As its rivals downsize in Germany, Latham & Watkins is in hiring mode. The firm is targeting premium M&A work in a bid to catch up with key rivals by 2020, says country head Oliver Felsenstein, formerly global co-head of private equity at Clifford Chance (CC).

"In three years' time we want to be viewed at least on a par with Freshfields Bruckhaus Deringer and Hengeler Mueller. These firms have traditionally had strong reputations in strategic M&A, but we have invested and continue to win market share."

The new strategy encompasses four areas: Latham's reputation in the German market; recruiting and retaining the best talent; integration within the firm's four offices in Germany and around the firm's global network; and innovation and modernisation.

It was launched by Felsenstein in September to fulfil the firm's overall goal to become the number one law firm in the world.

He explains: "To be the world's leading global law firm you need market-leading expertise in the key financial and regulatory centres. In Germany, we are focused on building on our existing strengths to establish ourselves firmly at the top of the market.

"We are looking to continue to grow the M&A practice, but don't have set goals in terms of size. We are already market-leading in areas like private equity, capital markets and finance." He adds that the litigation practice is also earmarked for growth.

With Brexit we have seen a slight change in some clients' focus towards Frankfurt and Paris

Currently, the firm has 16 M&A partners in Germany, including nine private equity partners. In total, Latham has 170 lawyers in the country including 43 partners, across four offices in Frankfurt, Munich, Duesseldorf and Hamburg.

The focus in Germany on M&A laterals mirrors the approach taken in London. It was the hire of Allen & Overy (A&O) City M&A partner Ed Barnett in November that first signalled the firm's intent to ramp up in M&A, traditionally a magic circle stronghold.

However, the firm is yet to recruit a prominent M&A partner in Germany.

Recent M&A mandates include, in March, acting for German consumer products group Henkel, maker of household brands Persil and Pritt glue sticks, on a $1.05bn (£800m) deal to buy the can sealants and coatings unit of GCP Applied Technologies.

Felsenstein suggests the firm is also turning its attention more towards Germany in part due to uncertainty over how Brexit will impact the City. "London will remain a key strategic market for the firm, and we're not done there yet, but with Brexit we have seen a slight change in some clients' focus towards Frankfurt and Paris. The firm takes a long-term view and won't be making any snap decisions. We are well placed to pivot as required."

Felsenstein, who joined from CC along with fellow private equity partner Burc Hesse in 2015, was appointed country head in August 2016. Previously, the firm's Germany operations were led by three individual office managing partners.

His key clients include private equity firms CVC, Hg Capital, Permira, Terra Firma, 3i and Frankfurt's Quadriga Capital.

The firm is planning to grow in Germany while others opt for steep cuts in the region. Freshfields has reduced Germany partner numbers by 20% since late 2015, while CC has pushed forward with a similarly aggressive reduction in partner count in recent years.

So far, Latham's partner count has remained broadly stable at 43 during the past few years. The firm has no plans to close any offices or launch new ones.

Despite a sharp rise in exits in Germany, the firm has replaced these with lateral hires and promotions. In 2016, the firm brought in three magic circle partners – A&O Germany capital markets head Oliver Seiler in Frankfurt, Linklaters German head of private equity Rainer Traugott in Munich and Freshfields competition partner Michael Esser in Duesseldorf.

Prominent exits include Frankfurt white-collar defence partner Finn Zeidler, who last month quit for Gibson Dunn & Crutcher, where he was reunited with former Latham colleagues Dirk Oberbracht and Wilhelm Reinhardt, who left to launch the Frankfurt base last year.

Going forward, Felsenstein says Latham's ultimate position in the market by 2020 will depend on market perception.

"How will I know if we've achieved our goal? The test for me will be when I ask 10 people which law firm they regard as the best in Germany and the majority say Latham."