Until two months ago, Luxembourg’s Bar had for many years required its practising lawyers to pass a language proficiency test in the local language, Luxembourgish. A landmark ruling from the European Court of Justice put an end to this protectionist measure in September this year, finally handing down a judgment that confirmed lawyers did not have to undertake the competency test in order to practise in the country.
So what effect will this long-awaited judgment have on Luxembourg’s law firms? Not much, if their predictions for "business as usual" are to be believed. As in London, commercial lawyers are in short supply in Luxembourg; the specialist finance knowledge required to practise in the country’s top firms means the pool of potential recruits from across Europe is small.
However, Luxembourg has seen the establishment of a new firm, Chevalier & Sciales, introducing some welcome competition into the market.
Founding partners Remi Chevalier and Olivier Sciales met at local leader Elvinger Hoss & Prussen, where they decided to go it alone a year ago. Sciales says the firm’s client base is mostly foreign investors, both private and institutional, but they also work with accountancy giant KPMG on tax issues that arise in local law.
Sciales predicts the language test change "will probably help them" but admits it is hard to hire lawyers in Luxembourg who know the local law. That said, the firm has grown from two to five lawyers over a year and will be six-strong by the end of the year. The demand is there among younger lawyers for the opportunity to work in smaller firms, but many senior associates at Luxembourg’s more established firms are less keen to take the risk of setting up shop as a new independent firm — a career change usually takes the form of a move in-house to one of the many financial institutions based in the tiny jurisdiction.
For its part, Chevalier & Sciales builds up trust among new clients by initially working on test files before moving on to bigger instructions. And as with many new independents, they have also taken the decision to become a member of an international network — in this case Iuris Link, which has members in France, The Netherlands, Poland and the UK.
Closer to home, demand for corporate governance advice to amend company bylaws is set to take off in Luxembourg next year, with a raft of governance measures being introduced recently.
"I imagine a lot of companies will have to amend their laws in order to have a two-tier governance structure [as required by the new law]," explains Chevalier.
Interestingly, the neighbouring Netherlands has announced corporate tax cuts from the beginning of next year, which some Amsterdam lawyers are hoping will create a dent in Luxembourg’s popularity. "The intention is to stop a lot of the business we have here leaving for places such as Luxembourg — where they have a more generous tax regime and hopefully encourage more foreign investment," Linklaters’ Peter Goes explains.
