Switzerland: Uncertainty reigns

As the status of Switzerland as a major player in the global business community has waned, young Swiss lawyers are finding it increasingly difficult to pick up valuable international secondments to global firms. Sophie Evans reports

January 19, 2004 at 07:03 PM

5 minute read

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With few firms having made the leap into Switzerland, set up an office and stayed in the market, Swiss lawyers remain confounded as to why more US and UK giants have not tested the water by setting up small offices in either Zurich or Geneva.

Rumours persist that some of the UK's magic circle firms are looking to set up in Zurich, but with certain such firms' European offices having cost them dearly in the past three years, the appetite for further European expansion is far from voracious.

Jones Day for one terminated its presence in the market two years ago, its Swiss experiment being the most recent in the history of US firms entering and subsequently leaving the market.

In reality, Swiss law has become less important to many global firms, some of whom have chosen to ditch their private client practices – the area which could generate good fees in Switzerland for a global firm with the right expertise. Many of today's generation of senior partners in Switzerland have spent time in the US or UK working for the biggest and best firms and are well acquainted with the global firms' way of working and what the client expects of them.

Today's generation of young Swiss lawyers does not have the same opportunity to work overseas, with foreign firms more keen on recruiting secondees from jurisdictions with booming economies, particularly China, India and the developing world.

Does this mean that Switzerland's next generation of partners will not have the same outward-looking perspective that gave Swiss firms the edge in the 20th century?

Many firms admit that securing young lawyers placements with firms overseas is a problem.

Guy-Philippe Rubeli of Pestalozzi Lachenal Patry says the high number of Swiss-based multinational companies means the business community as a whole is geared towards servicing clients at an international level, while at the same time exposing the younger lawyers to international business and ways of working. Pestalozzi sends its young lawyers to China, Hong Kong, Spain and Latin America for a year.

However, no-one is suggesting that the dearth of opportunities for secondees is a positive thing for the Swiss legal market. Martin Anderson, managing partner of Baker & McKenzie in Geneva, says young lawyers do find it hard to find work in general in a mature market such as Switzerland.

"An Indian associate would be much more likely to be taken on by a firm in the US or the UK, because of the links that could be built up," he says. "The Swiss market is not so strategic."

Pierre-Yves Tschanz, of Geneva firm Tavernier Tschanz, agrees that young lawyers do need greater international exposure – his firm sends at least one person to the US every year. "Swiss lawyers used to be a big contingent in New York, but now the Swiss typically do not refer US firms much business and most Swiss companies do not require Swiss lawyers for the international work," he explains.

Matthias Oertle of Lenz & Staehelin says that placing young lawyers overseas now often relies on personal contacts rather than there being a real demand for Swiss links.

The prospects for Switzerland's young lawyers to increase their international exposure depends to a large extent on the entry of foreign firms into the market. Most major firms keep a close watching brief on Switzerland, but for the time being there is reportedly a gentleman's agreement between the country's biggest firms not to merge with a US or UK rival.

The fear is that once one firm goes, the others will quickly follow. Many senior partners admit they talk with magic circle firms every year about them coming to Switzerland, but these talks have not so far come to fruition. Even US firms wonder why UK firms are not in the market – on paper, what the country's economy has to offer makes it look like they should have a Zurich presence at least.

As one partner pointed out in 2002, the Swiss stock exchange had 10 times the equity transactions of Germany in terms of volume. "I wonder why they are not interested in getting more than just the international cake, as the Swiss cake is quite attractive," he says.

For the time being though, the country's rising stars of law will have to continue searching overseas for opportunities to work for a non-Swiss firm. The costs of setting up a Swiss office are, in the current climate, prohibitively high and the US and UK firms seem happy to continue working with the country's best lawyers, whichever firm they are in. Some global firms have Swiss lawyers, or Swiss desks based in other European jurisdictions – Paris or Frankfurt are favoured locations to base such operations.

Most large Swiss firms have in turn developed good ties with US and UK firms acting out of Frankfurt or Paris on Swiss work. Whether this is the first step of phase two – a move into Switzerland- is the million dollar question. In the meantime, the majority of young Swiss lawyers hoping to gain experience in the global arena will just have to wait it out.