For independent, full-service firms operating across the Benelux countries, the global uncertainty and turmoil of the last few years has served to highlight the advantages of their business model; being able to pivot between workstreams and react rapidly to changing circumstances has proven to be a concerted advantage. Antoine De Raeve, a senior banking and finance partner who moved from Baker McKenzie to AKD in May 2023, is quick to point out that his new firm is ‘naturally hedged against dips in the transactional market’. This has proven key in recent times, with deals slowing down right across the region because of the combined effects of ongoing conflicts and long-term impacts of Covid-19, despite the positive effects that Brexit appears to have had on the international stance of the Benelux countries.
In the Netherlands, there is reported reluctance at the higher end of the market to invest, with clients seemingly ‘waiting out’ the unpredictability of the current climate; Harmen Holtrop, managing partner at Loyens & Loeff, notes that ‘uncertainty in the market will have a bigger impact on the transactional practices than it may on certain others’, again highlighting the importance of wide-ranging capabilities if firms are to maintain their flow of work.
Over in Belgium, the upcoming federal election in June 2024 is another contributory factor towards a cautious market, with AKD’s labour law specialist Julien Hick pointing out that ‘clients tend to wait rather than act in these circumstances’. For investors, fundraising has become a longer process than it once was, while in the equity capital markets sphere, the volatility of interest rates and inflation globally have not lent themselves to a booming market. Independent firms have consequently made use of their agile structure to capitalise on an increase in work in other areas. A key example is the restructuring and insolvency sector; Stibbe’s managing partner Hans Witteveen comments that ‘the sentiment in the market was already turning but 2023 finally saw the awaited uptick in restructuring work’. This trend is likely to continue at least for the short to medium term, with continued supply chain disruptions looming.
Other fields which have remained buoyant for several years are also proving to be lucrative sources of work for those independent firms that are able to attract experts and grow their specialised departments. AKD’s office managing partner in Brussels, Timothy Speelman, picks out the two areas which have been generating particular buzz in recent times, commenting that ‘people talk about AI and people talk about ESG, so that’s already been on people’s minds and will continue’. Witteveen, likewise, is keen to emphasise the fact that the ‘phenomenon’ of AI and its potential impact on the legal market ‘shouldn’t be underestimated’. In the Netherlands, the fintech sphere is currently the one in which AI is making its influence most strongly felt; since Brexit, Amsterdam has become a key hub and network for such work, with Holtrop pointing out that the UK’s exit ‘continues to have an impact on continental Europe as a whole, as a significant number of headquarters have moved from London to the continent’.
As far as ESG is concerned, environmental considerations – next to the societal and economic ones – continue to be uppermost in clients’ minds. ‘Sustainability is becoming increasingly important because European companies are considering having production closer by,’ according to Holtrop. The impact of this market trend has been particularly noteworthy in such areas as private equity, where there is reportedly almost always some degree of ESG focus or interest. Further, in debt capital markets, the green aspect of bonds is increasingly becoming significant. In the Netherlands, the environment and planning sector itself is busy figuring out how businesses will work following the 1 January 2024 implementation of the Environmental Planning Act, which has been subject to significant delays; reportedly it makes the interpretation of European laws less liberal, so existing businesses may need to adapt while newly developing ones need to consider the effects of this legislation. Social and governance considerations are also coming to the fore across a range of sectors, partially owing to related legislation coming out of the EU.
‘Brexit continues to have an impact on continental Europe as a whole, as a significant number of headquarters have moved from London to the continent.’ Harmen Holtrop, Loyens & Loeff
Sensing the fast-moving dynamics of the market, therefore, clients are increasingly veering towards agile independent firms fielding specialised teams with international capabilities and lower prices, as opposed to automatically instructing globally renowned international firms. Holtrop remarks that ‘Dutch firms are becoming more robust and have an increasingly solid place in the market’, and the pattern is repeating all the way across the Benelux region. For such outfits, the key issue will be their ability to develop the best-calibre teams in a highly dynamic market; Witteveen notes that ‘the acquisition of talent remains very competitive despite the stuttering of the market’, while De Raeve points out that ‘nowadays there is less commitment to a particular firm or brand, even at partner level, with practitioners regularly moving firms’.
Provided that they can attract the best names, and retain them, the outlook is encouraging for independent firms in the Benelux region – no matter where the next flurry of activity comes from, they will be well positioned to pivot and adapt. LB