“We live in very transformative times,” says Alexander Ritvay, co-managing partner of Noerr, Germany’s second-largest homegrown law firm. “Transformation in many different ways is driving the economy and driving our business as well.”

Once seen as the continent’s anchor of stability, both politically and fiscally, Europe’s largest economy and democracy is struggling. With Chancellor Olaf Scholz announcing early elections last week after the first coalition breakdown since 1982, German politicos are learning that fragmentation of the political landscape makes forming stable governing coalitions more difficult. Until 2017, there were only five parties in the Bundestag, Germany’s Parliament. Now, there are eight.

With little quarterly GDP growth since late 2021 and heading toward the end of a projected second year of decline, the economic miracle that defined much of post-war western Germany is well and truly over. Robin Winkler, chief economist of Deutsche Bank, called it “the greatest downturn in the history of the federal republic.”

National masthead firms like Volkswagen have been hit by reports of potential job cuts of up to 30,000 of its 100,000 Germany-based employees, while further down the supply chain auto parts suppliers Bosch, Schaeffler, and ZF Friedrichshafen are following suit, cutting around 25,000 jobs in Germany between them.

Opportunity in Crisis

But despite—or perhaps because of—these problems, leading law firm partnerships continue to view Germany as a big opportunity.

“Irrespective of the slight economic downturn we experience, we think in the long run Germany will still be the economic powerhouse in Europe,” Baker McKenzie’s managing partner for Germany Alexander Wolff said, calling it “a focus market for M&A” and pointing to an expansion of their team.

Wolff added that disputes and litigation had a “marvelous year,” particularly Baker McKenzie’s employment team.

“We benefit from the economic downturn because we see factories closing on the one hand. On the other hand, we see large investments coming into Germany—and we work for both. So if there are companies closing down sites or operations, we help our international clients there. And at the same time, if you have huge investments, we are involved there as well.”

The ifo Institute think tank described the German economy as “stuck in crisis” caused by structural problems and structural change.