Sights set on the big three

The largest firms in Germany have a great deal to offer UK firms looking to forge stronger links across Europe.

Bruckhaus Westrick Heller Laber

Number of partners: 141

Number of lawyers: 370

German offices: Frankfurt, Hamburg, Dusseldorf, Berlin, Munich and Leipzig.

Areas of practice: Full service.

The firm is listed as the largest in Germany by the JuVe national ranking system. 'It is clearly recognised that we are one of two. Hengelers is the other one,' says Bruckhaus partner Burkhard Bastuck.

Lawyers say that Hengeler Mueller Weitzel Wirtz is not as much of a full service firm as Bruckhaus because it tends to specialise in M&A and finance law. This gives Bruckhaus a clear edge as the leading German full service firm.

But Bruckhaus' pre-eminent position may be in jeopardy if Clifford Chance Punder starts to aggressively dominate the market. Punder Volhard Weber & Axster had 125 partners before it merged and now has the backing of a magic circle firm. The offices it adds to the Clifford Chance empire include Frankfurt, Berlin, Munich and Dusseldorf.

Rumours abound that Bruckhaus is about to merge with Freshfields Deringer to maintain its position at the top. If the merger goes ahead, it will make Freshfields Deringer Bruckhaus the largest domestic firm in Germany, and the international firm with the most German lawyers.

Bruckhaus denies that it has made any decisions on merging with a UK practice, but almost all other lawyers interviewed say that the merger is imminent.

Bastuck admits: 'Internationalisation is important. The next step we have been exploring with a lot of thinking and energy is the common law aspect – English and colonial law. We have not yet made a determination on how to go about this but the consensus is that we will need a common law capability in the near future. I know there are rumours and our firm has been mentioned in connection with a number of firms in London. We have had contacts with many firms in the last two years or so on different levels but there is nothing we feel has reached any end.'

He implies that Bruckhaus may choose not to merge with a UK firm after all. 'Contrary to the UK and perhaps others in European countries we have a very strong home market. Up to now we have explored and strengthened that. The success of a firm should not be measured by the merger rumours but how successful it is at building a strong culture,' he says.

He adds that Bruckhaus is committed to federal organisation of the practice, the firm's partnership structure and lockstep salaries, all of which may pose obstacles for a possible merger with Freshfields Deringer, which differs considerably on each of these issues.

Hengeler Mueller Weitzel Wirtz

Number of partners: 66

Number of lawyers: 186

German offices: Berlin, Dusseldorf and Frankfurt.

Areas of practice: Full service, but viewed as an M&A and finance powerhouse.

Hengelers is the second largest firm in the domestic German market. But it is considerably smaller than Bruckhaus Westrick Heller Laber, which has almost twice as many partners. Hengelers does not have a head office but its two main branches are in Dusseldorf and Frankfurt.

The firm claims to be fiercely independent, but it has strong relationships with Slaughter and May in London and Davis Polk & Wardwell in New York, which it refers to as its 'best friends'.

There is some sharing of the IT and management systems but no sharing of fees. Charges are worked out on a case by case basis according to client demands.

Slaughters has a partner permanently working out of Hengelers' Frankfurt office. Finance and banking expert Andrew McClean works in a team that comprises himself, a Slaughters assistant from London, a Hengelers partner and one of its assistants.

The practices only refer work to other law firms if issues of conflict arise from using each other.

Andreas Austmann, a partner at Hengelers in Dusseldorf, says about half of the firm's work is international and the other half is domestic. He adds that if Freshfields Deringer merges with Bruckhaus then Hengelers will have to rethink its strategy.

'The liberalisation would make it a powerful force. We cannot just sit there and say there is no English firm with our expertise. But we will have to see whether Freshfields Deringer Bruckhaus does go through.

'Traditionally, Hengelers has followed a different route from merger. For the time being we will not divert from it. We wish to keep our independence as a law firm. However, we also realise that we have to provide advice for foreign legal jurisdictions, especially in the UK and US.'

Although the 'best friends' are close, Austmann says the component firms would ideally like to retain their brand identities.

'We have to market the approach we have taken against a merger approach, which is much more easy to explain.

'It is more difficult to say to a client you are a merged firm. There would be a mixed reaction from clients if we went through with a merger. Some tend to like a merged firm, others like independence.

'We have not spent a lot of time discussing merger and trying to make it work, which is a big advantage.'

Gleiss Lutz Hootz Hirsch Rechtsanwalte

Number of partners: 59

Number of lawyers: 157

German offices: Stuttgart, Frankfurt and Berlin.

Areas of practice: Full service.

Gleiss is viewed as the third largest domestic German firm, behind Bruckhaus Westrick Heller Laber and Hengeler Mueller Weitzel Wirtz.

It is another attractive prospect for merger with a UK practice. Gleiss was allied with Clifford Chance in the early 1990s, but since the association broke the firm has not had a strong bond with any UK firm.

But partner Gerhard Wegen says: 'We are not pursuing a stand-alone policy. We would consider merger.'

Gleiss was in merger talks with Clifford Chance and Freshfields last year, he adds. 'The problem we see is that a merger is not easy. There can be profitability and cultural problems.

'It would mean more profitability but there would be more internal competition from lawyers competing for partnership. It is a problem because in Germany assistants are generally older – German lawyers start training about six years later than their English counterparts.

'We retire at 69, we have no pension plans in place which you do in Britain. We have strict lockstep, which is being abolished in the UK and US – in the US they say: 'Eat what you kill'.'

But Wegen admits that the current German legal climate should lead to Gleiss opting for closer links with a UK firm.

'We will be in an exclusive relationship or nearly exclusive relationship with a full service law firm in the UK.

'If you look at the roster of firms in England that are not allied you start at the top and go down.'

A merger with another German firm is also a possibility. 'But if the Bruckhaus-Freshfields Deringer merger does go ahead there will not be much left. Our perspectives are good but the question is whether we will work on a more independent basis.'

Whatever happens, he says, the firm will increase its number of lawyers. Gleiss is changing its corporate governance rules to help the firm compete with the newly merged Clifford Chance Punder and Freshfields Deringer.

Wegen refuses to comment on what alterations will be made, but says: 'We are in the decision stage. These matters will be shortly realised.'