Germany’s leading corporate law firms have posted static figures after a year of difficult market conditions.
Freshfields Bruckhaus Deringer continues to dominate the market, according to figures produced by German legal magazine Juve. The figures indicate that the firm’s revenue remained stable at €280m (£194.3m) during a year when cost-cutting was at the top of the agenda. This continued strength of the top line is an inevitable by-product of the firm’s weighty client list, which includes 13 of the DAX 30 (the smaller German equivalent of the FTSE 100) corporations as clients.
Clifford Chance had a better year in Germany than many of its partners expected, recording a whopping 11.4 per cent lift in revenue per fee-earner to €412,000 (£286,000). Much of the growth is based on the success with which the firm’s corporate practice leveraged off its finance expertise, which resulted in the firm advising 11 of the DAX 30 as clients.
Juve editor Aled Griffiths attributed Freshfields’ success to the firm’s increasing focus on improving profit and cutting costs. It was this strategy which saw the firm move three partners from corporate into finance and litigation earlier in the year, while also encouraging early retirement among some of the firm’s older German partners.
“It’s been a difficult environment in Germany, but some firms are making the most of it,” noted Griffiths. “Those that are doing so are the firms that are being the most decisive about equity.”
Freshfields’ approach to overpartnering was, however, far softer than the tactics used by Linklaters Oppenhoff & Rädler, which opted for the far more radical step of reorganising 19 German equity partners. Following a review of the firm’s German partnership, as revealed by The Lawyer in July, the firm froze 10 partners at their positions on the lockstep, made five of counsel and asked a further four to leave.
The changes contributed to a dramatic drop in the number of fee-earners at Linklaters, which fell by 17 per cent, from 403 to just 335, helping to bolster the firm’s revenue to €138m (£95.8m).
Lovells’ German operations have seen a similar 18 per cent decline in fee-earner numbers, from 300 to 248. This has resulted in an increase in the firm’s revenue per fee-earner to €460,000 (£319,000), although both figure changes can be qualified by noting that the firm switched to using full-time equivalent figures in its calculations for the last financial year.
Of the US firms, Shearman & Sterling has enjoyed the most consistent improvements, recording an increase in revenue to €84.6m (£58.7m) for the last financial year, even before beginning the refinancing of its equity. By comparison, Cleary Gottlieb Steen & Hamilton, which is understood to bill many of its German clients in US dollars, suffered from the instability of that currency.
Most notably, only two independent German law firms are positioned in the top 10 firms ranked by revenue. Elite corporate outfit Hengeler Mueller secured a prominent spot at number three in the table after reporting annual revenue of €147m (£102m), while Gleiss Lutz scraped into the eighth spot with €91m (£63.2m).
Both firms enjoyed a successful year, which has in particular seen Gleiss Lutz defy the trend by increasing its lawyer count by 23 per cent, from 165 in 2003 to 213 fee-earners in 2004. This is a dramatic turnaround for the firm, which dropped 15 lawyers between 2002 and 2003.
Click here to view table: ‘Top 30 firms by revenue’