Comment: If there is one thing HKLW has never been scared of, it is recruiting laterals. But for the last two years it has changed its traditionally more opportunistic strategy and set about strategically rounding off the services at its offices. This goes for Cologne, where the corporate practice raised its headcount, and for the youngest office in Stuttgart, which now also offers (tax) criminal law expertise. The latter could drive further office integration, as criminal law compliance advice is often the vehicle that brings lawyers of all persuasions – and from all offices – around one table. Initial signs are already evident that HKLW, with its diverse base of Mittelstand clients, could secure an even larger share of this market. The firm stood out for its traditional cornerstone practices in public procurement, litigation and the private client sector. While such a development is expected, there was real progress elsewhere: advice on the Tesla market entry made the market sit up and take notice, as did Tom Tailor’s change of corporate form into an SE. With advice on a series of real estate portfolio transactions and high-volume project developments, as well as the Vart IPO – albeit alongside Latham & Watkins – HKLW showed that it can do more than low-volume work. These instructions also highlighted the capability of the Frankfurt, Cologne and Stuttgart offices, which otherwise tend to be in the shadows of Düsseldorf and Hamburg. They also show, however, that the offices can operate largely autonomously and generally continue to do so.
Strategically, HKLW is not only holding firm to its hesitant course when it comes to internal cooperation: it is taking a similarly cautious approach to the field of legal tech. For a firm that frequently provides regular clients with high-volume and routine work, which could be dealt with more efficiently – and more lucratively – with the right tools, the decision to use this resource comes relatively late in the day. Motivating all partners to support this development will be a challenge.
Strengths: ?Public procurement. Transport law.
Lawyers in Germany: 338
International network: Independent firm, the only German member of the global network World Services Group, which includes Garrigues (Spain), Dorda (Austria), Arendt & Medernach (Luxembourg) and Gianni Origoni Grippo (Italy). There is also an alliance with the Brazilian firm Veirano and numerous individual contacts. International offices in Brussels and Zurich.
Developments: The past year brought much success for HKLW: a transaction for Sodecia, which the Stuttgart office advised on with a host of foreign firms, landing a number of Scandinavian PE investors as clients in Hamburg, and advice to a German company on taking a stake in a Chinese state-owned corporate. These examples show which direction the firm could take – if it wants to. With excellent regularity, HKLW impresses the market with cross-border instructions, but rarely draws strategic consequences from these. This is highlighted by the fact that it has not made it out of the midfield for years with its turnover per fee earner. The firm did recently set up a broad French desk, but with no clear strategic objective. As an independent firm with moderate fee expectations, HKLW would have the potential to act as a cooperation partner for foreign firms and companies. The chances are probably better than ever, now that a partner is on the board of the vast firm network World Services Group. Using this network more consistently would be more promising than a half-hearted nurturing of the firm’s two international offices. Although Brussels was staffed permanently again last year with a lateral, the office hardly plays any role at all in client work. It is a similar situation in Zurich: a lateral based there left the firm.
Management is still able to hold on to the majority of partners and acquire laterals by allowing a lot of freedom in business development. But the recent drop in turnover per fee earner should be taken as a warning sign. The growth by laterals of recent years has evidently only resulted in higher end work here and there. This makes it hard for HKLW to gain new partners from outside who appreciate legal teamwork and the added value associated with this. The firm also runs the risk of losing ambitious young salary partners, as it is developing too slowly as a whole and its interest in supporting these in strategic business development appears low. HKLW will only be able to grow again in the medium term if it pools together the potential of its individual partners and presents long-term career prospects to its young talent.
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