Following the Austrian government's plan to privatise a number of state-owned companies such as Austria Tabak (the former Austrian tobacco monopoly), Telekom Austria and Flughafen Wien (Vienna airport), the tension among the big law firms trying to win these assignments is growing. But discussions arise about firms being barred from participating in the various beauty contests because they are somehow related to the potential bidders or to ÖIAG, the Austrian state holding company owning the shares that are supposed to be sold in the privatisation process. Given the legal framework, according to which Austrian interests have to be considered when deciding about the future owner, European lawyers are eagerly watching how this issue can be reconciled with the principles of community law clearly prohibiting discrimination of “EU foreigners”.

These projects, like others, show that the level of expertise required to provide a full-range service which succeeds in the marketplace is getting higher. Clients expect more than sufficient expertise in corporate and contract law. And only firms that can offer profound knowledge in other, relatively new areas of the law such as takeover rules and European Community law have a chance to compete. Last but not least, all solutions offered have to be most efficient from a tax perspective. Those firms that are able to provide integrated high-tech corporate and tax law advice clearly have a competitive edge. And it appears that only very few firms are currently able to meet these needs.

More or less the same applies to a huge number of smaller projects in which the Bundesländer (federal provinces) as well as cities and local municipalities try to outsource many of their activities and combine them with the expertise of private companies, which is happening particularly in the utilities sector. Although a relatively young field of law, public procurement has attracted a lot of attention. Many firms render advice to the various state entities as well as representing bidders in the numerous procedures required. An important indicator for the legal profession's success in public procurement is the growing number of requests for preliminary rulings from the European Court of Justice under the Article 234 EC Treaty.

As regards the firms, the Austrian legal market has been relatively stable during the past year. The only exception is the merger of Hügel & Partner with the German multidisciplinary partnership Haarmann Hemmelrath & Partner, which makes Haarmann Hemmelrath Hügel (as they are now called in Austria), only the second Austrian firm to have successfully integrated with a foreign law firm. Heller Löber Bahn was the first to sign up with German firm Bruckhaus Westrick Stegemann, forming Bruckhaus Westrick Heller Löber, and due to the merger of Bruckhaus with Freshfields Deringer, the firm is now called Freshfields Bruckhaus Deringer. Both mergers gave rise to a number of questions regarding the Austrian bar rules, such as multidisciplinarity and the use of firm names, constituting quite some challenge for the Vienna bar.

At the same time, Freshfields Bruckhaus Deringer has led to the break-up of one of the few large strategic alliances between law firms. Freshfields' association agreement with Wolf Theiss, which originally was designed to lead to a full merger around the turn of the century, has been abandoned.

It seems, however, that even Austrian clients have started to like the taste of large, integrated services including legal and tax expertise throughout a number of countries, particularly within the EU and the eastern reform countries. Thus, it remains to be seen whether more firms will follow these examples. Schönherr Barfuß Torggler and Wolf Theiss are said to have had intensive talks with some of the large UK City firms.

Dr Rainer Roniger and Dr Clemens Hasenauer are partners at Haarmann Hemmelrath Hügel