Going global in Germany

Most players in the German legal market have known that internationalisation has been on its way for two or three years. It has simply been a question of when it would arrive. Last year, most leading practices were being wooed by just about every major UK firm, and 1999 was decision time.

In a couple of years, there will be hardly a firm in the top 25 national ranking (see table, page 29) which is not part of an international firm or exclusive alliance.

There is one exception – the M&A and finance powerhouse Hengeler Mueller Weitzel. But in truth, the fierce independence of the firm is borne of a secure working relationship with Slaughter and May and Davis Polk & Wardwell, an arrangement which many see as better integrated than some of the merged firms.

It is now rare to hear that it is better for firms to stay independent than lose the referral work from London, New York or Paris. However, it is likely that this argument was always only an excuse put about by senior lawyers in order to avoid restructuring their practices.

Most international mergers (Punder Volhard Weber & Axster with Clifford Chance and Boesebeck Droste with Lovell White Durrant are good examples) take place because German firms have realised that they need to be able to offer a one-stop shop for industry, whose export growth has noticeably picked up. In other words, an international merger secures a domestic client base for German firms. And international firms want a foothold in the huge German market, not just because so many companies are expanding and acquiring abroad, but also because the domestic market itself dwarfs anything else in Europe.

This process is taken for granted so much that the domestic mergers in the last two years – such as Hasche Eschenlohr with Sigle Loose, Gaedertz with Schon Nolte or Wessing with a number of smaller firms – were made with an eye on the international market. Indeed, most German law firms have expanded in order to be able to specialise. For the first time they are being managed along practice or industry-based lines, which allows them to be far more easily integrated into international structures.

So which firms are left? Of the 25 leading firms in the JuVe national ranking, three are international (Clifford Chance, Doser Amereller Noack/Baker & McKenzie, and Shearman & Sterling); nine are part of international firms or exclusive groups; and two (Hengeler Mueller and Norr Stiefenhofer & Lutz) have close relationships with UK firms.

Of the others, Beiten Burkhardt Mittl & Wegener is a founder member of alliance BBLP, while Wessing & Berenberg-Gossler works with Benelux and French firms. Both have hinted that a link-up with a UK firm is inevitable, but some of their lawyers see this as a medium-term, rather than an immediate, option.

Of the rest, one is a dyed-in-the-wool multidisciplinary partnership (Haarmann Hemmelrath & Partner) and three are seen as mid-size corporate firms, even if they do show excellence in other areas (Schilling Zutt & Anschutz, Pollathe & Partner, Haver & MailAnder).

Which leaves four: Bruckhaus Westrick Heller Lober, Gleiss Lutz Hootz Hirsch RechtsanwAlte, Feddersen Laule and Gaedertz are considered highly attractive partners by UK firms, albeit for different reasons. Both Gaedertz and Feddersen have risen in prominence in the last two years and have not been short of offers from both law firms and accountants.

But the stars are Bruckhaus and Gleiss. Unconvinced by Clifford Chance, Bruckhaus insists that it is concentrating on extending its already outstanding domestic market position. Younger lawyers at the firm, many of whom have spent time in the US, say there is no need to rush, but peer wistfully across the Atlantic.

After its letdown with Stibbe Simont, according to some Gleiss is ready to try again. But one Stuttgart partner says that rumours of it entering a “best friends” relationship with Travers Smith Braithwaite are “absolute rubbish”.

National ranking in Germany 199

Bruckhaus Westrick Heller Lober

Hengeler Mueller Weitzel Wirtz

Deringer Tessin Herrmann & Sedemund

Gleiss Lutz Hootz Hirsch & Partner

Oppenhoff & RAdler Linklaters & Alliance

Punder Volhard Weber & Axster

Boesebeck Droste

Doser Amereller Noack/Baker & McKenzie

Feddersen Laule Ewerwahn Scherzberg Nor, Stiefenhofer & Lutz

BBLP Beiten Burkhardt Mittl & Wegener

Clifford Chance

CMS Hasche Sigle Eschenlohr Peltzer

Gaedertz RechtsanwAlte

Haarmann Hemmelrath & Partner

Heuking Kuhn Loer Heussen Wojtek

Schilling Zutt & Anschutz

Shearman & Sterling

Wessing & Berenberg-Gossler

Haver & MailAnder

Menold Herrlinger

Pollath & Partner

Schurmann & Partner

Graf von Westphalen Fritze & Modest

There is one bastion of German law which some UK lawyers thought could never be breached. Transaction skills and client service could never reach international standards unless German firms were more flexible in the drafting of contracts. It was fashionable to complain about the encroachment of Anglo-Saxon law into Germany. But a vital change is the leading firms' acceptance that the appearance of contracts spelling out every warranty is not due to the power of London firms or Anglo-Saxon investment banks. German firms realise that Anglo-Saxon contracts are becoming the international standard because they are exhaustive, not because they are Anglo-Saxon. Their emergence in Germany heralds the arrival of punctuated, transaction-based legal advice. German lawyers are no longer able to insist that the statute referred to in the contract covers any potential problem. International clients have wanted more for some time, and German firms are now discovering the advantages. When things move in Germany, they move fast. It it is not only big City firms which should cement German ties. Medium-size and regional firms should make the call – if they don't get called first, that is.

National Ranking 1999 Germany

first tier

Bruckhaus Westrick Heller Lober

Hengeler Mueller Weitzel Wirtz

second tier

Deringer Tessin Herrmann & Sedemund

Gleiss Lutz Hootz Hirsch

Oppenhoff & Radler Linklaters & Alliance

Punder, Volhard, Weber & Axster

third tier

Boesebeck Droste

Doser Amereller Noack/Baker & McKenzie

Feddersen Laule Ewerwahn Scherzberg Finkelnburg Clemm

Norr, Stiefenhofer & Lutz

fourth tier

BBLP Beiten Burkhardt Mittl & Wegener

Clifford Chance

CMS Hasche Sigle Eschenlohr Peltzer

Gaedertz

Haarmann, Hemmelrath & Partner

Heuking Kuhn Luer Heussen Wojtek

Schilling, Zutt & Anschutz

Shearman & Sterling

Wessing & Berenberg-Gossler

fifth tier

Haver & Mailander

Menold Herrlinger

Pollath + Partner

Schurmann & Partner

Graf von Westphalen, Fritze & Modest