The Irish economy has taken a battering in recent years, but many legal firms are seeing signs of growth and recovery. Dominic Carman asks if Ireland has reached a pivotal moment

Dublin's most celebrated question mark is mapped out through the city streets in Ulysses – to which James Joyce's novel provides no clear answer. Nor does the immediate question facing Dublin's most celebrated lawyers: have we turned the corner?

Having endured one of the deepest recessions in the eurozone, Ireland's €85bn (£71bn) troika bailout is scheduled to complete in December. "Ireland appears to have turned a corner," says Julian Yarr, managing partner at A&L Goodbody, Ireland's largest firm. "It's been a very positive year for Ireland," agrees Tim Scanlon, partner at Matheson. 

But before resuming its previous growth path, Nobel Prize winning economist Joseph Stiglitz predicts a "lost decade" for the Irish economy. Irish lawyers are generally upbeat, although optimism is sometimes guarded. "We've grown by 6% in overall terms, including headcount, in 2013. We expect that to continue, but I wouldn't yet call it a turning point," says Scanlon.

Bullish

Arthur Cox's managing partner Brian O'Gorman (pictured, below) is palpably bullish: "Two years ago, we were very busy doing crisis-related work, rebuilding the Irish banking sector. Now, there's a much broader spread, a lot more fund-raisings, acquisitions. It's a reflection of the economy." 

Cox has secured almost half the total legal fees paid out by the Irish Government since 2008. Emer Gilvarry, managing partner of Mason Hayes & Curran (MHC), the only leading independent to publish figures, says: "Since the recession started to bite, by the end of 2013, MHC will have increased its revenues by 50%."

At McCann Fitzgerald, managing partner John Cronin adds: "Are things turning upwards? Yes. But you still have two economies in Ireland: a local economy and the international economy, and the international work is really the work that most often goes to the top law firms."

Myra Garrett at William Fry develops the point: "I became managing partner in 2008. This is the first year where we've seen definite, sustained growth. It is a tale of two economies – the export economy and international investment into Ireland have coped very well, but the domestic economy is still depressed. 

"We're having a very good year with healthy increases in transactional activity, which reflects exports and international investment. Activity is right across the board in different sectors, from agri and food, to industrial, financial services, pharma and technology." She highlights increased US private equity interest. 

Cronin adds: "Before the recession, I would say it was 50-50 international/domestic. Post-recession, it's 60-40."

Inward investment

So where is investment coming from? At Matheson, where international work exceeds 70% of the total, Scanlon points to North America, from where "there's been a big pick up in corporate activity".

As evidence he highlights the firm advising US pharma company Actavis on its $8.5bn (£5.3bn) acquisition of Dublin-based Warner Chilcott, which was advised by Arthur Cox; and Royalty Pharma on its $6.5bn (£4bn) bid for Elan, the Irish biotech company, which was advised by Goodbody.

MHC advised Royalty's banks, JP Morgan and Bank of America Merrill Lynch. Matheson also advised Ireland's finance minister on the €1.3bn (£815m) sale of state-owned Irish Life to Canada Life parent Great-West Lifeco, represented respectively by Arthur Cox and McCann Fitzgerald.

While headcounts have increased, fee rates remain depressed – down by up to 20% from pre-crisis levels, according to Cronin, who adds that local domestic work is "extremely competitive" and "almost always determined by price". 

Off the record, others suggest the figure is more like 25%. "Domestic clients are in very stressed financial circumstances; there is significant pricing pressure," admits O'Gorman.

Another managing partner adds: "Rates did reduce, but they have stabilised over the past year. Before that, we were getting significantly undercut; that hasn't happened this year."

Numbers up

Cox added 20 lawyers in 2013, taking the total towards 250, and is "looking to add more".

Boosted by a strong litigation practice, MHC has seen the greatest percentage growth in lawyer numbers, now at about 150, staking a claim to be part of Ireland's premier league. 

Gilvarry says: "In terms of pressure on fees, clients look for alternatives, moving away from the hourly rate, towards fixed-fee arrangements."

Awarded the lead mandate on the liquidation of IBRC, Goodbody has boosted Dublin fee earners from 330 to 370. Yarr says that "for the second year in a row, we have done more than €20bn (£12bn) in deals, in particular in the tech and pharmaceutical sectors".

He adds: "We're leading with our technology business. Dublin and California are now becoming synonymous as the two key tech centres."

With a 12.5% corporate tax rate, Ireland is an attractive low-tax jurisdiction – 50% of the world's commercial aircraft are leased through Dublin, for example. But despite the local presence of several offshore firms, Cronin says: "Ireland is not and has never been an offshore centre. It's extremely important for people to understand that – it's extremely misleading and could be detrimental to the Irish brand for it to be so branded." 

As Joyce observed: "Nations have their ego, just like individuals."