A tale of two business models
24 November 2003
Even the most casual student of the German legal market knows that it is not all about Frankfurt. A strong presence in Munich and Berlin has become essential for most major law firms, and two magic circle firms in particular have seen their investments pay off this year, according to the latest research from the Juve Handbook.
The degree to which the Munich office of Freshfields Bruckhaus Deringer has made an impact in the city was confirmed by the fact that it is by some way the firm’s most profitable corporate practice in Germany, which is down to the number of billable hours, which far outstrips Freshfields’ other German offices.
The secret is in the focus. Private equity and non-public M&A dominate the practice. It also had a strong foothold in the local media industry. The M&A team is headed up by Hans-Jörg Ziegenhain and Barbara Keil, both of whom have made considerable progress from a standing start in the Munich market. Norbert Rieger and Peter Nussbaum are the two stars in private equity. Nussbaum is the global co-head of private equity (PE) in Freshfields and the point man for Apax among others, while Rieger can boast almost symbiotic relations to Carlyle, despite the attempts of other firms to force their way in.
Work for media companies has also played a major role in Freshfields’ rise in Munich, ProSiebenSat.1 being the best known client. Michael Knospe advised on negotiations with Disney and Columbia, as well as on the acquisition of rights for the football’s World Cup in 2006 and the German Football League. ProSieben will also no doubt provide considerable amounts of corporate work in the future.
All of these clients pale into insignificance for most Munich lawyers in comparison with Rieger’s star turn: he has fulfilled the childhood dream of most lawyers down south (although it may be the nightmare of anybody north of Frankfurt) and now advises Bayern Munich FC.
The other UK magic circle firm that has had an excellent year is Linklaters’ Berlin office – despite the Jeremiahs. Berlin was one of the offices thrown into some turmoil during Oppenhoff & Rädler’s merger with Linklaters, with a number of partners either setting up their own firm or more spectacularly defecting to Hogan & Hartson. The prediction was that what was left in Berlin would soon be wound up by the profit-obsessed managers in London.
The opposite has been the case – Linklaters has grown strongly in Berlin. It now numbers some 60 lawyers with a practice best known for energy and public sector transactions, including project finance and PPP. The past year also saw new practice groups in structured finance and media, bringing cross-departmental cooperation, which is still the exception rather than the rule in most German firms.
The problem of most Berlin offices of large international firms is squaring the circle of a weak local economy with considerable demand by lawyers to move to the capital. Linklaters seems to be successful in this regard and has established a practice that exploits the admittedly thin pickings on the ground. Stefan Lütje is one of the best known media lawyers in Germany, and the firm now advises a number of media conglomerates that have recently moved to Berlin. Other star turns include Kai Uwe Pritzsche in energy, Kornelius Kleinlein in administrative law and Detlev Schuster and Hans-Hermann Rösch for M&A. The progress of the corporate practice over the past two years has been notable: running the DaimlerChrysler AGM was a particular highlight.
Outside the magic circle, two independent firms have also had stellar years: Oppenländer Rechtsanwälte in Stuttgart and Esche Schümann Commichau (ESC) in Hamburg.
Oppenländer is always mentioned in the same breath as Gleiss Lutz (where a number of its lawyers originally come from) and CMS Hasche Sigle as one of the leading Stuttgart firms, even though a large part of the firm’s strength stems from its ability to attract clients from outside the Swabian capital. Examples last year were South West German Media Holding on its investment in the Süddeutsche Verlag and the constitutional court case for GEHE Pharma on health insurance contributions.
Oppenländer is somewhere between a boutique and a full-service firm, with a range of partners who have outstanding reputations in particular fields: Thomas Trölitzsch (corporate), Albrecht Bach (antitrust), Marc Stuckel (intellectual property (IP)) and Christofer Lenz (administrative).
One name now missing is that of Frank Oppenländer himself. He retired from the firm this year, but will still be active as a notary at his old office. If anything, the gradual handing over of the reins to the abovementioned partners has strengthened the firm’s image in the market, since the generational transition has proven to be a stumbling block for many German firms. At Oppenländer, however, they seem to have got it right.
In Hamburg, ESC is the oldest firm in a city that prides itself generally on the importance of local Hanseatic contacts. These deep roots in the local economy have been complemented by a full-blooded multidisciplinary partnership approach, despite the difficulties suffered by the large accountancy firms in the recent past. Some Hamburg lawyers have speculated that, perhaps precisely because of this, ESC can be seen to have developed a dynamism over the past few years which few would have expected.
An example of this was the recruitment of the former KPMG board member Klaus Stolberg on the accountancy side, as well as up-and-coming employment lawyer Jan-Marcus Rossa, previously a local partner in the Berlin office of White & Case Feddersen.
ESC remains best known for its Mittelstand work, and over the past two years the increased call for its tax and corporate advice on restructuring has paid dividends. But the reason why more Hamburg lawyers are sitting up and taking notice is the ability of ESC to attract major international clients, the best known being Philips, which it has been advising on major patent litigation.
Its ability to do so – and once again this demonstrates the cultural shift at the firm towards taking on laterals – was strengthened by the arrival of an IP lawyer from the local Hamburg office, which is probably the strongest IP practice in the country.