Shrinking tulips

With Dutch deals thin on the ground, the leading corporate firms shrank their headcounts and closed practices. Matt Byrne reports on the The Lawyer Euro 100’s Dutch firms

The Netherlands has endured another year of comparatively low deal activity. A handful of major projects dominated the year, including Shell’s €148.9bn (£103.6bn) restructuring to form Royal Dutch Shell, VNU’s €2.08bn (£1.45bn) sale of its directories business to Cinven and Apax, Ispat International’s $13.3bn (£6.91bn) acquisition of LNM Holdings to form Mittal Steel and the KLM-Air France merger.

The country’s low deal-flow was not enough to stop Allen & Overy (A&O) confirming the symbolic number one position in Mergermarket’s league table of Benelux corporate advisers (by value on deals over €5m (£3.5m)). The firm headed the list with 64 deals, worth €29.19bn (£20.31bn). It was followed by a resurgent De Brauw Blackstone Westbroek, up from sixth last year to second place, with 48 deals totalling €24.34bn (£16.94bn). The only other domestic Dutch firms to feature were Stibbe (with Herbert Smith and Gleiss Lutz), Nauta Dutilh and Loyens & Loeff, although Houthoff Buruma made the volume chart with 16 deals, worth €2.47bn (£1.72bn). No independent Dutch firm made the European top 20.

With few exceptions, the leading local corporate firms found the going tough. A defining characteristic of the year for the domestic firms was the trend to shrink headcount. Several of the top firms pruned partnerships, fee-earners and practice areas to counter the demanding economic climate. ‘Focus’ was the magic word.

De Brauw was one such firm. The partnership shrank from 80 to 73 during the year, while the total lawyers number dropped by 8 per cent to 330. Revenues also dropped by some 3 per cent to €116m (£80.7m). Chairman Jaap de Keijzer says that for De Brauw it had been “a year of transition” and agreed that most of the largest Dutch firms had been shrinking recently. “But we’re at the end of the cycle,” he insisted. The firm confirmed its position as the leading corporate Dutch independent, with roles on the Shell and Royal Ahold restructurings and on VNU’s sale of its directories business. The firm also saw its tax practice reborn with the hires of Dick Hofland and three associates from Freshfields Bruckhaus Deringer, along with highly rated former Merrill Lynch managing director Paul Sleurink.

Nauta also cut headcount, but saw even more significant changes than De Brauw. Whereas the latter reinstated De Keijzer for two more years when his four-year tenure ended in December 2004, Nauta installed a whole new management team headed by chairman Marc Blom. It also restructured internally in four core areas: talent, know-how, client sectors and communications. As Blom puts it: “It was a year full of changes, but we’ve been making moves and are back on track.” ‘Back on track’ equates more to ‘business-focused’ – a shift that was demonstrated in March 2005 when The Lawyer revealed that Nauta jettisoned its private client team in Rotterdam. The firm’s solid financial institutions client base, which includes ABN Amro, Rabobank, ING and a clutch of foreign banks, and its regular appearance at the table on the biggest M&A deals (including the Mittal deal and the Air France-KLM merger), ensured its revenues crept up to €144.4m (£100.5m), while top of equity also rose to €459,000 (£319,400), with average profit also rising to €403,000 (£280,400).

Stibbe’s lawyer count dropped significantly, by some 50 fee-earners and 10 partners. This was due partly to an effort to increase profitability, but the year also saw the end of Stibbe’s once market-leading patents, pharmaceutical and IP practice with the exit of three partners , including telecoms specialist Egbert Dommering to new boutique Brinkhof Advocaaten. Revenues dropped below the psychologically important €100m (£69.6m) level to €95.8m (£66.7m) globally and €92.6m (£64.4m) in Europe. In the year when A&O proved that a merger between a Dutch and a UK firm can be hugely successful, Stibbe’s position strategically remains unclear. Loyens, the country’s largest firm, continues to provide evidence that its combination of tax and corporate muscle is a winner. It had a particularly good year in private equity, where the team that features the prominent Herman Kaemingk, advised ABN Amro on the €230m (£160m) acquisition of plastics and metals manufacturer Borstlap and the Dutch online auction site Marktplaats on its sale to eBay for a similar sum. Revenues grew by 5 per cent, continuing the trend of the last three years, and have now reached €214m (£148.9m) globally and €189m (£131.5m) in Europe. The firm confirmed its tax-led international growth strategy by opening its second Swiss office in Zurich on 1 January 2005.

Houthoff may not feature much in top-tier M&A, but according to corporate and finance head Jan van der Hart, the firm put in “a strong performance” in mid-market deals. So much so that firmwide revenues rose by 5 per cent to €84m (£58.5m), while the corporate group’s revenues rose by 8 per cent, narrowly missing its ambitious 12 per cent budget. Profit per equity partner (PEP) failed to match that, but was still up by some 4 per cent.

Elsewhere, AKD Prinsen Van Wijmen continues to fly the flag for the accountancy-related firms. Although independent from its former alliance partner Deloitte & Touche, it maintains a ‘preferred cooperation’ relationship, which means it does not share profits and has no exclusivity in referrals, but it will work with Deloitte on deals. The firm, a product of several mergers, has shed around 15 partners in the last two years in an attempt to focus. It also closed its Dordrecht office in 2003. Profit this year reached the €300,000 (£208,700) mark, while revenues were €62.1m (£43.2m). The firm remains best known for public law, and in particular infrastructure projects: it is involved in the HSL (the high speed railway link between Amsterdam, Rotterdam and Breda) and Betuweroute projects, and is advising Dutch railway owner ProRail on the Spoorwegwet (Railways Act), which became law on 1 January 2005.

Finally, Van Doorne completed its first full year since its 1 January 2004 merger with Landwell, which created a e43m (£29.9m)-turnover firm. The firm also downsized, losing five partners during the year, while revenues have shrunk slightly to around €41m (£28.5m).