Overview – Elite level

While the war in Ukraine and the energy crisis dominated the agenda for law firms in 2022, our annual Euro Elite report finds the continent’s leading independents still in a bullish mood

Baltics – Covering all bases

A pan-regional approach by the biggest players in the Baltic states means these elite independent firms are well placed to face any challenges that lie ahead

Benelux – Hitting the buffers

Despite bumps in the road cooling down transactional work in Belgium, the Netherlands and Luxembourg, there is plenty keeping elite independent firms busy

CEE – Looking ahead

Despite the geographic proximity of CEE nations to Russia, independent firms across the region are responding to inevitable market volatility well

France – Pretty good year

2022 was another banner year for independent firms in Paris but any optimism is tempered by caution over what lies ahead

Germany – The centre holds

The independent elite continues to thrive in Germany, despite predictable economic headwinds in 2022

Iberia – Back on track

The independent firms that dominate Spain and Portugal are proving their mettle again as they tackle crisis and competition with flair

Ireland – Slight return

While Dublin’s legal elite enjoyed a renaissance in 2021, danger lurks just around the corner. Can the optimistic mood endure?

Italy – Toughening up

The Italian market remains dominated by independent firms facing myriad challenges both at home and abroad

Nordics – New challenges

Despite market forces taking their toll and the geographic proximity of the region to Russia, Nordic law firms continue to show their resilience

Southern Europe – Hanging on

Israeli and Greek firms are geared up to cope with any turbulence that the pandemic and the Ukraine conflict might bring their way

Switzerland – Strength in depth

2023 is shaping up to be another strong year for the leading Swiss independents, despite various global headwinds

Main table

Methodology

The Last Word: Next level

As part of our annual Euro Elite report, management at independent firms in Europe give their views on today’s market challenges

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‘The future is Pan-Baltic!’ says Vilius Bernatonis, managing partner of TGS Baltic’s Lithuania branch. He is referring to the integration goals of Baltic states’ major firms, which aim to ensure that legal expertise from a firm’s office in one Baltic nation will be readily available to its client in another. But his words have a broader resonance. Though distinct, Estonia, Latvia and Lithuania co-operate at nearly every economic level, investing in the infrastructure, energy and technology of one another to foster shared growth and development. They do so because in numbers there is strength. In numbers, there is safety.

Looking at the structure of the Baltic legal market in general terms, at the top is the pan-Baltic bracket comprising Ellex, TGS Baltic, Cobalt and Sorainen, all of which offer full-service, cross-border practices covering all areas of law in Estonia, Lithuania and Latvia. According to Liga Merwin, managing partner at Ellex [Latvia], ‘the pan-Baltic firms remain largely unchallenged’.

The second bracket, which includes WALLESS, features large-to-mid-sized firms that have notable attorneys and a high spectrum of work in the Baltics, with some international capability. The third bracket of firms includes international firms and consultancy firms such as Eversheds Sutherland, KPMG Law, and PricewaterhouseCoopers, which benefit from their established international reputations and can draw upon their expertise from across the globe to provide specialist services, using their shared networks with their other offices. However, the strength of the pan-Baltic firms has largely kept international firms out of the market and Eversheds, for example, franchises to standout local lawyers, such as Jonas Saladzius, Agris Bitāns and Maivi Ots.

‘By 2025 the Baltic states will have no energy connections with Russia and Belarus – Poland has a huge role to play, but it is not integration with Poland that is the goal, it is integration with Europe.’ Vilius Bernatonis, TGS Baltic

Early 2022 saw the end of the restrictions of the Covid-19 pandemic and the start of the war between Russia and Ukraine, which led to several issues for the Baltic states as they share a land border with Russia and are close to the conflict. In the banking, finance and corporate space, there was a fear early on that the war would collapse the entire market, leading to a recession and market crash reminiscent of 2008. Instead, to the surprise of many of the region’s lawyers, the opposite occurred; while a few investors left the regions, a number of new ones moved in to fill the gap.

However, other sectors have suffered. In the real estate, construction and energy space, the rise in gas prices and the current energy crisis has led to high costs being passed onto the population. The inability to get certain materials from Ukraine and Belarus has led to a high volume of public procurement disputes, as prices rocket far beyond the pre-agreed contractual fees. As a response to these problems, the governments have expanded their relationships and ties with each other and neighbouring countries as they break their dependency on Russia, and particularly its gas, and accelerate towards a more sustainable future. Poland and Lithuania, historically closely aligned, have been jointly constructing an LNG pipeline. As Bernatonis says: ‘By 2025 the three Baltic states will have no energy connections with Russia and Belarus – Poland has a huge role to play here, but it is not integration with Poland that is the goal, it is integration with Europe.’

One silver lining in these troubled times is the rapid development and growth of renewable energies in the Baltic region. Energy independence from Russia means finding your own supply and, in contrast to some other parts of the world where fracking has been considered, the Baltics have chosen to do it green. The Lithuanian seaport of Klaipeda is a hub of activity with the building of wind turbines and the establishment of the necessary infrastructure to construct, operate and sustain offshore wind farms. In Latvia, too, wind farms are under construction, particularly in the coastal areas around Tukums. As early as 2020, Latvia led the way in clean energy financing, with sustainability and green bonds being issued first by state-owned energy companies and then the government itself. Lithuania and Estonia have since followed suit. Noticeably, the Baltic states have heavily invested in each other’s renewables initiatives, with the markets seeing an increased level of M&A and numerous joint ventures between energy companies from different nations. The environment is an important consideration in the Baltics and this trend extends beyond the realms of energy production and supply, with a significant amount of legal disputes now concerning pollution.

There has been a palpable tussle for talent between law firms and the emergent IT startups and unicorns that have entered the region, with staff and potential trainees migrating to smaller tech-based startups for a variety of issues. These include offering a friendlier and attractive workspace, flexible work environments, to more lucrative contracts being offered. This has provided a unique challenge for the traditional law firm as they have had to strategise and adapt to the changes in the modern employment climate to compete, with Bernatonis noting that tech startups are doing this to ‘build their in-house teams’. Interestingly enough, only Lithuania and Estonia have faced this issue, with Latvian law firms still being the premier offering for attorneys and trainees.

Looking to the future, although the Baltic markets face an uncertain road ahead, new growth opportunities continue to appear. Within the banking and finance and corporate arenas, investors are slowly over time returning to the region, and within the energy sector, the prioritisation of renewable energy sources, coupled with the close business ties with Poland via the GIPL pipeline, will see the region remove its dependency from Russian fuel sources. LB

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In last year’s overview, we predicted full steam ahead for the Benelux market – a reflection of the buoyant sentiments swirling in the region as Europe emerged from the Covid-19 pandemic. But the road turned out to be rockier than expected as the outbreak of the largest land war in Europe combined with the after-effects of the pandemic to send inflation soaring and rupture supply chains.

Nonetheless, there were times throughout 2022 when dealmaking thrived across the Benelux region. Hans Witteveen, managing partner in Stibbe’s Amsterdam office, observed ‘a remarkable level of activity, certainly involving large-cap deals’. However, this didn’t last. As the year progressed, the foreboding economic climate dashed hopes of a continued M&A surge. This tapered growth was felt strongly in capital market hotspots, including the Netherlands, as financings struggled to gain a foothold in the face of increasing inflation and reactive interest rate hikes.

‘The big question will be whether there really will be a serious downturn across
the Benelux region or on the continent as a whole.’ Wouter Ghijsels, Stibbe

The combination of lacklustre financing options and economic slowdown has also hit large private equity deals particularly hard and, although mid-market activity persists, even these deals are increasingly difficult to get off the ground. The real estate market was viewed a touch more positively, with activity more consistent throughout the year, though this too slowed off the back of interest rate increases towards the final quarter.

A general rule of thumb in the legal profession is that when dealmaking is down, disputes are up. This countercyclical relationship held true in the Benelux in 2022. ‘We’ve seen a significant growth in the broad dispute resolution market’, says Sjoerd Kamerbeek, managing partner at Van Doorne. ‘Existing relationships are under pressure, obviously due to inflation and interest rate increases, and also, somewhat, due to shocks in demand.’ He comments inflation and supply-line disruptions have hit the construction sector especially hard, provoking an uptick in contractual disputes that lawyers expect to see continuing into 2023. In Belgium, this increase in disputes is exacerbating a backlog in the courts, and clients, frustrated with the slow pace of litigation, are turning to alternative forms of dispute resolution, with arbitration in particular on the rise.

Another expected change in a time of economic downturn is an increase in restructuring work. Companies become distressed and call on their legal advisers to aid with renegotiations, refinancings, restructurings, and, potentially, insolvencies. A situation like this requires flexibility from firms, and, as Witteveen puts it: ‘Stibbe is well equipped for this change, and we’re cautiously optimistic that we’ll do just fine, like in previous recessions.’ This will also be an area to watch in terms of the recently introduced Dutch WHOA scheme, a new mechanism that facilitates restructuring agreements despite dissenting creditors, which has gone from being used for SMEs to larger companies over the past 12 months.

However, a true boom here has not yet materialised. Wouter Ghijsels, managing partner in Stibbe’s Brussels office, comments that the ‘big question will be whether there really will be a serious downturn across the Benelux region or on the continent as a whole’. Restructurings are set to be increasingly important in 2023, then, though the full extent of the damage is yet to be determined.

Some changes, by contrast, are visible and undeniable. The consequences of Russia’s invasion of Ukraine have been most acute in the field of energy. Europe’s decision to wean itself off Russian gas has combined with the ongoing green transition to produce a real expansion in the energy sector. In the Netherlands, issues with grid congestion have left investors more cautious than elsewhere in the Benelux. But the picture across the region is one of increasing activity, with clients ever more interested in novel technologies such as hydrogen, carbon capture, and electricity storage, though questions remain over how cost-effective these technologies will ultimately prove.

Firms in the region continue to note the effects of Brexit. Again, this trend is especially notable in Luxembourg which, due to its triple-A credit rating and favourable regulatory environment, remains a popular destination for multinationals that would once have set up in the City of London. Another related trend is an increase in US firms establishing offices in Brussels, to be on the doorstep of the European Commission (EC). Still, this shift does not worry established domestic players in Belgium. As Ghijsels explains: ‘Although Brussels is a crowded market, this won’t have a major impact on other firms, as they are here to service their existing US clientele on competition matters.’ Similarly, while the Dutch market is not a target for access to the EC, it has seen a handful of US firms open their doors. Again, though, the legal landscape in the Netherlands has grown accustomed to the presence of both domestic and international firms. As Witteveen puts it: ‘The market is big enough to have all these firms in it, so there isn’t a big change in the composition at the top.’

Despite the lack of major disruption from big international firms, the Benelux legal market remains competitive, with many lawyers speaking of a war for talent. ‘We expect to see increased competition for the pie that we have on the table’, says Kamerbeek, and ‘there is a talent problem’, as the number of law graduates leaving university declines, and fewer are interested in ‘taking the classical partnership route’. Though few expect to see a wave of upheaval crash through the region, and lateral hiring remains muted, ‘more junior partners are being appointed’ to ensure firms can continue to meet demand. Witteveen sets this change in a wider context. ‘There is still quite a shortage in the labour market’, he points out. And, as a result, ‘it is very important to make sure you attract and retain the right people.’

With an uncertain outlook for transactional work and an increase in disputes and restructurings, as well as major changes to the regulatory landscape, this may be more important in 2023 than ever. LB

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Across the CEE region, uncertainty was the watchword throughout 2022, and the pattern looks set to continue. Although independent firms remain well placed to make the most of booming practice areas, the ongoing conflict in the region, coupled with the lingering effects of the Covid-19 pandemic, has resulted in a volatile market.

In the Czech Republic, exorbitant oil and gas prices have hit businesses hard, and, although this did not cause an immediate drop in regular financing transactions, state and EU intervention is anticipated in 2023. Despite the strong start to 2022 and hopes of post-pandemic recovery across the board, the macro-economic challenges in the second half of the year have left a much emptier pipeline for law firms, with many major stakeholders waiting to see what unfolds. The domestic real estate market, meanwhile, is seeing stagnation following the overheating of real estate prices in the last few years, while current inflation means there are cumbersome restrictions on mortgages.

The start of 2022 saw an increase in cross-border M&A, characteristic of the period of frenzy which followed the lifting of Covid-19 restrictions. However, the advent of the war in Ukraine left many deals incomplete due to price mismatches. Those that are successfully closing typically show high complexity and value. Investors are reportedly apprehensive, with those based in the US viewing the region as precariously close to Ukraine. The shortage of capital has impacted most sectors, although technology-related M&A remains on the rise, in keeping with the wider technology boom across the entire region. Looking ahead, the implementation of the Digital Markets Act – aimed at establishing fair play rules for major digital companies by applying antitrust law principles to digital markets – is hotly anticipated.

Over in Serbia, 2022 shaped up to be ‘one of the best years for M&A’, according to Miloš Vučković, a senior partner at Karanovic & Partners. The outlook for 2023 is consequently optimistic, with predictions that it will be even busier than the previous year, despite the looming threat of sudden changes presented by the conflict in Ukraine. Although the turbulent situation makes rapid shifts a constant possibility, the nimbleness of independent firms ensures that, even if there were to be a slowdown in transactional work, they would be well placed to act on the consequent uptick in disputes and restructuring mandates. Practitioners such as Vučković therefore anticipate an active period ahead. More broadly, however, a major challenge has become ensuring the job satisfaction of junior lawyers, since competition is longer limited to other firms, but has expanded to cover banks, the Big Four, and other leading companies recruiting in-house lawyers.

Austrian firms, likewise, saw a pick-up in transactional work in 2022, and also predict that the number of deals in the market will remain robust in the face of external pressures. In keeping with jurisdictions across the region, pandemic-related work decreased throughout the latter half of 2022, only to be replaced by conflict-driven mandates. Encapsulating the mercurial nature of the market, and the adaptability of independent outfits, Andrea Gritsch, managing partner at Wolf Theiss, comments that ‘firms have to be resilient on the one hand, while at the same time remaining ready to seize opportunities lying ahead’.

Financing in the ESG space has begun to capture the Austrian market of late, as have capital markets and private equity mandates in the start-up space. The jurisdiction has also seen an increase in regulatory work across the banking and insurance sectors, as well as public procurement matters in the IT and media fields. Due to the volatile situation in the gas market, provision of restructuring advice in the energy sector has likewise emerged as an active area.

‘Firms have to be resilient on the one hand, while at the same time remaining ready to seize opportunities lying ahead.’ Andrea Gritsch, Wolf Theiss

A common theme uniting legal markets throughout the CEE region is the rapid emergence of sustainability and technology as dominant drivers of activity across the board. Poland is no different, and in the financing, construction, transactional, disputes and tax spaces, a significant proportion of mandates now have a nexus to the renewable energy field. More specifically, for projects-focused practitioners, offshore wind and photovoltaic developments, already long established as the major areas of interest for international investors, have become key targets for state-owned enterprises.

Even more than renewable energy, technology has come to undergird work in every major practice area. Most obviously, TMT lawyers have been grappling with an ever-growing roster of novel matters, with the metaverse and AI proving to be particularly hot topics of late. As technology has become so pervasive, firms have increasingly found themselves under dual sources of pressure: full-service outfits have felt a greater need to shore up their specific expertise; while boutiques have seen a need to expand beyond their niche offering.

As a direct consequence of this, in January 2023 the Polish market saw its first major merger between two highly regarded independent firms, namely Rymarz Zdort and TMT-focused Maruta Wachta; the resultant entity, Rymarz Zdort Maruta, is now led jointly by Paweł Zdort and Paweł Rymarz, and Marcin Maruta. The driving force for the headline-grabbing move was neatly encapsulated by Zdort, who says: ‘If you want to really service the upper quartile of the market, this breadth and depth is the only way.’

Following on from the tumult of 2022, the market continues to present a changeable face, with rapid expansion in certain sectors matched by uncertainty and hesitancy elsewhere. For independent firms, though, a natural agility means that pivoting to boom areas is always an option. Practitioners across the CEE region are looking ahead with confidence, ready to make the most of the coming period. LB

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* Data for Schoenherr is estimated FTE for the fiscal year 2022/23.

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Activity levels bounced back in France in 2021 after the initial impact of the pandemic and this recovery continued apace in 2022.

‘2022 was the best year,’ says Henri Savoie, who heads the public law and regulatory practice at Darrois Villey Maillot Brochier. ‘2023 will be more normal,’ he warns, pointing out that ‘companies will be active, but they will be cautious. It is a trend.’

Indeed, while partners report that some practices in France have yet to feel the full impact of the ripples of geopolitical and economic uncertainty globally in the wake of Russia’s invasion of Ukraine, Brexit and the energy crisis, many are more concerned for the year ahead.

Gide managing partner Jean-François Levraud comments: ‘The economic situation is more difficult to face currently than a few years ago [but] across all departments, activity is high regardless of the economic situation, though the type of work in the practice area may change.’ He also notes that ‘the economic crisis requires reinvention and adapting to new ways of working’.

‘The economic crisis requires reinvention and adapting to new ways of working.’ Jean-François Levraud, Gide

Gide, like fellow leading French independent Bredin Prat, continued to represent notable clients on some of the country’s most significant acquisitions of 2022 both domestically and overseas. An example of this was Gide’s cross-jurisdictional work advising MSC Group on the acquisition of Bolloré Africa Logistics, which valued the transport company at €5.7bn.

At a domestic level, Bredin Prat notably advised Covéa, a leading French mutual insurer, on its €7.7bn acquisition of PartnerRe, the global reinsurer wholly owned by Exor, which completed in 2022. The firm also continues to advise GE in connection with the sale to EDF of its Nuclear Steam Power activity, a strategic transaction resulting from the new French energy plan announced by President Macron in February 2022.

Financial regulatory work also increased in the country last year, with a surge in work relating to crypto finance, following the European Council’s introduction of a regulatory framework in the form of the Markets in Crypto-Assets (MiCA) Regulation. But while some practices have – to date – held up relatively well, others saw a dip in activity levels last year, including bankruptcy and insolvency work. Other practices that struggled include debt capital markets. For example, while equity capital markets saw a rise in activity following the opening up of a blocked IPO pipeline, the debt capital markets saw a significant decline in both the number of issues and the value of debt raised, with high yield in particular falling starkly across Europe.

Covid has also affected the real estate market in France, with partners reporting a decrease in hotel and office-related activity during the pandemic. Meanwhile, the lingering impact of the pandemic and the ongoing effect of the war in Ukraine is continuing to have an impact on sectors such as construction. Outside Paris, rising prices have led construction firms to advise more owners of public projects and intercede in contract negotiations between clients and contractors.

Additionally, delays in sourcing and transporting materials have impacted the speed of development and construction projects across a host of sectors, including energy. This is just one of a number of problems hitting the energy sector, although wind energy work has increased in France as a result for President Macron’s push for cleaner air and his implementation of various renewable initiatives. The nuclear market has also remained strong, while aviation lawyers report a shift towards less-traditional matters involving climate change concerns, with a rising interest in pollution cases.

One shift in the way firms in France have been working is through better use of technology, with increased digitisation making international collaboration for French boutiques more accessible than ever, making it easier for boutiques to work together and better compete with larger, international players. Anglo-Saxon firms continue to make up a vast majority of the legal market in Paris, although Davis Polk made the decision to close its Paris office in December 2022, with some suggesting other US firms may also be less keen to invest. Savoie comments: ‘US law firms may not have as big an interest. Davis Polk made the decision last year to close.’

‘Continued organic growth is foreseen because of the nature of our practice and the expanding market we are in.’ Didier Martin, Bredin Prat

With regards to individual talent in France, junior-level hiring remains a gradual process following career uncertainties caused by the pandemic, but partner retention and consistent partner recruitment has reportedly remained steady across the board. Didier Martin of Bredin Prat notes that ‘continued organic growth is foreseen because of the nature of our practice… and the expanding market we are in’, while Levraud states that Gide strikes a ‘satisfactory balance between new hires and lateral promotions’.

Looking ahead to 2023, while some partners predict a slowdown in the first half of the year, many remain optimistic for the rest of 2023 and into next year. The arrival of the Olympics to Paris in 2024 is also expected to have a positive impact on the French economy, with opportunities in real estate, construction and employment arising as preparations kick off in earnest this year. LB

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The German legal market has again proven its ability to thrive in the face of challenge, as law firms continued their trajectory of growth in 2022. With the largest firms reporting a 7% increase in profit after a tumultuous year, German independents are demonstrating renewed confidence in their own resilience.

After the uncertainty of Covid-19 brought major moves to a halt, the legal market is finding itself back in motion, with spin-offs and mergers becoming a more regular occurrence, though major consolidations have failed to materialise in 2022. However, many firms report difficulties in finding junior lawyers to join their ranks across practice areas. Paired with shifting client expectations that demand a more holistic approach and, as Gleiss Lutz co-managing partners Michael Arnold and Alexander Schwarz put it, ‘a demand for more integrated services rendered by law firms to clients’, firms face an increased need to demonstrate adaptability. ‘This need will also change the search profile for law firm staff in the future. In addition to traditional lawyers, the need for new professional fields is growing strongly. Summarised in one expression: “the future-ready lawyer”,’ says Elisabeth Lepique, one of the managing partners at Luther.

2022 challenged firm’s abilities to react quickly and efficiently, as fast-evolving crises dominated the legal landscape, from the Ukraine war to energy woes and persistent supply-chain issues. According to Lepique: ‘Securing supply chains, safeguarding energy supplies, and accelerating the transformation of companies to ESG-compliant supply structures were key areas of demand.’

With supply chains being strained and a constant source of mandates from the previous years, law firms also found themselves tasked with preparing clients for new legislation. Notably one of the biggest sources of interest was the Supply Chain Due Diligence Act, which came into force in January 2023 for companies with at least 3,000 employees and aims at enforcing social and environmental standards along the whole supply chain. With its scope being extended to companies with at least 1,000 employees at the beginning of 2024, trade and distribution law will no doubt remain busy.

The new law forms part of an overarching trend that continued to accelerate in 2022. Penetrating virtually every practice area, ESG expertise has become a requirement rather than an add-on for full-service firms. Hengeler Mueller, one of the leading German independents, has found itself embroiled in one of the first high-profile ESG compliance matters in the market, advising Deutsche Bank subsidiary DWS in its ‘greenwashing’ scandal.

‘Increasingly, distressed M&A is becoming more relevant; in contrast to 2021, real estate M&A was rather moderate.’ Elisabeth Lepique, Luther

In light of the Ukraine war, foreign trade law became the centre of attention at the beginning of the year. Practice groups faced a massive need for advice, including the winding-up of many companies’ businesses in Russia and an ever-changing sanctions landscape. In July 2022, for example, the seventh package of sanctions by the EU was passed within the space of five months. Schwarz and Arnold expect that ‘this demand for foreign trade law expertise will continue for the time being’.

Gleiss Lutz’s transactional practice experienced a particularly strong year, with highlights including advising Deutsche Telekom on the sale of the majority stake in its tower business to a consortium consisting of Brookfield and DigitalBridge for €17.5bn. The firm was also the first German independent to open an office in the metaverse, a move that aids in its objective to provide ‘practical advice on the numerous interdisciplinary issues that arise through digitalisation in general, and through the advent of technologies such as the metaverse in particular’, according to Arnold and Schwarz. Lepique corroborates this need for firms to adapt to the demands of an increasingly digital market: ‘Law firms investing in the digitalisation of their own workflows have a significant advantage in making their work easier and faster for the benefit of their clients.’

Despite volatile markets, fuelled by supply chain distress, higher interest rates and inflation rates at a 40-year high, the deal market demonstrated surprising resilience. After a slump in activity at the beginning of the Ukraine war, the overall number of deals in the M&A market remained at a similar level to the previous year, although deal values remained significantly lower. ‘Increasingly, distressed M&A is becoming more relevant; in contrast to 2021, real estate M&A was rather moderate,’ says Lepique. In the private equity sphere, investments continued to soar, particularly within the IT, technology, and healthcare sectors.

Characterised by a heavy reliance on Russian oil and gas, Germany’s energy crisis has kept practice groups working to capacity to secure the future of the country’s energy supply, which culminated in the government’s move to place Gazprom Germania into long-term administration in summer 2022 alongside a €10bn loan. Luther remains an active player in this field, having advised energy supplier EnBW on its plans for a LNG terminal aimed at diversifying the country’s energy portfolio.

As the German economy moves from crisis to crisis, predictions for the future of the legal market prove difficult. The general mood of independent law firms appears to be cautious, but positive. Arnold and Schwarz conclude: ‘Overall, the world seems to have become even more fast-paced, with higher demands on the immediate availability of our lawyers to solve increasingly complex client problems, fast.’ No matter how the next year will pan out, 2022 has shown that the German market is likely to continue thriving in the face of challenges. LB

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The past three years have been nothing but challenging for Portugal and Spain. The neighbours, whose economies are hugely reliant on the hospitality and tourism sectors, were hit hard by the series of lockdowns imposed to battle soaring rates of Covid-19 infection in 2020. But fast forward to 2023, and the outlook has shifted significantly.

Emerging from what could understatedly be described as a turbulent period in 2020, with a 10.8% economic downturn, the Spanish legal sector has successfully regained its footing and competitive outlook. While the pandemic made economic constriction inevitable, it has also heralded an opportunity for significant year-on-year growth.

‘The Spanish legal market is extremely mature and competitive, but it grows consistently year after year,’ says Fernando Vives, executive chair of Garrigues.

The real estate, technology, and renewable energy sectors continued to garner serious attention from both domestic and foreign investors despite accelerating interest rates and galloping inflation, globally.

While Spain still trumps Portugal in both volume and scale, the latter has belied its size with a robust comeback. Despite GDP contracting by 8.4% in the first year of the pandemic, the country is on track to make a sound recovery.

The relaxation of Covid restrictions coupled with a wave of investment in the infrastructure and energy sectors spurred a 4.9% spike in growth in 2021, followed by a 6.7% boost in 2022, according to the OECD. With increasing pressure on private equity firms to deploy their ample reserves, Portugal’s sell-side M&A market remained an attractive option, especially for long-term investors seeking to diversify their portfolios both in terms of location and industries.

‘As the inflationary trend continues to spike, we are seeing client activity driven by a desire to use existing liquidity,’ says Paula Gomes Freire, who succeeded João Vieira de Almeida as VdA’s managing partner in February 2022. ‘Market volatility due to inflation, and rising interest rates are favouring investment-grade targets and driving investment into ESG-compliant assets and companies.’

Time and again, elite Iberian independent firms have proved that they can face adversity head on. Their breadth of service offering makes them well placed to adapt and reinvent themselves in periods of turbulence: the Eurozone crisis, the Covid-19 pandemic, and the current inflation surge.

Among the top Iberian firms, revenue grew on average by 12% in 2021. In a market with such strong competition, it is even more impressive to see powerhouses like Garrigues, Cuatrecasas and Uría Menéndez maintain pole position, continuing to report the highest revenues.

‘As the inflationary trend continues to spike, we are seeing client activity driven by a desire to use existing liquidity.’ Paula Gomes Freire, VdA

When it comes to growth strategies, Pérez-Llorca has set a standard for Spanish firms looking to expand in Asia after announcing it will become the first to have a presence in Singapore, with a new office set to open in the city state in early 2023.

‘Clients’ requirements have accelerated law firms’ digitalisation processes, as the need for efficiency and productivity are higher on their agenda,’ comments Vives. ‘Another important trend is the competition for hiring and retaining the best talent in the market.’

While some firms have focused on internal growth, others have sought out talent at rival practices. Lateral hires in Portugal have largely held steady over the past year, but top-tier firms have increasingly turned to recruiting former government officials. Assunção Cristas – a former minister of agriculture, sea, environment and territorial planning in Portugal – joined VdA to lead its environmental practice, while PLMJ’s finance and corporate groups were bolstered by the arrival of Pedro Siza Vieira, who served as minister of the economy between 2018 and 2022.

‘Attracting and retaining talent is clearly one of the sector’s key challenges and one we have been looking at very closely,’ says PLMJ’s managing partner Bruno Ferreira. ‘The leading Portuguese law firms are now competing for talent with the large London firms. And when it comes to UK law firms, compensation is a key driver where it’s very hard to compete.’

Iberia has a relatively stable legal market, particularly at the top end. Well-established independent law firms are at the helm of the most high-profile mandates and significant transactions in the region. VdA, Morais Leitão and PLMJ dominate the Portuguese market, while in Spain that role is shared by Uría Menéndez, Garrigues and Cuatrecasas, all of which have also managed to establish credible footholds in Portugal.

Save for a handful of Spanish firms, few international outfits have successfully made inroads into the Portuguese market. Among them is Linklaters, the only Magic Circle firm with a tangible presence in the country. But while international players are absent from the market, their impact is still significant.

‘Over the past few years, we have seen new entrants such as DLA Piper, CMS and Eversheds Sutherland using their international credentials and competing on scale, sector and local capabilities, while Spanish firms are also trying to capture market share,’ comments Gomes Freire. ‘This has created increased competition in a very small market where the proportion of high-end, complex, high-value and international work is relatively limited.’

Despite the increased competition faced by independent law firms in Iberia, the legal sector holds promise. Though 2023 will be marked by uncertainty, lawyers in Portugal are cautiously optimistic.

‘Law firms with strong transactional profiles and focused on large deals are particularly well-positioned to face what could be a few months or years of economic downturn,’ says Ferreira.

But perhaps optimism should be tempered. As Vives warns, market players would be remiss to forget that ‘geopolitical conflict, the energy market crisis, and the tightening of monetary policy’ loom around the corner. LB

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While Ireland’s competitive legal market has enjoyed a buoyant period post-Covid, fresh challenges have emerged to challenge this optimism. Ireland has not been insulated from the overheated recruitment market and is as alive as global peers to reversals wrought by the cost-of-living crisis, the war in Ukraine and a slowing of deals as concerns over interest rates and inflation continue to gather pace.

However, Declan Black, Mason Hayes & Curran’s managing partner, predicts high single-digit revenue growth for the 2022 calendar year, even as it comes on the back of a 2021 banner year for much of the Irish market at large. ‘Corporate transactions are down from the 2021 peak and that has spread through the western world,’ he says. ‘Valuations have tumbled amid concerns over interest rates and inflation. Deals have slowed down.’ That said, he points to real estate, financial services, contentious, regulatory and data regulatory as areas of sustained growth.

Geoff Moore, managing partner of Arthur Cox, is sanguine. He flags good levels of activity in corporate, with the finance group being kept busy with new mandates in real estate finance, private equity, corporate banking and infrastructure finance. The litigation group has also had a good run, with regulatory investigations and dispute resolution work being a large driver of activity.

‘Corporate transactions are down from the 2021 peak and that has spread through the western world.’
Declan Blank, Hayes & Curran

He insists there is no shortage of opportunity. ‘ESG has been a key area for us as businesses, particularly listed companies, continue to focus on this. We are working with our clients to help them identify and integrate ESG priorities at all levels of their businesses and our cross-disciplinary team has been busy with increased client demand in the areas of green financings, bonds, fund disclosures as well as energy conscious M&A and financial regulation.’

He reels off a list of substantive mandates for Arthur Cox that includes advising Greenlink on its 500MW, 190km interconnector project and acting for ESB and Bord na Móna on the development and financing of the 83MW second phase of the Oweninny windfarm, Ireland’s largest wind development project. Other standout matters include advising Brookfield Asset Management on its acquisition of the entire issued share capital of Hibernia REIT for €1.089bn and Starwood Capital Group on its debt finance provision for Echelon Data Centres, an Irish-owned company.

Stephen Keogh, William Fry’s head of corporate, points to advising Echelon on the €950m Starwood Capital financing; online food ordering service and Irish unicorn Flipdish on its series B and series C fundraising rounds; as well as deals for Melior, the spin-off private equity fund managed by the former Carlyle team in Ireland. Keogh says the first half of 2022 tracked that of 2021’s stellar run but he has also noticed a slowdown. ‘We would like to see more term sheets,’ he admits. ‘We are not yet seeing the same volume of new instructions to see us through to next year, but we can’t expect to be flat out forever.’

Owen O’Sullivan, William Fry’s managing partner, is similarly philosophical. ‘We can’t ignore the headwinds but we’re not panicking. The firm works to the calendar year and we have built in provisions around things slowing down and factored in inflation pressures.’

For his part, Matheson managing partner Michael Jackson’s highlights include advising Generation Investment Management (the investment management firm of Al Gore) on establishing the fourth vintage of its flagship private equity fund range; advising Bank of Ireland on its acquisition of the Irish assets of the Belgian bank, KBC, which is leaving the Irish market; and advising Octopus Renewables on the acquisition, development and project financing of a 250MW solar plant, which will be the largest in Ireland.

‘We can’t ignore the headwinds but we’re not panicking. We have built in provisions around things slowing down and factored in inflation pressures.’
William Fry, Owen O’Sullivan

With competition being so fierce, it doesn’t do for firms to hide their light under a bushel. As Black says: ‘Economic headwinds are obviously horrible but the business of law is very resilient. Brexit has been the gift that keeps on giving. There is an extraordinary centre of gravity in the Irish market which means that, because of its smaller size, it doesn’t take all that much to create a positive impact.

‘We now have 2.5 million people in employment, many in high-value jobs in tech, financial services and pharma, and that is driving a lot of activity. There are many problems in Ireland, but they are problems of growth rather than problems of contraction. There is a good set of indigenous companies. From a legal services point of view, that means just a lot of activity.’

Speaking with Legal Business at the end of 2022, Jackson noted the full effects of the slowdown were still to play out. ‘Earlier [in 2022] when things looked like being a little less busy than in 2021, I wondered whether we were just seeing a return to the pre-Covid “normal” where some practice areas were a little seasonal.’ He also predicted any downturn would not be felt until this year.

The message from Dublin’s law firm leaders is for the most part ‘prepare for the worst and hope for the best’. Black concludes: ‘I’m not expecting anything radical or a step change over the next few months but the macroeconomic environment makes me nervous. An energy shock and the cost-of-living crisis will feed into harder times for business. Ireland is resilient and performing very well. It will be squeezed but hopefully it will fit through the gap without too much damage. Ireland will suffer in a global downturn but it will bounce back quickly. That is a factor of our size.’ LB

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While the three years following the onset of the Covid-19 pandemic were marked by instability and uncertainty – exacerbated by Russia’s war against Ukraine resulting in gas supply issues and inflation – law firms have been presented with opportunities for expansion and growth within a significantly reshaped legal market. With Italy among the European countries that suffered the most from both the pandemic and the energy crisis, its legal community has been concerned as to their fate in 2022.

Both large international and independent law firms faced an arduous business environment, characterised by tightened competition, shifting client needs, technological advancement and strict regulatory developments. Despite these challenges, many of Italy’s best independent law firms were able to achieve strong results in 2022 and have unanimously reported their busiest and most successful years, with an average increase in revenue of up to 10%.

‘In 2022 we recorded an average growth in work of 9%,’ says Legance managing partner Alberto Maggi. ‘Corporate finance and banking grew at this rate, but also IP, white-collar crime and public law grew significantly. For Legance, 2022 was again a record year in terms of economic results.’

One of the key changes in the legal market in 2022 was the continued shift towards remote working and digital services, which forced law firms to invest in new technologies, especially AI, to streamline processes and improve client service and efficiency as well as seeking new ways of providing legal assistance. Similarly, the increased reliance on technology led to growth in demand for legal services in data protection, intellectual property, and cyber security matters. Growth has also been witnessed in regulatory compliance, M&A, and Covid-19-related litigation in the healthcare sector. Across the board, independent firms have reported significant growth in dispute resolution, with an unprecedented number of disputes arising, particularly in the M&A, banking and finance, infrastructure and digital sectors. For many firms, litigation departments were the main source of turnover.

As companies seek to navigate financial difficulties, Italian law firms have seen an uptick in restructuring and insolvency mandates. BonelliErede president Stefano Simontacchi, however, notes that while restructurings did in fact steadily increase, enormous state aid and recovery packages given to corporations and individuals have brought the economic decline to a temporary halt. But while a temporary reprieve was achieved by tapping into Italy’s PNRR (national recovery and resilience plan) and NextGenerationEU, the EU’s recovery package, this has yet again been toppled by geopolitical developments. As Simontacchi comments: ‘With inflation on the rise and the possibility of a major recession just around the corner, we and other European firms expect that 2023 will see a high number of restructuring cases.’

‘With inflation on the rise and the possibility of a major recession, we and other European firms expect that 2023 will see a high number of restructuring cases.’ Stefano Simontacchi, BonelliErede

Other areas of growth, predicted to continue this year, have been large investments in infrastructure, real estate projects and energy transactions. Disrupted energy supplies, changes to energy regulations, pricing and fees, has put pressure on businesses, and severely impacted financial institutions. Equally, it has propelled the transition towards green energy. Firms that were able to respond quickly and effectively to increasing demand and investment in renewables to reduce the existing dependence on Russia were able to capture new business and expand their client base. This trend is accompanied by an increased focus on sustainability and environmental, social, and governance (ESG) issues. In recent years, top Italian firms have established ESG-focused teams to address the pressing needs of clients to navigate the complex regulatory environment as transactions are increasingly structured through an environmentally and socially conscious lens. Contrary to the US or the UK, ESG work in Italy as well as other southern parts of Europe has not translated into large revenues yet; mandates are so far predominantly emanating from the public sector instead of high-level investigations within corporations.

Another layer of uncertainty was added by Italy’s new government. After Giorgia Meloni, party head of right-wing Fratelli d’Italia, was named prime minister in October following elections in 2022, the impact of the new government on the legal landscape is yet to be seen. While changes in regulation are expected to particularly impact the demand for legal services in data protection, IP, and environmental law matters, policies to attract foreign investment may lead to further growth in M&A, banking and finance, and the real estate sector.

With an augmentation in foreign investment, Italy is becoming more attractive for international firms. While historically several international outfits have entered the Italian legal market, few if any have been successful and as such are not perceived as an immediate threat to the independence of local firms. However, Simontacchi comments: ‘Will a local independent firm be able to compete in the next 20 years, given the quantum leap the world experienced and – at EU level – the increasing subjects that will be centrally regulated? Those are the real challenges to be faced, regardless of whether international firms expand into Italy.’

Filippo Modulo, Chiomenti’s managing partner, suggests ‘complex deals require more multidisciplinary and homogeneous capabilities from law firms’. To tackle a client’s issues effectively today, he says an integrated approach is essential: ‘Any transaction ought to be accompanied by the same level of quality and competence on the regulatory side that is provided with the main deal advice. Chiomenti got there after years of focus and pursuing a clear strategy.’ Other independents having achieved that strength-in-depth throughout the firm include BonelliErede and Legance.

Another challenge faced by the entire legal sector in a post-pandemic environment is being attractive to new talent. According to the managing partners of Chiomenti and BonelliErede, there is not a war for talent among firms per se but rather a structural problem that needs to be overcome. The generational shift is pushing firms to adapt their work-life balance management and their operations with the aim of improving flexibility, job satisfaction and good health among staff.

It is clear that independent Italian law firms face a range of challenges over the coming year, including increased competition, technological advancement, talent attraction, increased regulation, inflation and geopolitical uncertainty. Those with agility and the ability to embrace new technologies, respond to the needs of clients, and stay ahead of changes in a rapidly changing world, are headed towards success in this competitive market. LB

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In an increasingly tumultuous market, the Nordic region has thus far remained resilient to pressures; as the Covid-19 pandemic begins to abate, new stressors, such as the war in Ukraine and global economic downturn are starting to affect investment and deal flow across Norway, Sweden, Denmark and Finland. With the countries’ proximity to Russia, and Finland and Sweden in the process of joining Nato, the political and economic situation doesn’t look like settling down anytime soon.

In Norway, Thommessen’s Sverre Tyrhaug states that despite the vicissitudes of global market forces and a drop in capital markets work, 2022 ‘turned out surprisingly well, we were busy and up in terms of turnover’. With regards to sectors, as with most countries in Europe, Norway is looking to increase energy security and Thommessen has seen an increase in renewables, as well as oil and gas, and hydrogen projects. As for 2023, Tyrhaug remains optimistic: ‘Lots of clients will put cost-cutting high on the agenda, especially due to increasing inflation. However, it will not necessarily be a bad year for lawyers; we expect consolidation in the tech, energy and renewables sector and a lot of M&A and distressed M&A work.’ Norway remains a stable legal market with indigenous, independent firms taking up the bulk of high-profile work.

In Sweden, Vinge’s Maria-Pia Hope says: ‘The M&A market remained comparatively busy, if not at 2021 levels, and stock exchange volatility created opportunities – public takeover bids were a clear trend for the year.’ With regard to trends for the next year, she adds: ‘We expect the elite independent firms in the Nordics, with their full-service offering and robust client base, to continue to do well in a weaker market.’

In terms of sectors, infrastructure and energy will be a key area of focus, as it is across the Nordics and Europe; this will create investment opportunities for clients. With a weaker domestic currency, Hope suggests: ‘Swedish assets will continue to be attractive at a more general level to certain international investors.’

Denmark entered 2022 with a buoyant M&A market, particularly in the life sciences, financial services, and technology sectors, though early signs of deterioration soon became reality in September with the Ukraine conflict. In the latter half of the year, firms saw an uptick in insolvency mandates, as rising interest rates and material prices led to a steep decrease in real estate transactions. The renewable energy sector continues to remain strong within the Danish market, particularly with the development of offshore wind farms.

As firms contend with the possibility of an impending recession in 2023, practitioners worry about more than the potential impact on earnings. Christina Bruun Geertsen, managing partner of Kromann Reumert, expresses her concerns about the cultural effect of navigating employees through a potential recession, acknowledging that ‘getting used to a new normal’ may cause employees to develop stress, but ‘at least, sitting in Denmark, we will likely not be severely impacted’.

‘We expect the elite independent firms in the Nordics, with their full-service offering and robust client base, to continue to do well in a weaker market.’
Maria-Pia Hope, Vinge

The previously stable Danish legal market saw unprecedented movement in the form of lateral partner hires and team moves around Copenhagen, in addition to the growing presence of large audit firms, including KPMG. The Big Four have continued to establish legal practices within Denmark, despite thus far being unable to fully permeate the market. Geertsen confirms: ‘While they aren’t as present right now, we anticipate they are coming, they have the financial muscle’ [to compete with local firms].’

As the Ukraine war casts a shadow over Finland’s economic outlook (and consequently its 1,340km shared border with Russia), firms have seen energy transition become a huge area of investment as Finland seeks to reduce its dependence on fossil fuels. Despite previously maintaining a peaceful relationship with Russia, Finland’s decision to apply for Nato membership will affect the perceived risks for global investors and the surrounding investment environment, and will continue to affect how the nation will thrive over the next three to five years.

Mikko Manner, managing partner of Roschier, notes the ‘massive amounts of money being poured into industrial projects’ across the energy sector, particularly in relation to carbon capture. Firms have also noted an increase in general corporate mandates as Nordic companies scramble to exit from Russia, with Manner confirming that ‘there’s a lot of disruption in the environment’.

Decreases in activity in the capital markets and M&A spheres, though less severe than feared by numerous practitioners, has raised concerns for the possibility of economic recession in 2023. Practitioners, including the managing partner of Krogerus in Finland, Mårten Knuts, remain cautiously optimistic, with him suggesting that the ‘relative cosiness’ of the Finnish market ‘makes the consequence of a recession very tolerable… it will hit firms fairly equally’. But with the legal services industry showing surprising resilience overall, Manner cautions that the recession could have an uneven impact: ‘The smaller the firm and the weaker its position, the harder it’s going to be.’

In the face of a turbulent year of change, Nordic firms have retained their optimistic outlook for the future, cushioned by the longstanding stability of the region’s legal market. Looking forward, firms continue to contend with several issues, including the war for talent. Geertsen acknowledges that firms compete not only with each other, but ‘other businesses and ways of working that compete with the way law firms work’ and contends that firms must in turn ‘adapt and offer the solutions and workspaces’ which employees can identify with.

While coming year promises to provide uncertainty abound, practitioners remain confident, with Knuts observing that ‘the legal services industry is surprisingly resilient’, having survived the impact of the Covid-19 pandemic in tandem with ongoing geopolitical and economic anxieties. LB

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