Freshfields plans Euro expansion
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15 May 2014
After its German merger, Freshfields is seeking more organic growth on the Continent with a series of lateral hires. By Abigail Townsend.
Freshfields will use its merger with German firm Deringer Tessin Herrmann & Sedemund as a springboard for a major expansion on the Continent, says Alan Peck, the firm's chief executive.
In an exclusive interview following the successful merger vote on Friday, he tells The Lawyer of Freshfields' plans in the face of competition from rival magic circle firms interested in Germany.
He admits merger is a risky move, but the speed with which the deal has been sealed - five months ahead of schedule - shows the need of the big five to get into the German market before it is crowded out.
Peck says: "We merged in Germany because we could not do it organically. But mergers are quite risky. There are terribly few firms we would be interested in merging with.
"[Freshfields Deringer] is a useful base on which to build and we do need to grow."
Freshfields initially tried to achieve a presence in Germany through organic growth. But, says Peck: "We just could not get enough people. We were having to turn the big deals down. There was much less mobility in the German market then."
Freshfields Deringer has already signalled its intentions with two lateral hires announced at the same time as the firm's senior partners, Anthony Salz and Jochim Sedemund, were shaking hands following the unanimous merger vote.
Deringer has poached two senior tax lawyers - Thomas Wiesenbart and Holter Hauselmann - from PricewaterhouseCoopers' Cologne office as part of a plan to bolster its tax department.
Growing the German practice, via internally appointed partners and lateral hires, will be the next phase in the firms' development.
Ludwig Leyendecker, managing partner at Deringer's Cologne office, confirms the firm is already discussing which lawyers it will make up to partner next year.
He says: "It will be one of the largest numbers of partner appointments next year in the firm's history. But we are also doing lateral hiring."
Leyendecker will take a prime position and sit on the Freshfields Deringer integration committee. He will be joined by three of Deringer's other 32 partners.
Freshfields is not disclosing which of its senior lawyers will join the management committee.
Stephen Eilars, partner in charge of finance, will sit on the finance committee.
The German firm's head of IT, Klaus Beucher, will sit on the IT committee.
Frank Montag, managing partner of the Brussels office, will also be involved at a management level.
Freshfields Deringer was able to get the management committee up and running, because, says Leyendecker, the firms have spent the last 18 months working together as alliance partners building up to the full-blown merger.
One senior German lawyer at a rival firm believes the Freshfields-Deringer merger will work precisely because they have had this time to get to know each other.
But he is not so optimistic about other potential mergers and alliances between other German and Anglo-Saxon firms.
There are several mergers in the German pipeline.
Partners in Clifford Chance and Punder Volhard Weber & Axster were expected to vote over the weekend for the proposed merger, as revealed by The Lawyer (5 July).
Other firms looking towards the German market include Linklaters & Alliance and Slaughter and May, which have relationships witdler and Hengeler Mueller Weitzel Wirtz respectively.
Meanwhile, Lovell White Durrant will vote later this month on a merger with Boesebeck Droste, also revealed in The Lawyer (5 July).
But some think the rush to merge with German firms could create problems. One German lawyer at a top 10 firm questions how the Punders/Clifford Chance merger will pan out. He comments: "It seems a little bit hasty. They have both been on the market for a while, and until very recently, they were talking to different brides. They are merging first and hoping to integrate later."
Linklaters' partner Casper Lawson, who went to Germany three years ago to scout around for German alliances and was instrumental in arranging the Oppenhoff deal, will be returning to the UK within the next couple of weeks to work in the firm's London office.
Boesebecks wins second bite at airport deal
German firm Boesebeck Droste has won a groundbreaking case as it prepares for its merger vote with Lovell White Durrant.
The Berlin Court of Appeal has ruled that the selection process on bids for the u2.4bn to u4.1bn privatisation and rebuilding of Berlin's airport system must be repeated due to irregularities.
The ruling was the first test of Germany's amended procurement law and imposes tough demands on public authorities selecting bidders for privatisations.
The new procurement law allows the bidder to halt the whole process by making an application to the authorities.
Boesebecks acted for property company IVG AG, which was defeated in its bid to rebuild and maintain the airport by rival Hochtief.
Thomas Lindemann, the partner who led the Boesebecks team, says: "Over a long period of time in legal literature there are certain principles like neutrality that had to be observed, but nobody cared. But the court of appeal said you have to do this or the whole thing will go to the wall."
The main irregularity was that Berlin's minister of finance, Anette Fugmann-Heesing, who was involved in deciding on the tender bids, was on the board of Berliner Bank, which was part of the Hochtief consortium.
A further problem was that the requirements for bidders were ambiguous, and the court ruled that these must be clearly defined in future.
The German government has put the privatisation of Frankfurt airport and the building of the Olympic stadium in Berlin on hold as a result of the ruling.