Irish law firms are enjoying the fruits of the country's current economic boom with the top players reporting frenetic activity at all levels.

“We are all so busy we don't know what's happening. It's extraordinary,” says Dillon Eustace partner David Dillon.

The increase in activity has been experienced right across the board, according to The Lawyer's recent survey of Irish firms, with most of the top practices reporting average increases in business of between 10 and 20 per cent over the past year.

“Careful economic management at government level has met with a creative and enthusiastic response in the private sector and in the relevant state agencies,” says A&L Goodbody managing partner Frank O'Riordan.

“The result is a historic boom which looks set to continue for the foreseeable future.”

Figures from the banks back this prognosis with forecasts that the current economic climate could last another decade. However, there are some clouds on the horizon which could prove irritating, if not problematic, for the economy, including Ireland's entry into the European Monetary Union and the end of the International Financial Services Centre's (IFSC) special tax status in 2005.

Monetary union, in particular, could cause many headaches for Irish companies fearful of the consequences if the UK does not join. John Cronin, head of McCann Fitzgerald's London office, says the Irish are in two minds about the country's entry into monetary union. “On the one hand they want to be good Europeans,” he explains, “and on the other, big corporations are extremely concerned if we go in without Britain.”

He adds that businesses have taken some comfort from the Labour Party's position on EMU entry. However, there is a divide between the politicians, who wholly support monetary union, and the market, which is less enthusiastic. Some economists are even calling for a referendum on the issue, although under Ireland's constitution, that is not necessary.

Robert Ryan of Beauchamps says there are implications for law firms that have expanded in the current economic climate if EMU does not work well. “They may well find that they have over-expanded,” he says.

The other potential problem is the future of the IFSC which loses some of its tax incentives in 2005. Most lawyers are optimistic that the government will come up with a workable solution.

According to McCann Fitzgerald partner Ronan Maloney, the government is “already acting to clarify the position. There is a lot of ongoing discussion. Some measures have been taken and serious consideration is being given to other measures.”

James O'Dwyer, managing partner of Arthur Cox, predicts that the IFSC will continue to do well and that corporation tax rates will drop outside the centre after the expiry of its tax holiday. “The IFSC has to be evolutionary and has to stay with market demands.

It will continue to do that,” O'Dwyer says.

With these the only blips on the horizon, Irish law firms are at their busiest for some time.

Particularly buoyant, according to those responding to The Lawyer survey, are corporate and commercial work, banking and finance law, and residential and commercial property work. However, the emergence of specialist areas such as intellectual property, employment law, and computer and telecommunications work has put extra pressure on firms to recruit specialists in these sectors.

On the corporate commercial side, Irish companies are reporting a huge increase in the value of mergers and acquisitions transactions.

“A lot of companies are busy making acquisitions in the UK,” says Therese Rochford of Whitney Moore & Keller. “Because the English market was a little depressed in the last few years, Irish companies are buying subsidiaries in the UK”.

Property work is still spiralling upward with no end in sight for the rocketing prices, particularly in the residential market.

“Record prices are achieved almost weekly,” says O'Riordan. “Ireland has one of the highest rates of house-building per capita in the EU and still the demand for residential property outstrips supply.”

O'Riordan says that one of the key developments in the commercial property sector is retail property expansion. He adds that the retail development of Ireland's largest retail park in Blanchardstown, on the north side of Dublin, has provided an important launch site for several UK retail chains, a trend which is likely to continue.

Shopping centres, office blocks and residential developments are springing up all over the city and, according to Andrew Beer of Ivor Fitzpatrick, and not all of the developers behind them are Irish.

One development which a number of firms including Ivor Fitzpatrick are involved in is the Jervis Street complex in the centre of Dublin, which will provide one third of the shopping space of London's Oxford Street.

Another major project, the Dublin Bay Development next to the IFSC, is in the planning stages at the moment. It will, says Beer, “create the equivalent of a small Docklands development”.

Banks are particularly active on the acquisitions trail. One of the largest transactions of the past year is the Bank of Ireland's acquisition of UK building society Bristol & West with the Bank of Ireland represented by Slaughter and May.

This year has already seen AIB's acquisition of Dauphin Deposit Corporation through First Maryland in the US, a deal worth IR£850m.

A number of mid-tier banks are springing up and increasing the number of players in the marketplace. The recent setting up of a new clearing system for the banks is “part of a progression towards more competitive European banking”, says Robert Ryan of Beauchamps, which is acting for the Irish Banks Federation. “To date the larger banks have a monopoly on clearings.”

He says that Ireland will shortly have four new clearing companies up and running, supervised by the Irish Central Bank. “Members will be able to compete against each other to provide clearing systems to clients,” he explains. .

Ryan attributes Ireland's success in attracting technology companies to the activities of the Industrial Development Authority (IDA), which has adopted a “clustering” approach when searching out business opportunities. “This means that if you attract core businesses, you will need suppliers to service these companies. It is built on the same principle as Silicon Valley,” says Ryan.

Competition law is making life more uncomfortable for corporates following an amendment to the Competition Act last year, which made provisions for criminal sanctions against directors. “Now it has much more bite than previously,” says LK Shields partner Patricia McGovern.

Ireland also looks set to follow the UK lead in demutualisations with a number of the country's building societies “champing at the bit” to demutualise. And if next week's elections bring a change of government, privatisation work may also get a boost.

Less buoyant is the film industry, which was a top earner for Ireland some years ago. Declan Moylan of Mason Hayes & Curran says it has gone off the boil.

“The tax breaks are not generous enough now to attract the big projects,” he says.

But litigation is reasonably buoyant, according to Paul Gill of Dillon Eustace. “We've noticed in Ireland that good economic times are normally accompanied by a fall-off in litigation,” he says. “However, this is currently not the case. We are finding that our litigation is well up on last year, particularly from the UK.”

He says that UK firms are now less wary of litigating in Ireland and that a new glut of recently-appointed judges has “noticeably speeded up the process of litigating”.

Gill adds that in the past UK firms have been reserved about litigating in Ireland because of the length of time it takes for cases to come on. “In the past it used to be regarded as a sleeping jurisdiction litigation-wise. Now there is a much faster court structure.”