Comment: Hengeler lives up to its claim of being the only large German firm at the top of the market alongside international competitors Freshfields and Linklaters year after year. And this is despite the fact that some competitors do not see Hengeler as particularly dynamic, partly owing to its sense of tradition. Even though other leading firms are positioning themselves more clearly in the market for issues like the digitalization of legal advice, it is the firm’s self-imposed commitment innovation and excellence in difficult legal issues (esp. in corporate and finance) from which Hengeler draws its strength. Specifically, the firm demonstrated its legal dexterity in advice on complex dual- and triple-track transactions and major spinoffs from listed corporates, like those at Metro and RWE.
Firms like Freshfields no doubt take a more analytical approach to the market and their own business development. This means that Hengeler misses out on opportunities to be one of the first to occupy new fields of work and to adapt its practices quickly as required. This was evident a few years ago when everyone rushed to provide compliance advice. But the fact that it was Hengeler tackling the internal investigation at Robert Bosch in the diesel scandal shows: this is not necessarily a flaw in the long run. However, it is telling that the firm’s strong reputation in corporate and corporate governance issues paved the way here.
The firm’s reputation also ensures numerous solid client connections: Henegeler was selected by RWE for the Innogy spinoff without having a spot on the official panel.
Because the partnership is not driven solely by looking at the financial results, Hengeler can maintain the balancing act between high-end work and a broad spectrum of Mittelstand clients, despite its holding true to its lockstep pay system, while some of its closest international competitors restructure themselves over and over. In this way, Hengeler’s corporate practice held on to its advantage of a broad setup while excelling with major complex activity. With virtually all M&A practices gaining ground this year, the firm impressed the market with above-average visibility in deals thanks to its corporate core competence. Even by its own standards, the firm was involved in an unusually large number of top deals – both in Germany and internationally. Although Hengeler is rarely put on international panels with its best-friend firms, it is frequently seen in high-profile cross-border instructions for key clients. Examples include a major acquisition by Vitol Group in Turkey and various pan-European real estate deals.
It is this professional strength that is putting huge pressure on HM to bring only excellent young lawyers to the fore. It is thus a good sign that a group of young corporate partners is stepping out of the shadow of the veterans in Düsseldorf and Munich, as even Hengeler will face a generation change sooner or later. The loss of M&A partner Dr. Steffen Oppenländer to Milbank was thus far more relevant than the loss of an experienced partner to Kirkland & Ellis last year.
Following some years at a standstill, there is much going on in Frankfurt again. This is where the unusually large litigation practice is based, which handles complex cases (e.g. dealing with the fallout from selling dividend stripping products for Bank Sarasin) and boasts many years of experience in complex major proceedings. Young partners are enjoying more visibility here too, and the firm named three new (female) partners in Frankfurt from its own ranks. This was a spectacular move as the partnership has, up to now, been male-dominated and HM is thus keeping its promise of increasing diversity in the partnership.
Lawyers in Germany: 248
International network: Independent German firm, best-friend relationship with Slaughter and May in the UK, a range of US firms (incl. Davis Polk), Bredin Prat (France), Uria Menéndez (Spain), Bonelli Erede Pappalardo (Italy), De Brauw (Netherlands).
Developments: While Magic Circle competitors are tackling efficiency, with outsourcing centers in Manchester or artificial intelligence software, things in this regard are calmer at Hengeler. But the advancement of legal tech, be it digitization matters or the opportunities offered by AI, cannot be ignored. This issue may even be particularly important for HM as, because its corporate and M&A practice is now much larger than those of its fiercest competitors Linklaters and Freshfields, it is more reliant than these on amassing a broad base of work. But in a few years’ time, these could be the instructions that other firms take care of with the push of a button.
The second work in progress is the international network. Though the firm is nurturing this more intensively and strategically than ever before, it has far from exhausted its potential. Bearing in mind the expected economic challenges and shifting of focus due to Brexit, the best-friend firms will be putting strategic aspects on the joint agenda more than they have before. Some market observers believe that British member Slaughter and May is increasingly going its own way. As a consequence, closer solidarity with the other members should be all the more important. This is ultimately crucial if the firm is to continue to attract young lawyers who want to work on complex international instructions. This is one reason why it is a warning sign when partners move to US firms.
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