Freshfields ups stakes on German leverage

Freshfields Bruckhaus Deringer intends to push up its leverage ratios in Germany to as high as 1:3 in the next few years, putting clear water between the Anglo-German firm and Germany's remaining independent law firms.

Although Freshfields will be more highly leveraged than German rivals, the firms' planned rate is half what some Anglo-German firms privately predicted when they merged. However, with a downturn in the economy, there is less demand for large teams of assistants.

Germany's remaining independents meanwhile present low leverage rates as the cornerstone of their culture. Gleiss Lutz managing partner Martin Diller said that the firm would keep its partner-to-assistant ratio at around 1:1.5. He said: “Our whole working style is that the partners work as lawyers and not as managers.”

According to Hengeler Mueller partner Oleg de Lousanoff, the firm is currently operating at 1:1.3. He said: “We could envisage increasing it a bit, but we'd never go beyond 1:2.”

Freshfields' co-head of corporate Axl Epe told The Lawyer that German leverage rates, currently pegged at 1:2.1, would increase to between 1:2.5 and 1:3 in the next five years.