The astonishing success of the Irish economy over the past few years has been matched by the phenomenal growth of Dublin’s leading law firms. If confirmation of the current strength of the Irish legal market were needed, look no further than the headlong rush among the top firms to secure prime office space.
The past 12 months have seen a stampede to grab the best slots in Dublin’s emerging legal hub in the south docklands area. McCann Fitzgerald’s announcement that it is moving to the Riverside One building in August this year kickstarted the most recent round of moves to the south side of the Liffey, although Ireland’s largest firm by fee-earners, A&L Goodbody, originally led the charge when it moved to the north side of the river in the International Financial Services Centre in November 1999. And according to corporate head Paul White, it is “not planning to move”.
By the end of this year, Dillon Eustace, Beauchamps and Mason Hayes & Curran (MHC) will all have moved into the southside neighbourhood, across the water from A&L, while another of Dublin’s juggernauts, Matheson Ormsby Prentice (MOP), is expected to sign on the line in the next few weeks for its new home at Riverside Four. Arthur Cox has no current plans to move – it has only been in its Earlsfort Centre home since 1997 – but, according to managing partner Pádraig ” Ríordáin, the firm is taking extra space in the building next door “all the time”. He adds: “In the past 18 months we have grown by around 20 per cent in terms of lawyers.”
As McCanns partner John Cronin puts it: “The moves are absolutely a sign of confidence in the Irish market and a sign that the economy is currently very strong.”
Setting the recent trend
When McCanns announced its move, snapping up all 10,116sq m of the gleaming new building at Sir John Rogerson’s Quay, it kicked off the most recent round of law firm moves. It also broke new ground with a sale-and-leaseback deal that is believed to have injected some E35m (£24.2m) into the equity partnership, a method also used by Dillon Eustace on its move.
Whatever the method of acquiring a new home, the common theme for all firms is the same. “The tipping point was growth,” says Denise Kenny, a member of McCanns’ new building project triumvirate (chairman Ronan Molony and construction partner Tim Bouchier-Hayes make up the other two) which began working on the move in June 2003. “We knew our growth pattern and also we could see where the market was going – the riverfront. There was a risk that there would be no space left,” she adds.
Growth in departments across the board is currently powering the Irish expansion, although corporate remains the engine room for the top firms. And the past 12 months have seen no let-up in the raft of big-ticket deals. MHC, for example, acted as Irish legal adviser for a quartet of international venture funds run by Bain Capital, Credit Suisse, JPMorgan and Thomas H Lee partners on the E2.5bn (£1.7bn) buyout of Warner Chilcott.
Dillon Eustace, MHC’s soon-to-be near-neighbour when it moves to Sir John Rogerson’s Quay, is best known for its market-leading funds practice, but it also won some headline M&A deals last year. Among the highlights was corporate partner Abigail St John Kennedy’s role leading the team advising Johnston Press on its E138.6m (£96m) acquisition of the Leinster Leader Group of newspapers – a deal that incidentally featured name partner Anthony Collins of Leinster Leader’s firm Eugene F Collins as one of the major vendors.
And then there was the succession of headline deals featuring Dublin’s largest firms, including the E1.3bn (£900m) merger of Allied Irish Bank’s Ark Life Division (advised by MOP) with Aviva’s Hibernian Life & Pensions (A&L Goodbody), eircom’s (A&L) E420m (£290.9m) acquisition of Meteor Mobile Communications (Eugene F Collins), and Jefferson Smurfit’s (William Fry) E2.6bn (£1.8bn) merger with Kappa Packaging (no local representation).
The last year has been a barnstorming one for top five firm William Fry. Corporate partner Owen O’Connell led the team advising Jefferson Smurfit, while O’Connell and Bryan Bourke also advised JDH Acquisitions in its successful bid for the Jurys Doyle Hotel Group (Arthur Cox), a deal valued at E1.25bn (£865.4m) and the most high-profile of the year.
With that kind of track record, coupled with the fact that William Fry has occupied its building for some 20 years, the main question in property circles is when it will move. As one Dublin legal market insider puts it: “The only thing nice about their building is the view from the top floor.”
The expectation is that the firm will move in the next two to three years. According to Bourke, it is likely to be sooner rather than later.
“We made a decision in principal to move a few months ago,” reveals Bourke. “Last year we thought we might be able to stay in this building for another four or five years, but at the beginning of this year it became clear that we’d have to accelerate that thinking. I’d guess that we’ll move in the next two to three years, although it may be sooner.”
Centre of gravity
The likelihood is that when William Fry moves, it will be to the riverside. It is becoming the Dublin legal market centre of gravity, with three out of the top five firms being based there by 2007.
According to recruitment consultant Ciaran Buckley of HRM Legal, there are also psychological factors at play here, an element of ‘keeping up with the Joneses’. “It’s like Dublin firms are playing ‘who’s got the building with the most glass?’,” he says.
The latest of the big five Dublin firms to announce a move is MOP. The firm is expected to sign the lease for its new premises at Riverside Four within the month. At some 130,000sq ft, it will be the largest law firm office in the country.
MOP’s building will be unique in more than appearance. According to managing partner Liam Quirke, the genesis of Riverside Four has led to what is becoming known locally as “the MOPs model”. MOP retained architects’ firm Gensler, known for its work with Allen & Overy, Cliffford Chance and Shearman & Sterling among others, to design a ‘best-in-class’ working environment.
“We then put it out to the market,” says Quirke. “We invited bidders on our specifications and signed heads of terms in September 2005 with Sean Dunn [the managing director of Mountbrook Homes and the man behind the acquisition of Jurys Hotels last year].”
It is not just law firms, of course. Ireland’s favourable corporate tax rate of 12.5 per cent is attracting all kinds of interesting international clients – among the most recent being Google, which also set up its headquarters in the docklands area. And, like the lawyers, Google has found that its initial capacity was not enough and has since expanded into additional blocks of its building complex.
Property as a business has long been a mainstay of the Irish economy. In fact, the construction sector now accounts for approximately 24 per cent of gross national product (GNP) and 12 per cent of all employment. This raises questions of an overdependency on the sector, and fears of a downturn that could hit the construction and property markets are justified, although there is no sign of it currently on the horizon. Gross domestic product in the Irish economy is expected to increase by around 4.7 per cent in 2006, with GNP up by a similar figure.
The growth in Ireland is not exclusive to the south. Northern Ireland is witnessing a mini boom in corporate and commercial work, with the end of the troubles signalling a return of confidence in the market. The breakaway of three partners from Arthur Cox’s Belfast office to launch a corporate and commercial boutique is indicative of that confidence.
But it is the south that has seen consistent year-on-year growth in both its economy and in the majority of its indigenous law firms. As Imelda Reynolds, managing partner of Beauchamps, puts it: “Every year for the past three or four years we’ve grown by between 15 and 20 per cent.”
MOP’s Quirke echos this sentiment when he reveals that his firm has enjoyed “three years of double-digit profit growth”.
If anything, the current boom in the market is only adding to the capacity problems faced by Google and others like it.
As CB Richard Ellis director Marie Hunt explains: “Confidence has been coming into the Dublin market over the past six to eight months and firms are looking to expand. They want to get out of their old buildings, and the docks, where there are brand-new facilities, is an obvious location.”
Don’t bet against seeing William Fry and Arthur Cox down there sometime soon.
|Does O’Dwyer’s departure signal a ‘shift in power’?|
|The physical relocations of Ireland’s leading firms are not the only major moves to have taken place recently in Dublin.
The resignation of Arthur Cox’s iconic chair and head of corporate James O’Dwyer last Christmas was a landmark in the firm’s history. In the eyes of some rivals, it also signalled a great opportunity for the firm’s competitors to steal a march on Arthur Cox’s client base.
“There’s been a fundamental shift in the power in Ireland with the retirement of James O’Dwyer,” says a rival lawyer. “James was so connected; he held the Michael Smurfitt and Bank of Ireland connections. No one else at Cox can hope to match that ‘in’. No one else is that connected.”
There is no doubt that the engine driving Arthur Cox’s success is corporate and that in O’Dwyer the firm had a first-rate performer. But does one man make a firm?
As the managing partner of a rival top five firm puts it: “Yes, James O’Dwyer is a big name, but Arthur Cox is a big brand. Arthur Cox is on a good run and I don’t think the situation of James leaving is going to change that.”