Flat and happy
21 November 2011 | By Joanne Harris
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The Netherlands’ business community appears to have escaped the worst effects of the downturn, with the legal sector experiencing very
little in the way of peaks and troughs.
It would be easy to describe the Dutch legal market as boring, but perhaps a fairer word would be stable. While firms in neighbouring countries, particularly France and Germany, have indulged in unprecedented levels of lateral hiring throughout the year, the Netherlands has been pretty quiet.
The only sign that this could change was Taylor Wessing’s announcement a few weeks ago (The Lawyer, 17 October) that it was aiming to have a presence in the Netherlands within 12 months.
But that news has attracted little enthusiasm from Dutch incumbents, who are sceptical as to the firm’s chances of success.
Nauta Dutilh executive committee chair Michaëla Ulrici says she cannot see the strategic imperative for an international firm to try to enter the Dutch market at the moment.
“There’s not a lot of volume given the marketplace in the Netherlands,” she points out.
Stibbe M&A head Allard Metzelaar shares Ulrici’s views.
“I don’t think we’re going to fall off our seats because of this,” he comments. “There have always been quite a number of well-established larger firms here.”
Dutch firms feel that their market is well-lawyered and competitive, with the major independent firms all wedded to their strategies of independence, acting mainly for Dutch companies.
Most Dutch firms report that 2011 has been a good year so far and are predicting that it will be better, financially, than 2010, despite the current market instability.
“For us the opportunities have become bigger in the past couple of months,” says Houthoff Buruma managing partner Johan Rijlaarsdam. He adds that the firm is on the lookout for any lateral hiring chances that might come up, although he also admits that two or three partners have been “let go” during the course of the year.
“We’re focusing on the strategy and practices that really fit,” Rijlaarsdam explains.
Like everywhere else in the world, Dutch litigation practices are flourishing. Disputes connected with the financial crisis are common and litigators also report an increase in group claims by shareholders.
The strong funds industry in the Netherlands means the country has not been immune from the impact of events such as the Madoff fraud and the collapse of Lehman Brothers, with work ongoing for lawyers on both issues.
The crisis is also providing restructuring work in the financial services sector. For example, ABN Amro is continuing to divest pieces of Fortis, instructing De Brauw Blackstone Westbroek on the sale of Fortis Commercial Finance in June. ING, another large Dutch bank, is in the process of trying to sell its online bank ING Direct USA to Capital One for $9bn (£5.6bn).
De Brauw managing partner Martijn Snoep says most of the deals the firm is currently seeing are more “add-ons” for companies, with few truly transformational deals.
What corporate activity there is, is supported by a reasonably strong economic situation.
“The Dutch economy’s fairly stable, with unemployment still below 5 per cent,” says Snoep. “The government has its finances in order andDutch banks are well capitalised. We expect modest growth in the coming years.”
Loyens & Loeff corporate head Bas Vletter agrees with Snoep’s assessment. “What I hear from the banks is they’ve got reasonable pipelines again,” he relates.
But Vletter warns that, while pipelines might be filling up again they are short.
Quite a lot of the activity in the Netherlands has been around energy companies. De Brauw has advised energy trading company Vitol on three big transactions, including its $1bn acquisition of Shell’s downstream businesses in several African states.
Meanwhile, Houthoff was involved on several energy deals, notably advising North Sea Group on its recent merger with Argos Oil, which created a business with an annual turnover of around e10bn (£8.6bn). Simmons & Simmons in Amsterdam acted for Argos.
Both Loyens and Houthoff also report reasonably good private equity work, despite the general lack of finance options in the markets.
“A number of our clients are financially pretty strong in themselves, so they’re not dependent on financial arrangements,” Rijlaarsdam says.
Ulrici at Nauta thinks much of the advice needed in the coming months will relate to regulation. The Dutch government has been busily enacting legislation designed to protect against future crises, with several acts due to come into force in January 2012.
Among the changes on the cards are improvements to the country’s limited-liability company regime and an initiative that will, for the first time, allow Dutch companies to operate one-tier boards in the same way as Anglo-Saxon companies do.
Firms think there will be enough activity to keep them going for a while, but apart from Taylor Wessing’s attempt to break into the Netherlands there is likely to be little change in the Dutch market in the foreseeable future. In these turbulent times, stable is good.