A host of US and UK firms moved into Brussels last year. What’s in it for them?
Brussels’ legal market has been busy in the past year, but the activity has not materially affected domestic firms. All the movement has been among foreign players, with several US and UK outfits deciding to bulk up in one of Europe’s busiest markets.
New arrivals in 2011 included Brodies, K&L Gates, Cadwalader Wickersham & Taft, Martineau and Wilson Sonsini Goodrich & Rosati. Shearman & Sterling expanded its team with a group of partners from the now defunct Howrey, while Clifford Chance raided Linklaters for competition partner Johan Ysewyn.
Competition and trade law were the main areas for most, although Brodies and K&L Gates are concentrating on regulatory matters.
While all the hiring kept the newcomers busy, Brussels’ old hands remain relatively unconcerned.
“It’s a rearranging of deckchairs,” says Cleary Gottlieb Steen & Hamilton Brussels partner Nicholas Levy. “There are very few new names.”
Levy points out that most of the new firms are merely hiring Brussels-based lawyers from existing practices. In his view, the “big story” of the year was Howrey’s collapse. That was a boon for Shearman, which picked up the firm’s competition team, while its IP and data protection lawyers joined boutique Hoyng Monegier along with partners from Howrey’s other European offices.
“What you’re beginning to see is some of the firms that opened a few years ago having to scale back or look at what they’re doing,” Levy adds.
Of the major existing players in Brussels, sources think the loss of Ysewyn and also partner Alec Burnside to Cadwalader dented Linklaters’ competition practice in the city, although it still has a sizeable domestic law practice.
Even the new arrivals acknowledge that their presence is unlikely to make a big difference in the market.
“It’s never really game-changing,” says Michael Rosenthal, who joined Wilson Sonsini from Hunton & Williams last year. He says Wilson Sonsini has had a solid start to its Brussels foray, with instructions coming from both the firm’s wider network as well as the relationships brought by the new arrivals.
K&L Gates partner Philip Torbøl, who joined in early 2011 from McDermott Will & Emery, tells a similar tale.
“We’re fortunate,” he says, “because we’ve been followed by many existing clients from the first day; but also K&L Gates is extremely well-integrated and has one of the highest percentages of cross-office work.”
Both Torbøl and Rosenthal are certain that firms need work from elsewhere in their networks to prosper, although Levy says more long-established practices cope fine without it.
One thing is certain: there is plenty of work in Brussels. Levy reports a “fantastic year” for Cleary and even thinks that volumes have increased recently, despite there being less competition work related to M&A due to the economic downturn.
He observes that the European Commission is focusing on high-tech cases involving clients such as Google. This can be immensely complex and require teams of two or three partners plus several associates. He believes the Commission has become “more rigorous and demanding” when it comes to asking for evidence.
Rosenthal does not think there is more enforcement activity going on, although he notes that US clients are increasingly requiring advice in the EU on competition matters. This was one of the drivers behind Wilson Sonsini’s decision to launch in Brussels.
“I don’t think there’s been a shift in enforcement priorities. The Commission’s always been a tough antitrust enforcer,” he states.
While K&L Gates is focusing on regulation, in common with Wilson Sonsini, the firm’s move into Brussels was driven by the needs of overseas clients to seek EU advice. Torbøl thinks the firm’s Brussels strategy is designed to match what the firm already has in Washington DC, namely advising companies on upcoming regulation, and while not competing with lobbyists, playing a role in the development of legislation.
“Brussels is 20 years behind DC in how focused companies are on regulatory work,” he explains. “Companies realise the importance of investing sufficient resources in Brussels, not just in competition work, but we’re not thinking lawyers are going to be running around the corridors of the European Parliament yet.”
Those that have opened in Brussels in the past year are determined to grow headcounts, but Levy suggests that the market is now quite mature and that this could give those present the opportunity to consolidate.
“We may be reaching a point of maturity, which could provide firms with a chance to catch up,” he says.
Although Rosenthal says his new firm is doing well at present, he warns future arrivals that entering Brussels is not just a case of hiring a couple of lawyers and finding office space. Firms will have to really work to make their mark, particularly now that there are more lawyers in the capital of Europe than ever before.
“Brussels is a market that shouldn’t be underestimated,” Rosenthal contends.
Continuing competition and regulatory work is driving an increasing number of firms to open offices in Brussels, but making a mark in this crowded city will not necessarily be easy.
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Source: World Bank, Eurostat, Statistics Belgium