There may be a few more smoke-filled rooms than usual in Amsterdam this year. When the city hosts the IBA conference in September, there will be the usual run of men in suits and studiedly casual meetings. What better opportunity to meet and greet potential alliance partners?
As if Dutch lawyers have not had enough of foreign interlopers for the moment. For such a small country, The Netherlands has attracted an awful lot of attention from large City firms over the past year. In fact, the top end of the Dutch legal profession has undergone turbulence it has never experienced, all thanks to two UK firms – Freshfields and Allen & Overy.
Up until the beginning of last year, the Dutch legal elite was nicely sorted. The top firms had been around for years – De Brauw Blackstone Westbroek, Loeff Claeys Verbeke, NautaDutilh and Stibbe Simont Monahan Duhot were having a fine time of it. All had expanded outside The Netherlands with relative ease and had essentially become Benelux practices with highly-rated Brussels offices, mostly picked up by mergers.
Stibbe had merged with leading French firm Monahan Duhot, while Nauta – which already had a Paris outpost – had opened an office in London. These were not insular practices in hock to outmoded local bar rules. These were strong, collegiate partnerships where few lawyers ever jumped ship and where stability ruled.
But then A&O and Freshfields turned up and set in motion an entire restructuring of the top end of the legal sector.
A&O's and Freshfields' interest was inevitable. With Clifford Chance making decent money there, it was clear that a City firm could prosper. Taking a pan-European view, the country was a nice one to tick off. It may not have had the glitz of Paris or Frankfurt, but its favourable corporate tax regime – which has led to a number of multinationals either basing their operations there or registering subsidiaries and holding companies there – meant that Dutch lawyers had taken on a role wholly out of proportion to their size.
Both firms started off with a softly-softly approach. A&O had a long-standing relationship with Loeff Claeys as part of the tripartite arrangement with Paris-based Gide Loyrette Nouel. Although the Gide connection soured badly in the last years of the alliance, A&O and Loeff Claeys' relations remained cordial.
Freshfields, meanwhile, which had no obvious entr‚e into The Netherlands, conducted exploratory talks with NautaDutilh – talks which led nowhere. Freshfields chief executive Alan Peck says: “It was clear we weren't going to find a solution that would benefit both sides.”
Yet halfway through last year, things changed. Instead of opting for a merger or alliance, Freshfields set up its own office and began a series of ram raids. It kicked off with hires from De Brauw, Stibbe and Nauta, and kept on hiring from Dutch magic circle firms.
The Loeff Claeys/ Loyens & Volkmaars/ A&O saga provided some recruits. Last November, Freshfields picked up two partners, Loeff Claeys M&A specialist Jan Willem van der Staay and IP specialist Hub Harmeling after the Loeff Claeys split, and three Loyens partners – Dick Hofland, Hans Galavazi and Machiel Lambooij.
And in March this year, Freshfields poached Winfred Knibbeler, a competition/telecoms regulatory partner from NautaDutilh. The appointments have caused consternation among Dutch lawyers. “It is upsetting some people,” acknowledges Peck.
Meanwhile, A&O cannily exploited its long-standing relationship with Loeff Claeys. Shaken by its failure to merge with compatriot Buruma Maris (cultural differences were cited), and riven with dissent, Loeff Claeys split from top to bottom in the most spectacular fashion. In October, no fewer than 32 Loeff Claeys Amsterdam partners joined A&O (plus four partners from the firm's Luxembourg practice). “They'd created a Benelux Eversheds and you don't merge an Eversheds with an Allen & Overy,” says A&O partner Alistair Asher. “It was a question of the fit of the business – what they'd created was something wide-ranging and geographically spread.”
So why the sudden change? Why did A&O and Freshfields not hold out for mergers with larger outfits, rather than this permanent revolution? The reason is profitability. “Historically, London-based firms have been considerably more profitable than the Dutch firms,” notes Peck.
Even at the bigger and better-run Dutch firms, profitability rarely tops more than £300,000 per partner, which considering current magic circle profits is practically penury. (It may also lead to interesting discussions between De Brauw and Linklaters over the coming year).
This disparity of profitability extends outside the magic circles of both countries. The Lawyer (13 March) reported that Frits van Hees, partner at CMS Derks Star Busmann Hanotiau, who was on the CMS Cameron McKenna policy committee, left the firm for Ernst & Young because he was concerned at Derks' divergence in profitability.
One of the reasons for Dutch firms' weaker bottom line is their generalist tradition of full service, which includes matrimonial work even at the largest firms. Few Dutch firms have ever culled their practice areas to focus on more profitable lines of business.
The second reason is regional spread. There are three main centres in The Netherlands – banking and finance in Amsterdam, administrative and Supreme Court work in The Hague, and shipping and trade in Rotterdam. Back in the early 1990s, Dutch firms either merged with others from different cities or set up offices in order to cover the three different centres, none of which are more than 50 miles apart. It means that overheads are considerable. In City terms, merging with a 300-lawyer firm only to purge it of undesirable profit centres would be a strategic and PR disaster.
Since A&O's and Freshfields' incursions, the Dutch legal profession has seen a record number of mergers and splits among its ranks. And the number of individual partner defections – itself something unheard of until recently – has dramatically increased. Two mid-tier firms, Houthoff and Buruma Maris, merged. The Rotterdam office of Loeff Claeys joined tax attorneys Loyens & Volkmaars to become Loyens & Loeff (dubbed 'LoLo' by the Dutch).
Stibbe Simont partner Tom De Waard joined Clifford Chance. De Brauw's notarial Hague-based division moved over to Supreme Court litigation specialists Pels Rijcken & Droogleever Fortuijn. Goudsmit & Branbergen split into six separate entities and three partners joined the Amsterdam office of US firm Oppenheimer Wolff & Donnelly.
The Freshfields and A&O ram raids have opened up the market like never before. With Dutch lawyers now prepared to jump firms if necessary, it may well be worth eavesdropping on canalside conversations at the IBA this September.
MAJOR INDEPENDENT DUTCH FIRMS
The firm downsized its Paris office to concentrate on its London presence. Back home, it acts for major financial institutions such as ABN Amro, Rabobank and MeesPierson, and is regularly involved in major corporate deals.
The product of the merger of solid medium-sized firms Houthoff and Buruma Maris, which had previously been in talks with Loeff Claeys Verbeke. Houthoff Buruma has a strong Brussels competition practice in the shape of Liedekerke Sim‚on Wessing Houthoff, an alliance of firms from Belgium, France, Germany and The Netherlands. Clients include McDonald's and UPC.
Stibbe Simont Monahan Duhot
Stibbe operates on an Amsterdam/Brussels/Paris axis and has traditionally eschewed Anglo-Saxon linkups, preferring to build Continental strength. It held merger discussions with German heavyweight Gleiss Lutz Hootz & Hirsch last year, only for the talks to collapse. Domestically, it has a strong reputation in corporate finance and stock exchange listings, although it is currently trying to weather the departures of key corporate partners Tom de Waard and Hector de Beaufort to Clifford Chance.
Trenit‚ Van Doorne
The firm beefed up its Benelux capability last year by merging with Belgian firm Huysmans & Partners, but closed its Warsaw office. Last year, Dutch deals included the defence of listed property developers Breevast from Uni-Invest and advising Energis on the acquisition of Enertel.
UK FIRMS' DUTCH OFFICES
Allen & Overy
The Loeff practice, now part of Allen & Overy, was predominantly corporate-biased, and has traditionally had a role in most of the largest Dutch deals. It had a part on the Gucci-LVMH battle last year, acting for Pinault-Printemps-Redoute on its acquisition of an interest in Gucci. At the end of last year it advised Dutch telecoms group KPN on its euro20bn joint venture with BellSouth to acquire German cellular operator E-Plus – which saw BellSouth exercising its pre-emption right to acquire the 77.49 per cent interest which had been conditionally sold to France Telecom by the other consortium members, Vodafone Airtouch, VEBA and RWE.
Opened in 1973, the Amsterdam office majors on financial transactions, and acts for existing clients such as Citibank and Chase. The firm advised Merrill Lynch and ABN Amro on the $3bn (£1.98bn) debt financing for the acquisition by VNU of US TV ratings agency Nielsen Media Research (the largest syndicated financing in The Netherlands in 1999). It also represented ABN Amro and ING Group on the NLG4bn (£1.14bn) public bid financing for Getronics on its acquisition of Wang. More recently, Clifford Chance advised CVC Capital Partners on the multi-jurisdictional buyout of Acordis Akzo Nobel's fibres division for more than euro800m (£501m), in which the firm pioneered its virtual dealing room, FruitNet.
CMS Cameron McKenna
A very strong player in the Dutch second tier, CMS Derks Star Busmann Hanotiau has a solid corporate practice. Last year, it acted for Swets & Zeitlinger on its takeover of the UK company Blackwell.
Although it is still relatively early days, Freshfields is unsurprisingly focusing on M&A, where it has hired some of the best talent in the Dutch legal market. Cross-border deals last year included the Dutch end of Siemens' joint venture with Fujitsu; advising DaimlerChrysler Aerospace on the Dutch corporate and tax aspects of its proposed merger with Aerospatiale Matra of France and CASA of Spain; and advising Essent on the creation of its energy trading venture with Centrica through the formation of a Dutch 50:50 vehicle. Contentious work has included advising Fortis in tax litigation proceedings by the Dutch authorities to obtain due diligence documents, and acting for American Home Products and Hoffmann-la-Roche in relation to patent infringement proceedings in The Netherlands.
Linklaters & Alliance
De Brauw Blackstone Westbroek, the Linklaters partner in Holland, has one of the strongest corporate practices in the country. Last year, it advised Gucci on its takeover defences against LVMH and the litigation arising from it in the Amsterdam courts.
… and the national firms
DLA is to merge with boutique corporate firm Schut & Grosheide, while Eversheds has announced its tie-up with medium-sized Boekel de Neree.