US firms capitalizing on Brexit worries

The US firms expanding in Germany are not the traditional top New York names. These are actually keeping a low profile. Sullivan & Cromwell itself described its recent launch in Brussels with a German partner as the exception. The ambitious US outfits investing heavily in Germany have travelled a different path: Latham & Watkins originally comes from California; Gibson Dunn & Crutcher was founded in Los Angeles. Kirkland & Ellis and Sidley Austin, on the other hand, are headquartered in Chicago. These firms have decades of expanding and investing in new markets behind them, forming the bedrock of their success in the US market. They first had to conquer New York, then came London as the financial center of and gateway to Europe, and now Germany.

They all view Germany as a strategic goal where lucrative work awaits. The largest national economy in the EU – so go the calculations – could become even more relevant if London is weakened as a result of Brexit.

The huge potential impact of a hard Brexit is evidenced by the fact that it is already becoming difficult to rent office space in Frankfurt’s banking district. And moreover how Latham & Watkins in particular has been able to help itself time and again from the large London names. The Brexit decision caused much uncertainty among internationally positioned firms in the UK. The surge in applications for Irish law licenses by London lawyers in summer 2016 was just the first reaction. Firms are more concerned about the potential relocation of clients, the unresolved matter of what access the Brits will have to the EU single market, and whether or not the London market will retain its relevance in the medium term. The slump in the British pound is doing the rest. Suddenly, partners are finding the prospect of moving from British firms to US competitors even more attractive – and it is becoming increasingly difficult for British firms to attract top-class laterals.

Freshfields responded to the situation with a strategic decision: It has been pursuing a stringent global strategy for some years and even outpaced the German competition in some fields, as the immense VW instruction shows, but the firm now reacted by ramping up its New York office with laterals and restructuring its global finance practice – combined with partnership cuts in London.

Find out about what strategies the top law firms are using

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