New roads into northern Europe
5 October 1999
Virginia Ginnane explores the latest links between UK and Scandinavian law firms.
When the Oresund Bridge, spanning the eponymous Strait from Malmo to Copenhagen, opens in June next year, it will not only staple Denmark to its northern Scandinavian neighbours, but it will also open Scandinavia to a wider and increasingly integrated Europe. The time for legal business to grow within Scandinavia is ripe.
Leslie Perrin, managing partner of Osborne Clarke, which has been working in Denmark since 1903, puts it simply: "We're part of the Danish family."
UK-Scandinavia links have a long history and those involved hope that their long-standing commitments will mean their firms will get first pick of any new pan-European work. As Peter Sinding, a dual-qualified Danish partner in the London office of Eversheds says: "It's the early bird who gets the worm."
In more recent times, there have been a number of alliances and partnerships set up between the UK and Scandinavia.
In 1987, Osborne Clarke established an alliance with Copenhagen firm Horten & Partners. In 1995, Cameron McKenna formed an alliance with Schluter & Hald in Denmark and Tisell & Co in Stockholm as part of their Europe-wide alliance, launched recently as CMS. Last May Eversheds announced an alliance with an independently-owned local Copenhagen firm, operating under Eversheds' name. In 1998, Linklaters & Alliance allied itself with Lagerlof & Leman, one of the largest firms in Stockholm.
The traffic has not all been one way. Several Scandinavian firms also have offices in London, with the dual function of serving the needs of Scandinavian clients with UK interests and vice versa. However, Arne Mollin Ottosen, advokat in London for Kromann and Munter the Danish member of the Scandinavian Law Alliance based in Chancery Lane says: "We do not advise on English law."
For those English law firms considering a Scandinavian presence, there would appear to be three dominant models:
Enter the market as an English firm, practising purely English law, in the 1980s tradition of setting up European branch offices. This was the model adopted by Watson Farley & Williams in Copenhagen and in Oslo, until the firm closed its office in 1996.
Establish an alliance with a local Scandinavian firm with local capacity being careful not to subsume the Scandinavian firm within it. Linklaters has been careful to manage these relationships carefully as it expands across the area.
Create an alliance by integrating a local firm, which works under the same name and trading standards as the parent company yet has no English capacity the Eversheds strategy.
Each model has its defenders and detractors. The chair of CMS's executive committee, Dick Taylor, says the first option would confine the participant to being merely "a niche player". Nigel Thomas, founding partner of Watson Farley & Williams' former Oslo office, agrees.
"If we were to go back [to Norway] we'd do Norwegian and English law," he says.
Norway is now easing rules for foreign lawyers to set up there.
There are also fears that large-scale link-ups can be difficult to manage. Eversheds' Copenhagen partner Troels Askerud is wary that the larger alliances "are not as homogeneous as they could be".
Some lawyers argue that there are intangible benefits to retaining local offices. Watson Farley still maintains its Copenhagen office, "with no plans to close it" according to Thomas, even though its resident partner Chris Lowe has returned to London. "It is beneficial to be there, to pick up the news on the street, to be a listening post," Thomas argues.
There is some evidence that lucrative Scandinavian corporates with UK subsidiaries prefer to instruct a London firm rather than go to a local firm with an English-only capacity, says Jan Anderberg, a dual-qualified Swedish partner at London's Reynolds Porter Chamberlain. The Swedes like visiting London - the flight is short and online communications make working easier.
Accordingly, some kind of alliance with a local firm is certainly the favoured option among lawyers. As Sinding says, for most firms "relying on cross-border work is too risky", so you need to be able to fall back on servicing local clients. "That's why linking up with a firm which has an existing client base makes sense."
There are a dozen or so full-service firms which dominate Scandinavia. Stockholm's largest is Vinge, followed by Mannheimer Swartling and Lagerlof & Lehman.
Copenhagen's largest is Kromann and Munter, then Gorrissen Federspiel Kierkegaard, Dragsted & Helmer Nielsen, Reumert & Partnere and Jonas Brwn.
In Oslo, the largest firm is Thommessen Krefting Greve Lund, then BAHR, Wikborg Rein & Co, and Wiersholn Melbye & Beck.
As far as actual work goes, Sinding says the main areas of business in which English firms are likely to attract Scandinavian work are those that are serviced out of the City, such as banking, shipping and insurance.
Eversheds in Copenhagen, for instance, does a lot of banking and finance work, commercial work including acquisitions, and intellectual property, as well as some human rights business.
CMS in Copenhagen and Stockholm works on mergers and acquisitions, and is strong in IT and intellectual property. Taylor says the firm handles many cross-border transactions involving a number of European clients and that both offices focus on the Baltic States, which are currently grooming themselves for EU membership.
Ingvar Zander, managing partner at
Lagerlof, says that his firm concentrates on transactions, acquisitions, privatisations, infrastructure projects and is also strong in IT and intellectual property.
Watson Farley's Copenhagen work is in finance, shipping, transportation, oil and gas. In Oslo, business has chiefly focused on shipping (as in Bergen) and finance, but there is also corporate finance work, litigation and oil and gas-related work.
Osborne Clarke's Danish unit in London focuses on corporate and commercial matters, joint ventures, cross-border mergers, IT, telecoms, and media, and the firm's Danish office has "a considerable amount of property work and banking work" according to Perrin. There is scope though for more work in Scandinavia in some areas in which English lawyers are considered specialists.
Zander is impressed by the way English lawyers organise and manage both large organisations and transactions. He also sees potential for more work in project financing.
An opportunity exists in Denmark for English litigators according to Troels Askerud, and Jan Anderberg believes the commercial and corporate areas may offer future work in Sweden.
Sinding sees "an increased amount of integration between the financial markets serviced out of London and industry in general in the Scandinavian region".
"I definitely see a market for debt capital market transactions, because increasingly Scandinavian corporates are shying away from straightforward bank borrowing which used to be their preferred source of finance," he says.
Askerud suggests capital markets work would be more interesting in Sweden than in Norway and Denmark because of the presence of large companies such as Volvo, Saab and Ericsson.
Once the Oresund bridge is completed next year, Perrin sees "a fantastic opportunity" for growth around Malmo, particularly in IT. "The Danish government is investing very heavily in 21st century industries."
Anderberg believes that potentially the Copenhagen/Malmo area "will become the gateway to Scandinavia" and that Malmo "will outshine Stockholm" in importance, though Stockholm's current status as Sweden's commercial centre remains unchallenged.
In considering entrance to the Scandinavian market, there are a number of dangers to beware of, experts argue.
Anderberg advises that although there are many similarities between the English and Swedish legal systems, there are just as many differences. Plain contract law is quite similar, though consideration does not play as big a part.
However, there is no such thing as law and equity "and a trust is an unknown concept", says Anderberg. Also, the Swedish system is not based on case law; it is based on written law. There is much less scope for the grey areas which English lawyers are more accustomed to, but this can also mean greater predictability.
Anderberg insists that the only feasible way of entering the Swedish legal system is to have experience and knowledge of English and Swedish and both legal systems.
Transfer exams are available for English lawyers wanting to make the transition. But for Perrin, local language has not been an important requirement. Osborne Clarke's London lawyers, who work out of the Copenhagen office, have no Danish. "English is really the business language, the language for negotiations in a business transaction," he says.
Thomas advises also that Scandinavia is no place for the "traditional City lawyer". Just as the legal system is generally less heavy on documentation than in England, so too, legal dealings are lighter on paperwork.
"It is very bad news to over-lawyer the Scandinavians," he warns.
But reassuringly, as Sinding explains, "the legal profession certainly in Denmark and I'm sure it's the case in Sweden does embrace the Anglo-American way of doing things".
In considering Scandinavia as a new market, it is probably wise to also take into account the cultural adjustment and the advice of Perrin regarding Denmark: "It's a very tight little community. There are only four million Danes of any kind and half of them are farmers. It's a small village.
"It means your new entrance to the Danish market can't expect to make an overnight impact."