As traditional Nordic industries are augmented by successful modern companies, the region’s thriving economies are opening up to international law firms, writes Grania Langdon-Down


National law firm Eversheds’ recent announcement that it has formed an association with Swedish firm Andrén Bratt Partners in the latest stage of its global expansion raises an interesting question.


Given the strong economies of the Nordic countries – which are not only home to many major multinational corporations and have thriving industries, but are also a gateway to developing eastern European nations – why have so few UK law firms established offices there?


‘I am a bit surprised,’ admits Alan Jenkins, chairman of Eversheds, which has had an office in Copenhagen since 1996. However, he adds quickly: ‘But I am quite content with the position.’


That is a view shared by those who have made the leap: Linklaters and Bird & Bird, which have offices in Stockholm; Osborne Clarke, which has alliance members in Copenhagen and Helsinki; and DLA Piper Rudnick Gray Cary, which has offices in Stockholm, Copenhagen, Oslo and Bergen. Ian Ross, who runs boutique practice Ross & Co in London and has an office in Helsinki, also has no desire to encourage other law firms to look more closely across the North Sea.


The Nordic region is made up of Sweden, Denmark, Norway, Finland and Iceland. According to the key players in the legal market, much of their attraction lies in the disproportionate number of home-grown multinationals to the size of the countries – with Nokia in Finland, Volvo and Ericsson in Sweden, Statoil and Norsk Hydro in Norway and Maersk, one of the world’s largest shipping companies, in Denmark.


Sweden is the biggest of the markets, its wealth built on natural resources – with its forests, hydro-electric power and iron ore. It is also a significant arbitration centre. Norway has traditionally been the most international because of shipping, oil and fish farming. Finland has become an exciting market over the past ten years, mostly on the back of telecoms and other high-tech businesses. Denmark has strong trading companies and a good telecoms and media industry, but apart from Maersk does not have the same industrial champions as its neighbours.


Iceland is home to the highly acquisitive retail investor Baugur, which has snapped up much of the UK’s high street in recent years, including the toy store Hamleys, the Big Food Group – which owns frozen-food chain Iceland – and the fashion chain Oasis. Baugur’s advisers have included City firm Allen & Overy, Stoke-on-Trent-based Heatons, and national firm Pinsent Masons. No UK law firms have a presence in Iceland, where the legal market is made up mainly of sole practitioners, with few full full-service firms.


At one stage it was common for teams of lawyers from UK and US firms to set up shop in Stockholm hotels to carry out work. However, Linklaters’ merger with leading Swedish firm Lagerlöf & Leman in 2001 all but stopped that, with international firms preferring to work with the largest independent Swedish firms to present a more competitive challenge.


Linklaters has built up its Stockholm office, which now has 115 lawyers including 24 partners, to be the third largest firm in the country. The firm was named the leading Nordic mergers and acquisitions legal adviser by value in the first half of 2005, having advised on 15 deals totalling 7.7 billion euro (£5.2 billion), according to preliminary league tables produced by analyst Mergermarket.


Jörgen Durban has been managing partner of the Stockholm office since February. He says Sweden was something of a closed shop before Linklaters came on the scene. Having been with Lagerlöf since 1985, he led the firm’s merger negotiations with Linklaters, and then spent three years in the London office before returning to Sweden. The merger resulted in the closure of Lagerlöf’s former offices in Malmö and Gothenburg, and a shake-out of staff.


‘This is very easy for me to say,’ he comments, ‘but I am convinced that the distance between Stockholm and London seems much shorter than the distance between Stockholm and Malmö, or Stockholm and Gothenburg. It is fascinating to see the degree to which Swedish deals are generated in the City of London by investment banks.’


The Swedish Bar Association ruled last year that firms could not represent more than one bidder in controlled auctions to avoid conflicts of interest. Mr Durban says: ‘This has been beneficial for us because we have become really strong in private equity over the last year, and this has played into our hands with clients coming to us from other firms.’ One of Linklaters’ current deals involves acting on behalf of Old Mutual, which is looking to buy Skandia, the Swedish insurance company. It could be one of the largest transactions in Europe this year, he says.


The other big area is international arbitration. ‘The legal market for arbitration in Sweden is probably second tier, along with Amsterdam and Switzerland, after London, Paris and New York,’ Mr Durban explains. ‘The reason is the Cold War. Sweden has been neutral and it was common for the Soviet Union to insist on arbitration in Sweden in commercial transactions. When China became stronger in the commercial field, we saw an inflow of work from there. And after the Cold War, this has just continued.’


Looking around the region, he says Linklaters is keeping its eyes open for opportunities but he does not foresee establishing any more offices in the short term. He also does not anticipate other UK law firms following their lead in the next one or two years.


However, he says: ‘If the different capital markets of the region become more integrated and, in a few years, the stock markets merge so there is only one proper market across the Nordic region with the same listing and trading rules – and I think this will happen – that may attract more firms to come here.’


For Bird & Bird, Stockholm was the obvious choice for developing its business. Its office in the Swedish capital now has 35 lawyers following its merger with Gedda & Ekdahl in 2001, just ahead of Linklaters. ‘We chose Sweden because it is a very strong player in our core sectors, with a lot of very strong international businesses, and our subsequent experience has proved it to be a very good move,’ says David Kerr, the firm’s chief executive officer.


The Stockholm office offers a full service, but is sector focused. Last year, it took over the in-house legal team from Eniro, a telephone directory and information business in 27 countries, which has its headquarters in Stockholm.


Overall, DLA Nordic is the only firm with offices across the region, with about 220 lawyers. Nigel Knowles, co-chief executive of DLA Piper, says the firm has yet to reach full financial integration with DLA Nordic. ‘But we are looking at ways of achieving that. In terms of everything else, we are seamless. We have the same strategy and values and systems.’


Henning Ogland, who chairs DLA Nordic, explains the group’s origins, which started with the merger about five years ago of three national firms – Lind from Sweden, Stabell from Norway and Horten from Denmark – to form the first pan-Scandinavian firm. Three years ago, the firm associated with DLA and last year it went into a bilateral agreement to become DLA Nordic.


Mr Ogland says: ‘Linklaters’ move into Sweden sent shock waves through the Scandinavian market. The reason there haven’t been more link-ups is because each country is dominated by four or five very large law firms which all, typically, have five to ten good-friends relationships in the UK and US markets. If they concentrate only on an exclusive alliance or firm, they would lose a tremendous amount of business, which causes tension on the partners’ side.’


When it comes to the Danish market, Jens Jakob Bugge, managing partner of DLA Nordic’s 69-lawyer Copenhagen office, says with disarming candour: ‘Our competitors would say the Danish market is not attractive at all. On the other hand, we have seen very big transactions here. Last year, we were involved in a £1.1 billion deal when the energy company Dong bought Copenhagen Energy.’


For Mr Ross, opening an office in Helsinki harks back to his student days when he studied in both Sweden and Finland, later working for the Bank of Finland. In June 2001, he received a knighthood from the president of Finland for services to the country.


Mr Ross, who speaks Swedish and has a ‘working knowledge’ of Finnish, spends half his time in the Helsinki office. He believes the Nordic markets are ‘demanding, but they repay long-term attention’.


He explains: ‘Most of what we do concerns trade law and cross-border litigation, particularly since Finland became a fully-fledged member of the European Community.’


When it comes to Finland, it is impossible to consider the country without mentioning Nokia. It has a huge in-house legal team of about 150 lawyers, half in Helsinki. Tim Williams, who previously worked for Manchester firm Pannone & Partners, joined Nokia as corporate legal counsel six months ago, after four years working in private practice in Helsinki.


Part Finnish and married to a Finn, his personal view is that the legal market in Finland is extremely well served by a ‘competitive bunch of attorneys’. He explains: ‘What tends to happen is larger international firms will come here when they are instructed, usually by a client on the buy side of a transaction. They will then instruct a local firm as their correspondent for the local law issues, but quite often they will drive the deal themselves. It is very much on what the investment bankers call a “steal by deal” basis. There is a feeling that many Finnish companies will be bought up in ten years, and if the Finnish law firms are only acting on the sell side, it will be game over.’


He says foreign lawyers tend to struggle along in the top firms for about two years before going home ‘because the market is not very deep. The larger firms have sewn up all the big clients and the partners tend to cling on to the work extremely tenaciously’.


Those wanting to stay tend to go in-house in the big multinationals or technology start-ups, where they can find some of the ‘most exotic and interesting work’, he says. ‘Finnish companies tend to have larger in-house legal teams than many other corporates, partly because it is cheaper than using external counsel and partly because they do more than 90% of their business offshore, so it is important to hire and train up their own lawyers to provide relevant advice in the different jurisdictions.’


Eight years ago, Osborne Clarke teamed up with a Finnish firm to form the independent partnership of Hedman Osborne Clarke Alliance, which has five partners and 20 lawyers who rotate between offices in Helsinki, Tallin and St Petersburg.


This joined Denmark, which currently has three partners and 20 lawyers in its Copenhagen office, as the second Nordic member of the firm’s alliance of European firms. Both offices focus on corporate, corporate finance and commercial work, including IT and technology.


London partner Roy Lambert, who manages Osborne Clarke’s UK/Nordic business, says: ‘Law firms in the various capitals are very independent and it is therefore necessary that you have a reputation in the region before any of them will even consider discussing the possibility of some kind of formal alliance.’


The firm has established strong best-friends relationships in Oslo and Stockholm. Mr Lambert says: ‘Hopefully, at some stage, we might end up with full alliance partners in both cities. In an ideal world it would be in the short term, but we will just have to wait and see.’


For Eversheds, the Nordic region has been an important part of its European strategy since it formed an association with Danish firm Lunoe & Co in 1996, fully merging in 2003. The office has 14 lawyers, plus three English lawyers on secondment.


Mr Jenkins says Denmark was attractive because, at the time, few other law firms were moving there – ‘everyone was piling into France and Germany’ – despite its very interesting practices in banking, corporate finance, private equity and venture capital. ‘We are now seeing increasing amounts of business coming into us, not just from Denmark but wider Scandinavia, which is why we have extended our reach in the region by going to Stockholm.’


The 14-lawyer firm is now called Andrén Bratt Eversheds. A full merger is not excluded, but nor is it a pressing business objective, Mr Jenkins says. ‘As with the Danish office, we are relaxed about the period of time it takes to come to full merger.’ Eversheds also has good relationships with law firms in Iceland, Norway, Finland and the Baltic countries. ‘We’ll take a pause, look at how this is working and listen to our clients about what they would like us to do next,’ he says.


Not all firms with links to the region feel the need to have a physical presence there. Clyde & Co has historic links to Finland through its shipping business. It maintains these links through partner Pii Ketvel, a Finn, who is based in the firm’s London office. The firm has close relationships with two or three major firms in each country.


One key change he has noticed over the past ten years is the willingness of Scandinavian companies to use international law firms, even for transactions within the region. ‘The market is open and pragmatic. Many of the best people who come out of law school go in-house, so they are very shrewd buyers of legal services and expect to get good service. Very good lawyers themselves, they expect a lot from their external lawyers and are careful with the fees.’


Firms that have made the move to the region enjoy relative exclusivity. As Mr Bugge says: ‘I like the market right now because, considering the size of the two other international law firms in Copenhagen, we are the only sizeable one, so we can differentiate ourselves pretty well from the rest of the pack. I don’t think other international law firms will stay away forever – but I would like them to.’


Grania Langdon-Down is a freelance journalist