Defending legal territory
11 July 1995
The long summer vacation is a good time to sneak out bad news. While French lawyers were on their yachts, a decree was passed on 15 August denying business graduates access to legal studies, thanks to lobbying by hard-core traditional lawyers. This will mean only those with a first degree in law can go on to law school.
Xavier du Sarrau, Arthur Andersen International's managing partner, is flabbergasted. "This decree is absolutely ludicrous. Few people have noticed what has happened yet, but when they do there will be an outcry. The legislation will simply increase the dearth of lawyers with a financial background. It means the market will be taken over by accountants and auditors, achieving the opposite of what was presumably intended.
"It will hit the development of French influence in the legal world. We have had so much difficulty in recruiting people already. Now it is going to be impossible."
Recruitment is likely to exercise the minds of many in the French legal profession in the future. As John Sell, of Klein & Associes, points out: "Over the next 10 years, French law firms will be forced to grow to cover a wider area of competence. But resizing won't happen overnight and how big firms become is anybody's guess."
Many look across the channel and see the clout of the big firms in London.
However, Eugene Forcione, partner at US firm Dechert Price & Rhoads in Paris, says: "The French are individualistic. They like to be independent and that normally means working for a small firm."
But if competition for work stays as fierce as it is, combining skills and resources may be the only way that some firms will stay afloat.
Says Phillipe Nouel, of Gide Loyrette Nouel: "Twelve months ago, French lawyers were particularly bullish, but the economy has not picked up as much as we had hoped."
However, many believe the market is recovering. Pierre Verkhorskoy, a partner at Clifford Chance in Paris, says: "People are certainly more active. It's not as buoyant as the late 1980s but better than 1992-1993. Mergers and acquisitions is booming as are investment and foreign investment into France."
A potential money-spinner is multi-media law - advising companies involved in computing, telecommunications and intellectual property. Sell says: "It is a promising area where there are few specialists. If the bigger firms don't offer to do the work in-house, they will lose out to the smaller specialists."
Arbitration is also growing in France, although it is nothing like as popular as in the US and UK. Says one lawyer: "We're still at the very beginning."
Nouel has detected less arbitration work in the construction industry, but that has been compensated for by more M&As. The dearth of construction work is due to lawyers providing more competently drafted contracts. "There have been fewer disasters," says Nouel.
French law firms resent the fact that accountants can give legal advice in addition to their main activity. From 1997, law firms will not be allowed to make public reference to any links with an accounting firm. Sell is sceptical about the impact this provision will have. "We've been there before when accountants and statutory auditors were told to do the same thing. Auditors simply set up on their own but forged behind-the-scenes links."
The decree may make law firms think twice about choosing the route taken by SG Archibald, which hitched up with Arthur Andersen three years ago to form Association Archibald Andersen. The trend towards multi-disciplinary partnerships in the rest of Europe is taking a back-seat in France and it remains to be seen whether the needs of clients and the profession internationally will force a rethink.
Resentment against auditors runs high. Says one senior French lawyer: "I am not in favour of auditors being lawyers. They are not doing well in their field and now they want to invade ours. I am afraid our professional standards are going to suffer."
Another bone of contention has been the uniting of the avocat and conseil juridiques professions, roughly translatable as trial lawyer and legal adviser. Pre-merger, the conseils juridiques were open to foreigners and were extremely successful. Says Verkhorskoy: "The merger should have happened years ago, but was blocked by avocats. Then they realised if they didn't merge, they were going to miss out on a lot of business from commercial clients. For us, the merger has been a great success. We can now do in-house what we previously had to sub-contract." But for many avocats, conseils juridiques remain inferior.
Verkhorskoy also refutes allegations that Paris is a difficult market for foreign lawyers to break into. "There are more foreign banks involved in French privatisation than there are involved in privatisation in the UK," he says, though he concedes that French banks are still the first choice. "It is difficult for people in London to believe, but the French market is extremely open. Foreigners are involved in the government of local bars here. Imagine that happening in London."