Charlotte Edmond analyses the facts and figures to emerge from this year's survey of European independent law firms

Europe's independent firms have put expansion plans on hold, with the recession prompting fears among many managing partners that the risks of a tie-up with a like-minded firm could outweigh potential the benefits.

Despite the opportunistic merger openings presented by the recession, the number of independent firms that would consider tying the knot over the coming 18 months has fallen from almost a quarter (23%) in 2008, to just 15% in 2009.

Just three out of 125 of Europe's leading independent firms said that they would consider a merger with another continental European firm, with an additional 16 saying they would ‘possibly' consider such an opportunity.

When it comes to merging with a US or UK firm, a similar picture is painted, with 2% saying they would consider the option and 13% saying they would possibly consider ilfie-tables1going down that route. This marks a slight decrease on 2008's figures, where 17% of firms said they would, or possibly would, look at a merger over the coming year and a half.

Italy's Tonucci & Partners, which currently has an alliance with Mayer Brown, said that it would consider a merger with a US or UK firm, as did Ukraine's Astapov Lawyers. Romania's Buzescu was the only firm to say yes to the possibility of both a merger with a US/UK firm or a mainland European firm.

The figures are in contrast to a Legal Week Big Question survey carried out in June this year, which found that 44% of UK partner respondents believed there were substantial opportunities to secure an international merger.

Part of the reason for the lack of merger interest on the continent may be that well over half the firms to respond (58%) were members of some form of legal alliance or ‘best friends' relationship. Last year, 48% had some form of tie-up.

Practice breakdown

The share of firms looking to launch a new practice area has also fallen slightly on last year, with 14% looking to expand into new specialisms in the next year compared to 16% last year. Among the firms considering moving into new areas are Austria's Graf & Pikowitz which is planning to launch a life science practice and Belgium's Lydian Lawyers which is set to create a health and safety practice. In Romania both Musat & Asociatii and Tuca Zbarcea & Asociatii are expanding their offerings, with the former launching in the areas of consumer protection, health and pharmaceuticals law, while the latter is setting up a court bailiff unit.

The number of firms describing themselves as ‘full service' has fallen slightly on last year, with 11% saying they did not fall into that category, compared to 5% in 2008.

London strategy

However, although plans to expand on home territory appear to be limited, of the 22 firms to respond that have a presence in London, 41% are looking to grow in the region over the next 18 months. Russia's Egorov Puginsky Afanasiev & Partners, which launched an associated office in London in 2007, is set on growing its offering by some 20%-30%.

ilfie-tables2Germany's Schultze & Braun, Italian firms NCTM and Chiomenti Studio Legale, Portuguese firm PLMJ and Van de Feltz from the Netherlands are all planning to grow in the City by 10%-20% over the next year and a half. Meanwhile, Amsterdam firm Boekel de Neree and Uria Menendez and Gomez-Acebo & Pombo in Spain are all set to expand their headcount by up to 10%.

The rank of international firms in London is set to grow with Luxembourg's DSM Di Stefano Sedio Moyse and Ukraine's Astapov Lawyers both currently looking for a toehold in City as they consider opening offices during 2010.

Market share

Back on home ground, the number of firms expecting their market share to grow over the coming year compared to the local offices of international firms has fallen.

Last year 39% of firms thought that the coming 12 months would see them take business from international firms, while this year that proportion stands at 35%. Of those, the majority thought that market share would increase by 0%-10%, although several earmarked growth of up to 30%. The number of firms who thought that their market share would decrease has also risen over the year, accounting for 4% of respondents this year, compared to 2% last year.

The leading perception is that around 10%-25% of the market share currently is held by foreign firms, with 37% of firms believing this to be the case. Just over a quarter of respondents (27%) thought that foreign firms got less than 10% of the business in their local jurisdiction, while a further 16% thought it was in the region of 25%-50% of the work. Just 5% of firms thought that more than 50% of the work in their jurisdiction was done by international firms.

Given their spread of offices, it would be expected that much of the cross-border work would be done by international firms; however it seems that independent firms are getting their fair share of non-domestic work as well. A surprising 42% of firms thought that over half of their workload came via non-domestic firms, with 7% saying that this accounted for 75%-100% of their business. Thirty percent thought that advice for non-domestic clients accounted for 25%-50% of their business, while 16% said the share was more like 10%-25%.

-----------------------------------------------------------------------------------------------------------------------------------------------

Merger talk - Firms open to a US/UK merger in the next 18 months

Boteva & Kantutis Law Office (Bulgaria); Dinova & Rusev (Bulgaria); Georgiev Todorov & Co (Bulgaria); Cipcic-Bragadin (Croatia); Savoric & Partners (Croatia); Neocleous (Cyprus); PRK Partners (Czech Republic); Plesner (Denmark); Avocado (Germany); LABLAW Studio Legale Failla Rotondi & Partners (Italy); Studio Legale Sutti (Italy); Tonucci & Partners (Italy); Kronbergs Cukste (Latvia); Kleyr Grasso Associes (Luxembourg); DSM Di Stefano Sedlo Moyse (Luxembourg); Buzescu (Romania); Ramon & Cajal (Spain); Meyerlustenberger (Switzerland); Astapov Lawyers (Ukraine)

Firms open to a merger with another European (excluding UK) independent firm in the next 18 months

Boteva & Kantutis Law Office (Bulgaria); Dinova & Rusev (Bulgaria); Cipcic-Bragadin (Croatia); Neocleous (Cyprus); PRK Partners (Czech Republic); Vejmelka & Wuensch (Czech Republic); Plesner (Denmark); Juridia Attorneys-at-Law (Finland); Landwell & Associes (France); LABLAW Studio Legale Failla Rotondi & Partners (Italy); LCA Lega Colucci & Associati (Italy); Kronbergs Cukste (Latvia); Kleyr Grasso Associes (Luxembourg); DSM Di Stefano Sedlo Moyse (Luxembourg); Buzescu (Romania); Gomez-Acebo & Pombo Abogados (Spain); Meyerlustenberger (Switzerland); Sayenko Kharenko (Ukraine)

-----------------------------------------------------------------------------------------------------------------------------------------------

[asset_library_tag 427,Click here to download a digital version of Legal Week's Independent Law Firms in Europe supplement.]

Charlotte Edmond analyses the facts and figures to emerge from this year's survey of European independent law firms

Europe's independent firms have put expansion plans on hold, with the recession prompting fears among many managing partners that the risks of a tie-up with a like-minded firm could outweigh potential the benefits.

Despite the opportunistic merger openings presented by the recession, the number of independent firms that would consider tying the knot over the coming 18 months has fallen from almost a quarter (23%) in 2008, to just 15% in 2009.

Just three out of 125 of Europe's leading independent firms said that they would consider a merger with another continental European firm, with an additional 16 saying they would ‘possibly' consider such an opportunity.

When it comes to merging with a US or UK firm, a similar picture is painted, with 2% saying they would consider the option and 13% saying they would possibly consider ilfie-tables1going down that route. This marks a slight decrease on 2008's figures, where 17% of firms said they would, or possibly would, look at a merger over the coming year and a half.

Italy's Tonucci & Partners, which currently has an alliance with Mayer Brown, said that it would consider a merger with a US or UK firm, as did Ukraine's Astapov Lawyers. Romania's Buzescu was the only firm to say yes to the possibility of both a merger with a US/UK firm or a mainland European firm.

The figures are in contrast to a Legal Week Big Question survey carried out in June this year, which found that 44% of UK partner respondents believed there were substantial opportunities to secure an international merger.

Part of the reason for the lack of merger interest on the continent may be that well over half the firms to respond (58%) were members of some form of legal alliance or ‘best friends' relationship. Last year, 48% had some form of tie-up.

Practice breakdown

The share of firms looking to launch a new practice area has also fallen slightly on last year, with 14% looking to expand into new specialisms in the next year compared to 16% last year. Among the firms considering moving into new areas are Austria's Graf & Pikowitz which is planning to launch a life science practice and Belgium's Lydian Lawyers which is set to create a health and safety practice. In Romania both Musat & Asociatii and Tuca Zbarcea & Asociatii are expanding their offerings, with the former launching in the areas of consumer protection, health and pharmaceuticals law, while the latter is setting up a court bailiff unit.

The number of firms describing themselves as ‘full service' has fallen slightly on last year, with 11% saying they did not fall into that category, compared to 5% in 2008.

London strategy

However, although plans to expand on home territory appear to be limited, of the 22 firms to respond that have a presence in London, 41% are looking to grow in the region over the next 18 months. Russia's Egorov Puginsky Afanasiev & Partners, which launched an associated office in London in 2007, is set on growing its offering by some 20%-30%.

ilfie-tables2Germany's Schultze & Braun, Italian firms NCTM and Chiomenti Studio Legale, Portuguese firm PLMJ and Van de Feltz from the Netherlands are all planning to grow in the City by 10%-20% over the next year and a half. Meanwhile, Amsterdam firm Boekel de Neree and Uria Menendez and Gomez-Acebo & Pombo in Spain are all set to expand their headcount by up to 10%.

The rank of international firms in London is set to grow with Luxembourg's DSM Di Stefano Sedio Moyse and Ukraine's Astapov Lawyers both currently looking for a toehold in City as they consider opening offices during 2010.

Market share

Back on home ground, the number of firms expecting their market share to grow over the coming year compared to the local offices of international firms has fallen.

Last year 39% of firms thought that the coming 12 months would see them take business from international firms, while this year that proportion stands at 35%. Of those, the majority thought that market share would increase by 0%-10%, although several earmarked growth of up to 30%. The number of firms who thought that their market share would decrease has also risen over the year, accounting for 4% of respondents this year, compared to 2% last year.

The leading perception is that around 10%-25% of the market share currently is held by foreign firms, with 37% of firms believing this to be the case. Just over a quarter of respondents (27%) thought that foreign firms got less than 10% of the business in their local jurisdiction, while a further 16% thought it was in the region of 25%-50% of the work. Just 5% of firms thought that more than 50% of the work in their jurisdiction was done by international firms.

Given their spread of offices, it would be expected that much of the cross-border work would be done by international firms; however it seems that independent firms are getting their fair share of non-domestic work as well. A surprising 42% of firms thought that over half of their workload came via non-domestic firms, with 7% saying that this accounted for 75%-100% of their business. Thirty percent thought that advice for non-domestic clients accounted for 25%-50% of their business, while 16% said the share was more like 10%-25%.

-----------------------------------------------------------------------------------------------------------------------------------------------

Merger talk - Firms open to a US/UK merger in the next 18 months

Boteva & Kantutis Law Office (Bulgaria); Dinova & Rusev (Bulgaria); Georgiev Todorov & Co (Bulgaria); Cipcic-Bragadin (Croatia); Savoric & Partners (Croatia); Neocleous (Cyprus); PRK Partners (Czech Republic); Plesner (Denmark); Avocado (Germany); LABLAW Studio Legale Failla Rotondi & Partners (Italy); Studio Legale Sutti (Italy); Tonucci & Partners (Italy); Kronbergs Cukste (Latvia); Kleyr Grasso Associes (Luxembourg); DSM Di Stefano Sedlo Moyse (Luxembourg); Buzescu (Romania); Ramon & Cajal (Spain); Meyerlustenberger (Switzerland); Astapov Lawyers (Ukraine)

Firms open to a merger with another European (excluding UK) independent firm in the next 18 months

Boteva & Kantutis Law Office (Bulgaria); Dinova & Rusev (Bulgaria); Cipcic-Bragadin (Croatia); Neocleous (Cyprus); PRK Partners (Czech Republic); Vejmelka & Wuensch (Czech Republic); Plesner (Denmark); Juridia Attorneys-at-Law (Finland); Landwell & Associes (France); LABLAW Studio Legale Failla Rotondi & Partners (Italy); LCA Lega Colucci & Associati (Italy); Kronbergs Cukste (Latvia); Kleyr Grasso Associes (Luxembourg); DSM Di Stefano Sedlo Moyse (Luxembourg); Buzescu (Romania); Gomez-Acebo & Pombo Abogados (Spain); Meyerlustenberger (Switzerland); Sayenko Kharenko (Ukraine)

-----------------------------------------------------------------------------------------------------------------------------------------------

[asset_library_tag 427,Click here to download a digital version of Legal Week's Independent Law Firms in Europe supplement.]