Dutch spilts caused by Continental Shift

Crisis meetings, office closures, partner walkouts: it doesn’t sound much like the Netherlands. But UK legal culture is infectious. De Brauw and Nauta Dutilh are finally starting to grapple with the strange concept of profitability.

Until now the Dutch have had enough muscle to resist total invasion by the Brits, despite incursions by the magic circle five years ago. It may have a small economy, but the Netherlands’ low tax rates have always attracted multinationals. That and the Dutch trading culture have meant the growth of a professional services class which has given the Netherlands the biggest firms on the Continent after the Brits.

But that growth has never been allied to aggression – which is why De Brauw’s U-turn is so notable. It left the Linklaters alliance back in 2003 partly because the management knew that Linklaters would press for a cull. A couple of years on and De Brauw is doing it all by itself.

The importance of De Brauw’s decision to ditch both the Hague and Rotterdam operations cannot be overstated. Any firm with a sizable presence in Rotterdam is starting to look overweight (Simmons & Simmons, which merged with Nolst Trenité two years ago, might want to examine its current investment in the city).

Meanwhile, Nauta has fudged the issue. Sources say there has long been internal pressure from the more profitable Amsterdam partners to do something. The firm parted company with its Rotterdam private client practice earlier this year, but it seems that was as radical as it was going to get.

On one level there’s something faintly endearing about Nauta’s decision not to bend to grubby reality. But it may regret it in the long run. It’s already feeling pressure from De Brauw, which has muscled in on its relationship with Slaughter and May as well as forging strong links with US firms. Furthermore, it has suffered a string of departures in the past year. Unless it can prove to high-rolling partners that it’s serious about profitability, the UK firms will keep enticing them away.

Let’s be clear about this: what’s happening in the Netherlands is part of a fundamental shift within the the Continental legal sector. Half the French boutiques have been swallowed by US firms. Most of the German top 30 have merged with UK outfits in some form or other. UK firms are already everywhere in the Netherlands and it will take more than Nauta’s half-hearted measures to fend them off forever.