Described by Darrois Villey tax partner Loïc Védie as ‘better than expected’, 2023 was nonetheless a year marked by uncertainty for Euro Elite firms in France. Lawyers weathered an often-slow market; interest rates reached significantly higher levels than previous years, which limited the overall number of transactions.
In the corporate and finance arena, equity capital markets experienced a noticeable slowdown, characterised by a subdued market. Debt capital markets, however, showcased vibrancy, with a renewed interest in securitisation and factoring. Influenced by leading US firms, this move shaped the financial landscape for French elites, fostering a more diversified and adaptable approach to funding strategies. The trend underscored a departure from traditional methods, offering heightened flexibility and a broader array of financial instruments, prompting a re-evaluation of established approaches in the dynamic French market.
The construction and real estate sectors faced a particularly tough year. Supply chain disruptions led to construction delays, which, coupled with an increase in the price of construction materials such as steel, spelled bad news for construction, real estate, and projects alike. A surge in interest rates stifled the French real estate sector, a scenario that played out across multiple European jurisdictions. Due to reduced lending from traditional banks, the landscape of real estate work shifted, moving towards an increased focus on alternative lenders. With high-value deals largely drying up, the majority of work was to be found on small-to-medium sized transactions. The value of office real estate in the greater Paris area, notably in La Défense, suffered a substantial reduction, partially due to the endurance of remote working as a trend. In spite of this, the outlook for 2024 is hopeful, with many lawyers expecting the market to begin its return to a robust state of health from Q3 onwards.
The picture in the French private equity space is certainly rosier than in real estate, although admittedly the market is not as buoyant as once it was. Large-cap transactions were the hardest hit, mirroring a broader European trend. Lawyers reported that the fundraising process has become lengthier and more challenging than previously as investors act more cautiously. However, fund formation saw healthy performance with investments in infrastructure, debt, and renewable energy. Sustainable funds continued to gain prominence, aligning with the evolving regulatory landscape under the Sustainable Finance Disclosure Regulation.
The restructuring sector witnessed a notably dynamic year marked by the conclusion of state support provided during the Covid-19 pandemic. This development fostered a broader market recovery and expedited legal proceedings, especially in the context of financially distressed companies. Notably, three pivotal transactions involving major players – Orpea, Casino, and Pierre & Vacances – dominated the market. These transactions significantly influenced the French insolvency and restructuring landscape, establishing benchmarks for ongoing initiatives, and prompting discussions within the legal community regarding the implications of the recently implemented French insolvency law reform.
Amid global technological strides, Didier Martin, partner at Bredin Prat, emphasises firms’ imperatives to remain ‘alert, agile, and aware of what’s happening’ in this evolving landscape. Leading market players are integrating AI platforms and intensifying their focus on cyber security. In France’s intellectual property (IP) landscape, challenges related to AI-driven data protection and the rise of deepfake technologies have added new dimensions to copyright. Notably, the latter part of the year saw a shift from NFTs to a spotlight on AI-centred trade mark issues affecting IP. Gide Loyrette Nouel’s managing partner, Jean-François Levraud, notes: ‘Lawyers in these domains will find increased demand as businesses navigate the evolving digital landscape.’
Despite economic challenges in the French market, Paris has upheld its position as a hub for IP activity. A notable surge in trade-mark litigation highlights the assertiveness of IP owners. Concurrently, patent litigation, particularly within the new Unified Patent Court (UPC) framework, gained prominence.
In response to the growing complexity of national proceedings and the UPC’s implementation, Gide forged a groundbreaking partnership with Regimbeau, a leading French patent litigation firm. Looking ahead, expectations of increased IP copyright activity are fuelled by anticipation of major sporting events, focusing on trade-mark protection and strategic-ambush marketing, particularly during the Paris 2024 Olympics.
‘Business leaders are operating within an ever-more complex and restrictive environment.’ Jean-François Levraud, Gide Loyrette Nouel
In the face of France navigating persistent geopolitical uncertainties, significant changes have materialised. International arbitration, as suggested by Martin, has seen a decline, with the sentiment that: ‘it is no longer the time for international arbitration due to conflict’. Despite this, dispute resolution continues and is globally perceived as on an upswing. Crucial growth factors include the impact of new regulations, drawing more clients seeking legal support. These regulations, focusing on diligence, human rights, ESG, and environmental concerns, have significantly contributed to increased third-party litigation against groups armed with newfound information.
Levraud’s insight into shifting client expectations, where ‘business leaders are operating within an ever-more complex and restrictive environment’, highlights the challenges arising from a growing demand for expertise in ESG and market issues amid global sustainability priorities. This aligns with a broader trend in law firms expanding their offerings and specialised services, fostering a personalised, value-driven approach. As technology and AI advance, Levraud anticipates clients becoming more ‘discerning and demanding,’ presenting continued growth that will ‘no doubt present legal challenges requiring specialised knowledge’.
As France steps into 2024, an air of uncertainty prevails, acknowledged by Martin who articulates: ‘It’s impossible to know exactly what the future holds.’ Nevertheless, amid this uncertainty, a sense of predictability emerges. While Gide envisions growth opportunities in the digital economy and sustainable development, the prevailing sentiment suggests a continuation of market dynamics from 2023. Vedie underscores the anticipation of ongoing economic conditions until 2025, predicting that firms will need to implement cost-control measures and actively pursue new clients. This collective outlook reinforces Martin’s prediction of 2024 being ‘similar to the last’. LB