The legal markets of the European Union have long been of interest to international law firms, including many of the best known UK and US practices. Since the Brexit vote there has been much speculation over what the UK’s departure from the European Union might mean for these law firms active in the European Union.
SSQ has worked with numerous US and UK law firms to launch new offices in locations across Europe (and around the world). We have seen that recruitment challenges differ according to market forces and geographical location. Here we present a snapshot of US and UK firms’ current presence in some of the key EU jurisdictions and offer some predictions as to the impact of Brexit. (This is an excerpt from our larger report on the European legal markets.)
After the UK, the German legal market is the largest in the EU and arguably the most competitive. Over 70 international law firms compete for work in Frankfurt, Munich, Hamburg, Düsseldorf and Berlin. The UK’s magic circle entered the German legal market in the 1990s (both organically and via a series of major mergers with leading German law firms) and is deeply entrenched today. Some elite US firms have been active in Germany since the turn of the millennium and since the financial crisis have become increasingly active in the lateral recruitment market. The German market continues to be of interest to UK firms, for example with major UK firm Pinsent Masons opening a second German office in Düsseldorf in February 2016.
“Post-Brexit I believe that Germany will become increasingly attractive for US firms and also for some UK firms not yet present in the country. Germany clearly will become an even stronger hub; hence hiring activity will increase and there will be some attractive start-up/launch opportunities for partners and teams.”
(Helmut Rogalla, Director, SSQ Germany)
A number of international law firms have been highly successful in France over the last 30 to 40 years. The total number of lawyers at UK, US and global law firms in Paris is now over three times that of those at leading French firms, making Paris one of the few locations where domestic law firms make up a smaller percentage of the workforce in the sector. Recent key market developments have included fewer big deals and restructurings, while real estate activity has remained high and litigation has become more prevalent.
“I definitely see Brexit as a positive for France. As the time draws nearer, more financial institutions have instructed their lawyers to assist in ramping up or transferring their activity in/to Paris. The demand for financial services/regulatory lawyers, in particular, has increased significantly. Employment and “support” areas, such as tax, seem to be busier proportionately in Paris than in London and the need for resource in these practice areas may well increase in the run-up to Brexit and immediately after.”
(Melanie Tremblay, Director, France)
The Italian market has a smaller but still significant number of international law firms based in Milan and, to a lesser extent, Rome. While some have undoubtedly enjoyed success, a number of others have struggled historically. Italy is anticipated to be one of the EU economies least affected by Brexit. We believe international firm strategies in the Italian market will continue to be primarily driven by developments such as the recent inflow of outside investment in Italy’s large mid-market sector.
“The flow of private equity investments into Italy is expected to remain constant due to the appeal of Italian small and medium sized companies, which exemplify quality and excellence while being still affordable to foreign investors.”
(Cristiano Pettinelli, Senior Manager, Italy)
Spain’s international law firm contingent is primarily drawn from the UK rather than the US. This is a stark contrast to other continental European jurisdictions where the US firms are often more numerous. UK firms established their roots in Spain early on and reaped the rewards of the Spanish M&A market during the boom. US firms have a much more limited practice, primarily targeting big ticket M&A work. Since 2015, the M&A market in Spain has been on an upward trend thanks to a more robust economic climate, structural changes put in place to strengthen the economy and – until the Catalan crisis - a stable political background.
“It is difficult to predict what will happen in Spain post Brexit. This remains largely unknown. Nevertheless we believe that international law firms remain under represented in Spain, particularly given the nexus to Latin and South American markets, and anticipate a few further select international law firm arrivals in Madrid.”
(Alejandro Kress, Associate Director, Spain)
Ireland’s strong recovery from the depths of the financial crisis has made the country one of the eurozone’s strongest economies. Historically the legal market has been heavily dominated by a very strong group of highly regarded domestic independent firms, both elite and mid-tier, which has given international law firms little room for manoeuvre. June 2017 saw the announcement of the impending arrival of the first UK firm to enter Dublin since the leave vote, namely Pinsent Masons. Subsequently Covington & Burling and Simmons & Simmons have announced launches, with feverish speculation about which other firms will follow them.
“The post Brexit influx of finance jobs has given UK law firms, many of which have long had an interest in Ireland’s financial services and technology sectors, an additional incentive to enter the Dublin legal market. It therefore seems likely that a number of further firms will follow suit.”
(Robert Rooney, Associate Director, UK)
The information contained in this article is part of a comprehensive report compiled by SSQ, looking at various jurisdictions across Europe and how they might look post Brexit. For the full report or for more information on the markets across Europe more generally please contact Nick Shilton.