Invaders that never came

When the Scandinavian Law Alliance was launched seven years ago, bringing together some of the best legal names in the region – Sweden's Advokatfirman Vinge, Denmark's Kromann & Munter and Norway's Thomessen Krefting Greve Lund – the question of Scandinavian legal cooperation was put squarely on the agenda.

Because of the trio's grand ambitions, which included eventual merger, the SLA attracted much attention. But the results have not impressed everyone, and some believe the push towards closer integration has lost its momentum. One lawyer comments: “It seems to have come to nothing.”

Jorgen Madsen, a partner at Kromann & Munter, disputes this, insisting that the relationship is still close. The three firms, for example, continue to operate joint offices in London and Brussels. But he admits that the merger ambitions of the early days have been put on hold as a result of changing circumstances.

“When the SLA was initiated, it was seen as a convenient and practical measure which gave the firms a vehicle for the creation of a more coherent Scandinavian practice and for expanding in the European arena,” he says.

At the time, the talk in partnership meetings across the Continent was of pan-European law firms and the challenge presented by expansionist US and UK practices. “We felt that we needed to do something else”, notes Hans Bagner, Vinge's London resident partner.

But, in the ensuing years, the threat not did materialise as expected, and thanks to the recession, the pan-European idea barely got off the ground. Foreign firms showed little interest in Scandinavia. White & Case had longstanding offices in Helsinki and Stockholm, while Baker & McKenzie launched its Stockholm office four years ago. They remain the only two major international firms represented in the region. UK firm Watson Farley Williams set up in Norway and Denmark, but its Oslo office closed recently.

Bagner says: “There did not turn out to be any major change in the marketplace.” The alliance adapted to the changed circumstances. Playing down talk of merger was the most notable demonstration of the new mood, but other changes were taking place, for example, in how the alliance was marketed. The alliance name, which once had pride of place at the top of the letterhead used by the joint offices, has been consigned to the bottom of the page. Madsen says that the original letterhead was confusing to clients.

As the firms operate today essentially as individual entities, the question is raised whether the whole venture was worth it. Per Runeland, London resident partner of Lagerlof & Leman, argues that that there is limited scope for such cooperation between lawyers from Scandinavian countries: “You don't need formal arrangements in this market,” he says.

Yet the alliance move did raise wider strategic questions about how Scandinavian firms should protect their position in an increasingly competitive environment. Runeland's firm too has been looking at ways of bolstering its position in the European market. Like its rival Mannheimer Swartling, which has taken a robust approach in setting up offices abroad, Lagerlof explored the possibility of setting up foreign offices – which it did in Berlin.

But its European ambitions required a more radical solution. The Alliance of European Lawyers, which it joined a few years ago, provided another way forward, and one that the firm is happy with. “The Alliance has given us the ability to test this way of doing business and the results have been very satisfactory,” says Runewald.

But is Lagerlof's move, which cut the firm off from referrals from a number of countries, any better than the Scandinavian model? Just as the SLA trio are the only major firms to venture down the Scandinavian route, Lagerlof is the only blue-chip Scandinavian firm to tie its fate so intimately to Europe.

The fact remains that the vast majority of firms are unconvinced by formal link-ups of any sort, preferring the sanctuary of loose club networks. Terje Sommer, London resident partner of Norwegian firm Bugge Arentz-Hansen & Rasmussen, says: “Obviously, the question of alliances has been on the agenda many times and we are occasionally invited to join in an alliance, but we are reluctant to do so. For the moment, we are happy having friends in all countries.”

The same view is voiced all over Scandinavia, although a few firms have broken rank. Around the time the SLA was launched, other regional alliances involving smaller firms, such as the Scandinavian Business Law Alliance and the Nordic Alliance, were taking shape in response to the merger mania which had gripped the region at the time.

“This cooperation enabled us not to have to merge in our local market, but still appear larger to the outside world,” notes Morton Eldrup, a partner at Copenhagen firm Nielsen & Noeager, the Danish member of the Nordic Alliance.

Some exclusive associations with non-Scandinavian firms have also developed. Danish firm Lind & Cadovius, for example, is part of Denton International, the alliance spearheaded by UK firm Denton Hall – the common ground being the telecoms practices for which both are renowned. Denmark's Berning Schluter Hald and Sweden's Tisell & Co (two of the firms participating in the Scandinavian Business Law Alliance) recently linked up with UK firm McKenna & Co.

The fact that firms have been reluctant to establish formal links does not mean they are complacent. Wik argues that the emergence of accountants or of strong law firm groupings “could be a reason for something happening”.

In particular, accountancy firms are being watched carefully. In Finland, they have made few inroads, according to Wik, while in Norway, reports Christine Rodsaether, resident partner at the London office of Wikborg Rein & Co, some have placed adverts in the papers to recruit lawyers. No associated legal firms have, as yet, been set up in these countries.

However, in Sweden, Arthur Andersen recently joined forces with Danowsky & Partners, a law firm started by lawyers who defected from Lagerlof. “They are the first”, says Bagner, “and I suspect that the others are not going to sit there.”

In Denmark, the same firm poached a number of lawyers from Kromann & Munter and then engaged in a protracted court battle with the Danish Bar Association over whether it could use the Arthur Andersen name. It won the case, but opted for a more traditional name, Ronde Lundgren & Partners.

The accountants are using tactics successfully employed in other European jurisdictions and will work hard to build up market share, but some lawyers are unperturbed. Thomas Albrechtsen, London resident partner at Danish firm Reumert & Co, says they “are not a very large concern”, arguing that client mobility in Denmark is not as great as in some other jurisdictions.

Although it will be a long time before the accountants catch up with the market leaders, particularly in relation to premium transactional work, their presence is likely to put pressure on firms with fewer resources. In this developing scene, a careful growth strategy – and even a European alliance – begins to make very good sense indeed.