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New York law firms are the talk of the town in Frankfurt. The buzz is centered on rumors of $1-million-plus signing bonuses being dangled for top M & A and corporate finance partners. As American firms follow their investment banks and private equity clients to Germany, top lawyers in Frankfurt, Cologne and D�sseldorf report a rash of cold calls from headhunters. The question on everyone’s mind is whether U.S. legal powerhouses such as Sullivan & Cromwell and Skadden, Arps, Slate, Meagher & Flom, to name only two, can pry big-name lawyers from local firms. With so much demand and a short supply of lawyers with corporate finance skills, the headhunters are becoming increasingly blunt. A lawyer at a large firm recounted the conversation with one representing an American firm. “I said, ‘Why should I come?’ They said, ‘Money.’ “ One Frankfurt lawyer said a colleague was offered a signing bonus of $1.6 million by Sullivan & Cromwell, and Legal Week, a British legal newspaper, has reported that both S&C and Skadden are offering up-front payments on that order. The reports quickly made the rounds in Germany. Sources at both firms denied they are offering such huge cash lures, and signing bonuses are rare generally at the partner level. “We have never done it and would never consider doing it,” said a Sullivan & Cromwell partner. Even if those firms are not offering money up front, others are. “There are golden hellos on offer,” confirmed one recruiter who works for American firms in Germany. He said that firms are also willing to bend their compensation formulas to pay German partners more than they would otherwise get based on their seniority or the business they generate. S&C showed recently that it is willing to bend its rules in another way to beef up its practice on the Continent, hiring three lateral partners in Paris — Gerard Mazet and Jean-Pierre Le Gall from Jeantet & Associ�s and Richard Vilanova from Stibbe Simont Monahan Duhot. The firm had seldom hired senior lawyers from the outside, and it had always waited a year or two before making them full partners. Both Skadden and S&C have said they are interested in expanding in Frankfurt. Skadden has recently built up its office to 15 lawyers and will move later this year to an office with space for 60. S&C has had a small outpost with a partner, David Morrison, who splits his time with Paris. In Germany, demand in M&A is only part of the lure for Americans. For instance, technology investment prompted Brobeck Hale and Dorr last month to open an office in Munich, where much of Germany’s VC community and high-tech industry is centered. The London-based firm is a joint venture of San Francisco’s Brobeck, Phleger & Harrison and Boston’s Hale and Dorr. And in addition to the increasing deal flow, a string of mergers between top English and German law firms has altered American strategies in Germany. Most of the German firms that had close ties to New York counterparts have merged to become Anglo-German firms now trying to compete with U.S. firms around the globe. In the last year, three top German firms have merged with British firms: Bruckhaus Westrick Heller & Lober with Freshfields to form Freshfields Bruckhaus Deringer; P�nder Volhard Weber & Axster with Clifford Chance to form Clifford Chance LLP; and Oppenhoff & R�dler with Linklaters & Alliance. The mergers could eventually create hiring opportunities for U.S. firms. Two sources in Germany report that some German partners in these firms are becoming disillusioned as management power shifts to London, and some believe that client conflicts are too often resolved in favor of clients of the English firm. But so far, the corporate finance partners have stayed put. The breakup of Gaedertz, a large firm, created an opening for Los Angeles’ Latham & Watkins, which is picking up Gaedertz’s Hamburg office. London’s Norton Rose will take the Cologne office. But aside from the Hamburg office, the firm did not have a strong corporate finance practice. That has left U.S. firms to target partners at the top-tier firms, including Hengeler Mueller Weitzel Wirtz, the last big independent German law firm, which is considered by most lawyers to be Germany’s finest. To do that, they have to offer very generous packages because Germany’s big firms are as profitable as the top English firms. The Germans are not hurting in the way that second-tier London firms were in the mid-90s, when American firms raided them to establish their English-law practices. Partners in a large office in Frankfurt can expect to make $1 million a year for many years, said a German partner in Frankfurt. “You probably do have to offer a lot of money to step into a risky career opportunity of, say, a 10-lawyer office.” Copyright (c)2001 TDD, LLC. All rights reserved.

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