Facing Recessions and Inflation, Global Law Firms Take Action
Last week marked the end of summer in the northern hemisphere, usually a quiet time for major law firms, when partners are off with family, squeezing in some R&R before the autumn work onslaught rushes in. But it’s been far from quiet on the global law firm front.
International law firms based in the U.S., Mexico and Japan launched new offices in cities far from home, while also hiring experienced lawyers in existing offices around the world.
U.S.-headquartered Norton Rose Fulbright opened its fourth office in Germany—this one in Düsseldorf—and added nine lawyers to its corporate practice, recruiting them from such firms as Eversheds Sutherland, Allen & Overy, Pinsent Masons and Freshfields Bruckhaus Deringer. Leading Mexican law firm Creel, García-Cuéllar, Aiza y Enríquez said it is launching an office in Madrid—its first office outside of Mexico. And in London, the law firm Anderson Mori & Tomostune, one of Japan’s “Big Four” law firms, launched its first European office.
It may seem like an odd time to be setting up shop, given the economic climate and the uncertainty that brings. But there’s an argument for being ready on the ground in a place where you anticipate your services will be needed.
Anderson Mori, for example, says its London office will focus on cross-border M&A and real estate transactions, which are in particularly high demand among U.K. and Europe-based companies entering the Japanese market.
Creel’s move into Spain comes at a time when manufacturers are looking to relocate production to North America from Asia as they try to position supply chains closer to consumers in the U.S. The firm wants to not only be closer to European clients, but also to leading law firms in Europe. It also says it hopes to guide more business leaders through opportunities arising from the shift toward regionalization, or near-shoring, that is taking place around the globe.
And Norton Rose’s launch in Düsseldorf and expansion of its corporate team is part of the firm’s larger ambition to lead the sector in Germany, focusing on pharmaceuticals, real estate, energy, and insurance. The firm also hired a five-lawyer real estate team in Munich back in May from Simmons & Simmons.
Other firms also have been active in Germany recently: U.K. firm Addleshaw Goddard launched a Munich and Frankfurt office in March; Bryan Cave Leight Paisner added four partners to its Frankfurt real estate practice from DLA Piper in June; last week, King & Spalding added five lawyers to its corporate team in Germany from the M&A boutique firm Memminger; and Baker McKenzie expanded its information technology and intellectual property law practice in Germany by establishing an IP/IT department in Düsseldorf.
Elsewhere in Europe, Paris continues to stake a claim to the private equity legal market. DLA Piper, which says France is a key market for its private equity practice, added a three-lawyer team, including one partner, to its PE practice there. Other international firms that have added strength to their private equity teams in Paris in recent months include Eversheds Sutherland, which added a seven-lawyer corporate team from CMS Francis Lefebvre in June, and Squire Patton Boggs, which has hired four partners for its PE team since last July. In addition, several PE boutique firms, headed by veterans of Big Law and elite French firms, have launched in Paris over the past 18 months.
The Latin America legal market also was noticeably active last week. Greenberg Traurig, which has long been active in Latin America, absorbed a team from a litigation boutique in Mexico City, led by a litigation partner who is well-known in Mexico’s legal community. The firm also is covering its bases in Miami: Last week it hired a corporate partner from Holland & Knight. Greenberg says it has seen enormous increased demand from Latin American clients for corporate, M&A, banking, finance, taxation and international arbitration work. Meanwhile, Holland & Knight recruited a renowned international tax attorney in Miami to advise Latin American families pouring money into South Florida amid political shifts in their home countries.
One more new office launch far from home took place last week: Honigman, a Midwestern U.S. firm based in Michigan, is seeking to capitalize on a growing pool of U.S. lawyers who have moved to Israel. It has opened a subsidiary in the country with five lawyers from such elite firms as Davis Polk & Wardwell and Goodwin Procter.
Over on the other side of the world, lawyers are trying to gauge whether the U.S.-China relationship will ever improve, or if they are seeing the end of what for some firms was a good run. The most recent development that gave them some hope, at least initially, was an agreement between the U.S. and China that supposedly will allow U.S. authorities to vet audits of U.S.-listed companies.
The U.S. listings market for international lawyers has all but dried up as Chinese companies have grown leery of trying to list since China cracked down on listings on the U.S. stock market, claiming national security and privacy concerns. And more than 150 existing U.S.-listed Chinese companies face the threat of expulsion from American bourses by the U.S. Securities and Exchange Commission as early as next year if the audits do not take place.
Chinese issuers, who could lose trillions of dollars if that happens, are hoping the agreement will prevent their de-listing. And international businesses and law firms are hoping it will be successful as well. In fact, they Initially saw the agreement as a sign that the two countries were taking a step toward repairing their fractious relationship. But all too quickly, lawyers grew skeptical. After examining statements from U.S. and Chinese authorities, they are no longer convinced that the agreement will pave the way for unfettered access to Chinese issuers’ documents.
And the issue surrounding company listings isn’t the only concern for lawyers dealing with U.S.-China matters. Now, the U.S. is in the process of writing a bill, dubbed “Reverse CFIUS.” Instead of just screening U.S. inbound investments, as CFIUS mandates, the new law would require regulators to also scrutinize outbound investments from the U.S. to other countries, including China. This has raised concerns on both sides of the Pacific. As Law.com International Asia editor Jessica Seah wrote last week in The Asia Legal Briefing (a column you can subscribe to here), law firms are starting to think about what the constant bickering between China and the U.S. is going to mean for their practices.
So, as law firms try to position themselves as they brace in various regions for recessions, double-digit inflation, an energy crisis and a myriad of other geopolitical events that will impact their practices, it might help to look at the legal market of one country that appears to be doing all right.
The fundamentals of the Australian legal market are solid, even with slowing demand during the second half of 2022, according to a recent report published by the Thomson Reuters Institute and the Melbourne Law School. The legal market in this country/continent faces many of the same challenges as legal markets in other parts of the world but so far it has managed to keep its lawyers content with their compensation while simultaneously holding their compensation expense growth relatively in check, the report says. And although client demand has slowed compared to last year, firms remain optimistic.
It’s no wonder. “Australian firms have largely outperformed their average global peers for most of the last five years,” the report says. Economies may take a beating, talent and salary wars may rage and geopolitics may continue to disrupt the status quo. But Australia’s legal market, the report concludes, “has good reason to continue to see itself as a beacon, a guide for how modern large law firms can navigate such crises.”
