Comment: Many firms strive to reach the top of the market, but few commit themselves lock, stock and barrel like L&W. Many competitors are feeling the impact of this absolute determination. It has been the reason for much of the success of recent years – but also comes with risks and side effects. The firm’s accomplishments are beyond dispute, both in terms of personnel and work. The arrival of renowned corporate partner Dr. Nikolaos Paschos from Linklaters was an advantage in two regards: he fits in perfectly with the firm’s strategy of better establishing itself as a regular advisor to German corporates, so as to get into position for major corporate projects. When it comes to international billion-euro deals like Bayer/Monsanto and Linde/Praxair, competitors such as Freshfields Bruckhaus Deringer and Hengeler Mueller are still a step ahead with their connections in the German boardrooms established over decades. Paschos, who in a manner of speaking is an archetypal Linklaters corporate lawyer, is known for precisely such connections.
Potentially more important than the contacts he brings to clients like Bayer and Deutsche Börse is the signal that L&W is sending to the market: the firm can attract partners of virtually every caliber. Indeed, all Magic Circle firms have lost central partners to L&W of late. Even the current managing partner of the German offices, PE lawyer Oliver Felsenstein, came from Clifford Chance. This is why, off the record, the leading firms in Germany are saying that their most dangerous rivals are not the established British or German firms, but L&W – esp. as it has wooed central partners away from leading competitors in London and other major European cities recently.
The large number of strategically logical hires bolstered practices like M&A, private equity and finance. L&W also deepened its DAX company contacts, e.g. to Lufthansa and VW in antitrust, Deutsche Bank in litigation and Siemens in M&A projects. But above all, the firm is able to embed these individual steps within a large narrative better than most competitors, and thus create a permanent spirit of optimism.
The remodeling in Frankfurt should also be viewed against this backdrop: L&W is investing millions to create an open-plan office following the model of Silicon Valley companies, which is fairly novel in the legal scene. This step is not uncontroversial and is an experiment that can hardly be reversed if it does not work. But at the end of the day it is not just about whether or not the quality of work measurably improves, but about making a confident statement. At the same time, it will put Frankfurt in a pioneering role within the firm worldwide, demonstrating the German practice’s growing standing within the international firm structure.
The remarkable progress and ambition have a down side: a US firm in Germany reaching the breadth and profitability that now characterize L&W is partly the result of more rigid standards and interventions by US management. And these occasionally conflict with the consensus-oriented culture with comparatively independent partners that L&W used to stand for. The restructuring of the German offices thus triggered a domino effect: in addition to partner departures that appeared logical within the overall strategy, L&W also lost partners it would have liked to keep, among them compliance specialist Dr. Finn Zeidler (to Gibson Dunn). L&W also lost some very experienced associates who represented the key fields for the future of arbitration and antitrust damages claims. This can be seen as a wakeup call: despite all the dynamism with laterals, the firm must not lose sight of the prospects for its own young lawyers.
JUVE Law Firm of the Year for: Antitrust, private equity & venture capital.
Lawyers in Germany: 167
International network: Internationally integrated firm with its origins in Los Angeles, with strong offices in New York, Washington and London. The firm recently focused its strategic efforts on strengthening its European offices.
Developments: The success of recent years could easily divert attention away from the fact that there are certainly areas where L&W is not fulfilling its potential. With its strong litigation practice and close ties between the German and US offices, the firm is predestined for complex compliance instructions. Although there has been progress here, e.g. work for Deutsche Bank in negotiations with the US Department of Justice, US competitors with much smaller German practices like Skadden or Gibson Dunn are far more visible in internal investigations. The fact that Zeidler, the firm’s best-known white collar crime specialist, turned his back on it shows that L&W is not immune to painful losses. But the firm has proven often enough that it can attract preeminent partners who are not actually on the market. In this regard, a top-class hire in this field would not only close a gap, but also cement L&W’s reputation as a feared attacker in the German market.
Following a partner move last year, the firm has a gap in public law. Paschos’ arrival reduces this, but does not close it fully, as his specialties lie more in ongoing corporate advice to corporates.
Apart from areas in need of attention in terms of staffing and specialties, management challenges arising from the restructuring of the German practice and the cultural shift are likely to keep L&W on its toes in the years ahead. These include defining the roles of private equity and M&A partners more clearly: Dr. Rainer Traugott’s position within the overall strategy, for example, is somewhat vague. He is seen in the market as more of a corporate heavyweight than PE rainmaker. This may be in line with the firm’s strategy regarding work for corporates, given his involvement for Siemens, but L&W may be missing out on opportunities if it fails to make better use of the connections he used to build up one of the market’s strongest PE practices at his former firm Linklaters.
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