International roundup

FRANCE
In a year when France faced action from the European Court of Justice over its failure to ratify a directive allowing for the free establishment of lawyers, the march of the Anglo Saxon firms continued.

“Paris has virtually turned into Wall Street-sur-Seine. Unfortunately for those of us who prefer to see a little legal biodiversity, Stibbe’s determinedly independent stance is crumbling. But then basing an entire strategy on being anti-Anglo-Saxon was always going to be doomed in the current French market”
Catrin Griffiths, 16 April

SJ Berwin opened a Paris office targeted at the private equity market, with hires from Salans Hertzfeld & Heilbronn in January. The next month saw Bureau Francis Lefebvre join Cameron McKenna’s CMS alliance and Hammond Suddards Edge vote to merge with five-partner Hausmann & Associés.

In April, Stibbe’s Paris office decided that it wanted the Anglo Saxon merger that the rest of the firm was stalling on, and so split off to merge with US firm Latham & Watkins.

Lovells strengthened its presence with lateral hires, while Baker & McKenzie took on France Telecom’s general counsel to launch a telecoms practice.

At the end of the year, Ince & Co announced it was taking Constant & Constant’s Paris and Le Havre offices and Pinsent Curtis Biddle decided to link up with most of long-term ally Granrut Vatier Baudelot & Associés.

GERMANY
If last year saw turmoil in the German market, this year saw utter chaos, as well-regarded firms started falling apart in the face of pressure from Anglo-Saxon invaders.

First to fall was Gaedertz, and by the end of the year, nothing of the firm was left in its original form. Norton Rose scooped the Cologne office but failed to bag the Frankfurt one after talks ended in January. February saw McDermott Will & Emery re-enter talks with the firm in a head-to-head battle with Mayer Brown & Platt for the Frankfurt office. As this was happening the Hamburg office crept under Latham & Watkins’ wing.

“The big test now for Cann and Kyle will be whether they can strengthen the ownership of all partners of the merged firm. Because at the moment the grand pan-European firm of Linklaters still has a distinctly Anglo Saxon flavour”
Julia Cahill, 3 December

A month later, after the vote was delayed due to disputes with the Cologne and Hamburg office about who should pay the costs of the dissolution, the Frankfurt office plumped for Mayer Brown. By this time, the Munich office had split back into the two halves that had come together in 1999, when Illert Bernstoff Zapp merged with Gaedertz. Three of the partners went on to form a Munich office for Norton Rose. The final piece in the jigsaw, the Berlin office, which had renamed itself Quack, decided to marry Wilmer Cutler & Pickering in November.

In March, tensions started rising within Wessing. Bird & Bird had started secret negotiations with the Munich and Hamburg offices of the German firm, but the whole firm, which also had offices in Frankfurt and Düsseldorf, could not decide whether it ought to merge with a UK firm.

To try and reach a solution before the firm imploded, Wessing called in Hildebrandt International to advise. While none of the individual offices have yet moved wholesale, the Düsseldorf office has been decimated with the loss of eight partners to Andersen Legal’s German arm Andersen Luther, while another three partners headed for Lovells.

But while many firms were scouting for mergers, only a handful were successful. In February, DLA signed up Cologne-based Görg to join its D&P alliance. The same month, DLA’s rival Hammond Suddards Edge took on a team from Knauthe Paul Schmitt to set up in Munich and Berlin. Simmons & Simmons briefly courted both Beiten Burkhardt Mittl & Wegener and Wessing, but both sets of talks stalled. Beiten opted for accountants instead, merging with KPMG’s Treuhand & Goerdeler in October.

In March, Osborne Clarke decided against merging with long-term alliance partner Graf von Westphalen Fritze & Modest, with whom it had previously set up a Silicon Valley office. The decision came after the Frankfurt office split from the rest of the firm and Osborne Clarke had to instead take on three partners from Coudert Schürmann to set up its own presence in the city.

Alongside the mergers came a rash of new office openings. In May, Skadden Arps Slate Meagher & Flom opened in Frankfurt, closely followed by Debevoise & Plimpton, then Milbank Tweed Hadley & McCloy and finally, in October, Sullivan & Cromwell.

In February, Herbert Smith’s best friend Gleiss Lutz Hootz Hirsch turned its sights to Munich, Germany’s high-tech centre. The move was replicated by Shearman & Sterling in March, Ashurst Morris Crisp in May, Gibson Dunn in August, and McDermott in November. In March, Allen & Overy (A&O) took on a trio from White & Case to open in Hamburg, the city in which Ince & Co landed six months later.

In December, there were Brownie points for Oppenhoff & Rädler, which secured a deal with Linklaters that will bring them into the lockstep earlier than expected due to better than expected profitability.

ITALY
The biggest news to come out of the Italian market this year was the collapse of merger talks between Freshfields Bruckhaus Deringer and Chiomenti e Associati because of lockstep integration in January. In the same month, White & Case merged with Italian corporate boutique Varrenti e Associati to gain offices in Rome and Milan.

In May, Simmons took an employment team from Turin firm Rossotto e Associati. A couple of months later, Hammonds decided to merge with the rest.

BENELUX
The biggest news from the region was the breakdown of merger talks between Linklaters and its alliance member De Brauw Blackstone & Westbroek. The Dutch firm was not happy about having to cut core areas, but in October, it started to warm to the idea of restarting discussions.

Dechert also merged with Luxembourg’s Brucher & Seimetz, while Simmons was poised to sign up Rotterdam firm Nolst Trenite.

A&O’s Brussels senior partner Louis Verbeke was put “under suspicion” after raids on the firm’s Brussels office in June, connected with investigations into technology company Lernout & Hauspie, a former client.

ASIA
China was the focus for many as it was forced to open its doors to foreign firms to join the World Trade Organisation.

Perkins Coie set up in Beijing in April, while Norton Rose planned its own move there. Dorsey & Whitney and Faegre & Benson gained a licence to open in Shanghai, while in November, DLA announced it was seeking one. Hammonds also set up a Hong Kong construction practice in its first move into Asia.

Both Clifford Chance and Morrison & Foerster set up joint ventures with Japanese firms, while Jones Day Reavis & Pogue merged with Tokyo’s Showa Law.

In Singapore, the future of Slaughter and May‘s office was up in the air, while Shearman set up a joint venture with Stamford, the firm set up by Lee Suet Fern after she left Clifford Chance’s local link the Wong Partnership.

UNITED STATES
The warm glow that Clifford Chance Rogers & Wells sported throughout 2000 faded. In May, around 25 partners were cut out of equity with some having to take paycuts of up to 50 per cent. That still left the dilemma of the eight rainmakers left out of the Clifford Chance lockstep system temporarily at the time of making the merger deal (see page 16).

Magic circle rival A&O turned heads as it tempted the first ever partner to leave Cravath Swaine & Moore for a rival – superstar Dan Cunningham – a coup which showed the firm had truly arrived in the Big Apple.

“This could be the most explosive issue Clifford Chance has had to deal with yet, and its US partners are terrified… But the management’s passivity in the face of the panic in New York is extraordinary. A new listening culture at Clifford Chance? You decide”
Catrin Griffiths on the impending de-equitisation of CC partners in the US, 30 April

National mergers were in vogue in the first half of the year, kicked off by the February marriage between Sidley & Austin and Brown & Wood creating the third biggest law firm in the US. Then both Holland & Knight and Bingham Dana sealed New York mergers, while Stephenson Harwood carried on half-hearted talks with the former.

Theodore Goddard and Salans Hertzfeld started merger talks that eventually fell apart because of a lack of impetus and economic uncertainty following 11 September.

Silicon Valley welcomed O’Melveny & Myers and Mayer Brown, while Valley firm Wilson Sonsini moved into New York and Salt Lake City.

Then the downturn hit. Brobeck Hale and Dorr attempted to tackle it by offering a new scheme of unpaid leave in August. Its proponent, chairman Tower Snow, who promised the firm would not lay off lawyers, then stepped down in October.

Valley firm Wilson Sonsini axed its August bonuses. Then Cooley Godward laid off 86, Shearman cut 10 per cent of its lawyers and Perkins Coie, Venture Law Group and Gunderson Dettmer also made redundancies.

September brought the horror of the New York attacks in which Sidley & Austin and Harris Beach & Wilcox lost staff. The two firms, together with Thatcher Proffitt & Wood, had offices in the World Trade Center, while Cleary Gottlieb Steen & Hamilton’s headquarters at One Liberty Plaza also had to be evacuated. Other law firms rallied round with offers of office space for stranded rivals and offers of pro bono work for victims and their families.