Euro elite: focus France – Liberté, égalité, fraternité

Strong competition from UK and US firms in Paris and a penchant for tight, focused practices means French firms do not feature large among the Euro Elite.

With its lack of large full-service domestic law firms, the French legal market is unique when compared with other European jurisdictions. A traditional culture of non-partnership and a low threshold when it comes to international investment has created a legal landscape where the few larger French firms face fierce competition from smaller French boutiques, as well as the significant US and UK presence that dominates the Paris market.

As French firms are comparatively small and do not practise in all key disciplines, just four independents make the Euro Elite 100: Gide Loyrette Nouel, Bredin Prat, De Pardieu Brocas Maffei and FIDAL. Respected French firms such as August & Debouzy, Darrois Villey Maillot Brochier and Jeantet do not make the cut, mostly because of their relatively small size. Gide has 499 lawyers and competes on a daily basis against high-profile international firms in Paris, such as Clifford Chance, Linklaters, Orrick Rambaud Martel, Weil, Gotshal & Manges, White & Case and Cleary Gottlieb Steen & Hamilton. With 1,368 fee-earners, FIDAL is one of the largest firms by headcount in the world but has a very specialist focus on tax advice and does not operate a conventional law firm partnership.

‘If you look at the German market you have Noerr, Gleiss Lutz, Beiten Burkhardt… a number of large firms,’ notes Gide managing partner Stéphane Puel. ‘There are two reasons for this. One is that for a long time the French Bar refused partnerships – lawyers had to exercise as a sole practitioner. The second is the French market has always been very open to foreign firms. It is easy for UK and US firms to practise in the French market, contrary to some Bars which are more protectionist.’

Didier Martin, senior partner of Bredin Prat, adds: ‘In Paris, we certainly have the top 15 London law firms. There are maybe 40 or 50 American law firms in Paris.’

Against the backdrop of a tough economic environment in France, larger independent firms continue to perform well. According to Mahasti Razavi, a partner at August & Debouzy, which has seen its turnover grow 9% to €49.2m this year, this is a result of strong corporate deal flow.

‘If I were looking for an overall trend I would tend to say that if you are in a larger firm you will have seen a positive upward trend. I don’t know if others have the same percentage increases compared to what we have, but there have been more announcements about large deals, the volume of deals and so on.’

The Euro Elite: France	Total lawyers	Total partners	No. of offices
Gide Loyrette Nouel	499	115	14
Bredin Prat	160	43	2
FIDAL	1,368	320	93
De Pardieu Brocas Maffei	130	33	1

However, Puel at Gide – which saw a 1% increase in turnover to €189m last year – disputes the view that the larger firms in France are seeing an increase in their profitability, mostly as a result of the ‘more for less’ agenda of French in-house counsel.

‘The last year has been difficult for most of the big firms,’ he says. ‘French clients have always been very demanding in the sense that the pressure on price has always been very high and it is getting higher. We have new firms coming in or new teams entering new parts of the market, and French clients are very fond of tender offers for each and every mandate, basically, so there is huge competition on price and on quality.’

Nevertheless, significant transactional activity in the French market in 2015/16 included the failed merger between Bouygues Telecom and Orange worth an estimated €10bn in cash and shares. Such a deal would have left Bouygues as Orange’s second-biggest shareholder after the French state, which holds a stake of around 23%. Bouygues was represented by Darrois Villey, while Orange was advised by Weil Gotshal alongside August & Debouzy.

‘That deal kept every single practice group of August & Debouzy busy – it was our largest deal,’ says Razavi. ‘Corporate is strong; labour law is very strong because it is always a big topic under French law; litigation, of course; compliance is a big thing; and intellectual property is pretty strong as well.’

‘French clients have always been very demanding – the pressure on price has always been very high and it is getting higher.’
Stéphane Puel, Gide Loyrette Nouel

Bredin Prat may be relatively small in comparison with many firms in the top 100, but it played a leading role alongside Latham & Watkins on the recent acquisition by China’s Shandong Ruyi Group of a controlling stake in the French affordable luxury brand SMCP from private equity house Kohlberg Kravis Roberts & Co (KKR). Bredin Prat advised KKR, with Latham & Watkins acting for Shandong Ruyi and Mayer Brown representing SMCP. The firm also advised General Electric in 2014, alongside ‘best friend’ Slaughter and May on the company’s acquisition of Alstom’s thermal, renewables and grid businesses for a total of €12.35bn.

Says Martin: ‘We are very active in the M&A market. I would say last year was the strongest and I would guess that this year could be the equivalent or maybe better – it’s too early to tell. There has been an uptick in M&A activity for the last two years, but it slowed down in January.’

As in other European jurisdictions, uncertainty around Brexit, as well as the general slowdown in China, may be some of the macro-economic factors affecting the performance of M&A, but French businesses will also be facing the additional distraction of an upcoming presidential election in 2017. This election, in addition to a poor economic backdrop and fierce competition from international firms, continues to foster an uncertain future for domestic players.

‘The elections always create some sort of quietness or a climate of worry,’ says Razavi. ‘We need to take this perspective into account when looking at our business plan and deciding on our activities going forward.’

‘There is a big question mark,’ concludes Martin. ‘We have good reason to hope that France will be on the right track, but it’s not certain.’ LB

kathryn.mccann@legalease.co.uk