Belgian waffle

It’s all talk and no action as far as Belgium’s vacant government is concerned, but as Joanne Harris finds, the legal market is soldiering on

As you are reading this, it has been almost 250 days since Belgium last had a government. The prime minister, Yves Leterme, resigned in late April 2010 after the liberal party Open Vlaamse Liberalen en Democraten pulled out of the government. Elections on 13 June 2010 were inconclusive, and so far nobody has been able to reach agreement over who should govern the country.

The deadlock has left Belgium in limbo. “Things have been going slowly,” says ­Eubelius co-managing partner Patrick ­Hofströssler. “Nothing spectacular happens in Belgium. We have some huge difficulties with the creation of a new government. There are no new laws and there’s no strong government in place for the time being, which means that no essential political decisions are being taken.”

The lack of government means a lack of new legislation. However, lawyers say that, outside the regulatory sphere, business is continuing pretty much as normal.

“When I travel abroad I always get people asking what’s happening in Belgium,” reports Christian Chéruy, Loyens & Loeff Belgium managing partner. “We’re becoming a bit schizophrenic because at the political level we’re having these difficult times, but on the ground we’re not impacted by political discussions.”

Chéruy says tax law has probably been the area most heavily affected by the political ­situation, as this field depends on legislation developing constantly.

Others are more gloomy. Jean-Paul Hordies, one of the founders of Belgian independent firm Koan, says transactions and investments are cancelled “every day” as investors feel uncomfortable.
“As you might imagine, the political situation’s dreadful and the consequences are immediate,” says Hordies.

The areas where most firms have seen growth in the past year are in litigation and employment law. With many Belgian companies restructuring there has been a number of employment issues. Hordies reports growth in Koan’s litigation department, while Hofströssler says Eubelius has been recruiting in its employment team.

Business requirements

“There are a lot of large companies in ­Belgium that still need restructuring,” adds Olivier Clevenbergh, managing partner of Stibbe in Brussels, who adds that he thinks this work will continue for a few months yet.

However, Clevenbergh is hopeful that ­transactional work will return to Belgium after a quiet 2010. “What we see, probably since the last quarter of 2010, is a comeback of more ordinary M&A,” he says.

Christel Van den Eynden, a corporate partner at Liedekerke Wolters Waelbroeck Kirkpatrick, pins the resurgence in M&A work down to a specific date – 15 December. She reports a significant increase in activity since then and an active pipeline of work for the beginning of 2011.

Van Bael & Bellis managing partner Jean-François Bellis points out that the Belgian economy is connected closely to that of ­Germany, which is growing strongly.

“We’re not complaining about the situation in the Belgian legal market for the time being,” says Bellis.

Renewable energy is singled out by many lawyers as a good source of work at the moment. There are three large wind farms off the Belgian coast and three more projects were approved last year. Chéruy says this is an area Loyens has invested in recently.

Corporate governance law

On the pure advisory side lawyers are beginning to see the effect of one of the last laws to be passed before the government collapsed – a corporate governance law passed on 6 April 2010.
The law affects listed companies, regulating their remuneration policies and the information released in annual reports, among other things.

As most Belgian companies have a calendar-based financial year they are now worried about the implications of the legislation on their forthcoming financial reports. But the corporate governance law is an exception to the rule when it comes to Belgian regulation.

Rapid fire, rapid hire

The difficulties of the business and ­economic climate in the country have prompted varying responses from law firms. Some have been forced to make redundancies, with others having focused on hiring trainees and associates or improving their training ­programmes. “Some big firms dismissed a lot of people,” reveals Hofströssler. “We did the inverse – we hired a lot. There was a lot of talent available.”

At Loyens the focus was on improving the talent the firm already had. Chéruy explains that the firm invested in a training programme for all levels of associates, encouraging them to specialise in particular fields. No Loyens associates were made up to partner in 2010, although Chéruy stresses that “it will happen in 2011”.

Outside influence

Meanwhile, the Belgian legal market as a whole remains fairly stable, albeit competitive purely because of the sheer number of firms present in Brussels. Hordies points out that the UK and US firms present have an advantage over smaller independent Belgian outfits due to a pipeline of work from their Anglo-Saxon parents.

The biggest developments recently were the spin-off of a big chunk of Howrey’s IP team to set up boutique Hoyng Monegier, and K&L Gates’ launch in Brussels with two former McDermott Will & Emery partners.

Lawyers do not expect much more change or lateral hiring this year. Instead everyone is waiting to see what happens with Belgium’s political situation in the hope that stability will increase transactional flow. But quite when that will happen is anybody’s guess.