Ireland's legal services market has proved more resilient than initially feared in the aftermath of the financial crisis, which hit the country hard. For the past few years the legal sector has been thriving as the country's pro-business stance has boosted optimism and finance flows, attracting trillions of euros in funds as well as huge corporate behemoths like Google, Twitter and Facebook to its shores.

"2015 has been consistently busy and it looks likely to remain so," says Ed Butler, managing partner at LK Shields. "There is a more substantial and confident feel to the market than in 2014 – a little less hesitant and more optimistic. Possibilities are opening up. Cranes and scaffolding are in evidence in Dublin once again, there's pressure on commercial premises and the government is committed to business-friendly policies and improving infrastructure, so the indicators for 2016 are positive."

Irish law firm Mason Hayes & Curran increased its revenue by 25% in 2014 to €60m (£42.8m). According to managing partner Declan Black, about 40% of this growth related to work undertaken on behalf of international clients operating in Ireland. The strong results also reflected the uptick in activity in the Irish economy generally.

At A&L Goodbody managing partner Julian Yarr describes 2014 as "a record year for us", with 2015 looking like it will be "even better". One of the key drivers has been loan portfolio sales – which amounted to around €43bn (£30.7bn) last year in Ireland – of which A&L Goodbody was involved in 70%, he says. Yarr expects this area to remain a major source of work for the firm for the rest of 2015 and even into 2016.

Brian O'Gorman (pictured), managing partner at Arthur Cox, is equally positive about the most recent financial year: "2015 has been extremely busy across all practice areas and there are no signs of this tailing off."

The practice areas where demand is particularly high are M&A, commercial real estate and infrastructure projects – areas where the majority of law firms have seen revenue increases recently.

Clouds ahead?
O'Gorman says he is "cautiously optimistic" about the outlook for 2016, but warns there could be clouds on the horizon. "We are hopeful that the good run the Irish legal sector is currently having will continue, but Ireland is greatly susceptible to economic shocks in the eurozone, the UK and the US. The threat of a Greek exit from the eurozone is still having repercussions, and the prospect of the UK leaving the EU is also an issue for Ireland as it is our biggest trading partner."

Right now though, Ireland's law firms are still basking in the glory of an economic upturn, with few seeing any significant slowdown in work. Barry Devereux, the newly appointed managing partner of McCann FitzGerald, expects to see "some slowdown in restructuring and insolvency work, as many of the matters we have advised on since the financial collapse are now resolved". Otherwise, he adds, "all areas across the main groups of the firm have registered growth in the last 12 months".

Black agrees: "We aren't seeing slowdowns in any practice areas." Mason Hayes & Curran's financial services, property, corporate and tax units had a "particularly strong year" in 2015. Its corporate practice acted for Irish Residential Properties
REIT on its initial public offering (IPO) in Dublin and for Brookfield Renewable Energy Partners on its €700m (£499.3m) acquisition of certain assets from Bord Gais.

According to Black, the firm is preparing for another busy year for corporate activity, with a "significant pipeline of M&A activity and IPOs". In financial services, Mason Hayes & Curran secured mandates on several loan portfolio sales and it is currently acting for Permanent TSB on the €1.5bn (£1.1bn) sale of its Leinster and Munster portfolios.

"Fees and total hours are well up and hours per fee earner are up too, so 2015 is looking good," says Black. "Transactional business continues to increase rapidly and contentious business is rising steadily. Assuming economic conditions remain good, there should be continued foreign investment in and through Ireland and this, coupled with a domestic resurgence, are positive indicators for 2016."

He believes that "all Irish firms are seeing a surge in transactional activity", which he thinks is driven by the deleveraging process among the banks and the National Asset Management Agency – Ireland's 'bad bank' set up by the government to acquire property development loans from Irish banks in return for government bonds to help improve the availability of credit in the Irish economy – and assisted by the international, and now domestic, appetite for these assets. Also, areas such as technology, health and energy continue to develop in Ireland aided by political prioritisation and a developed business infrastructure, says Black.

Other firms agree. "Businesses are accessing finance again, foreign direct investment continues to be a significant factor, and there's a rising level of regulation in certain sectors – all of which generates an increase in activity in the market so work begins to flow, and requirements for commercial legal advice increase," explains Butler.

"Banking, restructuring, funds, litigation and employment were solid over the last few years, but they are now experiencing increasing demand. We're also seeing growth in M&A, corporate, capital markets, intellectual property/IT, construction/projects and regulation/compliance. Our practice related to distressed finance continues, though the work type is changing away from disputes towards restructures."

However, while the volume of work may be growing, Butler says that "profitability remains under pressure", but adds: "[In some cases] rates did fall below sustainability and we are negotiating accordingly for more sustainable rates."

Soaring dealflow
The bellwether of any successful economy is how quickly finance can be accessed and raised, and there is no better indicator of this than dealflow. Fortunately, this has been another success story in Ireland.

Last year saw a notable increase in M&A activity and a significant uplift in transactions undertaken by private equity players, according to the 'Merger Notifications Review', published by A&L Goodbody's EU, competition and procurement group. The most active sectors during 2014 were financial services, health and medical, and food and drink.

While trade buyers continued to dominate the market, the number of private equity deals showed a significant increase in 2014, representing 34% (14 deals) of overall M&A activity in 2014 – demonstrating the strong appetite among private equity players to buy into Ireland's recovering economy.

A&L Goodbody advised on more M&A transactions than any other Irish law firm in 2014. These included acting for the Irish government on the sale of Bord Gais Energy; Medtronic on its proposed $42.9bn (£28.1bn) acquisition of Covidien; Endo International on its $2.6bn (£1.7bn) purchase of Auxilium Pharmaceuticals; and Dalata Hotel Group on its capital raising and ongoing acquisition of a number of hotels in Ireland. Yarr expects "deal volume to be as high this year as last, but deal values are likely to be down".

Other firms have also enjoyed working on high-profile and high-value transactions. In February Arthur Cox acted as lead adviser to CRH on its acquisition of assets held by Lafarge and Holcim. The deal makes CRH the third-largest building materials company in the world.

Also in February, McCann FitzGerald was appointed by Allied Irish Banks (AIG) to act in relation to its proposed capital restructuring and privatisation. It is anticipated that this will be one of the most significant corporate transactions in Europe in 2015.
In March McCann FitzGerald advised Horizon Pharma on its proposed $1.1bn (£719.4m) purchase of Hyperion Therapeutics, which led to the firm also acting on its $475m (£310.7m) share offering in April. The firm also advised AerCap, a global leader in aircraft leasing and aviation finance, in relation to its $7.6bn (£4.9bn) acquisition of the International Lease Finance Corporation (ILFC) from AIG, its $2.6bn (£1.7bn) bond issuance and the reorganisation and transfer of the majority of the ILFC fleet (approximately 900 aircraft) into Ireland. The transaction is the largest M&A deal in the aviation industry to date in a country where more than half of the world's leased aircraft are managed. 

Tax appeal
Beyond deals, other opportunities are opening up for Irish firms. Ireland has been synonymous in recent years with the rise of the corporate inversion, which has effectively allowed international companies to register in Ireland and take advantage of its low-tax regime. Now another tax-efficiency phenomenon – the Irish collective asset-management vehicle (ICAV) – is set to grow in popularity and it is anticipated that its related tax and administrative benefits will allow Ireland to continue its growth as one of the world's premier fund domiciles.

Essentially a new form of corporate vehicle for funds established this year (with one of its main attractions being that it is an 'eligible entity' for US tax purposes), the ICAV offers a streamlined, bespoke product for fund managers considering the establishment of new funds in Ireland, the redomiciliation of existing offshore funds or, indeed, the conversion of an already authorised Irish fund to an ICAV.

William Fry completed the first ICAV conversion in Ireland at the end of April, and, since then, Ireland's leading firms have all taken note and become active – Arthur Cox included. "Early indications are that the ICAV will be the investment vehicle of choice for asset managers establishing funds in Ireland," says O'Gorman. "Already, almost all of our new investment fund structures are being established as ICAVs and we are advising several existing investment companies on converting to the ICAV structure. The next phase for the ICAV will be providing for the redomiciliation of investment funds to Ireland as ICAVs on a tax-efficient basis."

The hunt for talent
The resurgence in Ireland's economic fortunes has led to the country's law firms beefing up their staff numbers: making new partner appointments, hunting lateral hires and recruiting trainees and graduates.

McCann FitzGerald has hired 100 new people over the past 15 months, while Yarr says "A&L Goodbody's headcount is up by 4% this year on last, and has increased by 20% over the past three years. The firm's present tally is 87 partners and 480 fee earners, out of a total staff of around 700."

Meanwhile, Mason Hayes & Curran took on 64 staff last year in response to continued workflows. It now has 375 employees, including 72 partners, and recently leased additional office space in neighbouring buildings.

In January William Fry announced that during 2014 the firm had made 54 new appointments across several key areas including corporate, tax, financial services and real estate. It is set to continue its growth in 2015 with the planned recruitment of 50 staff throughout the year. The firm currently employs 430 people.

In fact, it is the hunt for fresh local talent that is proving to be the biggest challenge to Ireland's thriving legal services market at the moment. Firms are heavily touting their graduate trainee schemes. Arthur Cox, for example, has managed to increase its intake of graduate recruits since the crisis – up to 35 this year from 25 per year during the worst years of the recession, while A&L Goodbody will also take 35 people onto its graduate scheme this year. William Fry has recruited 28 trainees who are due to join its programme by September 2015.

Some firms are also working directly with universities in an attempt to tap future talent. For example, Matheson has partnered with Maynooth University to create the first-ever specialised funds law university course in Ireland to educate graduates for accelerated entry into the country's growing International Financial Services Sector.

Butler says "legal recruitment in Ireland is highly competitive at the moment", adding that this is "predictable in a more buoyant market". He believes that the influx of large international firms such as Baker & McKenzie and Allen & Overy (A&O) into Northern Ireland over the past few years demonstrates that there is a homegrown recruitment market for people to work in legal services, but that the bigger players are likely to get first pickings of recruits.

"That international firms have located in Ireland clearly illustrates there is legal talent of an international standard in the country and that it is an attractive location for international law and business," comments Butler. "Such firms are actively recruiting staff. New competitors present opportunities and challenges. Some are very strong in their niches and have 'captive' clients. They wouldn't be here if it wasn't worthwhile, but their establishment does emphasise that we can never be complacent about our clients or traditional sources of work."

O'Gorman says that Arthur Cox is "always on the lookout for talent" and is making a strong commitment to nurturing new recruits. However, it is not all plain sailing: in the Northern Ireland market, where the firm has an office in Belfast, O'Gorman points out that the presence of international firms in the city has meant that "the competition for talent has increased and there is a greater desire [by junior lawyers] to work in the larger law firms with international reach".

Devereux agrees. "In an already constrained recruitment environment, the presence of firms like Bakers, A&O and Herbert Smith Freehills means that there is bound to be some impact on the availability of qualified talent."

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Northern Ireland
While law firms in the Republic of Ireland are enjoying the country's economic fortunes, its northern neighbour is also relishing the spoils of a boon in investor confidence and the decision by some of the world's biggest law firms to set up shop in Belfast.

Last August Baker & McKenzie opened a legal and business support centre in Belfast (its second after Manila) aimed at providing 24-hour assistance to the firm's lawyers around the world. The office provides back-office support for cross-border transactional matters, as well as projects and disputes work.

The firm aims to grow office headcount to between 200 and 250 within three years, by which point Bakers expects the centre to cost £8m a year. The firm says the decision to open in Belfast was driven by client demand, with Northern Ireland chosen "for a variety of social, economic and business reasons".

Baker & McKenzie received just under £1.3m of public funding from government agency Invest Northern Ireland as an incentive to locate in Belfast to create jobs (with an average salary of £31,000). Other law firms have also benefitted from public funding. Allen & Overy launched a business and legal support centre in the city in 2011 in a deal that saw the firm receive £2.5m of public funding from Invest Northern Ireland in return for creating 300 jobs, while legacy Herbert Smith received £208,000 in support when it decided to open a Belfast office in 2010.

In January US law firm SmithDehn received £50,000 in grants from the agency after it set up a new office in Londonderry to provide specialist legal services – including legal compliance review and advice for TV and film projects, drafting and negotiating contracts, trademark and copyright work – to media and entertainment companies based in the UK and the US.

With much of these grants earmarked for salaries for local talent, law firms south of the border may find that their recruitment drives need to be tweaked to attract junior lawyers and graduates who may naturally gravitate to the larger pay packages on offer in the north.