Beiten's festival friends

A couple of Chinese tourists thought they’d struck gold at the Munich beer festival the other day. For there, kitted out in lederhosen, was none other than Harry Potter. Actually it was Berwin Leighton Paisner competition partner Beckett McGrath. But the likeness was uncanny. Or at least it was after a couple of beers.

Beckett had gamely dressed for the part at a gathering of representatives from Beiten Burkhardt’s referral firms or ‘international friends’. He was the only non-local to respond to an invitation to sport traditional Bavarian attire, although all of Beiten’s partners rose to the challenge.

I was in Munich to debate the future of independent law firms with the gathering. Naturally the turmoil that has gripped the financial markets in recent weeks was uppermost in everybody’s thoughts. During the last downturn events actually conspired to favour Europe’s network of independent law firms, just when everyone was writing them off. The dotcom crash hit the magic circle and large international firms particularly badly. These firms had spent the preceding couple of years on an unprecedented merger spree in Europe in anticipation of a boom in cross-border work that didn’t materialise. Then Enron’s demise sparked a backlash against large, multi-office professional firms. It was enough to stop the accountancy firms’ drive to set up legal networks in its tracks and it put the leading international law firms on the back foot. Finally, London’s band of single-office ‘independent’ firms actually did rather well. Unburdened by the overheads of their larger rivals they benefited from London’s relative strength, particularly in the fields of property and private equity.

This time around, with the UK economy running into the buffers, and property work in particular grinding to a halt, it seems unlikely that London’s mid-tier will lead the way for the independents. The latest Legal Week Top 50 set of financial results saw this group of firms trailing in the wake of the magic circle and international firms, which were buoyed up by their international networks, particularly in the Middle East.

However, several of the lawyers at Beiten’s Munich gathering did foresee the ethics debate playing to their strengths once again. They predicted that some of scorn being poured on the bankers would inevitably rub off on the lawyers who advised them on those fancy financial instruments. But there will be a powerful countervailing force. The wave of consolidation that has been taking place within the banking sector is leading to larger and fewer institutional clients. The inevitable focus on risk management, compliance and regulation may also boost the use and enforcement of legal panels, making it harder for the smaller, independent law firms to get a piece of the action.

Assuming, that is, there is action to get a piece of.

There is in fact mounting evidence that the leading independent firms are expanding their horizons beyond Europe, and revising their strategies in order to secure vital coverage in those regions that do not boast large numbers of potential referral partners. In Moscow the firms in the CMS network are joining forces, in Beijing Slaughter and May is teaming up with its best friends to open an office while BLP is preparing to launch in Abu Dhabi.

Indeed Beiten already operates a substantial international network of its own. Although I’d be surprised if any of its branches are as well-appointed as its Munich office, especially during Oktoberfest.