Boom for Irish law firms
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3 September 2013
6 January 2014
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20 January 2014
Ireland's position as the fastest growing economy in the European Union has paid dividends for lawyers across the country who are reporting one of their busiest years ever.
"Ireland is doing well at the minute," says James O'Dwyer, senior partner at Arthur Cox. "It is a feature of the low interest rates and low inflation which are leading to a lot of activity in the commercial world and property sector."
William Earley, of McCann FitzGerald, agrees. "The general level of work has risen fairly dramatically all around," he says. "You are seeing a lot of mergers and acquisitions and corporate banking. The rise in corporate banking is a clear indication that there is a bit of action."
An upsurge in mergers and acquisitions work saw the value of deals grow to £2.1 billion in the £5 million-plus category alone, according to a recent Finance magazine survey, a rise of 13 per cent on last year. There is also evidence of increased activity from abroad. "Across the board we see a good level of increase in M&A work, particularly from the UK," says Mason Hayes & Curran partner Declan Moylan.
The increased activity on the mergers and acquisitions side has led to greater scrutiny by the competition authorities, with more deals getting referred. "The recent rejection of the Statoil acquisition of Jett Connoco demonstrated that the competition authorities have teeth," says O'Dwyer, although the matter is now the subject of a High Court appeal.
A new Competition Bill to strengthen the current Competition Act will give the Competition Authority power to intervene and initiate investigations in its own right. "It is going to become more regulated from a competition point of view," O'Dwyer adds.
The property market has also spiralled, with property lawyers working flat out to accommodate the huge number of transactions going through the books. However, there are fears that the market may have overheated, and O'Dwyer predicts this will continue until interest rates rise. The same factor is governing the buoyant construction market. According to partner David Beattie, of O'Donnell Sweeney, construction lawyers in his firm are working all the hours of the day on large numbers of major projects, major developments and shopping precincts. Public procurement rules should also provide a lot of work for lawyers, he predicts.
The influx of telecommunications companies into Ireland has led to the development of telecoms practices in some firms. Dublin firm William Fry was involved in the recent licensing of the second GSM mobile phone system where the Irish-Norwegian consortium Esat Digifone was awarded the licence. In the run-up, several firms helped the six consortia which tendered for the licence, including Gerrard Scallan & O'Brien and Beauchamps.
Another telecoms venture which has created interest among firms is the Irish government's search for partners through Morgan Stanley to take a 35 per cent stake in state-owned Telecom Eireann. Firms were involved in assisting parties " in preliminary due diligence after Telecom Eireann opened its books and organisation on a limited basis to selected interested partners," says John Glackin, of Gerrard Scallan & O'Brien.
Intellectual property is another growing area in Ireland, with trade mark law beginning to rear its head. Mason Hayes Curran found itself involved in the recent dispute between the London-based, newly established Sunday Business and Dublin's Sunday Business Post when the latter took a passing off action against Sunday Business. The case was settled when Sunday Business, represented by Mason Hayes & Curran, agreed to change its masthead on Irish editions to Business on Sunday for a time. Michael Hanahoe & Co represented The Sunday Business Post on that occasion.
The film industry, a major growth area in Ireland in recent years, has taken a nosedive after the government introduced legislation which considerably cut the generous tax advantages for film-making in Ireland.
"The film industry is not a great story to tell," says O'Donnell Sweeney's Beattie. "Changes in section 35 of the Finance Bill has killed the industry. There have been no new projects on the ground since January, and there is a groundswell of protest." He adds: "The move was due to dynamics between the Department of Arts and Culture and the Revenue. The Revenue sees it as another tax break."
The rules kept changing with the result that it was impossible for clients to plan their finances, he says. And he adds that The Heir Apparent, a $40 million movie which the firm was working on, has been withdrawn because of the changes.
It is not only firms in Dublin which are enjoying a boom - companies in the regions are also having a fair share of success. Justin Fennell, of Cork-based PJ O'Driscoll & Co, says his firm had seen an increase in corporate business. "We used to be a private client business, but corporate business is growing." He points out that the bulk of his fees came from commercial work. Many of the US multinationals in the regions tended to use Dublin firms, he adds. However, the firm was targeting such clients. "There is a lot to be said for having someone on the ground. We're faster and cheaper and these clients will get a very personal service. They will be a big fish in a small pond."
Despite the increased work, firms are finding that they have to be very competitive on price, and that clients are much more demanding. "You need to be able to adapt to demand and to their fee structure," says Dillon Eustace's David Dillon. O'Dwyer agrees that the trend was for lawyers to work harder on a more competitive basis.
There are also rumours that an accountancy firm is looking to set up a legal practice in Dublin. "A major issue for Irish and UK firms is the question of others seeking a place in our market. There is creditable testimony that other professions are trying to bolt on legal services," says McCann Fitzgerald's Earley. "We're not shaking in our shoes," he adds.
In general, firms have not increased greatly in size and there has been little change in the structure of the profession in the past year. But two firms which bucked the trend were O'Donnell Sweeney and Dillon Eustace which each merged with another firm.
Beattie says the amalgamation of Dublin-based Rory O'Donnell & Co and Limerick firm Murray Sweeney, resulted from a long relationship a couple of partners had with Murray Sweeney managing partner Joe Sweeney. "Murray Sweeney was finding it difficult to run a branch office in Dublin without sending people from Limerick. Equally we were keen to increase our critical mass."
One partner and five assistants joined the firm, although not all of them stayed, says Beattie. Joe Sweeney took over as managing partner while Rory O'Donnell became chair of the firm. "That has worked out extremely well because Joe has a particular penchant for management and has brought in a lot of new ideas," Beattie comments. "While a merger can be difficult, this has worked out extremely well."
The O'Donnell Sweeney merger was described by one onlooker as a "smart merger". "Now Rory O'Donnell's talents can be used fully, while Joe Sweeney is very talented on the management side. This will be a practice to watch."
Dillon Eustace and Kevans also merged earlier this year. Dillon Eustace, which was known for its focus on financial services and banking work, was keen to broaden its base. Says Dillon, of Dillon Eustace: "Kevans was strong on corporate finance and we wanted a more broadly based practice."
For the future, firms are hoping that the economic boom lasts. Glackin optimistically says: "If interest rates stay as low and stable as they are and the Germans do not raise theirs, the boom could last another 12 to 24 months."