Belgian detective Hercule Poirot came to England – but UK law firms are finding it profitable to head in the opposite direction towards europe’s low countries, writes Lucy Trevelyan

Dutch law firms beware. Or Dutch lawyers rejoice, depending on how you look at it, because Linklaters is on the move.


Not content with recruiting veteran corporate law partner Peiter Reimer and three associates from Allen & Overy (A&O) last month to kick off a corporate practice in Holland, the magic circle firm is now looking to advance its presence in Holland even more. Much more.


Linklaters’ ‘BeLux’ (Belgium and Luxembourg) managing partner Jean-Pierre Blumberg says: ‘This is the start of a big expansion drive. We have been trying to find ways to expand the practice but it’s not that easy if you can’t attract established lawyers, especially in the corporate markets.’


Linklaters’ ambition, he says, is to expand the 20-lawyer office into a ten-15 partner firm with 50 to 70 lawyers – or more if the market will support it. Mr Blumberg is being realistic, though, saying he will be happy if the Dutch office can grow into a 50-lawyer firm in the next two to three years.


Mr Blumberg explains that Linklaters’ failure to merge with former alliance partner and current national leader De Brauw Blackstone Westbroek in 2002 has forced the firm to grow in the area organically – unlike A&O, which successfully swallowed up much of Loeff Claeys Verbeke in 2000 and now has a 250-lawyer Dutch office. Those who did not wish to join A&O went on to form respected tax specialist firm, Loyens & Loeff.


But if, as A&O’s Dutch marketing manager Marcel Wendrich maintains, Holland is still wallowing in recession and many large multinationals are pulling some or all of their operations out of the area to move to cheaper labour climes, what’s the attraction of a vastly enlarged office in the area?


Mr Wendrich says: ‘What we see in Holland is that some companies – especially more labour-intensive ones – tend to go to other regions like Eastern Europe and Asia, for example Phillips.


‘At the moment we are getting business out of it because we are helping them with the outsourcing and so on, but if a lot of companies do decide to leave Holland, that could have an affect on our business in the future. It will though hopefully be replaced by other sorts of business. We’re certainly doing very well in terms of flow of business at the moment. Mergers and acquisitions are picking up and we’re seeing a lot of work in private equities as well.’


Says Mr Blumberg: ‘If Benelux [Belgium, Netherlands and Luxembourg] was one country instead of three it would be in the G9. If you claim to be a European law firm, you can’t not be there.


‘Holland is particularly interesting. You have disproportionate numbers of multinationals there, such as Shell and Phillips, which is very interesting from a financial perspective, for finance transactions are not easily linked to Dutch law.’


After its alliance with De Brauw broke down, Linklaters was left with purely English law-trained lawyers which, as he explains, is fine for finance-based transactions – of which there are many in the Dutch market – since these are usually conducted under English law.


Similarly, he says, in the bonds market, often it may be a Dutch company issuing the bonds but the deal is likely to be governed by English or New York law. However, a successful corporate practice, he says, needs local lawyers, hence the recruitment drive.


Mr Wendrich insists that Mr Reimer’s parting from his firm was amicable and spawned from the former partner’s desire to join a smaller practice. His firm aims to replace Mr Reimer, but he predicts recruitment in the area is likely to become more difficult in the future.


He says: ‘Holland has a saturated market but the feeling is that some time from now there will be a lack of lawyers and it will be hard to get people on board.


‘There are fewer law students now, and although some people are willing to go to the nth degree working 70 hours a week or more, more people now want more of a work-life balance and are saying this is not something I choose to do.


‘We can’t cope with people working only 40 hours a week or so and we sometimes lose people, not to the competition but because they want to have a better balance of work and home life.


‘We are making it possible for people to work part-time and making it clear it’s not a show stopper if they want to become a partner. It can make things difficult but it’s something we have to do otherwise we will lose good people, especially women.’


Steven De Keyser, DLA Piper Rudnick Gray Cary’s managing director for continental Europe and the regional managing partner for Belgium, says that in general, fee rates in Holland are higher than those in Belgium. His firm opened offices in Belgium three years ago and offices in Holland just 12 months ago.


He says: ‘Although the markets in Holland are well developed, there is less pressure there than on the markets than in Belgium. The market in Belgium is very mature and its importance on the international scene has been reducing over the last few years.


‘International companies, which ten years ago would have been looking to open headquarters in Belgium, are looking to move to other areas such as India, China and Eastern Europe. It’s a very competitive market.


‘I expect a number of law firms will reconsider their strategy and perhaps reduce their practices in the area. We want to make sure we can service our clients on a global basis. We won’t take the decision to stay out of a market because the market is not sufficiently profitable. That’s why we’re different from other law firms.


‘Only two UK firms have a larger presence in Belgium than us and that’s Linklaters [Linklaters Oppenhoff & Rädler merged with Belgium/Luxembourg firm De Band van Hecke Lagae & Loesch in January 2002] and Allen & Overy, which both acquired very large practices. I’m not sure though if they have grown.’


Mr Blumberg says there are two markets in Belgium – the domestic market and the EU practice – borne out, he says, by the fact that there are around 200 non-Belgian firms established in Brussels offering purely EU law services.


‘In Belgium we have 150 domestic lawyers and 30 international lawyers practising EU law. The EU practice is very busy and always has been, focusing predominantly on merger control and notification of mergers.


‘I can’t see firms pulling out of here, but Belgium is over-lawyered and the market here and in Holland is mature. I can’t see anyone wanting to set up a new operation for the domestic market here starting from scratch. It’s a question of consolidating in a mature market, but I think a lot of firms got there houses in order when the recession hit and reduced in size and cut costs. Now partners are just waiting to see how the market goes.


‘We had a terrific year last year but I think everyone is still cautious that the market is still slightly volatile. You can have a good two or three months but you still have the feeling that things might change. There is also increased competition. If you lose an important pitch, you’re not sure if something else will come along.’


Both Mr Blumberg and Mr Wendrich agree that fees in Benelux are still quite sensitive – and are likely to remain so for quite some time.


Mr Blumberg says: ‘There is pressure on fees when times are tough. You often see second-tier firms cut into deals with very low fees just to be in the market, which is quite often a problem for larger law firms.


‘You even get some of the very largest firms offering their services for a ridiculous price just so they can say in the league tables that they have been involved. They do the work practically for free so it adds to their deals value. They then come out on top in a country in the league tables, which leads to more work. I feel this is a short-sighted strategy.’


Mr Blumberg says the Luxembourg office – the product of a successful merger with former alliance partner De Bandt van Hecke Lagae & Loesch in 2002 – is doing ‘tremendously well’.


He says: ‘It has been exploding after the merger. Luxembourg is a small country which is highly specialised in financial services, particularly banking, structured finance and regulated and unregulated funds. Many of our international client see Luxembourg as the best place to establish a fund. That’s why the influx of work into Luxembourg has increased significantly.’


Geographically this area of northern Europe may be small, But for some time yet it appearis that it will figure large in the plans of City law firms.


Lucy Trevelyan is a freelance journalist