashurst, Freshfields Bruckhaus Deringer, K&L Gates, Orrick, Herrington & Sutcliffe, and Weil, Gotshal & Manges. Among Noerr’s new client wins last year were Deutsche Börse, Qmatic Group and BDI The Voice of German Industry.
Bürgers points to Hengeler Mueller and Gleiss Lutz as the strongest independent competitors, and singles out Freshfields among the international firms active in Germany. Despite the recent difficulties of some US firms in Germany, he says that ‘very few foreign law firms are really successful in New York, but there are quite a few who are successful in the German market’.
They have long sustained a sufficient size so that international firms seem unlikely to be able to displace them in the foreseeable future – except perhaps through a merger, which none of them are prepared to countenance. Instead, they are themselves expanding their reach further in Latin America.
The international firms’ share of German domestic work is not as great as in France, but more so than in Spain, which limits the number of German independents in the top 25 to three. However, given the added weighting given to Germany as a jurisdiction in our methodology, it is noticeable only one firm makes the top ten. Noerr has extended its reach through offices in several CEE countries, unlike the other two German firms in the top 25 and is nearly twice the size of its rivals. Hengeler Mueller in particular, and Gleiss Lutz to a degree, are more transaction-focused, especially in large cross-border deals. Although it practises exclusively in Germany, Hengeler was placed third overall for points scored for its Legal 500 rankings.
FOCUS: Loyens & Loeff
Lawyer headcount 807
Partners 101
Revenue €302.3m (+6%)
Offices 13 – Amsterdam, Arnhem, Brussels, Dubai, Hong Kong, London, Luxembourg, New York, Paris, Rotterdam, Singapore, Tokyo, Zürich
Key clients American International Group, ING Bank, Kohlberg Kravis Roberts & Co (KKR)
Managing partner Willem Jarigsma
Recent work highlights Advising the European Investment Bank on a €100m loan to Qredits, a non-profit organisation focusing on financing businesses in the Netherlands; acting for Liberty Global on tax aspects of the 50:50 joint venture between Liberty Global Europe Holding and Vodafone International Holdings to merge their operating businesses in the Netherlands; acting as legal and tax adviser to KKR on Dutch, Luxembourg and Swiss law aspects of its acquisition of Selecta Group from Allianz Capital Partners.
Formed at the turn of the Millennium from a merger between tax practice Loyens & Volkmaars and parts of Dutch firm Loeff Claeys Verbeke, in headcount terms Amsterdam-based Loyens & Loeff far outstrips its rivals, with 101 partners and more than 800 fee-earners working at the firm, a mixture of commercial and tax lawyers.
As expected from a law firm operating out of the Netherlands, Loyens has a substantial tax practice and a core part of the firm’s business comes from advising on tax for those doing business in or from the Netherlands, Belgium, Luxembourg and Switzerland.
‘Most of the work comes from the US, UK, Germany, France, and then the Far East and China,’ says Loyens’ managing partner Willem Jarigsma, who was re-elected in April for another two-year term. In addition to full coverage of its four ‘home’ markets, as it describes Benelux and Switzerland, the firm also has an extensive international offering in Asia, the UK, the US and the Middle East.
Aside from tax, Loyens also covers corporate law, financial law and capital markets, cross-border financing, private equity, real estate, VAT, EU, regulatory issues and employment law across its 13 offices.
According to Jarigsma, the firm is currently performing well across a wide range of practice areas. ‘If I look at corporate or tax, litigation or banking – they are all in the plus. Within M&A, you will always have capital markets, strategic parties and private equity. The deals we did were private equity and strategic parties at equal levels. There isn’t one that stands out.’
Key work highlights for the firm in 2015 include acting for Liberty Global on its acquisition of Dutch cable operator Ziggo for approximately €10bn. Loyens acted as the lead tax adviser for the acquisition structuring, transaction documentation and tax due diligence.
The firm also advised Sun Capital Partners in the operational and financial restructuring of Vroom & Dreesman, which was a well-known Dutch chain of department stores, and one of the country’s largest and oldest retail companies.
However, Hengeler managing partner Seyfarth is clear on what his firm needs to do as a business. ‘Hengeler always seeks to grow in terms of turnover and profitability. In doing so, we also constantly strive to internationalise our business.’
In Italy, the trio of firms in the top 25 face as much domestic as international competition in a market that was, until recently, subdued. Again, the top ten sees only one Italian firm in the list. Gianni Origoni has maintained an edge by being notably larger than its two Italian rivals. BonelliErede and Chiomenti are high-level transaction firms with a strong cohort of M&A and finance lawyers able to match the international firms in Milan.
Of the 24 Nordic firms in the top 100, only two make it into the final top 25 – Sweden’s Mannheimer Swartling and Finland’s Roschier – the most highly ranked in a quality Scandinavian field. Roschier, although it has Finnish roots, considers itself a pan-Scandinavia firm after becoming a force in Stockholm.
Ireland has the largest representation in the Top 25 – all five of the top Irish firms thrive with almost no international competition – although none gain entry into the top ten.
Sizeable, sophisticated and full service, Arthur Cox, A&L Goodbody, Matheson, McCann FitzGerald and William Fry offer City of London quality in a Dublin setting. International firms are welcome, but much more often as referrers of work than as competitors.
The calibre of Benelux law firms is also apparent by their three slots in the top ten: the heavyweight Loyens & Loeff (the largest non-Spanish firm in the list) and the smaller Stibbe and NautaDutilh. The rankings for all three across Belgium and Luxembourg add further weight to their overall score.
Two Austrian-based firms also make it not just to the top 25, but the top ten, largely through their strong rankings across multiple CEE jurisdictions in which they operate.
Schoenherr and Wolf Theiss have expanded eastward beyond their domestic base, each opening more than a dozen CEE offices. There are many strong local firms in the region’s markets, not least in Poland, but their breadth of expertise across a wide jurisdictional spectrum, as demonstrated by their first and second place in The Legal 500 rankings, guarantees the Austrian pair a top ten place.
The successful Baltic markets see two smaller firms emerging as key players: the newly-merged Cobalt and the more established SORAINEN. Both firms operate across Estonia, Latvia and Lithuania, boosting their jurisdictional rankings. Finally, Egorov Puginsky Afanasiev & Partners is the only entrant from Russia and the CIS in the top 25 – in the long term, potentially Europe’s largest market.
FOCUS: Gide Loyrette Nouel
Lawyer headcount 499
Partners 115
Revenue €189m (+1%)
Offices 14 – Algiers, Beijing, Brussels, Casablanca, Ho Chi Minh City, Hong Kong, Istanbul, London, Moscow, New York, Paris, Shanghai, Tunis, Warsaw
Key clients BNP Paribas, Société Générale, Total, LVMH, Michelin
Managing partner Stéphane Puel
Recent work highlights Advising Lactalis Group on the refinancing of its existing debt in one of the major deals in the syndicated loan market in France in 2015, amounting to €5bn; advising Agence des participations de l’État on the €2bn privatisation of Nice and Lyon airports; representing 18 banks on the refinancing of Eiffarie and APRR’s debt for €3.3bn.
With 499 lawyers worldwide and between 150 and 200 in Paris, Gide Loyrette Nouel is one of the largest independent French law firms in a market dominated by UK and US players.
‘Who we compete with depends on the type of work,’ says managing partner Stéphane Puel. ‘For the big mandates, we compete with the big international firms. For M&A work, for instance, there are a number of good niche firms and sometimes we also compete with them. There is room for one international French firm. And we are that firm for the time being.’
Despite a fiercely competitive market and a year in which the firm saw two offices in Budapest and Kiev move to domestic rival Jeantet, Gide posted a total revenue increase of €189m, a 1% increase on last year. However, Puel says the firm’s focus is on profitability rather than the top line.
‘We will compete more and fight more on profitability than on revenue, and this is the goal we decided to work on two years ago,’ he says. ‘Last year we increased the profitability of the firm by at least 20%, despite the fact that revenue was stable.’
Puel also confirms that the firm’s focus is moving away from Central and Eastern Europe to its other offices in Africa and China.
‘We will probably de-invest more in jurisdictions where we feel that the macro-economic conditions are not there, or there is no room for us to make significant profits, which are probably the Eastern European countries. We will continue to focus more on where we think we have an edge: London, North Africa – Morocco, Casablanca and Algeria are all doing really well – and China.’
Significant mandates for the firm in the last year include the €5bn debt refinancing of Lactalis and advising a syndicate of 18 banks on the refinancing of Eiffarie and APRR’s debt for a total of €3.3bn.
‘Finance is doing well again. We see more and more financing coming in – we have been on a number of them,’ he says.
However, according to Puel, this is not the only practice that has performed well for the firm. ‘Litigation and arbitration is strong – there have been a number of mandates coming in over the last three or four years and the flow is still very important. Compliance and financial services work is very good as well because of the level of regulation in the French market. And labour law, of course, as a result of restructurings companies closing down and some investment.’
Despite the fact that certain international offices continue to pay dividends for the firm, Puel is less confident about the market close to home.
‘I wouldn’t say I am very optimistic about the French market. Competition will become fiercer clearly and the client portfolio will be key. We think we are well positioned, but we will see.’
Size matters
There are 10,319 lawyers and 2,184 partners in the Euro Elite top 25. Measured by lawyer headcount, a clear top five emerges: Garrigues (1,410 lawyers), Cuatrecasas (970), Loyens & Loeff (807), Uría (555); and Gide (499).
The average number of 416 lawyers per firm in the top 25 compares to 240 lawyers in the top 100 firms. Ten of the largest firms by headcount occupy positions in the first 15 of the top 25 table. Likewise, eight of the top ten firms have ten or more offices. Size does make a difference.
In terms of revenues, figures for 13 of the top 25 firms are estimated, with 12 having supplied or confirmed a figure. The total revenue of the top 25 firms is €3.83bn, giving an average revenue per firm of €153m. Six firms have revenues above €200m: Garrigues (€339m); Loyens & Loeff (€302.3m); Cuatrecasas (€265.7m); Hengeler Mueller (€243m); Uría Menéndez (€210m); and Noerr (€207.7m).
Across all of the top 25, average revenue per lawyer (RPL) is €369,000. There are 18 firms with RPL between €250,000 and €500,000. At the top end, the figures spike sharply with an RPL of more than half a million euros occurring at only four firms: Hengeler Mueller (€953,000); Uría Menéndez (€823,000); Gleiss Lutz (€676,000); and BonelliErede (€525,000).
In terms of leverage, a similar consistency is apparent. Across all firms in the top 25, an average (lawyer/partner) leverage ratio of 3.8 can be calculated. This figure does not account for a few firms with salaried rather than equity partners, which would only serve to increase rather than decrease the leverage. Nevertheless, 18 firms have leverage ratios of between three and five. Three all-equity partnerships fall below this norm: Hengeler Mueller (1.9); Gleiss Lutz (2.3); and A&L Goodbody (2.8).
Numbers, of course, tell only part of the story about what it takes to become a Euro Elite firm. The hard part is staying there. As Chiomenti’s managing partner Carlo Croff points out: ‘To remain independent you have to be on top of the market. The moment you make even half a step down, you’re dead, because the type and quality of work you do, your capability to attract the best lawyers will decrease immeasurably.’ LB
THE EURO ELITE TOP 25
| Rank | Firm | Region | Size rank | The Legal 500 rank | Lawyers | Partners | Last annual partner promotions | Offices | Revenue |
| 1 | Garrigues | Iberia | 1 | 6 | 1,410 | 285 | 12 | 34 | €339m |
| 2 | Uría Menéndez | Iberia | 6 | 4 | 555 | 128 | 6 | 17 | €210m |
| 3 | Cuatrecasas, Gonçalves Pereira | Iberia | 3 | 8 | 970 | 213 | 8 | 25 | €265.7m |
| 4 | Loyens & Loeff | Benelux | 4 | 11 | 807 | 101 | 5 | 13 | €302.3m |
| 5 | Wolf Theiss | CEE | 19 | 1 | 307 | 66 | 6 | 13 | €78m |
| 6 | Noerr | Germany | 8 | 13 | 427 | 87 | 7 | 15 | €207.7m |
| 7 | Schoenherr | CEE | 20 | 2 | 303 | 42 | 8 | 14 | €72m* |
| 8 | Stibbe | Benelux | 11 | 14 | 391 | 79 | 5 | 7 | €141.3m |
| 9 | NautaDutilh | Benelux | 13 | 15 | 367 | 72 | 6 | €160m* | |
| 10 | Gianni, Origoni, Grippo, Cappelli & Partners | Italy | 10 | 22 | 394 | 81 | 1 | 10 | €118m |
| 11 | Gide Loyrette Nouel | France | 7 | 27 | 499 | 115 | 9 | 14 | €189m |
| 12 | Hengeler Mueller | Germany | 33 | 3 | 255 | 88 | 2 | 7 | €243m* |
| 13 | Mannheimer Swartling | Nordics | 9 | 28 | 400 | 92 | 7 | 11 | €152m |
| 14 | Arthur Cox | Ireland | 12 | 29 | 347 | 87 | 3 | 5 | €155m* |
| 15 | Chiomenti | Italy | 22 | 19 | 301 | 63 | 5 | 8 | €140m* |
| 16 | A&L Goodbody | Ireland | 15 | 30 | 322 | 85 | 4 | 6 | €135m* |
| 17 | Gleiss Lutz | Germany | 30 | 17 | 259 | 82 | 2 | 7 | €175m* |
| 18 | BonelliErede | Italy | 31 | 16 | 257 | 55 | 5 | 5 | €135m* |
| 19 | Matheson | Ireland | 18 | 31 | 319 | 74 | 6 | 4 | €135m* |
| 20 | William Fry | Ireland | 17 | 33 | 320 | 79 | 4 | 5 | €103m* |
| 21 | Egorov Puginsky Afanasiev & Partners | Russia and CIS | 32 | 21 | 256 | 32 | 4 | 6 | €120m* |
| 22 | McCann FitzGerald | Ireland | 16 | 38 | 322 | 70 | 4 | 4 | €145m* |
| 23 | Sorainen | Baltics | 52 | 7 | 176 | 25 | 1 | 4 | €19.5m* |
| 24 | Roschier | Nordics | 42 | 18 | 210 | 39 | 3 | 3 | €75.9m |
| 25 | Cobalt | Baltics | 51 | 9 | 176 | 31 | 5 | €17m |
*Market estimate, not provided by firm
The Euro Elite methodology
Legal Business’ Euro Elite comprises independent law firms based in more than 40 European jurisdictions, rather than the local offices of international firms.
To compile the 100 firms featured in this report Legal Business analysed more than 150 of the largest law firms in Europe by the number of lawyers, as well as more than 150 of the top-ranking firms in the current edition of The Legal 500 EMEA. A combined score was given for the size of the firm and its The Legal 500 rankings, providing a qualitative as well as a quantitative analysis. The 100 firms with the highest combined score make the Euro Elite.
The 100 firms that appear in the main table are listed alphabetically within 12 regions: Baltics; Benelux; CEE; France; Germany; Greece, Turkey, Cyprus and the Balkans; Iberia; Ireland; Italy; Nordics; Russia and CIS; and Switzerland.
The firms in the top 25 are ranked according to their combined score for size and Legal 500 rankings.
Scoring for The Legal 500 EMEA rankings
Points were allocated for firms ranked in tiers 1-3 in tables featured in the 2016 edition of The Legal 500 EMEA. Top-tier rankings earned three points, second tier two and third one point.
Points were given for rankings in key strategic practice areas only: corporate/commercial; banking/finance; disputes; real estate; tax. Corporate/M&A was given extra weighting, so rankings in this category earned a +50% points score. Therefore a top-tier ranking in M&A would score 4.5 points.
Jurisdiction weighting
Points scored for The Legal 500 EMEA rankings were adjusted depending on the size of the jurisdiction, according to the banding below. Jurisdictions in Band 3 received no mark-up on points, while rankings for countries in Band 1 scored a +75% mark-up. Scores in countries in Band 2 received a +50% mark-up. Those in Band 4 received a -25% mark down.
Band 1
Germany
Band 2
France, Italy, Spain
Band 3
Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Sweden, Switzerland, Turkey
Band 4
Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Estonia, Hungary, Iceland, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Montenegro, Romania, Serbia, Slovakia, Slovenia, Ukraine
Therefore, for example, a tier-one ranking in Germany for M&A, real estate and banking would score a total of 18 points, while the same rankings in those practice areas in the Ukraine would receive seven points.
Navigation
Market Reports
- Germany – Weltmeister
- Italy – La dolce vita?
- France – Liberté, égalité, fraternité
- Iberia – Pushing boundaries
- CEE – The tiger by the tail
- Switzerland – Like clockwork
- Ireland – Back with a bang
- Baltics – All change
- Greece, Turkey and The Balkans – Bouncing back
- Nordics – Power, soft and hard
- Benelux – Perfect triptych
- Russia and CIS – Cold fronts