Comment: CMS’ role in dealing with the fallout from the diesel scandal is almost the perfect example of the firm’s tenacious and cautious advancement: thanks to work for the VW management, CMS now works for subsidiary Audi as well. Step by step, CMS is widening its access to corporates. The VW instruction also shows how serious the risk of conflicts of interest is: the firm was criticized for its connections to the Niedersachsen state chancellery. Ensuring that work stays clean and above board becomes all the more important the further CMS advances into high-end advice. Even though the firm stresses that there were no overlaps in work at any time, it will have to be more aware in the future.
At the same time as advising corporates, the firm is incredibly good at maintaining its traditional Mittelstand base. Its strong headcount helps here, but also its masterful and pragmatic approach to standardization, incl. the use of artificial intelligence. Both give CMS the freedom to play a part in major, complex deals alongside ongoing work. One such deal was the sale of offshore wind farm project Deutsche Bucht, where CMS advised investment company Highland/Laidlaw Capital, led by energy lawyer Dr. Holger Kraft and corporate heavyweight Dr. Christian von Lenthe. CMS also proved yet again how strong the synergies between its practices are: in advice to LBBW concerning the financing of Busch’s public takeover bid for Pfeiffer Vacuum Technology, the corporate, stock corporation law/capital markets and finance practices worked in close cooperation.
The now-established compliance practice is demonstrating how the cross-border network can be capitalized on: shortly after the London merger of CMS Cameron McKenna with Olswang and Nabarro it landed a referral from here. The only fly in the ointment is the firm’s weak access to banks, which would have a lot of work to dole out in compliance. But the banking and finance practice does know how to impress when it comes to major transactions, such as the financing of the Rofin Sinar acquisition for Coherent, where seven CMS alliance firms were involved. The capital markets practice raised its profile. The team around Oliver Dreher, who joined from Linklaters a few years ago, entered a new dimension with banking work for two €750m debt issues of HSH Finanzfonds, and the equity capital markets practice stood out for its involvement in the Vapiano IPO.
The strong headcount in many practices allows CMS to develop its activity on many fronts. Of eleven partner appointments, one was in Leipzig, a city where other firms threw in the towel long ago. But not CMS: typically, the firm, which is still only driven to a small degree by profitability expectations, persevered. Today, experts consider Leipzig the next venture capital hub and the Leipzig CMS partner Dr. Jörg Lips the leading M&A and VC lawyer in Sachsen.
A number of partner departures last year created the impression that the CMS management around Dr. Hubertus Kolster had strayed from its patient course and would now tighten the reins in terms of profitability. But no further losses followed, nor was there a disgruntled atmosphere evident. However, CMS, like some of its competitors, faces a generation change. It is trying to use its age structure more consciously, and strategically opts for teams of one young and one experienced partner. A prime example is the tandem of Dr. Hilke Herchen and Dr. Wolfgang Richter, who together are devoted to further development on the corporate/stock corporation law interface.
JUVE Law Firm of the Year for: Corporate.
Lawyers in Germany: 655
International network: Member of the CMS alliance, an affiliation of ten independent European firms with a common brand and practice and industry focus groups spanning the alliance. Own offices in Teheran and Hong Kong. CMS members operate offices in various setups in Moscow, Turkey and Asia. There are established connections to eastern Europe via CMS Reich-Rohrwig Hainz (Austria) and a Bratislava office opened in 2017. New members in 2017: Carey & Allende (Chile), Grau (Peru), Rodríguez Azuero Contexto Legal (Colombia).
Developments: The firm is consistently pursuing its strategy of advancing further into high-end advice, but the impression that CMS has plateaued solidified. The firm will not be able to keep up the balancing act between Mittelstand work and advice on ever larger deals like those seen at more profitability-driven firms like Clifford Chance and Latham & Watkins indefinitely – at least not if it wants to maintain its more individualistic culture, and it looks like it does. CMS’ reputation as a more operationally oriented advisor still precedes it, thanks to its service-focused use of IT. But with the use of legal tech set to rise in the future, CMS will have to tackle the question of the right size and setup of its teams. With that in mind, the generation change at CMS will be particularly important; the firm is steering toward a soft transition by forming teams of one senior and one younger partner (in corporate and stock corporation law as well as employment).
The firm is also making headway internationally, as shown by the most recent office openings (Teheran and Hong Kong) and three new members in Latin America. All of these steps are part of the strategy of having a presence with an integrated full-service legal advisory team in all of its markets. The German offices could benefit in particular from the London merger with Olswang and Nabarro, as they bring strengths in IT/media and real estate/insurance respectively. To exploit this potential, however, the German offices will need to achieve stronger, more active cooperation and promote synergies, instead of merely taking short-term advantage of alliance partners.
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