Local advisers warn of challenges ahead as Herbert Smith sets out to build German practice

The news that Herbert Smith Freehills is set to launch in Germany later this year has been met with a mixed response from the local market, with lawyers questioning whether the firm will be able to come close to matching the strength offered through its former alliance with Gleiss Lutz.

The firm last week confirmed it is opening an office in Frankfurt in the second quarter of 2013 with the hire of Ralf Thaeter, who was head of corporate and M&A at Gleiss. 

The office will initially focus on M&A, corporate, disputes and finance work, with a view to expanding to a full-service offering. The firm was not able to open in the country earlier than January 2013 due to the wind-down terms of its alliance with Gleiss and Benelux firm Stibbe, which broke down in December 2011.

Herbert Smith is now looking to hire other partners ahead of the launch, with the firm understood to be aiming for around four to six partners on the ground by the end of the second quarter. 

As a key legal jurisdiction within Europe, the majority of top 20 UK law firms have a presence in Germany. However, local lawyers have cautioned that the market is already over-lawyered and the new office will face tough competition.

Former Linklaters Germany head Markus Hartung, now a mediator and director of the Bucerius Center on the Legal Profession, said: "There is fierce competition among law firms in Germany, which is generally over-lawyered, and some may have found it hard to make an impact despite making strong lawyer hires. Any office launch would have to rely on the charisma of the founding partners to bulk up the practice with good performers."

Herbert Smith had previously stated an intention to open offices in Duesseldorf and Munich as part of further expansion plans in Germany, but these plans have now been put on the back-burner. 

A partner at a rival firm said of Herbert Smith's move: "It's a small step for the firm, and as it currently stands, I don't think the office will make much of an impact in the regional market or present much of a threat to local firms. But we will wait and see how it develops."

But Marc Bartel, a partner at consulting firm Heidrick & Struggles, said: "Law firms can't be regarded as European players without a practice in Germany. I don't think firms would be too late in opening in the region now. There is room for a new entrant with a strong prestigious practice. 

"Germany isn't an over-lawyered jurisdiction, unlike Paris and London. But any launches in the region would take time to build, particularly as there isn't much banking and finance work in the market at the moment."

Markus Hartung is chairing Legal Week's Global Independent Law Firms Forum on Thursday 21 March in London. Click here for more details.