It may be easy to lump the three Benelux jurisdictions together and, with Brussels at the heart of the European Government, some might argue that Belgium has the lion’s share of lawyers, both in-house and in private practice.
But, according to Yves Debruyne, former general counsel for Benelux and now general counsel for Procter & Gamble in the UK, things are changing in Belgium, the Netherlands and Luxembourg.
“In the Benelux countries, more and more companies now have a legal department and some deal with Benelux as a region,” he says.
Debruyne adds that one recent development is that in large companies, the legal departments are getting smaller and have a leaner structure to better meet the business needs.
Being the seat of the European Commission and the nominated ‘capital’ of Europe, a number of companies have regional headquarters in Brussels. Local companies have a major presence, with large in-house departments.
But, says Debruyne, although there are still some companies with 40-50 in-house lawyers, those are the exception rather than the rule.
Veronique Huysmans heads the Benelux department at Procter & Gamble, which has three lawyers and two assistants. The Belgian and Dutch legal departments were recently merged so there is one structure for the Benelux market. The department gives local support to the Belgian and Dutch business and to the European HQ.
Huysmans says that although there is one department to cover the entire Benelux region there are significant differences between the three jurisdictions, particularly in their legal frameworks.
“Belgium and the Netherlands are the most different considering the size of their border,” she says. “In law, the Netherlands has inherited a certain German legal influence, topped with a pragmatic approach to business solutions. Belgium, on the other hand, developed a Napoleonic civil code, similar to the French legal system.
Huysmans says that while Luxembourg also retains its place in Benelux, its size means goods and services are often imported, so European regulations may have a more direct influence on legal matters. Luxembourg law, however, sometimes provides surprisingly strict legislation, so local provisions cannot be overlooked.
At Solutia, formerly the chemical division of Monsanto, which now specialises in life sciences, Chris Parr is general counsel for Europe, Africa and Asia, with two full-time lawyers and one part-timer, based in Brussels. The head office is in St Louis, US, and has 20 lawyers. In Europe, Solutia instructs DLA’s Brussels-based partner David Cox, who was formerly in-house at Monsanto, Eversheds for litigation in the UK and competition work and Brussels firm Van Bael & Bellis.
“In Europe, certainly in the chemicals sector, in-house counsel who are trying to expand the legal department are having difficulties,” says Parr.
“The pure chemical industry has suffered because of the high prices of raw materials. That has a knock-on effect if you are a cost centre rather than a profit centre. With nine or 10 plants throughout Europe, it is difficult for a small legal team to service the demands of the client. My impression is that a lot of legal departments are made up of one or two lawyers who are overstretched and our position here is not unique.”
Although in-house numbers are squeezed more generally, there is a greater recognition of the role that in-house lawyers play in Belgium. For Jettie Van Caenegem, UCB’s group general counsel, one of the major developments for the in-house market was the setting up in March 2000 of the new Belgian Institute of In-house Lawyers.
Van Caenegem, who sits on the board of the institute, says one of the objectives was to get recognition for in-house counsel and that the institute has achieved this.
Only members of the institute will be “juristes enterprises”, recognised as employees whose principal task is to give legal advice to their employers and related companies.
Van Caenegem says it is envisaged that there will be about 1,000 members of the new institute, which plans to set up a disciplinary body, to be presided over by judges.
She adds that the institute plans to carry out a benchmark study on in-house remuneration. Lawyers in Belgium are not well paid, compared with London or other professions in Belgium.
“There is enormous competition between law firms and the remuneration of young lawyers in private practice is above what industry can pay,” says Van Caenegem. “It is a problem attracting high fliers in-house. Whether that is a sensible long-term approach is questionable.”
She adds: “Five years ago, you could hire a relatively good lawyer with a newspaper ad. Those days are over. In the next few years, industry will find it very difficult to recruit reasonably priced lawyers who are properly trained.”
Specialist headhunters are now making headway in the local markets. One area in particular where demand outstrips supply is intellectual property. As businesses move into the global market which has become more aggressive and more protectionist, so they are keen to exploit their intellectual property rights, and those with the specialist skills are in demand.
Compared with Belgium, Luxembourg is a much more specialised market, where the banking sector dominates.
Consequently, there are few in-house lawyers working in the jurisdiction. One leading banking in-house counsel in Luxembourg says: “This is a fairly small jurisdiction. An idea of the size is that the Association Luxemboureoise des Juristes de Banque numbers about 150, so the total generally would be 200-250. Most banks have one in-house lawyer and one or two have a large department of five or six.”
For most lawyers in the banking sector, the issues relate to compliance, particularly banking secrecy issues.
Work that is outsourced tends to be international. Many banks are involved in business in the neighbouring countries, as well as Italy and Spain, and there is a lot of cross-border activity.
The lawyer says the main firms used by his bank are the independent firms such as Arendt & Medernach, Elvinger, Hoss & Prussen and the affiliated firms De Bandt, Faltz & Kremer and Clifford Chance.
As for the impact of the international firms and using external lawyers generally, he says cost is an issue. “My view is that they do not get cheaper and hourly rates have tended to increase.”
The future for in-house lawyers in Luxembourg looks fairly positive. Despite widescale mergers on the international stage, such as the merger of French banks BNP and Paribas and Societe Generale with Fortis.
However, this merger activity has not led to mass firings or major bloodletting.
One in-house lawyer in banking says: “Everyone tends to agree that Luxembourg has a certain stability, although the market is tight, there is demand for qualified people in general and there is little movement between companies from different jurisdictions.
And there is likely to be plenty of work out there. In terms of the economy, he adds that the general view is that there will be development in the investment fund and pensions sector and that although the private banking sector may be in a bit of a decline, the aim is to stabilise that area.
As for any new areas, the view is that Luxembourg has the right infrastructure to play a role in the future expansion of banking into e-banking.
In the Netherlands, some view the internationalisation of business and its advisers as inevitable.
Wilco Jiskoot, a member of the management board at ABN Amro, one of the three largest banks in the country that service 80% of the market and with a legal department of 50 professionals, says: “For most large corporations, the importance of in-house lawyers and their external advisers has increased over the years and that is probably true across Europe.”
The increasing amount of international work has resulted in a demand for international law firms, he says. The work has grown exponentially and there is more than enough work for in-house lawyers.
Jiskoot adds that for him the influx of international firms has been positive – as well as negative in terms of fees – in that the quality of the work and standards has been raised.
“Generally, in-house counsel will always go to the individual rather than any firm. It is certainly noticeable that more firms are pitching for work. Although other departments have input, it is ultimately down to the legal department to decide who to work with and what work to outsource.
And there are as many approaches to that as there are companies.” concludes UCB’s van Caenegem.
The lie of the land
Recent moves by lawyers
in private practice have changed the legal landscape in the region.
The Belgian arm of Loeff Clays Verbeke merged with Allen & Overy in January 2001 and De Bandt Van Hecke Lagae & Loesch is still in discussions about whether to integrate with Linklaters & Alliance.
In Luxembourg, Clifford Chance and Linklaters have moved in and Linklaters has also linked up with De Brauw Blackstone Westbroek in the Netherlands.
But whether they are making major inroads in getting work is a moot point – only a small number of the 200 foreign law firms in Brussels offer local advice.
“Most companies use Benelux law firms. There has been a recent trend where large local firms have linked up with the UK international firms, which has led to some concern about whether, as a consequence, those firms will increase their fees in line with the international firms. If that were the case, there would be no guarantee that all clients would follow the local firms linking up with the international firms,” says Yves Debruyne at Procter & Gamble.
“In fact, I have even seen some businesses switching from London to Brussels because legal fees in London can be 30% higher than in Brussels,” he says.
Some London firms are finding that Brussels is not as profitable as they assumed because the work tends to be highly specialised and competition-related.
Eversheds’ Brussels partner John Grayston says the firm is divided in the work it does for the companies there.
“The majority of the UK firms here have opened up in Belgium with the intention of doing competition work, but over time, the volume of competition work can go down as well as up,” he says. He adds that firms hoping to increase their rates to London ones are unlikely to be successful.
“If you take a realistic view and see Belgium as a region, which justifies those rates for that type of work, then you can get good rates, but they will never be the same as the UK,” he says.
The consensus is that many in-house counsel will not go to the mega firms as they are seen as interested only in the monster transaction. In-house lawyers say they do not expect to get the same level of service or attention as a company doing a multi-million pound deal.
One in-house lawyer expresses surprise at the overkill and inefficiency in some of the large international firms: “I am astonished by the efforts of the Brits and even some from the US because the number of huge transactions in this region is limited.”
At Brussels UCB, van Caenegem says: “Most of this department’s work is contractual and we tend to go for outside counsel only when a foreign jurisdiction is involved. But with the influx of international firms, there has been an interesting shakeout. There is a view (among in-house counsel) that firms are looking to service the financial community and at the other end there is an evolution towards boutique firms.”
