A slice of the action
17 June 2002
The past 12 months in the Dutch legal market read like a fictional drama of birth, marriage, separation and bankruptcy. One UK firm launched a greenfield Dutch law practice, no fewer than three signed up to international mergers, two Dutch firms broke off engagements to their UK suitors, one went bankrupt and, thanks to Enron, another disintegrated altogether.
Furthermore, while the UK's mid-tier firms have been taking Amsterdam by storm over the past year, the magic circle has been left either struggling or standing still. Linklaters is still thrashing out the shape of its future presence in the Netherlands, while Freshfields Bruckhaus Deringer recently felt the need to quash rumours that its greenfield operation was floundering by ringing round the management of its competitors and launching a recruitment ad campaign.
Bird & Bird went on an aggressive hiring spree to launch its own Dutch practice, taking partners from Houthoff Buruma and collapsing Andersen firm Wouters Advocaten. Lovells, Simmons & Simmons and Norton Rose all moved a step closer to completing their European maps through merger strategies.
Lovells and Simmons merged with established Dutch firms Ekelmans Den Hollander and Nolst Trenité respectively, taking on the challenges of integrating existing cultures. But Norton Rose took a rather different route. It finally joined the rest of the Anglo-Saxon interlopers in March this year when it voted in favour of merging with newly-created Dutch boutique Groenewald van Wassenaer. With clients such as ABN Amro, KLM, IMG and Fortis Bank it is no surprise that Norton Rose was eager to tick the Amsterdam box as it accelerated the implementation of its international strategy.
John Inglis will give up his role as Bahrain managing partner and relocate to Amsterdam in October to help build up the banking practice and integrate the office with the rest of the firm.
Groenewald van Wassenaer had been co-founded by the ex-managing partner of former Norton Rose ally Houthoff Buruma. Merger talks between Norton Rose and Houthoff had long since broken down and managing partner Arent van Wassenaer fell out with the 70-partner firm over the reform strategy he wanted to implement, which included signing off an international merger within three years. The subsequent partner vote of 67 to three in favour of remaining independent gave a measure of the gulf between their aspirations - no points for guessing which three partners have now quit Houthoff to join van Wassenaer in the Norton Rose operation.
But it was several months after van Wassenaer stepped down as managing partner in September 2001 that a deal was struck with Norton Rose.
He says: "I decided to take time to see what work I wanted to do, who I wanted to work with, and even whether I should stay in the legal profession."
In the last week of December, Norton Rose reached an agreement with van Wassenaer and former Trenité Van Doorne partner Edo Groenewald that the two would put together a business plan for a greenfield Amsterdam office.
"We decided to start our cooperation with Norton Rose to see if we could start this firm. There were lots of hurdles, but at least we had a relationship with Norton Rose," says van Wassenaer of those early days.
The boutique's partnership deed was appropriately scrawled on the back of a cigar packet, pledging a commitment to doing "fun work with fun people". It has since been given pride of place on the office wall. Both partners contributed e10,000 (£6,400) to get the practice up and running and managed to survive for the first month with no office personnel.
With the Norton Rose deal now signed and van Wassenaer as managing partner, the office boasts an additional three Houthoff partners, a second Van Doorne partner and 28 assistants hired from firms including Clifford Chance, De Brauw Blackstone Westbroek and Baker & McKenzie.
Van Wassenaer says there is still room for more international legal brands to enter the market. "Lots of clients have been pleased about what we are doing because Clifford Chance, Allen & Overy and Freshfields have had something of a monopoly here. We can deliver the same quality for a little less We think they are charging too much," he says. Norton Rose, he says, will bill its Dutch partners at around e350 (£224) an hour, as opposed to e500 (£320) an hour at a magic circle firm. You have been warned.
It was once Italy that was seen as the graveyard for the international dreams of Anglo Saxon firms. But over the past year, two Dutch firms have thrown the international strategies of their UK suitors totally off course.
Most recently, Eversheds found itself back in the market for a Dutch merger partner after agreeing to break off its exclusive association with Boekel De Nerée. The three-year Dutch alliance had been a rare success story in Eversheds' international strategy and the news overshadowed the appointment of litigator Alan Jenkins as Eversheds' new international head, taking over from Victor Semmens. Each side tried to shift the blame for the breakdown. Jenkins emphasised the contrast between Eversheds' pan-European strategy and Boekel's domestic slant, while Boekel managing partner Jan ter Meer insisted: "We remain focused on the international legal market."
Further up the league tables, market leader De Brauw yet again pulled out of its on-off-on merger talks with Linklaters.
When you consider that De Brauw's turnover of £80m in the last financial year puts it at a level with SJ Berwin in UK league tables, you begin to see why this merger just wasn't a goer. Fees per fee-earner stand just short of £200,000 - impressive by Continental standards, but not so great when you compare it with the Linklaters figure of £316,000 in fees per fee-earner for the previous year (2000-2001).
When it came to the crunch, De Brauw was simply unwilling to hand itself over for a Linklaters-style hatchet job to make it more profitable.
The saga continues. As The Lawyer went to press, talks were still ongoing between De Brauw managing partner Jaap de Keijzer and Linklaters senior partner Anthony Cann on how De Brauw will extricate itself from the alliance and the shape of any future relationship between the firms. De Brauw's receptionists still answer the switchboard as 'De Brauw Linklaters & Alliance', but both firms are painfully aware that this embarrassing stalemate cannot be allowed to drag on. The alliance was designed as a transitional stage en route to merger. A source at De Brauw sums up the situation thus: "We have said that we want to be independent. There is now no future for Linklaters & Alliance because Linklaters & Alliance will be ultimately consumed by Linklaters."
De Brauw is now bracing itself for a raid by Linklaters as the magic circle firm hatches plans to open its own Dutch operation. Linklaters partners Stephen Blackshaw and Richard Levy were already based in the De Brauw office, so will be instrumental in setting up the standalone operation.
And now for a little crystal ball gazing: Linklaters will set up on its own; Ashursts will be one of the next to enter, as one Dutch managing partner put it, "If you look at what it is doing in Belgium and Germany, it should be here as well,"; and over the next three years, the US firms will start the next round of upheaval here.