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Top U.S. law firms are adding a steadily increasing number of attorneys to their overseas offices, but most are remaining cautious about which cities to choose. Since 2000, the 250 largest U.S.-based law firms have more than doubled their attorney ranks in Europe and increased the number of attorneys in Asia by 60%, mainly due to growth in China, according to data collected in The National Law Journal‘s annual survey of the nation’s 250 largest law firms. London is far ahead of any other international city as a destination for U.S. firms to practice, though Paris and Frankfurt, Germany, are also two of the most popular cities. The three are arguably the top business centers of Europe. Firms are starting to pull out of the Middle East, employing slightly fewer attorneys in the region over the past six years, and there is still no market in Africa yet for firms, due to its poor economy. Perhaps most notably, firms are also beginning to develop a Latin American presence, increasing their ranks in the region by 42% over the past six years. “Most firms want to be in three major financial spots,” said Brad Hildebrandt, chairman of legal consulting firm Hildebrandt International. “It’s a really different model, you have the Baker & McKenzies, DLA [Piper Rudnick Gray Cary]s and Clifford Chances doing a lot of work around the world, then you have the large American firms with offices in London, Paris, Frankfurt, maybe Tokyo.” Hildebrandt said he thinks that more firms are trying to compete with the megafirms. As a result, more U.S.-based firms are opening or enlarging overseas offices. The megafirms, meanwhile, are strengthening their presence in the top foreign markets, while expanding into the Middle Eastern, Eastern European and Latin American markets. England still a hot spot England remains as popular as ever, with U.S. firms staffing 4,265 attorneys there, a 166% increase since 2000. However, part of that increase is due to the mergers last year of DLA with Piper Rudnick and Gray Cary, so the head count in DLA’s English offices is included in the 2005 figures, but not in those for 2000. “Everyone’s still going to the U.K.,” said Ward Bower, a principal at legal consulting firm Altman Weil. “There’s over a hundred U.S. firms there now, and almost all are viewing their London office as a stepping stone to Europe.” Hildebrandt said that as firms gain footing in London, their practices are thriving. “Most of the [U.S.] firms that are in London are doing better, and they’re doing all types of transactions, including some litigation,” Hildebrandt said. “They’re competing directly with the U.K. firms.” More than any other region in the world, U.S. law firms are opening and expanding offices in Europe. The capitals of finance and commerce in the region-London, Paris, Brussels and Frankfurt-remain the most popular cities for growth. “In 2000, we were watching the competition, and the English firms had expanded rapidly into Europe,” said Duane Wall, the managing partner of White & Case. “From our point of view, if we need to truly be a global law firm, we needed a [strong] London office, a Paris office, and so on.” Most recently, the firm opened a Munich, Germany, office, and is eyeing Spain. “I assume that we will have [an office] in Madrid,” Wall said. “We’re looking for the right opportunity.” American firms are starting to take an interest in Spain, especially Madrid, increasing the number of attorneys working there by 219% since 2000, from 57 attorneys to 182. DLA Piper Rudnick made a move in the region by acquiring Squire, Sanders & Dempsey’s Madrid office in December 2005, boosting its office to around 60 attorneys and making it one of the largest international firms in the city. Baker & McKenzie has more than tripled the number of attorneys in its Madrid office since 2000, positing itself as one of the major players in the Spanish market. “Spain is an increasingly important area in the European market,” said John Conroy, the chairman of Baker & McKenzie. “The level of activity and its role in the European Union has gained increased visibility.” The legal market in Asia is also booming right now, mainly because of a strengthened economy in China. Top U.S. law firms are expanding their Chinese practices to cover several major cities, usually Hong Kong, Beijing and Shanghai. The number of attorneys from U.S. firms practicing in China nearly doubled in the past six years, increasing from 509 attorneys to 957. DLA Piper Rudnick opened a practice in Beijing in December and already had lawyers practicing in Hong Kong and Shanghai. “China is the place that has had the most expansion over the last couple of years,” Hildebrandt said. “Hong Kong has always been popular, but in mainland China, there’s infrastructure work, [initial public offerings], project finance, litigation advice to Chinese companies who may have to litigate in the U.S.” White & Case is proceeding cautiously, though. As of now, the firm has a 33-attorney office in Hong Kong, and small offices in Beijing and Shanghai. They’ve added nine attorneys in China since 2000. “China will someday be a huge market,” Wall said. “We’re adding attorneys prudently as we go along.” DLA Piper Rudnick has around 90 attorneys practicing there now. “China is one of the really important emerging economies,” said David Church, the international development partner at DLA, via e-mail. The second-largest legal market in Asia for U.S. attorneys is Japan. The number of attorneys there has nearly doubled since 2000, but still remains much less than China, at 470 U.S.-based attorneys. “U.S. firms have been in Japan for years,” Hildebrandt said. “Three years ago, the laws changed so that U.S. firms could hire Japanese attorneys, which opened things up a bit. But the sizes of firms in Japan are still pretty small. Some firms have pulled out; right now there’s a renewed interest in Japan with their strong economy.” Law firms continue to monitor restrictions in India and South Korea that prevent U.S.-based attorneys from practicing there. Gaining momentum Foreign growth in Latin America is still in its infancy, but is starting to gain momentum. U.S. firms expanded their presence in the region by 41.7%, with most of the growth coming from Mexico and Brazil. The only country in the region with fewer U.S.-based attorneys working there now than in 2000 is Argentina, where the economy has experienced severe instability over the past years. “Latin America is starting to pick up,” said Hildebrandt. “The stability of the South American governments make people nervous, but I predict more [legal work] there. Those are countries whose economies are developing, there’s a lot more foreign trade and you can practice there if you want to, there are no restrictions. So far, it’s small numbers, though.” Baker & McKenzie features some of the highest numbers of attorneys practicing in Latin America, with 498 attorneys in the region. “Very important to us is the energy industry,” Conroy said, explaining the firm’s growth in Latin America. “Though whether we will establish additional offices there remains to be seen for present purposes.” The firm has added a substantial number of attorneys to its six Mexican offices to bolster its tax practice in the area, Conroy said. Squire, Sanders & Dempsey merged with Steel Hector & Davis last year, largely because the latter firm had developed a significant presence in Latin America, with offices in Caracas, Venezuela; Santo Domingo, Dominican Republic; and Rio de Janeiro, Brazil; and affiliated offices in Buenos Aires, Argentina, and Santiago, Chile. “For many years, Western firms had been establishing presence in Europe and Asia, but Latin America had been left untouched. One thing that attracted us to Steel Hector was that they were ahead of the curve,” said Coralyn Goode, the head of the Latin America practice at Squire, Sanders & Dempsey. “Generally, the market is seeing Latin America open up, the way Europe did back in the 1970s.” Goode cited lucrative legal work in Latin America, including infrastructure projects, communications, hotel and hospitality, and natural resources. However, Bower of Altman Weil said that it may take time before U.S. firms start increasing their presence significantly in Latin America because of a stagnant economy and similar time zones. “U.S. firms can serve Latin American climates out of New York and Miami because of the geographic time zones,” Bower explained. “It’s not like Hong Kong. You’ve also got indigenous firms that you can affiliate with. The economy is there, but it’s just not growing the way that everyone hoped.” DLA Piper Rudnick’s Church said that the megafirm “will be reviewing our options” in the region. DLA currently has no offices in Latin America. Law firms are sending slightly fewer attorneys to work in the Middle East now than in 2000. Many parts of the region aren’t safe and the economies aren’t stable, though the opportunities for lucrative legal work still exist in the oil and gas industry and development. “The Middle East is tough,” Hildebrandt said. “You have to have a reason to be there. Living there is not a pleasant experience. You’ll see some, but very slow, growth. It’s very complicated and dangerous there.” Bower echoed that sentiment. “The political instability has resulted in some U.S. and U.K. firms either pulling out or consolidating [in the Middle East]. If we get some political stability there, we’ll see some growth.” White & Case has closed two offices in the Middle East since 2000, phasing out the Manama, Bahrain, office and adding the Jeddah, Saudi Arabia, practice to the office in the Saudi Arabian capital, Riyadh. “We’re not cutting back in the Middle East,” Wall said. “We’re just consolidating our opportunities in Riyadh, as it’s most important for us to be there as the business center. Our practice there is more robust than it’s ever been.” The only city in the Middle East to which firms are sending their attorneys is Dubai in the United Arab Emirates, one of the safest countries in the region. Most recently, DLA Piper Rudnick announced the opening of a Dubai office in December. “We have established our office there as a hub for the [Persian] Gulf and wider Middle East,” Church said. “The gulf region is important economically and particularly in view of the high liquidity due principally to the high oil price.” Numerous European-based firms have taken the cue, with Clifford Chance, Allen & Overy of London and Linklaters of London all positioned in Dubai.

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