Lovells and Camerons: two ways to prosper in Germany
14 July 2003
21 June 2013
17 April 2014
14 March 2014
9 September 2013
5 September 2013
Magic circle firms have suffered considerable grief with their obstreperous German offices. Lovells and Camerons have had better luck.
Cornelius Brandi and Oliver Felsenstein are chalk and cheese. The managing partners of CMS Hasche Sigle and Lovells respectively have seen their firms in Germany through a difficult couple of years, but are both also responsible for coaxing them through to the other side, with strongly improved corporate track records, climbing profitability and confirmed full-service approaches.
But while Felsenstein is your rainmaker's rainmaker - a brash and highly-driven private equity lawyer who loves only his Austin Healey above the minutiae of anti-dilution structures - Brandi is a taciturn Hanseatic shipping lawyer who now has to devote nearly all his time to
non-fee-earning matters. As some recompense, he won JuVe's Management of the Year Award last year for bringing together a disparate firm which, like so many others in Germany, was the result of a number of mergers.
The corporate lawyers at CMS in particular have done Brandi proud over the past year. They have one of the biggest practices (only Freshfields Bruckhaus Deringer has more partners) and are spread all over the country, but they have demonstrated that they can get a look-in on big deals, especially in Camerons' favourite energy sector: Deutsche Shell on its disposal of shares in Ruhrgas to E.ON; Gaz de France on the acquisition of Preussag Energie's German exploration and production business from Tui; or BP on the sale of Veba Oil & Gas to Petro-Canada.
The corporate group has in its ranks the Stuttgart Wunderkind Thomas Meyding (just mention his name to any Camerons corporate lawyer and hear them squeal); Klaus Sachs, the Munich arbitrator who pulled in the Deutsche Telekom/Voicestream deal for the firm; and Ludwig Linder, the Berkeley-educated Hamburg energy specialist, who is seen by other firms up north as one of the primary corporate figures in Hamburg.
Add to that the biggest and most widely-spread private equity practice in the country (everything from venture capital in Munich to being the house firm for BC Partners) and you have a
potent mix. CMS in Germany now enjoys, it must be said, a relative market position that Camerons must envy. Which makes it all the more galling is that most of the German lawyers - even a big proportion of the deal gurus - continue to resist closer or more rapid integration within CMS or with Camerons.
Although few now like to mention this four-letter word, German lawyers quote KPMG as the business model, and they are a good deal more convincing in their justification of the no-merger, slow-integration model than some of their London counterparts, who can only utter the 'K'-word through clenched teeth.
Camerons will just have to hang on. At some point in the medium term - perhaps when it has done something about its leverage - CMS Hasche Sigle will be no less profitable than Camerons, and as if by magic German lawyers will have stopped worrying about interference in their practice.
The Lovells way couldn't be more different. The German offices (then Boesebeck Droste) were also the result of a merger, but the two halves didn't display elective affinities for each other - they even had to call in an arbitrator to decide which way round the merged firm should be named. The merger with Lovells gave the firm - and in particular the younger generation of partners who were fed up with the bickering - the chance to import new structures that would supplant the office rivalries.
Lesley MacDonagh's right-hand man in Germany was to be Felsenstein, who was also the driving force behind the corporate practice. He has presided over strong growth in profitability, helped to no small extent by the parsimonious distribution of equity over the past two years, and the deal-flow is looking healthy.
Most importantly, the private equity team is seen by some competitors as the most integrated in Europe. There's certainly no other firm on the London-Germany axis that has managed quite the same referral rate of key clients in private equity. Most investment managers in Germany have proven more stubborn than expected and don't seem interested in instructing the London or New York house firm for a German deal.
But Lovells has a firm hand on Doughty Hanson (for example, for the acquisition of ATU Autoteile Unger) and has done its first big deal for HG Capital (previously Mercury Asset Management) on the acquisition of Dana Group and followed it up with WET Automotive. Other highlights of the past year were Advent on its purchase of Viatris from Degussa (but beware, Advent International also uses Shearman & Sterling and Ashurst Morris Crisp) and Terra Firma's audacious attempt to acquire GAG Real Estate, which would have been a huge deal had it not run into political difficulties. It has also done work over the past year for Industri Kapital, as well as long-term client Quadriga.
Of the two firms, it is Lovells that has the furthest to go: its M&A practice is respectable, but nothing like it should be, and it is a relatively young firm where the partners will need time to make a name for themselves in the market. On the other hand, the difficult work is behind it. Felsenstein is all too quick to lay the praise for this at Walter Klosterfelde's door, the Hamburg senior partner whose gravitas carried the day on some sensitive issues.
CMS has, by contrast, established its market position in the corporate field, but European integration remains nascent. And even though the cross-border deal market continues to look relatively quiet, firmwide integration across practice and industry groups will have the day when the big tickets return. At that point, Brandi won't be able to be so different from Felsenstein after all.Aled Griffiths is the editor of JuVe Rechtsmarkt