Freshfields and its new Frankfurt partner Deringer Tessin are close to announcing an alliance with 9-partner Austrian firm Wolf Theiss.
It is understood that Deringer had been talking to Wolf Theiss for some time before it entered its alliance with Freshfields, designed to become a full merger in two years. Talks with Wolf were put on hold while the Freshfields deal was put together, but have now been restarted again.
Deringer partner Heinz Johann Kummer stressed that the firm's first priority was to merge with Freshfields but he did not deny that his firm was also talking to Wolf Theiss.
The Austrian practice is regarded as one of the more entrepreneurial firms in the country. It was founded by Peter Wolf in 1957 and his son Richard is a finance partner and now plays a key role in the firm. The firm worked together with Freshfields on the Erste Bank privatisation last year.
Austrian firms are increasingly waking up to the need for international presence, particularly since the full merger between Austrian firm Heller Lober Bahn and top German firm Bruckhaus Westrick at the beginning of this year.
In turn, German firms believe an Austrian link can act as a useful gateway to Eastern Europe. Although both Freshfields and Deringer have Moscow offices, neither have any in Eastern Europe - but Wolf Theiss has a Prague office.
Kummer stressed: "There is a lot to do to work together and grow together with Freshfields, that's our first goal."
Christian Herbst of Austria's largest firm, 15-partner Schonherr Barfuss & Partners, which has traditionally wanted to remain independent, said his firm was prepared to wait for two years to see whether big pan-European alliances appeared and referral work from UK and German firms dried up: "If we see this happening then we will take action," he said. "But we don't see a need to do this right now."
But Armin Dallmann, partner at another leading Austrian firm Hugel Dallmann & Partners, said his firm was "looking at possibilities and strategies" for gaining international presence and a number of his partners had talked to a number of partners at German and other firms. "We feel that the globalisation of the legal marketplace will continue," he said.