Ireland's economy and legal market are bouncing back from the disastrous impact of the financial crisis, says Neil Hodge

Just three years ago Ireland accepted an €85bn (£67.9bn) bailout package to support the budget and bolster the economy. But fortunes have quickly turned around for the better, with Irish law firms saying that 2015 promises further growth opportunities.

John Cronin, chairman at McCann FitzGerald, says there is more confidence in Ireland's economy now: "The legal sector had to be resilient and adapt to client needs and the financial realities on the ground, and it is paying off. Law firms appear to be busier than they have been for a while.

"We have taken on up to 50 staff – from partners to trainees – in the last 15 months to cope with work demands, and if a firm of our size is doing that, then others must be too."

Cronin is also excited that the firm is capturing some of the country's public sector infrastructure work. Earlier this year McCann FitzGerald advised Bord Gais Eireann on the sale of its energy business for €1.1bn (£878.5m), and was retained in October by the Electricity Supply Board as external lawyers to advise on its 'Fibre to the Building' broadband joint venture with Vodafone Ireland.

"All indications suggest that next year will be a good year for legal services in Ireland, and I don't expect a slowdown in any practice areas," comments Cronin. "Corporate finance and overseas investment are encouragingly active. In addition, some of the infrastructure and construction projects that were put back a couple of years ago are set to get the green light now, and there is increased interest in renewable energy projects as well. We expect to see opportunities for legal work, both in the financing and development of those projects."

Declan Black (pictured), managing partner at Mason Hayes & Curran, says that 2014 has been "a great year so far", with all the transactional areas of financial services, real estate and corporate experiencing significant growth. The firm's litigation team has also been busy, with litigation work accounting for around 40% of the firm's workload. The internet services sector is also a real driver of growth across the firm. Black adds that Mason Hayes & Curran has managed to be resilient throughout the recession, experiencing growth year on year since 2008 through a "combination of luck and judgement".

Black says recruitment is the key issue for the firm going into next year: "We can't get people into the firm fast enough to deal with work demands," he explains.

"Looking for people with the right mix of skills and experience to cope with our workload is a priority for us in 2015. We have already brought 10 lawyers into the real estate team since the start of the year and we are exploring contracting options to help out on a short-term basis."

Magnet for investment
Investor confidence in Ireland was cemented when a report from Forbes magazine last December placed Ireland at the top of its list The Best Countries for Business 2013 after finishing sixth the previous year. According to the publication, Ireland scored well across the board in terms of 'business friendliness' because of its low corporate tax rate of 12.5% – one of the lowest in Europe – and high levels of investor protection and personal freedom.

Some of the world's most renowned companies – particularly technology firms – are located in Ireland: Dublin provides the European headquarters for the US technology elite of Google, LinkedIn, Twitter and Facebook. Indeed, US firms have invested heavily in the country in recent years, with $130bn (£82.9bn) pouring in between 2008 and 2012. Only three other countries received more US foreign direct investment than Ireland in 2013, and the Irish total was almost as much as the whole of developing Asia received.

Like other law firms, A&L Goodbody has certainly benefitted from the influx of foreign investment. "More than 60% of our business revenue now comes from the international markets," says Julian Yarr, the firm's managing partner. "The increased demand for legal services has seen an uptick in recruitment across our profession. Our headcount is up more than 7% year-on-year. We've also appointed six new partners this year, and that's on top of the eight created last year."

Deal rush
Ireland's attractive mix of low-tax benefits for corporates has helped stoked up legal work. "Domestically, we're still seeing significant volumes of work arising from loan sales and real estate transactions. Last year our property team had one of its busiest years ever," comments Yarr. "Corporate inversion activity has also been strong in 2014. We worked on nine of the 10 inversion deals in Ireland this year."

Deals have long been a bellwether of economic activity, and Ireland appears to be bursting with high-value transactions. Matheson acted for Questcor Pharmaceuticals on its $5.6bn (£3.6bn) merger with Mallinckrodt, William Fry advised Forest Laboratories on its $28bn (£17.9bn) acquisition by Actavis, while in June A&L Goodbody acted alongside US law firm Cleary Gottlieb Steen & Hamilton as Medtronic's Irish legal adviser on its $43bn (£27.4bn) purchase of Covidien. The transaction is the largest M&A deal in Irish corporate history.

Brian O'Gorman, managing partner at Arthur Cox in Dublin, says that M&A activity is getting back to pre-crisis levels as the country's economy continues to grow. But he adds that, while deal turnaround is getting shorter, it is still longer than most parties would like. "Before the crash, typical deal turnarounds were between three to six months, but during the past few years deals have taken longer to complete – some taking more than a year," he explains.

"It looks like the pace has been quickening as there is more finance available to fund transactions, as well as more confidence generally in the sector, so we are hoping that the number of deals grows in 2015, and that the pace of deal completions continues to quicken."

Success of the second tier
The future is also looking positive for those law firms outside of Ireland's 'Big Six'. Edmund Butler, managing partner at LK Shields, which has more than 50 solicitors, says that the next largest law firms outside of Ireland's half dozen first-tier firms have tended to pick up work from "recycled" top-level FDI (foreign direct investment) clients. "LK Shields often gets such work when it can show that it has the capability and those clients no longer wish to have the expense and the less personal service of a first-tier firm," he says.

Butler believes the larger law firms, as well as many second-tier firms, have been agile over the past few years of recession and have used their experience, expertise and manpower to focus on recession-related legal work, such as distressed lending, insolvency, personal and corporate restructurings and refinancing. "Smaller firms with a narrower skills base have not been able to offer that kind of capability," he points out.

However, there is one area that law firms tend to agree has failed to improve: pricing. While work levels have picked up, firms say that rates are broadly in line with crisis levels for several key practice areas. "Domestic clients have kept rates down during the crisis, but for specialist services they are beginning to harden again now," comments Black. "We have been able to maintain our pricing for international clients because the rates in Ireland tend to be cheaper than other countries anyway."

Further reading: The future of independent law firms 2014 – online special