Smoke signals

It is not essential to have a London office to be a top European firm - but it helps. Half the top 50 European firms by revenue now have a base in the City, and more and more of the next 50 and smaller firms are adding London to their arsenal.

The latest arrivals are German firm Luther and Ireland’s William Fry, both with new London offices this year. Italian firm Legance is preparing its launch, having recently hired a partner from Gianni Origoni Grippo Cappelli & Partners to set up the office.

Other firms are bulking up their presence in the City; most recently Dutch firm Boekel de Nerée sent three partners to London in place of office founder Ferdinand Mason, who has left for Jones Day.

The biggest London offices are now, indeed, pretty big. Bonelli Erede Pappalardo has six partners and seven associates in London, bringing in £4.7m of revenue, with £2.2m profit in 2011, according to LLP accounts. Germany’s Noerr, which opened in London two years ago, now has three partners and seven associates in the City. And marking its quarter-century in the City, Wikborg Rein weighs in with four partners and 12 associates, practising both Norwegian and English law.

The investment needed to open in the City is huge. London remains expensive, and with so much of the work carried out in the UK being business development, there needs to be a budget for entertaining and networking too.

A place in the drizzle

However, many firms that are not here are considering it, and the new arrivals are convinced of the need for a City office.

Stephen Keogh, the head of William Fry’s new London base, explains that the firm did previously have an office in the City. That ­office closed down in the late 1990s at the height of the Irish boom, when there was enough work going through Dublin for the firm to feel it unnecessary.

But things have changed, and with the Irish economy and the work of the biggest Irish firms focused on investment, both in and outbound, William Fry again saw the need to be on the ground in the UK.

“We think it’s an opportune time,” says Keogh, adding that while the domestic economy in Ireland has become “twin-tracked”, being closer to clients in the financial capitals of London and New York is essential.

Legance partner Bruno Bartocci, who, along with Andrea Gianelli and new recruit Marco Gubitosi, is leading the firm’s entry into London, says the move is a natural step in the firm’s development since its launch in 2008.

“We’ve been thinking about this for some time,” Bartocci says. “London is an important centre for a firm like ours - we’re grown-up enough now to have a London office.”

Bartocci says Legance hopes to build closer relationships with UK and US law firms, investment banks, private equity houses and firms and clients from emerging economies using London as a hub.

“Many Italian teams of investment banks have been moved back recently to London,” he adds - a story Gianni Origoni Grippo Cappelli & Partners’ London head Marco Zaccagnini also relates.

Luther’s London office head Tobias Verlende agrees that London is a key hub for Continental firms.

“We realised that to be represented in the biggest financial hub, which is London, would really make sense, especially because all the international investors are based in London and most of them, at least the biggest ones, have no office in Germany,” Verlende says.

He adds that London was a natural progression for Luther, which has international offices in places including Luxembourg, China and Eastern Europe.

“It was a long process internally for all offices to find out how they can benefit,” says Verlende.

The office opened in March this year and Verlende adds that Luther is “very happy” with progress to date. Work is already being referred to it from Anglo-Saxon firms without a German presence.

Noerr-brainer

Noerr’s London head Hans Radau says that despite the economic climate in the two years since the firm opened in the UK, the office moved into profit in its second year and, he thinks, has met its strategic targets. The office contributed to the firm’s growth in 2011, which helped Noerr to the title of European Firm of the Year at last week’s The Lawyer European Awards.

Radau says that as well as establishing Noerr as a strong brand in the UK, he was given a remit to build up workflows from London.

“The second target was to build relationships with referral sources and contacts we hadn’t had a meaningful relationship with before we came to London, to strengthen existing relationships and increase international referrals through London to Continental Noerr, and also earn sufficient revenue to cover costs and contribute to Noerr’s overall revenue,” he says.

Radau adds that at the beginning the London lawyers were still spending time on German transactions, but now the entire workload is made up of matters sourced through London.

“We’ve found the right balance between the hours we’ve worked here in London on matters and the hours worked elsewhere in ­Germany within Noerr - we know for sure that some significant transactions were brought to us in London that we wouldn’t have got if we hadn’t had the office there,” he says.

Belgian firm Liedekerke Wolters Waelbroeck Kirkpatrick, The Lawyer’s Benelux firm of the year, is celebrating its fifth anniversary in London, having made the decision to open just as the economy started to turn.

“We realised that we had an increasing number of international clients that were involved in more cross-border transactions and working with many more international law firms,” explains London head Kristien Carbonez. “Given the market conditions we felt it was critical to be closer to our clients.”

Friends and relationships

Many European firms enter London expecting to bolster their relationships with UK and US firms in particular. Keogh says the welcome William Fry has received has been encouraging.

“I’ve been amazed how receptive English lawyers have been - how welcoming they’ve been,” he says.

London these days is not all about the Anglo-Saxons, however. Increasingly the City is being used as a hub not just by US firms wanting to get into Europe or European firms wanting a slice of the City’s cake, but by firms from Asia, the Middle East or Africa, either with a permanent presence or travelling in regularly.

Carbonez says this aspect of being in the City surprised Liedekerke and has helped the firm boost its worldwide profile from being a purely Belgian firm to being one with a more international outlook.

“This is something we might not have envisaged when we started,” she says. “It’s not only about London, it’s about the exposure of Liedekerke to the rest of the world. It’s really giving us a platform to the rest of the world.”

She cites the example of companies wanting to invest in Francophone Africa that now approach Liedekerke in London with a view to instructing the firm’s Africa desk.

“We were a typical domestic Belgian law firm and opening this office has given us a pathway to get much more international work in Brussels,” Carbonez adds.

Verlende agrees that the opportunities in London go beyond the UK and US firms.

“Chinese investors and Chinese law firms are trying to approach the Continental market through the UK,” he says. “The same goes for Brazilian and Indian firms.”

Gubitosi says getting Legance’s brand and its full-service offering better known is the driving force behind the firm’s imminent arrival in London. “London will be a kind of flag for all these services,” he adds.

Keogh also says being in London has exposed William Fry to a wider range of firms than expected.

Cash point

Banking and finance, along with corporate work, remain the focal points for European firms in London. Of this year’s arrivals, Verlende is a corporate lawyer while Keogh specialises in private equity. At Legance, new partner Gubitosi is another corporate specialist.

Liedekerke has always tried to have a range of practice areas represented by London, says Carbonez, herself an IP lawyer. However, the firm has recently brought on board a finance specialist and a corporate lawyer for London, and she says it is possible this will be more of a focus going forward.

Boekel de Nerée’s expanded London offering consists of corporate partner Kris Ruijters, banking and finance specialist Angelique Thiele and employment partner Eugenie Nunes. Although corporate and finance will continue to be the firm’s main offering in the City, employment matters - especially those related to corporate transactions - are expected to grow, Thiele says.

Being in London can also, adds Radau, provide one extra bonus for a European firm.

“London has become an extremely successful tool for the recruitment of high-end candidates - that’s a pleasant side-effect of the London office,” he notes.

But the main driver for any continental firm choosing to open in London remains the development of closer referral relationships with like-minded UK firms, and those US outfits without a significant European presence who run the region from London. There is little sign this will ever change, and the increasing internationalisation of the market will mean the City offices of European firms will continue to be a crucial element in their business development strategies.