It was one of the defining moments of the year: on 7 May president-elect Emmanuel Macron strode towards the stage outside the Louvre to give his victory speech to Ode to Joy. Much has been written on what that moment meant for France as a more confident, globally-minded country. The triumph of a 39-year-old ex-banker who marked his success with the EU’s German-born anthem rather than La Marseillaise has done much to raise hopes in the French business community.
Rising confidence is obviously welcome for the profession with the French legal market remaining one of Europe’s key hunting grounds and – unlike Germany’s increasingly-price-sensitive sector – one that comfortably sustains Global 100-level profitability.
Such hopes are underlined by a robust economic showing this year with France projecting annual GDP growth of 1.7%, well ahead of the UK. And there is much hope that Macron’s programme, including the flagship labour law reforms passed in the autumn, will bring further investment.
‘The new government and new laws are good signs for the economy,’ notes Latham & Watkins’ Patrick Laporte. ‘M&A is growing very quickly. There are IPOs in the pipeline and, on the PE side, financing since the summer has evolved in an extremely good way.’
Deal activity has remained solid, with high-end advisers increasingly focused on the outbound M&A that French champions routinely generate. Since the banking crisis, deal work has tilted somewhat away from public M&A, one reason for the heavy private equity investment of recent years. Nevertheless, the warm post-election mood has yet to drive major domestic activity. After a busy first half, France’s Q1-Q3 deal count was 1,389 according to Thomson Reuters, down 30% on the same period in 2016.
As one of the first European legal markets to see significant foreign investment, US and UK advisers remain dominant for high-end work with only Slaughter and May’s ally Bredin Prat the local contender for marquee deals despite fielding just 165 lawyers. Bredin is felt by many to have remained successful in part by widening its coverage beyond its core corporate work even as once-vaunted brands like Darrois Villey Maillot Brochier and Gide Loyrette Nouel have been pushed into the mid-market. Bredin senior partner Didier Martin echoes the point, predicting greater development in contentious practices than corporate. ‘Clearly there will be more activity in the French legal market but not necessarily M&A. With the introduction of a French FCPA, there will be investigations needing lawyers.’
The Legal 500 researcher Dana Ferchland observes: ‘Regulatory work has become an important driver of growth in the industry. Many firms welcomed the recent adoption of the Sapin II law, targeting transparency, anti-corruption and the modernisation of the economy.’
Despite expectations that France’s legal scene would move to a City-style institutional model, Paris’s profession is as defined as ever by star individuals, one of many reasons US firms feel at home. A few stars and 120-150 lawyers in the capital is all you need to compete at the very top of the game.
The pecking order has not changed hugely in recent years, though Cleary Gottlieb Steen & Hamilton’s commanding reputation, thanks to heavyweights like Pierre-Yves Chabert, has, if anything, grown. Linklaters and Clifford Chance are typically the best regarded of London firms.
A quick glance at two of this year’s top deals is telling. The €15bn merger between German Siemens’ and French Alstom’s railway operations was led by Cleary, Latham and Freshfields Bruckhaus Deringer. And the €50bn merger of French Essilor International and Italian Luxottica Group again saw Cleary involved. Bredin joined the table with its Italian ally BonelliErede.
It is a striking turnaround for a legal market that spent most of the last 15 years in danger of relegation into the minor leagues.
As such Bredin jumped from fifth to first place in Mergermarket’s local advisers table for deals value in Q1-Q3, above Cleary and Jones Day – with rankings for volume still dominated by global players, with DLA Piper, Orrick, Herrington & Sutcliffe (Orrick Rambaud Martel in Paris) and Linklaters in the top three spots.
‘Clients want two things,’ concludes Linklaters’ Arnaud de La Cotardière. ‘A firm able to act everywhere in the world and practice coverage.’
The last two years have been active for senior moves. This year has included a 12-lawyer property team quitting Herbert Smith Freehills (HSF) for CMS and Reed Smith hiring three partners from Winston & Strawn and an 18-lawyer team from the imploding local arm of King & Wood Mallesons. Top 100 US firm Ogletree Deakins also launched locally after hiring 11 lawyers and staff including two partners from Olswang and Hogan Lovells, and Quinn Emanuel Urquhart & Sullivan tapped Allen & Overy and HSF for senior arbitration talent.
A four-partner team quit Ashurst for Gibson, Dunn & Crutcher in the summer, four months after Freshfields hired a five-partner private equity group, losses that halved the size of Ashurst’s local arm. As well as one of the largest team hires between major City law firms for years, the move will be significant for Freshfields, which has been striving to reposition its struggling Paris office after a period of departures and managed exits.
Interestingly, France has been generating solid returns for a string of mid-tier operators like Fieldfisher and Gowling WLG for years now, a contrast to the period not so long ago when cultural tensions made local arms a challenge for any foreign players without decades of history in Paris. (The notable exception here remains Berwin Leighton Paisner, which is still plotting its French relaunch.)
And while local lawyers typically expect Frankfurt to get greater Brexit dividend than Paris, it is also hard to see an outcome that does not provide some upside for the French capital as a global hub. All in, it is a striking turnaround for a legal market that spent most of the last 15 years in danger of relegation into the minor leagues for global advisers. Macron or not, the mood has not looked this upbeat in Paris since the late-1990s boom.