But legal market cosmologists have been disappointed. Instead of watching the explosions unfold simultaneously in parallel European universes, it has turned out to be a much slower, gradual and evolutionary affair.
The big five in Germany have not had it easy, not least because they have suffered under the weight of expectation from their competitors. As soon as there was a major step forwards (such as the merger of Andersen Legal with Hamburg/Berlin corporate firm Luther & Partner), then there came a setback to follow soon after – such as the departure of some of the firm’s best-known senior lawyers.
Although Haarmann Hemmelrath & Partner or any number of leading German regional firms have demonstrated that multidisciplinary partnerships as a species have been one of the German market’s great success stories, the big five have settled for less spectacular growth than most were expecting. Indeed, they have in no way outstripped the expansion of the more conventional law firms.
So it is not surprising that everybody is talking about talks at the moment: Beiten Burkhardt Mittl & Wegener (we can, perhaps, finally dispense with the BBLP moniker) was due to vote last Saturday (22 September) on a merger with KPMG in the form of its legal arm Treuhand & Goerdeler. The latter has around 150 fee-earners spread around Germany and a couple of corporate heavy-hitters, but otherwise what is regarded as a relatively young and inexperienced team.
(Before we go any further, a linguistic note: calling the KPMG lawyers ’Treuhands’ does not compute. It is a word, Jim, but not as we know it. Treuhand is a standard feature of the name of accountancy firms. It would be like abbreviating Tite & Lewis to ’Auditors’ – although maybe the lawyers left at Landwell would no doubt chuckle at that idea.)
KPMG has been notable by its relatively slow start in the market up until the beginning of this year. The Cologne office is strong and the Leipzig base has benefited strongly from lateral hires out of Gaedertz, and ironically enough Beiten Burkhardt, but otherwise the firm is distinctly low profile. A merger with an established law firm like Beiten Burkhardt, which has solid corporate, employment and media practices, would be a major step forward. Having said that, Beiten Burkhardt has been depleted; the loss of the extraordinary Frankfurt partners to Weil Gotshal & Manges and the departure of a group of younger Munich and Berlin rainmakers – who were being touted as the next generation to watch in the firm – were serious blows. Indeed, it was probably these events which forced Beiten Burkhardt into negotiations in the first place.
Whispers coming out of Beiten Burkhardt suggest that negotiations are going well and that the partnership will vote overwhelmingly for a merger. But such confidence does hide problems. The Munich market is awash with rumours about further groups jumping ship, and there is even some resistance within KPMG to seeing the merger as inevitable. Some KPMG lawyers insist that their future merger partner would have to prove that it can hold on to its brightest and best, and contrary to the belief abroad in the market, they are in no mood to lie back and let the Beiten Burkhardt management walk all over them. KPMG has a high leverage, and sources there point out that it is far more profitable than many outsiders think. Some sources at KPMG believe that the firm should not reduce its gearing to less than 1:5 (and that is the compromise figure touted), a ratio which no one will be surprised to hear is substantially higher than at Beiten Burkhardt.
For their part, Beiten Burkhardt lawyers see themselves as displaying a calibre and track record that the KPMG lawyers can only dream about – the instructions from Siemens alone are enough to make your mouth water. So even if the vote has been in favour, there is still much work to be done.