There must be some glum faces at Kempson House right now. The failure of Norton Rose to push through a merger with German firm Gaedertz leaves it the only firm directly below the magic circle without a widespread European presence. Ashurst Morris Crisp is opening in Spain, and has chunky operations in France and Germany; Herbert Smith has ensnared Gleiss Lutz; and Lovells is careering through Europe like a runaway train.
On one level, it was unsuprising that Gaedertz rejected Norton Rose. After all, Gaedertz is home to the former Schön Nolte partnership, many of whom believe they were well and truly stuffed by Linklaters when the firm abandoned it for Oppenhoffs. Norton Rose would have had a lot of convincing to do.
In contrast to Norton Rose’s predicament is Freshfields Bruckhaus Deringer. The way the Freshfields management managed to cajole the Bruckhaus partners with all the generosity it could muster is an example to UK firms targeting Germany. Freshfields Bruckhaus Deringer’s partnership retreat in Paris the weekend before last was the first time all the partners had met. Despite initial nervousness, the atmosphere was euphoric; so much so, that one wine-fuelled partner was heard to declare: “I want to go out and conquer a couple of countries!” (Whether these countries include the US is still a moot point. Despite City rumours linking the firm with Debevoise & Plimpton and Cleary Gottlieb Steen & Hamilton, the Freshfields management wearily deny all – but then, they would.) But there will be no such Anglo-German retreat for Norton Rose – instead, it is considering the extraordinary step of opening its own German office.
A few questions, then, for the Norton Rose management. 1) Given the fact that you waved goodbye to your Hong Kong franchise when the agreement with Johnson Stokes & Master had terminated, presumably Continental Europe became a priority. Why, then, has expansion been so belated? 2) Are your institutional clients going to be happy with European coverage that will only include mid-sized offices in Brussels and Paris, and tiny outposts in Frankfurt, Milan, Warsaw and Moscow? 3) How exactly are you going to recruit into any new German office, given the fierce competition? And that’s not just magic circle competition, but the likes of Latham & Watkins and Sullivan & Cromwell, which are set on building up their German operations with their considerably bigger war chests. 4) How does all of this complement your intention to find the right US merger partner? All we can say is: Good luck.