A year after the takeover of Dutch banking giant ABN Amro ignited the local deal market, public consternation at the way the deal was handled is growing. Sofia Lind reports from Amsterdam

The fanfare surrounding last year's E71bn (£56bn) hostile takeover of Dutch banking giant ABN Amro is now over and, in its place, local criticism of the deal is growing. Although the deal was unparalleled in the local market for its size and for the number of law firms involved, are Dutch advisers about to feel long-term pain and a dearth of lead-adviser finance instructions at the expense of a few months of short-term gain?

The ABN takeover by a consortium of banks – led by the Royal Bank of Scotland (RBS) and including Fortis and Banco Santander – saw busy times for local lawyers. Dutch giant NautaDutilh acted for ABN opposite Dutch rival De Brauw Blackstone Westbroek, which advised the consortium on Dutch law issues. It was also the deal where the Amsterdam arm of Linklaters won the lead role for RBS, a coveted role for the 50-lawyer outfit which has expanded rapidly since the decision to launch a greenfield office after the ill-fated relationship with De Brauw.

But in the aftermath of this historic deal criticism abounds, thanks in part from a disillusioned Dutch public which says the legacy bank should have been safeguarded by the Government in order to stay Dutch. In response, the Dutch ministry of finance is preparing a report, due for completion next month. The ministry instructed Loyens & Loeff partners Peter Corten and Kitty Lieverse to advise on the Government investigation into the foreign takeover of a Dutch banking icon.

Once published, the report will form part of a debate that will be held in the Dutch Parliament and in the special committee of the ministry of finance. The focus is on the position of the Dutch Central Bank and of the Dutch Financial Markets Authority and the supervisory role they played in the takeover process.

"It was all fairly quick and uncontrolled," says Loyens corporate partner and board member Hendrik van Druten. "The Government has launched an investigation into the procedure, also to see if there is a demand for legislation. There was public pressure to safeguard ABN Amro to stay Dutch, but that did not happen. The investigation is an exercise to see if we can learn from this deal."

In an unrelated matter, another side effect of the takeover was the redundancy of the entire legal team advising the former ABN Amro management board, a group of seven lawyers including two general counsel.

Another group that has taken a hit in the wake of the mega-deal, are Dutch finance lawyers. The local view is that finance teams at firms including Clifford Chance (CC) and Nauta could suffer considerably from the absence of the banking giant as a Dutch-listed company.

While Nauta's chairman Marc Blom said the firm has no shortage of work, CC Amsterdam head Jan ter Haar concedes the effects of the worldwide economic downturn and the loss of ABN Amro are being felt. He says: "Overall there has been a period of less work in banking. As a result, our banking business has at least 10%-15% less work compared with last year."

He also says the firm has been forced to drop its fees in the field to attract work. "The pressure on fees is less in private equity but more so on the banking side. We see that firms have dropped prices to get work in – that puts a pressure on our fees, but we do have a limit," ter Haar explains.

Having set up shop in 1972, rivals have noted that as a well-established finance player CC has aimed for a larger share of the corporate cake to compensate for the downturn in finance work – a logical move says ter Haar.

CC has also enjoyed a slight upturn in work in restructuring, with ter Haar adding that the firm is still waiting for the "big hit" which could see the finance practice busy again.

The Dutch crunch

Despite the almost inevitable drop in banking instructions, Dutch banks have generally not been as badly affected by the credit crunch as their UK counterparts.

"Dutch banks have been rather conservative. If you compare their troubles with banks such as UBS and Citibank, the Dutch banks have not been very badly hit. ABN Amro has had some troubles with lay-offs but that doesn't count as a Dutch bank anymore, plus that could be as a result of the split," says Freshfields Bruckhaus Deringer's newly-elected Amsterdam managing partner Robert ten Have.

"The consortium had a good idea but it was not done at the right time. It was done at an unfortunate moment, right at the beginning of the credit crunch and at a very high price, due to the competition from the Barclays bid," he added.

Freshfields Bruckhaus Deringer was conflicted out of the ABN Amro deal early on because it represented ING in earlier talks with ABN Amro; these talks ceased when Barclays made its bid. However, Freshfields was still able to get involved, through advising Merrill Lynch, the sole adviser to the winning consortium. Bank of America also approached Freshfields in connection with its bid for LaSalle (the US arm of ABN Amro) but due to a conflict they referred the work to Dutch firm Loyens & Loeff.

With memories of the ABN deal fading fast, ten Have says with characteristic lawyerly conservatism, that the Netherlands' legal market is "a bit" slower.

"In 2008, overall activity has gone down. We have not yet seen an increase in insolvency and restructuring; there is only a slowdown in M&A so far. It seems we are at a crossroads where things could go in two directions. If the whole of Europe goes into a recession, then of course things will get worse here."

Linklaters Amsterdam head Martijn Koopal voices similar caution about the knock-on effects of a Europe-wide recession but remains positive for now. He says: "The Netherlands is holding up well against the credit crunch so far. There was a report last month which said consumer confidence has decreased but commentators say it normally takes a longer period before it is seen in their spending. Also, there is not much unemployment although a recent report mentioned that an increase could be expected next year. Of course, the Netherlands will not be able to fully avoid the credit crunch, but with the economy reasonably in order we should be able to sail through the storm."

Unlike in the UK, the Dutch housing market is not expected to slump, meaning real estate and related practices are not being hit as hard.

"There is no slump in the Dutch housing market like the one in the US and UK," says Koopal. "The increases seen in domestic house prices could slow down, but there is still a shortage of houses. The demand means that house prices are not expected to fall."

Internationalisation on the cards

As in many European jurisdictions, local lawyers have in recent years been losing out on lead adviser roles thanks to the US and UK firms' relationships with the dominant investment banks and hedge funds. This trend has, for the time being, slowed as deal flow dries up due to lack of liquidity. For the Dutch arms of international firms, the sooner the trend picks up, the better.

Freshfields' ten Have says: "In public M&A, Dutch-listed companies were always protected, which led to international shareholders' criticism. In the last couple of years new legislation has come into force – a new corporate governance code – which gives the shareholders more rights. That and increased activity from hedge funds has led to public M&A now being more open. Before there were hardly any hostile bids, now there are, plus there are often competing bids. For lawyers it is, of course, good news."

It is good news for UK and US-qualified lawyers, but not so much for the local lawyer. In the long term, the problem of how to nail the lead role on big-ticket deals will not disappear. In response, local blueblood De Brauw is turning its mind to internationalisation, and is considering hiring lawyers qualified in non-Dutch jurisdictions.

"So far our hiring of internationally-qualified lawyers has been incidental but at a certain moment one may look for international lawyers that have a more general knowledge of international cross-border business law," says De Brauw corporate partner Berend Crans. The reaction of rivals to this move is positive, as one partner at a local rival articulates: "De Brauw has always had a strong market position. Its weak link is that it is really a domestic firm, not an international firm. Considering its strong relationship with Slaughter & May it would be interesting to see what would happen if they started hiring their own English-law capability lawyers.

"If it wants to do English law it will be an international firm and therefore in competition with Slaughters."

Faasen inks the Eversheds deal

Another firm aiming to internationalise its practice is mid-sized player Faasen & Partners, which recently agreed to join the international network of top 10 UK law firm Eversheds, from 1 October.

The now 45-lawyer firm was created in 2004 from the Dutch arm of KPMG's legal arm KLegal. Three of the current nine partners were part of the original team, including managing partner Rob Faasen and corporate partners Michel Chatelin and Claudine Maeijer. With offices in Amsterdam and Rotterdam, about 60% of the firm's lawyers are based in the capital.

Market rivals expressed some surprise at the alliance news, partly in the light of the previous unsuccessful attempt made by Eversheds in the market. The firm tied up with Boekel de Neree in December 1999, with plans for a full merger after five years, but Boekel pulled out of the alliance in May 2002, citing a lack of referrals as the reason.

"Eversheds is not a well-known firm in the Netherlands. It is an interesting move to re-enter the market at this time. The market is still going strong but everybody is cautious," comments one market rival.

"I have always been somewhat surprised at the interest of UK firms in the Netherlands. US firms tend to choose to serve the market from their London office," comments Crans at De Brauw – a firm with a sour history of tie-ups with UK firms, having been part of
Linklaters' alliance venture for a few years in the early days of the new millennium.

Faasen's Chatelin says the new tie-up was sparked by client demand for a more international practice: "Most of all we want to give our clients an international offering, but we also think we will give them added value. We have always focused on being innovative and entrepreneurial. When we talked to Eversheds we heard they had a number of tools to further this, including IT tools that allow us to work in a project management form."

Despite talk of working together, he excludes the merger option for now. "For us it was important to remain an independent firm, that's why we became a member of Eversheds International. One of the benefits is that we don't share profits," he says.

Some of the market reaction to Faasen's move can be attributed to a common fear of tie-ups because of the consequent loss of referral work from other UK firms, but the fear is not shared among Faasen partners.

"We expect to generate more international work via referrals. We have seen this already during the six months that we have been talking with Eversheds. We are seeing a significant jump in our turnover," said Chatelin.

Faasen says its business model is not so dependent on referrals as to make the move unnecessarily risky, with 10% of turnover represented by referrals at the time of the tie-up. "Based on the experience of other members that have joined the network, we estimate that with Eversheds' referrals that number could be 10-20%, up to 45%" says Chatelin.

To its credit, Eversheds is a significantly larger and more international firm than at the tie of the Boekel tie-up.

"Eversheds has become an international powerhouse over the last few years so there is more work to be referred. During the past six years, Eversheds has also learned how to work within the network. There is a strong culture of cooperation between the offices," says Chatelin.

Former ally Boekel, meanwhile, is set to open in London next year, marking the first office outside Amsterdam for the 130-year-old firm.

The office will be led by corporate partner and M&A head Ferdinand Mason, who will relocate to the City along with three associates for the launch on 1 July, 2009. After one year, the firm plans to add one more partner to the office.

Since the firm re-established its independence, Boekel has changed its strategy from acting largely on referrals to become a full client-based practice. Mirroring the strategy, the London office will be a practising office rather than a referral office, with the Netherlands headquarters to support the London team.

"Terminating the relationship with Eversheds in May 2002 is ancient history for us – a very long time ago. From 2002 onwards, we have had a client-based practice rather than one based on referrals, which has resulted in this strong position in the market," says Mason.

"It is difficult to say what the firm will do long term, as the world is changing very quickly, but for now we see an independent future."

Boekel has around 170 lawyers based in Amsterdam. Other Dutch independents with offices in London include Stibbe, Loyens & Loeff, Houthoff Buruma, Nauta and De Brauw.