The secret to making your country attractive to foreign investors at a time when populism is reshaping global politics and protectionism is on the march? A stable and business-friendly government, an open society, a well-trained and internationally-minded workforce, and reliable infrastructure are not bad places to start.
And, luckily for Amsterdam’s legal elite, the Netherlands has them all. ‘In these uncertain times, the country has been able to show some stability and that’s appealing,’ says Allen & Overy (A&O)’s local senior partner Brechje van der Velden. ‘Its attractiveness was and still is its reliability – multinationals having security for the future,’ notes Baker McKenzie’s Kim Tan. ‘We know what’s going to happen. The government is co-operative and transparent.’
The country’s openness to foreign investment has long been what allowed a nation of 17 million to punch well above its weight – and its legal profession with it.
A number of US companies, including West Coast tech giants, have their European headquarters along the river Amstel – Uber, Netflix and Tesla, to name but three. Plus the country has its own huge multinationals, such as British-Dutch groups Shell and Unilever.
It was once its benign tax environment that made Amsterdam attractive. As scrutiny of companies’ tax structures increased and the EU pushed for more alignment among member states, the Netherlands’ political stability became the main selling point. Attractive housing and working culture also make it a popular destination with foreign workers.
And, of course, there was never a better time to appeal to multinationals’ desire for stability, with Brexit prompting firms based in the UK to look for a better hub for their European operations. ‘Amsterdam has been successful at profiling itself as a good alternative to London,’ says Jones Day office partner-in-charge Yvan Desmedt. Even as the country’s stringent rules on bonus caps mean investment banks prefer Paris and Frankfurt, it still scored some notable victories in Japanese tech groups Panasonic and Sony, as well as the relocating European Medicines Agency. Many others are considering similar moves and hiring legal counsel for advice.
Openness to foreign investment has long allowed a nation of 17 million to punch well above its weight – and its legal profession with it.
The country also offers cheaper assets than Germany and France – one of the reasons for its simmering private equity market. Beyond the transactional space, the Netherlands has long been an attractive place to settle international class-action disputes and the opening of the Dutch Commercial Court in January this year is expected to attract more cross-border litigation.
The mood recorded in 15 interviews with the local elite is certainly bullish. ‘Business is booming here. There is a lot of work in the corporate field. M&A, competition, litigation and real estate are all doing well,’ says David Orobio de Castro, real estate head at local leader Stibbe.
In such an open climate, you would expect international law firms to be putting local players under intense competitive pressure. The reality is more nuanced.
Indeed, London law firms began efforts in Amsterdam a long time ago, but they found a legal market unusually sophisticated in the late nineties for a continental European country. It is no coincidence that the most successful among them is one of the few that managed to pull off a substantive local merger.
A&O, which took over much of Loeff Claeys Verbeke in 2000, is the undisputed leader among the international pack, also thanks to a strong corporate client base at a time when banks are shrinking their legal spending. The enduring Benelux influence on A&O is underlined also by the elevation of Belgian-born Loeff Claeys partner Wim Dejonghe to the City firm’s global senior partner role.
Not that life in the country is without challenges. A&O has since the merger gradually reduced its Amsterdam headcount by around 25 to 200 and in spring saw the early retirement of much-vaunted local M&A heavyweight Jan Louis Burggraaf due to health issues.
Van der Velden is adamant that there are no plans to scale back further and the office by consensus maintains a strong bench. Finance partner Femke Bierman, office managing partner Justin Steer and securities specialist Tim Stevens all have formidable reputations, as does corporate partner Christiaan De Brauw, hired from NautaDutilh in 2016.
Meanwhile, most other international firms are keeping smaller teams on the ground with little appetite for growth. Clifford Chance (CC)’s 47-year-old local practice has around 140 lawyers and growing clout within the firm’s global network after former head Jeroen Ouwehand was elected as its first-ever non-London based senior partner last November. Restructuring co-head Jelle Hofland has a prominent reputation and the office’s respectable deal list included payment platform Adyen’s €7.1bn initial public offering last year, although it reported flat revenue growth in 2018/19.
Freshfields Bruckhaus Deringer’s practice fields a solid corporate team, including M&A veteran Jan Willem van der Staay. The practice is smaller at 85 lawyers, although its head Dirk-Jan Smit insists: ‘This is not just a network office: it is an office with a stable and strong local client base and we are here to stay.’
Linklaters’ local branch is leaner still. Launched in 2004 after the firm failed to merge with Dutch leader De Brauw Blackstone Westbroek, its 56 lawyers focus almost exclusively on transactions and related litigation. Linklaters is, nonetheless, one of the few City players to have hired laterally over the last 18 months, bringing in former Nauta arbitration head Gerard Meijer in June 2019.
Successful and failed marriages had a similar impact on the mid-market. Simmons & Simmons merged with Trenité Van Doorne’s spin-off Nolst Trenité in 2002 and is today one of the few international players with a growth plan, aiming to increase local headcount from 85 to 110 in the next three years. Herbert Smith Freehills has no local base after its failed attempts to combine with Stibbe in 2011, although the Benelux outfit is still the Anglo-Australian firm’s preferred destination for referrals.
There is little doubt the market is still dominated by larger regional independents.
US players, meanwhile, are largely absent. Baker McKenzie, which launched in the country as far back as the ’50s, has in Amsterdam one of its largest continental European offices at 170 lawyers and some success thanks to its 70-strong tax practice. Greenberg Traurig unusually picked the Netherlands for its first non-US base in 2003 and now fields 40 lawyers. Jones Day launched in 2013 and has since grown to 50 lawyers with ambitions to get to 70 over the next three years.
But this trio is the exception rather than the rule. Nor has the country been booming with new office openings lately, the most recent significant launches dating back to spring 2017.
Globetrotting Dentons tied up in April 2017 with former Eversheds ally Boekel, a firm that had long sought an international merger to expand beyond its traditional focus on real estate. A validation of the tie-up came in the form of a six-partner tax, corporate and finance team joining from Bakers in the months following the merger. The branch has grown from 70 to 100 fee-earners in two years, its turnover rising 55% to around €30m in 2018.
Tech-focused Fieldfisher launched in May 2017 after noting the importance of the market to its core clients. Partner Frans-Jozef Crousen says Amsterdam is the office with the highest amount of referrals in the network, but it remains small at 13 lawyers.
There is little doubt the market is still dominated by larger regional independents. Their secret was their ability to build strong relationships with top international firms without a base in the country, especially US leaders. As such, De Brauw’s decision to go it alone as Slaughter and May’s local ally proved highly successful. Its 376-lawyer Amsterdam arm is the Netherlands’ top player alongside A&O and the firm turned over €174m in 2018 thanks to star names including corporate head Arne Grimme. Slaughters and De Brauw were recently instructed on Takeaway.com’s $10bn acquisition of Just Eat.
De Brauw has by consensus moved ahead of what was once its closest rival: the 282-strong Amsterdam and Rotterdam offices of Nauta faced a challenging 2017, with the firm’s revenue dropping 6% amid the retirement of some of its top figures, including corporate partner Hein Hooghoudt. Observers speak of a less profitable firm compared to De Brauw as it chose to build a ‘broad practice’ rather than focusing on high-end work. Managing partner Jaap Jan Trommel defends the approach: ‘We see other firms send clients away, only looking for the high-end, very profitable work. That’s contrary to our proposition. We strongly believe in client relationships.’ He says succession to Hooghoudt has been ‘well arranged’, pointing to partners including public M&A veteran Leo Groothuis. Indeed, the firm had a stronger 2018, with revenue rising 10% to €171m, and its transactional practice remains potent, with recent mandates including advising HAL Investments on the €5.5bn sale of its stake in GrandVision to EssilorLuxottica.
But the list of strong local firms goes beyond De Brauw and Nauta. The 200-lawyer Amsterdam arm of Stibbe is admired for its ability to build relationships with US firms, with those referring work including Latham & Watkins, Cravath, Swaine & Moore, Simpson Thacher & Bartlett and Weil Gotshal & Manges. Turnover at the Benelux firm in 2018 was around €150m.
Formed after a group of Loeff Claeys Verbeke lawyers turned down A&O to join forces with Benelux tax specialist Loyens & Volkmaars in 2000, Loyens & Loeff fields around 600 fee-earners in the Netherlands and last year billed €326m thanks to its big tax practice and solid private equity client base.
Meanwhile, 300-lawyer Houthoff, which rejected a merger with the legacy Norton Rose at the turn of the century, has built a solid referral network with major US practices like Sidley Austin and Skadden, Arps, Slate, Meagher & Flom, helping it generate around €120m in 2018.
Just as the Netherlands has managed to remain open to foreign investment in a world dominated by protectionism, its top independents have found a successful approach to a globalising legal sector. Barring an unlikely raft of openings by US firms over the next few years, the winning formula looks right on point for a challenging few years in the global economy.