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England and Germany rarely have much in common — but they are both out of Euro 2000, and have combined forces to create the world’s fourth-largest law firm. The Freshfields Bruckhaus Deringer mixes a UK Magic Circle firm with two top ten practices in Germany. This gives the combined clout of 1,850 lawyers based in 19 countries across Europe, America and the Far East. Bruckhaus itself has a ready command of corporate and financial practice in Germany, Austria and Central Europe, with 372 lawyers covering all significant areas — until the merger the largest independent firm left in Germany. Says Anthony Salz, Freshfields senior partner, “What makes this merger so significant is Bruckhaus’s position in its own market. “It is very strong and has decided to do something different, which may cause ripples for firms in other European markets.” Freshfields has been making definite moves for a German partner since last year, when it was believed to be making moves for Gleiss Lutz Hootz Hirsch Rechtsanwalte. Soon they were abandoned when the more seductive figure of Bruckhaus — four times the size — came into its sights. Competition for Bruckhaus’s affections has been stiff. Clifford Chance and Bruckhaus were, for a while, seriously stepping out, and even Shearman & Sterling — itself with a uniquely large presence in Germany for a major foreign player — had top-level discussions. Herbert Smith cast a desiring eye over Bruckhaus earlier in the year, only to be spurned for Freshfields. Alan Peck, Freshfields chief executive, said last year how vital the move is to Freshfields’ interests: “Germany is the powerhouse of Europe. UK and U.S. firms regard it as absolutely critical. For that reason, I think we will see a whole series of mergers.” Clearly Freshfields was not going to be left out. But the course of mergers can run as roughly as true love, and Freshfields hit a major hitch in April’s vote. Just 63 percent of Bruckhaus partners voted in favour, well short of the near-unanimity required. An industry insider says: “The vote was split along two lines. Frankfurt and Hamburg in favour, D�sseldorf much more wary. Business-wise, the capital market guys were all for the merger. It was the corporate lawyers who had major reservations.” Much of the last couple of months has been spent thrashing out the details of corporate governance and partners’ packages, culminating in a senior summit in London at the end of May. Differing lockstep provisions have been brought closer together. Bruckhaus’s Christian Wilde is to be joint senior partner alongside Salz. The Bruckhaus name is to be incorporated into the global brand. Says Salz, “There is a lot of value in the Bruckhaus and Deringer names in certain markets. By including those names, we signal and give weight to what we are trying to do.” The merger is the latest piece in the jigsaw for Magic Circle involvement in Germany. Clifford Chance has hooked up with Punder Volhard Weber & Axster. Linklaters is on course for a merger with Oppenhoff & Radler by 2001. Allen & Overy’s Frankfurt presence is ever-burgeoning. Slaughter and May refuses to merge in principle and prefers to enter the market through an integrated team approach. These cultural upheavals come just as the German law industry is recovering from the shock of a decade ago. It was then that the Supreme Court allowed mergers between firms in different cities, leading to a revolutionary series of mergers and take-overs. So what does the future hold for Freshfields Bruckhaus Deringer? And — with this merger coming in the wake of Clifford Chance and Punder Volhard Weber & Axster, and Linklater and Oppenhoff & Radler — where now for Anglo-German relationships? Robert Pay, managing director of Jaffe Associates, a marketing, management and communications company for law firms, applauds the latest merger. “It’s a smart move by Freshfields. Germany’s equity market is extremely underdeveloped. There’s nowhere more attractive right now,” he says. “Deringer has given Freshfields an in for IP and IT; Bruckhaus will give them across the board entry for corporate and finance.” Pay, former marketing director at Clifford Chance, sees significance in the recent rash of mergers. “We’re learning just how much the Anglo-German axis is going to increasingly dominate the legal market in Europe. “Of course there can be cultural clashes. Historically the Anglo-Saxon tradition is business-centred and flexible, continental law has to work within the impositions of the Napoleonic code. “However, increasingly the legal profession is becoming more and more accustomed to thinking in terms of cross-border services than national jurisdiction.” What about the much-renowned loyalty German clients feel towards German law firms? Pay says: “That whole notion of client loyalty is much exaggerated. Really they just want to deal with someone who speaks the language and is familiar with their expectations. “It’s all about focusing on the client’s needs and the service dimension — and no-one in business has addressed that area less internationally than law firms. A sensitive partnership will be able to consolidate and move forward in the German market.” Dr Andreas Austmann is partner with Hengeler Mueller Weitzel Wirtz, now the largest independent firm left in Germany. He wonders what the future holds in store after the merger. “It’s hard to believe that it will be a genuine merger of equals, although the appointment of Wilde will help to give the right impression. “There will be a ‘wait and see’ period while clients find out if the quality of work and easy access to partners will be maintained. “Conflict of interest between the two firms clients will be an area of concern. No doubt there will be technical losses as the issues unravel.” Giles Henderson, senior partner at Slaughter and May — Hengeler Mueller’s integrated team partners — echoes Austmann’s scepticism. “One client told me in the wake of another international merger, ‘You get involved in a lot of plumbing’. “Every single law firm is different from another. Coming together involves a lot of time and effort. You have to wonder how much that will allow partners to truly focus on clients’ interests. “But as far as the international market is concerned I don’t think the merger represents a significant change, in that cross-border transactions are already well developed.” Henderson fears that Freshfields interests are becoming increasingly stretched. “Bruckhaus is not the only thing they have on their plate. They’re taking in a lot of people all over — Italy, France, America, China. “That’s a big ship, and it takes a lot of driving. A genuine partnership is very important for the creativity of a team of lawyers. I don’t know how possible that will be if the environment increasingly takes on an Arthur Andersen style.”

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