Last week I hosted a webinar with legal industry experts from across Europe and the week before I helped chair a discussion between heads of top independent European law firms. In both cases, a subject of debate was particularly lively: the war for talent.
The continental European market is not the only one fighting this battle, but it may be different in the way the battle is fought.
In the UK, national firms are trying – as best they can – to compete with the high salaries offered by US-based law firms in London. UK companies are already offering a lot less, but they are constantly offering more. In Canada and Australia, international law firms are trying to get their lawyers out of the country, so local firms face a different kind of challenge.
In Europe, however, the reaction of international companies to raising wages has largely been to distract from wages.
In the webinar, which you can watch here, Law.com International Benelux correspondent Linda A. Thompson explained how local businesses in Brussels don’t want to compete on pay alone. Every company talks about the importance of areas such as diversity and ESG, but European companies want to position themselves as attractive employers by offering other elements such as a better work-life balance, an environment more enjoyable work and more reasonable billable hour targets.
It seems to be more than just talk. Every week there are examples of policies being rolled out across Europe that demonstrate this, whether it’s after-hours work absences, generous parental leave policies, or fully paid sabbaticals.
Law firms headquartered in the United States aren’t raising salaries just to make life harder for local firms around the world. They face a dilemma every time they increase pay levels in the United States because they have to decide exactly how it will affect all of their other offices. When Wilson Sonsini Goodrich & Rosati started a wage war in Brussels in early November, it was simply a matter of aligning the office with its US operations.
Even so, the effect on the local market is significant and unwelcome.
The cynic might point out that European companies offer an alternative to high wages because they have little choice. Most of the law firms based in Europe are smaller operations. Of the 31 law firms that have eight or more offices across Europe, only six are headquartered in Europe. And of those six, many have most of their offices in one country.
In other words, companies based in Europe tend to be independent operations which often do not have the clout to compete on wages with their international counterparts.
It also offers some advantages, however. During the webinar, Noerr partner Natalie Daghles, who was previously a partner at Latham & Watkins, pointed out that international firms are under constant pressure to achieve certain levels of profitability, which limits their ability to admit lawyers into partnership in less lucrative jurisdictions. . European companies can offer more career opportunities.
This was seen last week when elite German company Hengeler Mueller named six new partners, which may not seem like a lot, but it is one of the biggest promotional rounds in the company’s history. That’s more than the mighty Latham & Watkins promoted to Germany on their biggest promotions tour in October.
And when top international law firms Simpson Thacher & Bartlett and Weil, Gotshal & Manges announced their partner promotions last week, they added 57 combined lawyers to the top rows – but in mainland Europe they managed a total of two.
But even though European companies insist on the same points, and even though lawyers often say that they are looking for something more than money, it is undeniable that money is the ultimate driver.
After so many companies across the country said they would not participate in the wage war, Germany’s Gleiss Lutz unveiled huge pay increases last week. He raised the salaries of his newly qualified partners to € 150,000, ahead of the United States, Magic Circle and other international law firms, including his rival Clifford Chance, who now pays more in Germany than London.
Gleiss Lutz has also announced plans to open an office in London. Maybe European companies don’t need to think so defensively after all.
And yet, it is undeniable that despite the rhetoric of European firms that they are local leaders and that European clients prefer local lawyers, American firms have already made a very clear inroads on the continent.
It helps US companies know that many of the biggest private equity firms are US-based, but it is still important that two US companies advise KKR on Telecom’s $ 33 billion buyout offer. Italia. The deal would, after all, be one of the largest European private equity acquisitions in history.
Meanwhile, Weil, Gotshal & Manges are planning to open an office in Brussels and Latham is making his mark in the burgeoning field of cannabis law in Europe.
Businesses based in Europe might not like it, but this wage war is only part of a much bigger battle. And the economy is not on their side.
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