In mid-October, when Legal Business decided it would dedicate this column to analysing the Belgian legal market, there was still the outside chance that it would appear in our first post-Brexit issue. By the time the piece was written a few days later, the UK Government had conceded defeat on its pledge to take the country out of the EU by the end of the month, triggering yet another delay to the process.
Not that the Brussels legal elite was surprised. Located in offices a few metres from the rooms where the Brexit negotiations have dragged on for almost three years, local counsel have had more than enough time to prepare for possible outcomes – deal? No deal? No Brexit? ‘After the referendum people were concerned about what would happen, but things have smoothed down,’ notes Freshfields Bruckhaus Deringer local head Vincent Macq. ‘I don’t think there is any firm that sees it as a concern now.’
This is not to say that there will be no impact for the many UK solicitors operating out of Brussels, with legal privilege and rights of audience in Belgian and EU courts reserved for EU citizens. But contingency planning for the worst-case scenario started within a few weeks of the referendum in June 2016 and is now well in effect.
Those who could have largely already taken Belgian citizenship – a relatively straightforward process if you have been based in the country for at least five years. Examples include competition partners John Boyce at Slaughter and May and Trevor Soames at Quinn Emanuel Urquhart & Sullivan. Many more requalified as Belgian lawyers. Macq recalls a different Bar admission ceremony this year: usually mainly attended by young people fresh from university, this year it was packed with hundreds of veteran lawyers.
Local Bars were proactive too. A bilateral agreement signed with their British counterparts at the beginning of October committed them to lobbying the Belgian government to keep access to the profession as open as possible whatever the outcome of Brexit negotiations. But even if major disruptions are avoided, Brexit has set a process in motion that will reshape the heart of Brussels’ high-end legal market: the practice of competition law.
The reason is simple: leaving the bloc will take the UK out of the European Commission’s competition directorate’s jurisdiction. ‘Clients may well turn more to Brussels-based lawyers to advise them on their big-ticket EU competition law matters,’ says Cleary Gottlieb Steen & Hamilton’s competition partner Robbert Snelders. ‘At the same time, there will be more UK-based competition work in London, where the Competition and Markets Authority has staffed up in preparation for Brexit.’ That means, as he puts it, ‘an increased premium on having boots on the ground in Brussels’.
The list of firms opening in the Belgian capital since the referendum includes US tech leader Cooley in February this year, London intellectual property and technology specialist Bristows (in May 2018), Macfarlanes (in January 2017) and Wall Street royalty Sullivan & Cromwell (in May 2017).
Others have been expanding their local competition practices. Quinn had no full-time partner in the city until the hire of Soames and his team from Shearman & Sterling in 2017, and now fields 15 lawyers. Slaughters’ Boyce says that ‘Brexit has made it easier for us to make the case that we need to build up the office here,’ with the firm growing from two to four partners, a dozen associates and five trainees, and aiming to bring its lawyer headcount to around 25.
Brexit is also impacting local independents. The only Belgian law firm to have truly cracked the EU competition space, 70-lawyer Van Bael & Bellis (VBB), is launching in London early next year. ‘UK authorities will be targeting our clients,’ reflects partner Philippe De Baere. But the looming departure of Britain from the bloc – depending on the results of the UK’s December general election – is not the only reason EU law practices are expanding.
Several rulings from the European Commission put competition law onto the front pages over the last few years, such as the veto to the merger between German and French train manufacturers Siemens and Alstom, and multibillion-euro fines on tech giant Google. The increasingly energetic Competition Commissioner behind those decisions, Margrethe Vestager, was in September confirmed to an unprecedented second, five-year term.
As such, antitrust is acquiring more importance in the eyes of boardrooms, and Boyce says EU authorities are becoming ‘much more demanding in terms of the documentation that needs to be reviewed and submitted’, which in turn means bigger teams of lawyers, more time and effort. ‘The Commission is now much more focused on internal documents. That wasn’t the case until two/three years ago. People produce far more information the Commission feels the need to go through to see if there is any smoking gun.’
The age of muscular European antitrust enforcement is, of course, a licence to print money for global law firms.
Nor is competition the only area where EU law is becoming more important. The introduction of the General Data Protection Regulation (GDPR) regime in May last year is a factor. ‘In the past, privacy lawyers were in their own jurisdictions, now with GDPR it’s a more European product,’ notes Cooley Brussels partner Alexander Israel.
And upheaval started by Brexit itself promises to generate more legal work updating current contractual and regulatory arrangements. As such, local lawyers are understandably bullish on the outlook. Despite remaining cagey on the figures, the largest international firms speak of several years of solid turnover growth and are billing over €50m, a figure that in some cases approaches the €100m mark.
There are, however, two sizeable caveats. First, the increased complexity of competition work and the larger teams required mean the big-ticket work is safely in the hands of a small number of established players. Cleary’s 90-lawyer local outpost remains the top competition shop in the EU capital – even if one of its key figures, Mario Siragusa, has retired from the partnership. The Wall Street firm, which in the 1960s took the pioneering decision to make Brussels the hub for its European competition work, has by consensus managed to train a generation of stars, among them Antoine Winckler and Francisco Enrique González-Díaz.
Freshfields’ 85-strong arm is also a compelling force in competition, with a number of respected figures, including practice head Thomas Janssens and partner Frank Montag. The strongest of the independents is VBB, partly thanks to the enduring reputation of founding partner Jean-François Bellis.
Latham & Watkins’ 50-lawyer branch has meanwhile been climbing the ranks with the hire of Sven Völcker from Wilmer Cutler Pickering Hale and Dorr in 2013 paying off hugely. A third of Clifford Chance (CC)’s 60 Brussels-based lawyers focus on competition, including well-regarded practice head Thomas Vinje. Slaughters and Skadden, Arps, Slate, Meagher & Flom have smaller but successful operations. For the myriad smallish, mid-market practices, life is getting tougher. Notes VBB’s De Baere: ‘We have been here for 30 years, know the Commission – you don’t get there by just opening an office with one partner.’
The age of muscular European antitrust enforcement is, of course, a licence to print money for global law firms.
The second major caveat is that, beyond EU work in the capital, the Belgian market offers uneven returns, reflecting the modest size of its $550bn domestic economy. True, the Belgian transactional space is busy. ‘It is a combination of a number of large Belgian companies being active and a lot of activity from PE investors,’ says Macq.
The real estate sector remained busy throughout the financial crisis and is still doing well, as are energy, pharma and biotech. In an effort to make the country more attractive to foreign groups on the model of the neighbouring Netherlands, a new companies code introduced in February made shareholder agreements simpler and more flexible.
Freshfields has benefited hugely from keeping a transactional team on the ground thanks to its relationship with Leuven-bred Anheuser-Busch InBev: mandates included the $122bn acquisition of SAB Miller in 2016 and the $11.3bn sale of its Australian brands to Asahi this year.
Cleary also has a well-regarded corporate team, although the retirement from the partnership of local heavyweight Jan Meyers in 2017 is seen as a reverse, while CC has a strong reputation in real estate and finance.
But the dominant corporate practices remain Linklaters and Allen & Overy (A&O), the two members of the London elite that at the turn of the century pursued local mergers with Belgium-bred De Bandt, van Hecke, Lagae & Loesch and Benelux firm Loeff Claeys Verbeke respectively. Both retain second, smaller branches in Antwerp, citing the industrial activity around the harbour and cheaper office space.
‘De Bandt was the biggest law firm in Belgium,’ says Linklaters local head Bernd Meyring. ‘We moved into an international organisation and managed to keep a pretty broad practice – that’s our unique selling point.’ The firm has a premier client base including Linde, Takeda Pharmaceutical Company and Johnson & Johnson.
But by consensus A&O has overtaken it as the strongest corporate practice under well-liked global corporate co-head Dirk Meeus. ‘Belgium has an extremely open economy. There is virtually nothing that is not cross-border in this country,’ he says. ‘If you have a cross-border and full-service offering, that’s exactly what corporates in Belgium need.’ Underlining the clout of the Belgian practice on A&O is also the elevation of former Belgium head Wim Dejonghe to global senior partner in 2016.
Some local firms have also built successful operations around Belgian law, with 155-lawyer Eubelius seen as the top broad-service independent and Benelux institution Stibbe’s 140-lawyer Brussels arm fielding a robust transactional practice under former managing partner Jan Peeters.
Yet despite several consecutive years of growth, the turnover of the most established local firms remains well behind international players with large competition practices, 2018 billings ranging from Liedekerke Wolters Waelbroeck Kirkpatrick’s €33.5m to Stibbe’s €45m.
What is even more striking is how conservative firms are when it comes to investment and staff rosters. Both A&O and Linklaters went through a post-merger restructuring, the first scaling back from 130 to less than 100 in 2009 before returning to growth to the current 110, the latter from around 180 at its peak to 130. Although A&O plans to add around ten to its ranks in the near future, expansion will happen mainly in antitrust. Even respected outfits like Liedekerke and Stibbe scaled back over the last two to three years, from 135 to 120 and from 150 to 140 respectively.
While Brussels is set to attract increasing interest from international firms, it is clear their attention will be focused on its role as European rather than Belgian capital. Whichever form Brexit ultimately takes, the gap between a crowded EU law space and a small Belgian transactional market is getting bigger.