Nordic rivals

As Finnish firm Roschier hires yet another partner in Stockholm, Legal Business reports on how world events and regional rivalries have transformed the approach and strategies of the Nordic legal profession

Rivalries are rarely more intense than the enmity between the Finland and Sweden ice hockey sides. Sweden took the plaudits in the recent Winter Olympics with a straightforward 3-0 win, but when it comes to legal market superiority, the Finnish have clearly roughed up the Swedes.

At the end of April, Finnish firm Roschier secured yet another senior name in Stockholm, this time by hiring Björn Winström as a partner just hours after he had been appointed counsel at Linklaters. His hire took Roschier’s headcount in Sweden to nine partners and 50 lawyers. It’s enough to challenge the longstanding hegemony of Sweden’s traditional legal giants, Mannheimer Swartling and Vinge. Stockholm-based Axel Calissendorff took over as Roschier’s senior partner in 2009, yet another indication of how the firm’s emphasis has shifted westwards to the Swedish capital.

Of the Nordic nations, the Swedish market has undergone the greatest transformation over the past five years. Linklaters, which blazed into Sweden with its headline merger with Lagerlof & Leman in 2001, has now shrunk to just eight partners in Stockholm. At the same time, the gentle influx of international firms such as the UK’s Ashurst, and the arrival of Finnish leaders Roschier and Hannes Snellman, has created an effervescent recruitment market. It’s a far cry from the staid market of the 1990s. Indeed, few could ever have imagined that firms from the much smaller Finnish economy would end up competing for the premium work in Stockholm.

‘Internationalisation will not stop. If firms want to compete in the long run they’ll need to have a strong cross-border capacity’
Mats Andersen, Clear Blue Water

When he joined Roschier from Mannheimer Swartling back in 2005, Calissendorff says that the Finnish firm had already made a significant impression on Swedish clients from its headquarters in Helsinki. He suggests that many Swedish or Stockholm-based clients had indicated that they would consider switching more of their work to Roschier if it had an office in the Swedish capital. ‘We had become so big in Finland that there were no true expansion opportunities. The partners perceived that the market was changing and Stockholm was increasingly becoming the business hub of the region,’ Calissendorff says. ‘Many private equity houses have offices in Stockholm and cover the entire region from there. Many of them said that in the event we set up an office in Stockholm, they would retain us in Finland and in Sweden.’

Calissendorff claims that, in the private equity sector at least, the Roschier message is getting through to clients. ‘It is about greater partner attention when leading a deal, and about partners who know the private equity industry better and who are more commercially aware,’ he says. Swedish clients include the private equity giant IK Investment Partners (formerly Industri Kapital).

Unsurprisingly, one partner at a leading Swedish firm plays down Roschier’s impact, describing the firm as a ‘mouse that roars’, but its ability to assemble a truly credible team in just five years is an indication of its standing both in Stockholm and across the region. The firm advised Saab Automobile when General Motors sold the Swedish carmaker to Holland’s Spyker Cars for €315m earlier this year.

Since Roschier hired Calissendorff in 2005, many leading names have followed, including former Linklaters partners Jens Bengtsson and Fredrik Rydin and leading competition specialist Lars Johansson from Cederquist, as well as seasoned litigator Claes Lundblad and experienced employment figure Magnus Wallander, both from Mannheimer Swartling.

Aside from threatening the dominance of Mannheimer and Vinge, Roschier’s ability to prise prominent names away from big firms has changed what was a rather serene legal market to one of the most hotly contested in Europe.

Market forces

Roschier’s principal rival in Finland, Hannes Snellman, has also made a bold play to gain a greater share of Nordic business. It followed Roschier into Stockholm in 2008, but appears to have much grander plans for the region. ‘We see all of the separate Nordic markets as very interesting. They are all related markets, but nobody has yet provided a credible Nordic solution,’ Hannes Snellman’s managing partner Carl-Henrik Wallin says. Rumours of the firm fervently knocking on doors in the other Nordic states are not unfounded, Wallin admits. ‘We are actively looking at Denmark and Norway, but it is too early to tell what we are going to do,’ he says. Roschier however, is not looking beyond Stockholm. ‘We have no plans whatsoever to merge with a Danish or Norwegian firm, or to set up greenfield operations in those countries,’ Calissendorff confirms. The firm will do no more than tighten relationships with the top firms in those jurisdictions.

The Danish and Norwegian legal markets remain largely free of foreign firms. DLA Piper maintains a presence in Norway, and Eversheds has an office in Copenhagen.

In contrast, Sweden has succumbed to internationalisation and this has created much greater fluidity in the recruitment market.

‘We see all of the separate Nordic markets as very interesting. They are all related, but nobody has yet provided a credible Nordic solution.’
Carl-Henrik Wallin, Hannes Snellman

Roschier and Hannes Snellman’s arrival in Stockholm has certainly shaken things up, but the boom in transactional activity from around 2004 to 2007 also provided many mid-ranking firms with much greater exposure to high-value deals.

Calissendorff says conflicts partly explained his decision to start afresh and leave Mannheimer, and his former firm does not dispute the fact that it and Vinge’s dominance of a relatively small market was causing issues. Adam Green, a Mannheimer partner who recently represented Volvo during its $1.8bn disposal to China’s Zhejiang Geely Holding Group Co, says: ‘It is true to an extent that Swedish conflict rules have created a degree of overflow work that other firms have benefited from. This was particularly true in 2006 and 2007.’ Green claims that since transactional activity has subsided the firm has been proportionately less affected than its smaller rivals. Mannheimer’s managing partner Stefan Brocker adds that, while Swedish transactional activity dipped by about 60% in 2008 and 2009, the firm’s deal levels only dropped by about 20%.

Much of this can be explained by the influence of private equity during the M&A boom. Private equity was, like in many markets, a key driver of the M&A wave, and with that came numerous contested auctions, raising the need for multiple legal advisers. As industrial M&A has taken centre stage again, at least until private equity transactions return, Green and Brocker believe that conflicts will be less evident and as such, clients will be less inclined or compelled to consider smaller or mid-market firms.

Even so, with Hammarskiöld & Co advising General Motors on its sale of Saab Automobile to Spyker Cars, it is clear that smaller, second-tier firms are winning headline mandates. Cederquist, for instance, worked alongside Allen & Overy to represent Spyker, and it also teamed up with Freshfields Bruckhaus Deringer to act for Geely on the Volvo transaction.

Redrawing the map

It’s clear that the Swedish legal market will probably never return to the days when lawyers remained wedded to one firm throughout their careers. Petter Wirrell, a partner at Cederquist, says that his firm has certainly felt the impact of the increased fluidity in the recruitment market: ‘We have had to react, as we have been hit by the increase in lateral moves. We contributed to Roschier with two partners and it took us quite some time to recover. One partner [Lars Johansson] headed our competition group. We also lost three partners to a new set-up in Stockholm.’ He adds: ‘We have had to rethink, be more flexible, and focus on organic growth. We need to pursue growth and then lateral hires will come.’

Cederquist has recently hired two senior lawyers from White & Case’s Stockholm and New York offices, with Martin Ulfsen joining as a partner and Lars Bärnheim as a senior associate. They will form part of the firm’s new emphasis on private equity, perhaps just as that market is showing signs of recovery.

When the economy does recover and transactional activity returns, the competition for mandates will be more heated than ever. Joakim Edoff, CEO of Swedish firm Setterwalls, says that ‘the old map is being redrawn’ with the heightened trend for lateral moves.

Local firms, like their international competitors, are more tightly managed and profit driven. Vinge’s managing partner Michael Wigge says: ‘We have to have constant control over costs and we are really focused on profitability, utilisation and staffing. This was not so common in the market previously. We have to be competitive to attract and keep the best legal talent.’

‘We are focused on Sweden and Scandinavia as it is under-represented by international law firms.’
Adrian Clark, Ashurst

For firms, the bolt-on or the gradual development of new practices is viewed as the most appropriate way to guard against the effect of boom-and-bust economic cycles. Mannheimer Swartling has a pre-eminent dispute resolution practice, according to The Legal 500 Europe, Middle East and Africa, and this has helped to sustain solid financial results even during the economic downturn. Brocker says that dispute resolution revenues at the firm grew by 35% to 40% during the last financial year. Last October, the firm was mandated to represent the Republic of Hungary in its energy dispute with EDF under the Energy Charter Treaty.

This ability to provide counter-cyclical services has become the core strategy of many of its competitors. Setterwalls’ Edoff says that the firm’s full-service approach has enabled it to stay busy during the economic downturn by staying close to clients even while transactions have been non-existent. In fact, he claims that all departments in 2009 out-performed 2008 figures.

Jyrki Tähtinen, the senior partner of Finland’s Borenius & Kemppinen, says that the firm’s full-service commitment has been crucial. ‘We didn’t go into cutting service lines to become a transaction machine. We’ve had very healthy litigation, arbitration, labour and pre-insolvency workout matters for our financing lawyers. That is 2007 to 2009 in a nutshell.’

International stage

What many Nordic firms are missing is the confidence to go after international transactions. According to Mats Andersen, head of Stockholm-based strategy consultant clear blue water, firms need to work harder to get involved on international deals. The former Linklaters partner says: ‘If you look at the economy, internationalisation will not stop, it will grow and grow. If firms want to compete in the long run they’ll need to have a strong cross-border capacity and then the question is how they build that up. Take Mannheimer Swartling: it has offices in Russia, Germany, China, Brussels and New York and that might be right, but it’s very difficult for Swedish firms to set up powerful offices in the larger economies because they can’t afford to attract high-quality people.’

Clearly, the larger firms are ahead of the curve on the international front. Mannheimer Swartling believes that its involvement in the Volvo transaction earlier this year is portentous for the Nordic market and the firm’s business. Lead partner on the Volvo deal Adam Green believes that it is the ‘deal of the decade’. The former Cravath, Swaine & Moore associate says: ‘Volvo is so tied up with the Swedish national identity, both here and abroad. It was a huge event domestically and when you think of the industrial history of China, it could be that Volvo is the first premium consumer brand that China Inc has acquired.’

‘We have been hit by the increase in lateral moves. We contributed to Roschier with two partners and it took us quite some time to recover.’
Petter Wirrell, Cederquist

Mannheimer has offices in Shanghai and Hong Kong, and Brocker believes that the firm’s commitment to China will be crucial to its continued success: ‘More and more we are seeing a flow of capital from East to West, so it’s vitally important to have a team in China building and nurturing our contacts there.’

Vinge’s Wigge has just returned from a trip to China to meet with Chinese corporations and local law firms and to prepare for a Swedish delegation to Expo 2010 in Shanghai. He says the Chinese he met with had outstanding knowledge of the Nordic region. ‘They were so knowledgeable about the market and the type of companies here. They had pinpointed a number of companies that interested them. They had clearly done their homework,’ he says.

Wigge is also adamant that the Chinese will be initially drawn to Stockholm as the ‘gateway to the Nordic region’. He is no soothsayer in expecting another wave of cross-border work with much of it driven from China. Economists and law firms around the world are all braced for this phenomenon, but it will inevitably lead to even greater rivalries within the Nordic legal markets.

Even with the gradual downsizing of Linklaters in Stockholm, this has not spelt the end of international firms’ interest in the Nordic region. London-headquartered Ashurst is still committed to building its Stockholm presence, even with the legal profession’s current fixation on emerging markets and Asia. ‘We are focused on Sweden and Scandinavia as it is under-represented by international law firms,’ Ashurst’s global head of corporate Adrian Clark says. ‘Of the ten or so largest Scandinavian companies, all are large international corporates who are prepared to pay international rates. If we go into the head office of these big corporates we can sell them something totally different.’

Although firms in the region have consistently played down the impact of Linklaters’ arrival in 2001, the Magic Circle firm still topped mergermarket’s Nordic M&A tables by value for 2009. And Ashurst’s statement of intent must at least cause some concern. For Stockholm’s intensely competitive legal scene and for the wider Nordic market, facing up to the unstoppable internationalisation of local economies must be top of the agenda. And no doubt, as firms make themselves attractive for cross-border mandates, it could create even icier relationships between the Swedes and their Finnish equivalents. LB