To a London hack hitting the streets and the meeting rooms of Dublin for the first time since coronavirus struck, Ireland’s capital is abuzz, perhaps more so than usual. Somewhat inexplicably, there are excited hordes of Americans wherever you turn, many of whom look as if they’ve just stepped off the set of a spaghetti western.
All becomes clear in the first coffee meeting of the day. ‘Garth Brooks is playing five shows at Croke Park,’ laments one managing partner, with an eye-roll. ‘It’s bloody desperate.’ Clearly not a fan.
Notwithstanding divisive views on Stetson-donning country music singers (some of the people LB spoke with had actually been to a concert, one super fan more than once, naming no names), the mood in the city is firmly festive. Indeed, among the legal community there is a palpable sense of enthusiasm for in-person meetings again after some of Europe’s most protracted – and strict – coronavirus rules ended as recently as January.
‘2021 was an extraordinary year for me as managing partner – every practice went up. I should have quit while I was ahead!’
Declan Black, Mason Hayes & Curran
However, fresh challenges threaten to usurp this air of optimism. Ireland has not been insulated from the overheated recruitment market and is as alive as global peers to reversals wrought by the cost of living crisis, the war in Ukraine and a slowing of deals as concerns over interest rates and inflation continue to gather pace. LB decided to get the view from the ground and asked Ireland’s law firm leaders how their businesses are likely to fare over the next few months. Can Dublin’s regained mojo endure?
View on the ground
Declan Black, Mason Hayes & Curran’s managing partner, is in buoyant mood, predicting high single-digit revenue growth for the 2022 calendar year, even as it comes on the back of a 2021 banner year for much of the market at large. ‘2021 was an extraordinary year for me as managing partner – every practice went up. I should have quit while I was ahead!’ Black may have his tongue planted in his cheek, but the sentiment of last year being a tough act to follow rings true around the market. ‘Corporate transactions are down from the 2021 peak and that has spread through the western world,’ he adds. ‘Valuations have tumbled amid concerns over interest rates and inflation. Deals have slowed down.’
That said, he points to real estate, financial services, contentious, regulatory and data regulatory as areas of sustained growth.
Peter Stapleton succeeded Nicholas Butcher in December as Maples Group managing partner in Dublin. ‘May you live in interesting times!’ he quips, of the anything-but-dull set of circumstances that have defined his time at the helm so far, pointing to a list of corporate mandates that includes acting for UK wealth management group Fairstone on its inaugural deal in the Irish market – its acquisition of financial planning firm Pax Financial. The firm also advised the first Irish-regulated funds to be granted permission by the Central Bank of Ireland to take exposure to crypto assets, among many other mandates.
‘ESG has been a key area for us this year. We are working with our clients to help them identify and integrate ESG priorities at all levels of their businesses.’
Geoff Moore, Arthur Cox
Meanwhile, Walkers Ireland managing partner Jonathan Sheehan takes a balanced view: ‘Given current market volatility arising out of the current geopolitical and economic headwinds, inevitably the secondary market continues to be quite dislocated as evidenced by a recent spike in sell-offs towards the end of September.’ Conversely, there have been upsides. ‘We have seen a significant increase in volume and complexity of low-risk fund finance products driven by the continued success of Ireland as a leading European fund formation jurisdiction. ESG and sustainable finance continues to be a dominant theme across the asset management, structured finance and commercial lending sectors.’
Sheehan also notes a trend for increased participation of private equity funds in the commercial aviation lending market post-pandemic. ‘These funds have carved out a strong niche in the aviation lending market providing much needed liquidity for lessors and airlines. They can be nimble and often more flexible in terms of financing older aircraft as they are not subject to the same regulatory requirements as traditional aviation banks,’ he explains.
Standout matters for Walkers include the Norwegian Air Irish Examinership, Orange Capital Re DAC, a catastrophe bond programme structured through an Irish Solvency II MA SPV, and advising CK Asset Holdings on the $4bn sale of AMCK Aviation to Carlyle Aviation Partners.
James Duggan, managing partner of Flynn O’Driscoll, observes: ‘Aviation and asset finance has been really strong, notwithstanding fleets being grounded for the best part of two years. The employment group has been busy with queries around redundancies.’
‘The energy sector is particularly vibrant in light of the emerging issues around energy consumption and an energy crisis.’
Alan Connell, Eversheds Sutherland
Geoff Moore, managing partner of Arthur Cox, is sanguine. He flags good levels of activity in corporate, with the finance group being kept busy with new mandates in real estate finance, private equity, corporate banking and infrastructure finance. The litigation group also had a good run, with regulatory investigations and dispute resolution work being a large driver of activity.
Moore insists there is no shortage of opportunity. ‘ESG has been a key area for us this year, as businesses, particularly listed companies, continue to focus on this. We are working with our clients to help them identify and integrate ESG priorities at all levels of their businesses and our cross-disciplinary team has been busy with increased client demand in the areas of green financings, bonds, fund disclosures as well as energy conscious M&A and financial regulation.’
He reels off a list of substantive mandates for Arthur Cox that includes advising Greenlink on its 500MW, 190km interconnector project and acting for ESB and Bord na Móna on the development and financing of the 83MW second phase of the Oweninny windfarm, Ireland’s largest wind development project. Other standout matters include advising Brookfield Asset Management on its acquisition of the entire issued share capital of Hibernia REIT for €1.089bn and Starwood Capital Group on its debt finance provision for Echelon Data Centres, an Irish-owned company.
Alan Connell, managing partner of Eversheds Sutherland Ireland, also points to opportunities around energy and ESG. ‘The energy sector is particularly vibrant in light of the emerging issues around energy consumption and an energy crisis. We are seeing an increase in demand for alternative and renewable energy sources and we have worked with several providers on energy financing projects, particularly renewables. This has also led to increased levels of work for our clients across ESG.’
‘Retention is our biggest challenge. There is definitely a Covid-generation lawyer, working deal after deal, after deal. The effect of being so busy has been no work/life balance.’
Stephen Keogh, William Fry
Connell also notes an increase in activity across TMT, including data centres projects, and across the financial services, life sciences, and real estate sectors.
Stephen Keogh, William Fry’s head of corporate, points to advising Echelon on the €950m Starwood Capital financing; online food ordering service and Irish unicorn Flipdish on its series B and series C fundraising rounds; as well as deals for Melior, the spin-off private equity fund managed by the former Carlyle team in Ireland. Keogh says the first half of this year has tracked that of 2021’s stellar run but he has noticed a slowdown. ‘We would like to see more term sheets,’ he admits. ‘We are not yet seeing the same volume of new instructions to see us through to next year, but we can’t expect to be flat out forever.’
Owen O’Sullivan, William Fry’s managing partner, is similarly philosophical. ‘We can’t ignore the headwinds but we’re not panicking. The firm works to the calendar year and we have built in provisions around things slowing down and factored in inflation pressures.’
For his part, Matheson managing partner Michael Jackson’s highlights include advising Generation Investment Management (the investment management firm of Al Gore) on establishing the fourth vintage of its flagship private equity fund range; advising Bank of Ireland on its acquisition of the Irish assets of the Belgian bank, KBC, which is leaving the Irish market; and advising Octopus Renewables on the acquisition, development and project financing of a 250MW solar plant, which will be the largest in Ireland.
The tussle for hustle
Although it’s a close-run thing, there is one conversation piece overshadowing the Garth Brooks invasion – the question of talent retention in the wake of lockdown.
High on that agenda is how to strike the balance between nurturing young lawyers while giving them the flexibility they have come to expect from working remotely for so long. Black explains the conundrum: ‘What’s missing are the intangibles – the esprit de corps you get from coming into the office. There is absolutely no craic working from home! But we don’t have any rules. We are highly-flexible on the basis of high productivity. We are dealing with fully formed adults. We don’t have a dress code either because fully formed adults know how to dress.’
Nevertheless, there are only a certain number of experienced Irish practitioners and the new entrants into the Irish market are competing for the same talent. That has inevitably driven wage inflation.
Keogh expounds: ‘Retention is our biggest challenge. There is definitely a Covid-generation lawyer, working deal after deal, after deal. After 12 months one of our lawyers said he wanted to leave as it was far too relentless. We told him to take a long break but not to walk away. He came back. That has been the effect of being so busy – no work/life balance.’
‘Our priorities are culture, people and technology, in that order. We want to create a rewarding environment with flexibility around time spent in the office.’
Peter Stapleton, Maples Group
O’Sullivan adds: ‘We are losing people to London. They tend not to lose their connection with the firm and often come back, and with skills and networks they otherwise wouldn’t have had. We lose people to tech in-house roles too but very few to local competitors,’ he says, adding that the firm has bolstered headcount through recruiting from South Africa and Australia.
Duggan has also gone down the South Africa hiring route for corporate talent, and says the problem is existential. ‘It’s expensive to live in Dublin and there is a big housing issue. We have someone from France that is having to live in an Airbnb. Families are living out of hotels. Dublin has taken in 70,000 Ukrainian refugees, many of whom are staying in hotels and army barracks.’
That clearly ties in with the ever-pressing question of remuneration. ‘If the only reason people are leaving is money, that’s fixable, but there is a perception that we don’t make counter-offers. Three years ago, NQs were getting €55k and now they’re on €72k. We never used to use recruitment consultants but in the last year we’ve spent a fortune,’ says Duggan.
Notes Connell: ‘We have invested in several senior hires across our business –ranging across our corporate, commercial, IP, technology and DP, employment, real estate, tax, litigation, banking and financial services and our projects and energy departments. We have also remained focused on our own talent retention. Ensuring our talented people have the platform to achieve their own goals and aspirations has been a key component of our ongoing success. In April we appointed five senior associates and four associates to our lawyer group across our Dublin and Belfast offices. They will be able to grow their expertise and utilise our global network as we continue to provide excellent service to all our clients.
‘Diversity is also an important cornerstone for our firm and this work is continuously ongoing in response to the changes happening in our society. Before Covid, we were the only Irish business to be recognised for our commitment to diversity and inclusion in the workplace and business, and D&I will continue to be a priority focus for us.’
For its part, Addleshaw Goddard entered the Ireland market in March 2022 through its combination with Eugene F Collins. Mark Walsh, now head of AG Ireland (formerly Eugene F Collins managing partner), notes: ‘Salary is obviously a factor, and we pay a competitive salary, but it’s one of several factors that are now key to retaining talent. AG has a strong and supportive workplace culture that offers our people the opportunities and supports to pursue ongoing professional development, and ensure they feel valued as they do so. Alongside an inclusive, and diverse work environment, which we continue to strengthen through the recent rollout of our reverse mentoring programme.’
For Moore too, investment is critical. ‘In January we promoted six new partners in the key areas of finance, tax, technology and innovation and corporate and M&A, strengthening the firm’s expertise in these areas, and demonstrating the firm’s commitment to the highest level of client service.’
While alive to the challenges, Matheson’s Jackson cites the recent hires of Niall Collins from Mason Hayes & Curran to its EU and regulatory practice, Maireadh Dale in the banking group from Dentons and Karen Sheil from William Fry into the commercial real estate group as evidence that the firm continues to be attractive to lateral hires.
He adds: ‘Our hybrid model has worked well for us and it is a great way to help our people achieve the greater work/life balance we all crave. While we continue to offer highly competitive benefits packages and opportunities for personal and professional development, as well as remaining committed to promotions and to hiring throughout the pandemic, the key strategy to help mitigate attrition remains communicating with staff, listening to their concerns and issues and empowering them to help us make sure that they are fully engaged and invested in improving the work experience.’
‘It certainly looks like we are going to be very busy right through to the end of the year and so any downturn is not likely to be felt until 2023 at the earliest.’
Michael Jackson, Matheson
Moore echoes this view: ‘I would say hiring senior lawyers is a challenge for everyone, but we are able to offer a really attractive proposition to new hires, including a hybrid working policy which has an emphasis on trust and flexibility. Our overall purpose is to offer the best law firm experience, both for our people and our clients and this has resonated well with our staff and new recruits.’
And the hiring market has been on Flynn O’Driscoll’s side of late, with the firm in September hiring Michael Hanley and Danny Heffernan from Hayes Solicitors, who were head of banking and finance and an associate respectively.
Stapleton is confident. ‘Our priorities are culture, people and technology, in that order. We want to create a rewarding environment with flexibility around time spent in the office. We have over 2,500 people globally and Ireland is a very important part of our global network. Our retention rates have been consistently high and that is due to us differentiating ourselves on a number of unique grounds. With 16 offices globally, we have opportunities to bring our Irish expertise to clients whether as part of a wider international project, or as the centrepiece of a deal, for example, acquiring an Irish company. That allows our people to have a wider perspective on what’s happening globally on the client side and also gives them the opportunity to work, move and transact globally within our network. The legal market is shifting and what we’ve seen is that there is a greater demand for career diversity and progression. The Maples Group offers a lawyer starting their career in Ireland the chance to travel to our offices in North America, the Caribbean, Europe or Asia, while remaining and progressing within the same organisation.’
On his firm’s organic growth, Sheehan notes: ‘As a firm, Walkers had its largest ever round of global promotions this year, and we were delighted to recognise the contributions of Damien Barnaville in asset management and investment funds and Shane Martin in regulatory as they became the newest members of the Irish partnership earlier this year.’
However, one managing partner highlights the clear tensions between attracting talent against the backdrop of a likely downturn, echoing a common refrain among law firm leaders, not just in Ireland. ‘People want remote working, car parking and 30 days’ holiday a year. This is a corporate law firm and the work is deadline driven. They want the right to switch off, but no-one has told the clients that. In theory, everyone is supportive of that flexibility but the truth is that the right to switch off is not compatible with a career in corporate law. If there is a recession we’re faced with a whole group of people who haven’t experienced that before. People will have to be out there hunting for work again. That will become normalised again, instead of having to turn away work.’
Healthy competition
Needless to say, the fallout of Brexit has created a changed dynamic for the Ireland market, paving the way for non-domestic pretenders to the throne.
Observes one managing partner: ‘There has been a vote of faith in the Irish legal system, with international firms opening up in Ireland. It has become a very competitive environment for new entrants coming in. Clients demand a level of service that some of the new entrants might struggle to provide.’
‘In Covid we forecast 75% down on people paying bills but in reality it was only down 25% in the first month and 20% the next month. We are expecting problems with clients paying bills in the event of a downturn.’
James Duggan, Flynn O’Driscoll
Connell believes Eversheds Sutherland has the competitive advantage. ‘After many decades without change, the legal sector in Ireland is changing, and changing significantly. The attraction of Ireland as a hub for investment, particularly post-Brexit, has seen an increased number of internationally-focused organisations looking to establish operations in and from Ireland. This globalisation has meant that the number of global decision-makers based in Ireland, whether that is in Irish or multinational organisations, with significant budgets, has increased rapidly in recent times. Such global decision-makers need to be advised by global advisers. They require multi-jurisdictional services and solutions as their businesses are global. The indigenous law firms in Ireland are focused solely on Irish legal matters and as such, do not offer this.’
And with competition being so fierce, it doesn’t do for firms to hide their light under a bushel.
To that end Duggan is working on a formalised strategy and a rebrand for Flynn O’Driscoll. He is candid about the challenges. ‘Strategically, we have never talked about the deals we do on the assumption that what our competition doesn’t know, can’t hurt us. We lived by that for 15 years. It has led to a lack of understanding from clients about what we are doing and we realised that a lack of formal strategy will hurt us now. We are stronger for coming out of Covid and we want people to know that we are a business firm for big and small businesses.’
And there is a consensus that the market is feeling a lot bigger these days. As Black says: ‘Economic headwinds are obviously horrible but the business of law is very resilient. Brexit has been the gift that keeps on giving. There is an extraordinary centre of gravity in the Irish market which means that, because of its smaller size, it doesn’t take all that much to create a positive impact.
‘We now have 2.5 million people in employment, many in high-value jobs in tech, financial services and pharma, and that is driving a lot of activity. There are many problems in Ireland but they are problems of growth rather than problems of contraction. There is a good set of indigenous companies. From a legal services point of view, that means just a lot of activity.’
Remarks Walsh: ‘Certainly, in the current economic environment there is an element of wait and see. Cost of living is at record highs and the energy situation remains precarious. The recent budget support packages show just how challenging a time it is for individuals and businesses alike. Like all businesses, AG is being impacted by these market pressures, as are all of our clients, and we are working to support clients managing these challenges. In terms of activity, the outlook remains positive across our core practice areas, and we continue to focus on growth in real estate, dispute resolution, corporate and finance.’
Boom to bust?
Irish law firm leaders are notoriously reticent about hazarding guesses as to what the coming months will bring. That reluctance for once seems justified, given endemic volatility.
Stapleton takes a stab: ‘Our global teams have deep experience in advising our clients through turbulent times. So there is an institutional memory bank we can draw on from challenges posed as far back as the dotcom crash in the 1990s, through the global financial crisis just after we opened up in Ireland and up to the Covid-19 pandemic. That Europe is going through a major conflict as we cautiously exit the current phase of the pandemic, means there is a very high risk of contagion in key markets and unfortunately a very real potential for further military escalation. We hope to see a near-term resolution to the conflict, but as long as it continues we expect further impacts on the markets and potentially a mix of economic shocks reminiscent of the severity of the GFC.
‘However, we have had some of our most rewarding years and forged strong ties with our clients. So, while my glass remains half full in terms of our ability to act for our clients in that capacity, the question appears to be not “if” there will be an economic slow-down or even a recession, but rather how long it might last.’
Jackson believes the full effects are still to play out. ‘Earlier this year when things looked like being a little less busy than in 2021, I wondered whether we were just seeing a return to the pre-Covid “normal” where some practice areas were a little seasonal. It certainly looks like we are going to be very busy right through to the end of the year and so any downturn is not likely to be felt until 2023 at the earliest.’
Nevertheless, he notes that Matheson is prepared. ‘Should a downturn happen, we benefit from the fact that we are well spread as a firm with no over-reliance on any one sector or practice area. We also have shown an ability during Covid to redeploy talent from areas which were quieter (the property sector was shut down in Ireland for long periods of time), to areas which had high demand, and that experience will stand to benefit us. We have many senior lawyers who have experience of the financial crisis and of the issues that it threw up, and our restructuring team is the largest of any in the market. Our balance sheet is healthy, and as a firm we believe that we are well prepared both for further growth and for a downturn.’
Duggan also sees the danger. ‘Working capital and cash flow are a big concern. In Covid we forecast 75% down on people paying bills but in reality it was only down 25% in the first month and 20% the next month. We are expecting problems with clients paying bills in the event of a downturn.’
Conversely, firms could see opportunities if the glut of insolvencies expected in the pandemic but which never happened is finally triggered by the energy crisis, especially affecting low margin businesses.
‘The sharp and welcome bounce-back in travel post-Covid has had a positive impact on activity generally.’ Jonathan Sheehan, Walkers
As Sheehan observes: ‘While we cannot ignore the concerning global economic outlook, particularly as the true effect of Brexit and the economic fallout from the pandemic continue to emerge, we have historically performed strongly in downturns with an increase in counter-cyclical mandates in terms of restructuring work, corporate consolidation, the provision of alternative finance and disputes.
‘Competitiveness and fee sensitivity will continue to increase. As with any business we will have to manage our cost base and price work appropriately. However, none of this is new and we take confidence from the fact that we have weathered storms in the past. As the Irish office of an international law firm, we also look with confidence to the strength of our European offering which represents not only a differentiator to our domestic competitors, but also an opportunity to continue to broaden and deepen relationships with our existing clients.’
For Sheehan and his peers there is also a lot to be said for the generative impact of in-person networking: ‘The sharp and welcome bounce-back in travel post-Covid has had a positive impact on activity generally – with in-person board meetings, business travel and conferences all happening with renewed frequency and vigour which inevitably leads to increased mandates and deal flow.’
The message from Dublin’s law firm leaders is for the most part ‘prepare for the worst and hope for the best’. Black concludes: I’m not expecting anything radical or a step change over the next few months but the macroeconomic environment makes me nervous. An energy shock and the cost of living crisis will feed into harder times for business. Ireland is resilient and performing very well. It will be squeezed but hopefully it will fit through the gap without too much damage. Ireland will suffer in a global downturn but it will bounce back quickly. That is a factor of our size.’ LB
nathalie.tidman@legalease.co.uk
For more information on the Ireland market, see ‘The Ireland debate: Top GCs gather in Dublin to thrash out the strategic role of in-house counsel’