Sofia Lind assesses Linklaters' regional prospects after its CEE split and finds rivals are sceptical over pull-out In the end it may not have been a surprise, but Linklaters' decision to split with four offices across Central and Eastern Europe (CEE) has certainly sparked a debate among senior lawyers in the region.

The decision to pull out of Budapest, Bucharest, Bratislava and Prague, which will leave the magic circle law firm with bases in just Moscow and Warsaw, has been met with surprise from rivals.

Linklaters argues that the offices, which are now spinning off to form an independent firm of around eight partners and 125 lawyers, had a strong client base and have worked on a number of high-profile deals in the region. It argues that the move will allow it to focus on faster-growing emerging markets such as Russia, the Middle East and North Africa.

The head of Linklaters' new emerging markets in Europe, Middle East and North Africa (EEMENA) practice group, Nick Eastwell (pictured), told Legal Week: "These are highly successful offices and closing them is not what we are doing. This is not about closure – there is no way we would lose what we have built in the CEE."

Jason Mogg, Linklaters' current CEE head, who will be leading the spin-off firm set to launch officially in November, commented: "This move by Linklaters is despite profitability rather than because of it. This is more to do with a strategy of where the firm wants to be and which markets you want to cover."

Rivals have met the news with mixed reactions, with some arguing the firm would not pull out unless the offices were struggling to retain profitability.

Michael Cuthbert, office managing partner for Clifford Chance in Moscow and the firm's regional partner for CEE, said: "It is strange that they regard a substantial part of the EU as not worth being in. Either the offices were not doing terribly well or their clients do not want to be in those countries. That is not our experience – all our major clients use us in those jurisdictions."

White & Case's Budapest office co-head, Rob Irving, told Legal Week the offices may have been hampered by Linklaters' policy of trying to act for a group of top-tier core clients firm-wide.

He added: "Linklaters has tried to align itself across the world to act for certain clients. Other clients may be active in this region, but Linklaters' local lawyers could have been prohibited to act for them. It may make sense from a global perspective, but this might mean that the CEE offices have lost out on significant work."

The departing offices have worked with clients including Morgan Stanley, Credit Suisse, E.ON, Deutsche Telekom and T-Mobile and have notched up roles on deals such as Vodafone's £1.8bn takeover of mobile phone operators Mobifon and Oskar Mobilel – at the time the largest telecoms deal in the CEE region.

Despite the split, the offices plan to continue working with these Linklaters clients as well as investment banks such as ING, Merrill Lynch, JP Morgan and energy firm Enel.

Both Linklaters and the departing offices are keen to stress the plans for continued collaboration, with both expecting to maintain a best friends referral relationship, including secondments and joint training.

With an ambition to expand further across the region, Mogg also intends to keep both fees and remuneration rates at Linklaters levels.

Mogg said: "We are largely going to be working for the same clients as in the past, but certain conflicts will no longer be there. There will be an opportunity to work for clients that we could not in the past, but the basic targets will not change.

"My experience is that people want top-quality service and seek that out. We believe we provide that already, and we will continue to do that. Basically, what is happening is that now we are in a position to make more partners and expand in the region."

However, some in the market did not share Mogg's outlook, arguing that some clients may not be keen to work with the firm once they lose the Linklaters brand.

Allen & Overy's Prague-based head of CEE, Jane Townsend, said: "For a large number of clients it will compete in the same way as before, where the client is not concerned if it is represented by a known international firm.

"If Linklaters' clients want to work with a known international firm, the new spin-off firm may not tick that box."

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