The image of the continental independent law firm as a fading, conservative institution unable to keep pace with emerging foreign powers looks set to come up for revision, according to a comprehensive overview of the market.

Legal Week's annual Independent Law Firms in Europe (ILFIE) report charts a new breed of entrepreneurial practices often set up by young lawyers with experience of working at major international firms.

The new breed is geographically diverse, sometimes springing up in major Western markets where foreign law firms have already become a major force, but also in key emerging markets such Central & Eastern Europe (CEE) and Russia.

Firms to typify this breed include Dutch independent Stek, which was set up in 2005 by five partners from local leader NautaDutilh, Milan-based Labruna Mazziotta Segni – which split from Gianni Origoni Grippo & Partners – and Moscow practice Egorov Puginsky Afanasiev & Partners. Key independents in the CEE region include Czech firm Peterka & Partners.

Less is more

While lower legal bills and a more local client focus remain a common theme with the traditional independent, many of the new firms are distinguished by a more commercial attitude and an internationalist outlook. As such, these independents sell their experience of having worked with large international firms as a guarantee of their quality.

"As a boutique, individual clients are much more important to us than they are at a larger firm," says Pedro Cardigos, a partner at newly-formed Portuguese firm ABBC.

By downsizing headcount, firms also cut the number of potential conflicts they suffer in a climate where attitudes of both clients and regulators are hardening towards such issues.

Many firms are also specifically positioning themselves to attract talented associates at large international firms by offering a quicker route to partnership.

Christian Berger (pictured), managing partner of German independent Avocado, told Legal Week: "If a young lawyer is at a global firm, he or she assumes they will not make partner and will move to an independent firm at between two and five years' post-qualification experience."

He added: "They bring experience of quality work with them and this is what individual firms need to develop their business. It is becoming an established pattern."

The number of independents has also been bolstered by split-offs from major international firms, including this month's launch of Linklaters' Cologne office as Oppenhoff and the formation of Oppenheim in October out of Freshfields Bruckhaus Deringer's Hungarian arm.

Likewise, the Italian legal market, which has traditionally been dominated by a handful of elder statesmen with key client contacts, has seen several notable breakaway practices in recent years, often set up by younger partners.

Referrals: the lifeblood of the independent

Referrals remain the lifeblood of any independent outfit and an association with an international brand is often a key part of the marketing strategy. Sweden independent Setterwells' managing partner Richard Akerman says: "You need good contacts among London law firms and private equity houses. Investment banks are also a very good source of work for independent firms."

He adds: "You have to have had the personal contact and to have actually worked with these people."

This optimism among the independent firms' community was mirrored in this year's core ILFIE 2007 survey, which covered more than 80 firms. Ninety-eight percent of respondents said they expected their business to grow over the next 18 months.

While growth was a clear goal, independence also remains high on the agenda, with just 14% of firms stating that they would be open to a merger with a large UK or US firm.

Although only a small number of firms say they are open to a merger with a UK or US practice, many of these firms are fast-growing practices in emerging markets. Firms to pronounce themselves ready to merge with another European independent include Italy's NCTM, Romania's David & Partners and Spain's Gomez-Acebo & Pombo.

As if to further dispel the concept that the only way for an independent firm to thrive is to carve out a niche for itself, 80% of firms described themselves as full service, while a large minority (38%) were planning to launch a new practice area in the next 18 months.