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If you listened to the City you would think Germany had always been its backyard. But behind the headline mergers of Freshfields and Bruckhaus Westrick Heller Loeber or Lovells and Boesebeck Droste, there has been activity of an altogether American nature.There are 15 US firms with full offices in Germany; the UK has six. Another four US firms intend opening in Germany this year, while last week Legal Week revealed that elite New York firms Sullivan & Cromwell and Simpson Thacher & Bartlett were preparing to launch German law practices. They have been joined by Skadden Arps Slate Meagher & Flom.City partners remain sceptical of the lateral hiring strategy of most of the US firms. One Freshfields Bruckhaus Deringer partner said: “We tried to build a top-level practice in Germany with a small group of partners too, but we did not have enough critical mass.”But the US firms have adopted a range of strategies. White & Case and Coudert Brothers both merged with German firms while Cravath Swaine & Moore and Davis Polk & Wardwell have turned referral relationships into informal alliances.Cravath is strengthening its links with Gleiss Lutz Hootz Hirtz, the German ally of Herbert Smith, which ties in well with Cravath’s budding referral relationship with the City firm. US firms with German offices tend to keep them relatively small, specialising in high-end corporate and securities work. City firms generally merge with German firms to bulk up their practices beyond small, specialised units. Where UK firms appear to have an advantage is in the strength of their relationships in Germany. Anglo/German mergers have removed five of the top eight independent firms and another six City firms have alliances or strong associations with other leading German firms. Of the few large commercial firms left, Gaedertz is already in merger talks with Norton Rose.The US response to the City firms’ progress with mergers has been to stay small and specialised, with streamlined top-end corporate and securities practices.But they are not averse to building their teams with the right candidates and the Anglo-German mergers have made German partners think about their future. One such hunter is leading technology firm Brobeck Phleger & Harrison, which is due to open in Munich, but so far has had difficulty finding suitable candidates. Some US firms have ben successful. Washington DC’s Hogan & Hartson has forged a deal with a group of about 10 partners from Oppenhoff & Raedler in Berlin, which has just voted to merge with Linklaters. Berlin is not the nation’s business centre, but suitable for the telecoms regulatory work that will be the initial strength of the office.Whatever strategy firms choose, the economic rationale is accepted. Ian Coles, London managing partner of Mayer Brown & Platt, says Germany should remain stable after the current corporate boom wanes.“There is as much work in Germany as in London and German clients are increasingly looking for sophisticated financial products,” he adds.Whatever Germany’s economic future, UK firms should recognise that the US has woken up to Germany’s potential.

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