The last three years have seen an increase in UK firms' moves, many successfully. Interestingly, however, leading domestic Dutch firms have mostly resisted and chosen to maintain their independence. De Brauw Blackstone Westbroek's recent decision to pull out of a full merger with Linklaters was a decisive moment in the history of the independent firm in the Dutch legal market. The important question going forward is whether independence will continue to be seen as the winning formula. My own view is that it will be.
The key to any successful merger is the exploitation of synergies and complementary business expertise to create a single entity that benefits from scale efficiencies and international reach. Not all mergers realise this ideal. The obstacles to effective mergers and alliances in the legal market are numerous, but the most crucial can be identified in two broad categories. Neither of them should be underestimated, particularly in the Dutch market, where their impact is particularly significant.
The first, and least well understood, is the management of domestic client relationships. The 'engine room' of most Dutch firms is their strong, full-service domestic practices, often driven by longstanding relationships between lawyers and the senior management of leading Dutch companies. The management of these relationships can be a challenge during a merger, where they are expected to run alongside a London-based international corporate practice subject to hugely differing pressures in terms of timetable and fee expectations. A newly merged firm, by switching the focus to London, may cut across the Dutch firm's established relationships. There is clearly a danger that it may undermine the value of the whole domestic practice. When firms tamper with practices developed over a long period of cooperation, and based on high levels of personal trust and respect, client relationships may suffer.
The second, closely connected, obstacle is culture. The evolving client expectations of the UK market, along with rising hourly rates, have not been mirrored in the Netherlands. The British and Dutch share many cultural characteristics and interpersonal relations between the nations are very good. But the Dutch approach, and Dutch client expectations, remain different from the UK. To date, much of the integration does not appear to have taken sufficient account of these differences, and newly merged firms are only now realising how much time and investment it takes to build the right teams for the client.
This is not to say that international links are not essential for both lawyers and clients; it is simply that the inevitable tension between the national and international can be managed more effectively in an independent firm. All the benefits of international reach can be achieved through establishing strong referral relationships with leading independent firms across Europe. By drawing on a strong referral network, independent firms are free to choose the most appropriate firm for the client, without risking compromising its domestic client base or fostering potentially destructive internal cultural divisions.
Boekel De Nerée has achieved this through a new internationally focused practice group run by two UK partners concentrating exclusively on English-speaking clients. This kind of step may require significant investment – a decision not to be taken lightly in the current economic climate. However, the Dutch firms in the vanguard of developing this approach are finding that it is paying off. Boekel's own international fee income has doubled since 2001 and it receives a steady stream of referral work from the UK market.
So what does the future hold? Newly merged international firms are realising that mistakes have been made and are now investing more resources in anticipating cultural differences and the demands of domestic clients. Independent Dutch firms must continue to nurture their relationships with the leading independent firms across Europe. Two-way referral relationships are at their most effective when work is referred between lawyers who have confidence that they are acquiring the best possible expertise for their client. With these relationships in place, there is a successful future ahead for independent law firms, not only in the Netherlands but also across Europe as a whole.