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With the Swiss economy at its strongest in a decade and the World Trade Organization’s authority rising, Zurich and Geneva firms are facing increasing competition from outsiders looking to get a piece of the action. Once-staid Zurich, the country’s business capital, is booming with cross-border deals like the August acquisition by Credit Suisse Group of Donaldson, Lufkin & Jenrette, Inc., and the July acquisition of New York-based Paine Webber Group Inc. by Zurich-based banking titan UBS AG. There have been “a significantly larger number of major transactions of all sizes” during the last two years, says Peter Widmer, managing partner of Zurich’s 60-lawyer Homburger. IPOs of both the New and Old Economy varieties as well as mergers and acquisitions have been especially popular, Widmer says. And he expects their growth to continue. Dietrich Stettler, managing partner of Zurich’s 21-lawyer CMS von Erlach Klainguti Stettler Wille, shares the optimism. Deregulation in the telecom and energy markets has also generated enormous business for Swiss firms. For example, he notes, his own firm works as Swiss counsel to the telecommunications company Orange PLC, formerly a subsidiary of Vodafone Group PLC, now part of France Telecom SA. But the key roles in many of Switzerland’s biggest deals are often the domain of non-Swiss firms. In the Credit Suisse acquisition of DLJ, Shearman & Sterling, Davis Polk & Wardwell, and Wachtell, Lipton, Rosen & Katz played the most prominent roles. Says Stettler: “It is a concern that much of the big mergers and acquisition work is dealt with by the investment banks in London or New York.” These banks often hire U.S. or U.K. firms to handle even the Swiss law aspects of the deals. To combat the increased outside competition, Swiss firms are warming to the idea of joining the legal alliances that are springing up all over the Continent. Last summer Stettler’s firm became the first important Zurich player to actually join one when it signed up with the CMS alliance that includes the U.K.’s CMS Cameron McKenna. Now, says Stettler, rumors about other possible linkups are spreading around Zurich, especially as other European firms pay visits to local lawyers. “Everybody says they’re carefully watching, and that interesting times are approaching,” he says. Others remain dubious about the rumors. “Until one sees the Wall Street firms get into this, one shouldn’t rush to judgment,” says Homburger’s Widmer. Widmer does concede that since “almost all the major firms in Germany are hooked up, the question [of alliances] becomes much more acute.” But Widmer disputes the idea that the Anglo-Saxons are marginalizing the Swiss firms in their own legal market. He points to the financing work Homburger did for the Credit Suisse-DLJ deal and to the general corporate work that local firms do for Swiss banks as evidence that they’re not totally lost on the sidelines. So far, the deal work has not lured any major American firms to Zurich, with the exception of Baker & McKenzie, which has had an office there since 1958. Historically, American firms have found the Zurich market too small compared to other major European markets to warrant the expense of setting up a branch office, says Rolf Watter, a partner at Zurich’s Baer & Karrer. They have a different attitude about Geneva, where the emphasis is less on deals and more on the city’s role as an international political center. Attracted to the rising power of intergovernmental institutions based there, most notably the WTO, several American firms have recently opened branch offices or are considering doing so. A year ago Atlanta’s Powell, Goldstein, Frazer & Murphy opened a branch in Geneva devoted almost exclusively to WTO work. In September, Chicago’s Sonnenschein Nath & Rosenthal installed an of counsel there: Cherise Valles, formerly counsel at the trade law division of the Canadian department of foreign affairs and international trade. She will focus on WTO and e-commerce law. And Washington powerhouse Akin, Gump, Strauss, Hauer & Feld has also publicly mused about opening a WTO practice in Geneva. Says Akin Gump’s D.C.-based partner Daniel Spiegel: “We are still exploring the feasibility of the Geneva office, because we see opportunities in relation to the WTO, the U.N. system, and general arbitration work.” Who says nothing ever happens in Switzerland?

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