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Editorial

Legal market overview

Anxiety levels are high on the streets and inside French law firms. If the Lehman Brothers crisis marked the end of the flourishing post-war era, the search for a new model continues and – with the nation still mourning the Paris terrorist attacks in November 2015 – the future remains uncertain, both politically and economically. All eyes are now on the Presidential election in 2017.

Most agree that France has emerged from the financial crisis as a mid-cap market, a sector that is forecast to double in size in the next few years, driven by a dynamic private equity market. Engineering remains a strong national asset and France is nurturing a number of hi-tech and biotech companies that are attracting foreign investors.

The presence of Chinese and Asian clients, who were involved in a surprising number of large deals in France in 2015, especially in the hotels and leisure sector, is another new development.

Firms are increasingly focusing on regulatory and litigation work to remain profitable, with one firm declaring that ‘we have now entered the litigation era’. Adding to this, the French Competition Authority remains one of the most severe in Europe, delivering a record of €1bn in total fines in 2014 and handing out its largest fine ever (€350m) for a single company in 2015.

Financial fraud and corruption are also being more tightly investigated following the creation of a dedicated national investigation squad and a specialist section of the main court of justice in Paris in 2014. Its first ruling, rendered in 2015, shook the market: the heir to the Nina Ricci perfume and fashion fortune was convicted of tax fraud for the use of an offshore account, sentenced to a year in prison and fined €1m. Her lawyer, the managing partner of a major French law firm, was also convicted. French tax lawyers say the tax authorities have stepped up their game and are aggressively pursuing cases, more often putting lawyers and their clients in the dock, as in the Ricci case. In response, companies are now challenging the French tax regime in court.

Legality, morality and professional ethics are becoming hot topics – and not only in the tax field. In the groundbreaking Tapie case at the start of 2015, the Paris Court of Appeal cancelled a €400m arbitration award from 2008 after finding that one of the arbitrators involved lacked independence.

Despite such upheavals, the ‘ultra-competitive’ French legal market was relatively calm and saw few major changes in 2015. Many firms have already adjusted their model and are now better positioned to handle new demands for high-value advice at a lower fee structure.

Major market changes mainly involved French firms: Gide Loyrette Nouel A.A.R.P.I. took over Cuatrecasas, Gonçalves Pereira’s team in Paris, and closed its Budapest and Kiev offices, which were taken over by Jeantet AARPI.

Lefèvre Pelletier & associés, which still ranks among the top national firms despite another wave of departures, and leading renewable energy boutique CGR Legal announced their merger; the deal will result in the creation of a 160-lawyer firm with several offices in Europe and Asia. Independent firm CVML recently closed its Tokyo office and saw a number of partners defect to rivals.

Among international firms, DLA Piper and Jones Day continued their hiring spree in 2015 and new entrant Cohen & Gresser LLP, which opened in Paris in 2014, also bolstered its ranks in 2015. Wragge Lawrence Graham & Co LLP is now known as Gowling WLG.

The podium of law firms in France is made up of the following: French firms Bredin Prat, Darrois Villey Maillot Brochier, Gide Loyrette Nouel A.A.R.P.I. – which remains the largest French international law firm with some 600 lawyers worldwide – and De Pardieu Brocas Maffei; UK-originated firms Allen & Overy LLP, Clifford Chance, Freshfields Bruckhaus Deringer LLP and Linklaters LLP; and US firms Weil, Gotshal & Manges LLP, White & Case LLP and Cleary Gottlieb Steen & Hamilton LLP – which is widely regarded as the number one US firm in France. Herbert Smith Freehills LLP and Paul Hastings LLP are also emerging as high-profile contenders.

Notable French commercial law boutiques include BDGS Associés, Cabinet Bompoint and Dethomas Peltier Juvigny & Associés. Franklin, De Gaulle Fleurance & Associés, Scemla Loizon Veverka & de Fontmichel (SLVF) and Vivien & Associes rank among the best medium-size firms.

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  • The new French regulation applying to national insurance contributions for managers and shareholders

    French insurance contributions on executive and shareholder remuneration (pay + dividends) have been substantially increased by the National Insurance Funding for 2013 Act, No. 2012-1404, of 17th December 2012. Until 31st December 2012, all dividends were subject to national insurance contributions on unearned income but henceforth, under Article L136-3 of the National Insurance Code, amended by Act No. 2012-1404, certain dividends   are considered as pay received by executives and shareholders and are therefore subject to the national insurance contributions on pay. The Act also abolished the ceiling on health insurance contributions payable by the self-employed and all this means that businesses must rethink the way that they have been structured until now.
  • CHINA - PERSONAL TAXATION AND SOCIAL SECURITY : CHINESE AND FOREIGN NATIONALS ON AN EQUAL FOOTING

    The People's Republic of China has initiated an overhaul of its social security system, reformed the personal taxation regime and has extended the scope of these laws to foreigners residing in China.
  • MOROCCO TO BECOME THE LEADING FINANCIAL PLACE IN AFRICA

    The Kingdom of Morocco is supporting the ambition of becoming the leading financial place for Africa. In this context, a wave of draft laws is to be passed and implemented within the following months, amongst which, the Law No. 53.08, setting up a new financial authority, and the Law No. 54.08, reforming public offering rules, are of paramount importance to Moroccan and foreign issuers, and financial institutions.
  • ACQUISITIONS IN CHINA : ASSET OR SHARE DEAL?

    The opportunities offered to foreign investors by the Chinese mergers and acquisitions market are increasing every year: in 2010, transactions involving foreign companies came to 60.1 billion euros, an increase of 21.2% compared with 2009. Seen from the West, where markets are declining, all sectors of the Chinese economy seem to be undergoing promising development and the statistics indicate that the Middle Empire will be a lasting springboard for growth.
  • Prime de Partage des Profits

    Le dispositif L’article 1er de la loi de financement rectificative de la Sécurité sociale pour 2011 oblige les sociétés commerciales de 50 salariés et plus, dont les dividendes par part sociale ou par action sont en augmentation par rapport à la moyenne des deux années précédentes, à verser une prime à l’ensemble de leurs salariés
  • BULGARIA MARKET OVERVIEW

    Types of investors The private equity (PE) funds that are active in Bulgaria are not raised or registered in the country. Some Bulgarian PE funds were raised recently, but there are no statistics as to the sources of their funding, their number, the funds that were accumulated, etc.
  • RECENT DEVELOPMENTS REGARDING COMMITMENTS

    THE PROCEDURE IS CLARIFIED, BUT MAY COMMITMENTS APPLY WITHOUT LIMIT?
  • Landmark decision by French Competition Authority in conditioned LPG case

    cartel case closed after discovery that leniency application was largely based on forgeries and rejection of collective dominant position objection.
  • 2012 supplementary budget

    The second supplementary budget published in the Official Gazette September 19, 2011 provides for two key measures that affect the deferral of tax losses and taxation of capital gains realized on the sale of equity securities .
  • Actualité législative fiscale

    Au delà des mesures applicables à l’ensemble des contribuables (telles que la limitation du report des déficits ou la réforme du mode de calcul des plus values sur cessions de participations),le plan de réduction des déficits annoncé le 24 août dernier par le gouvernement comprend des mesures qui intéressent spécifiquement les acteurs du secteur financier.

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  • Lower VAT On Hotel Services In Montenegro

    An important piece of regulation has been introduced in Montenegro recently, through the reduction of VAT on catering services in four stars hotels (in the north of the country) and five-star hotels (on the seaside), which will be effective from 2018. According to media reports, Olivera Brajović, General Director of Tourism Development and Standards in the Ministry of Sustainable Development and Tourism, pointed out that these reduced tax rates on services of preparing and serving food and drinks are expected to raise the overall competitiveness in the hospitality sector, while at the same time contribute to the combat against grey economy.
  • Karanović & Nikolić Joins The NextLaw Global Referral Network

    Karanović & Nikolić is pleased to announce that it has joined the NextLaw Global Referral Network, created by global law firm Dentons. We are particularly excited by the fact that Nextlaw presents a new type of network, with a unique invitation-only approach in their selection, ensuring that all of its members have the highest quality standards and a proven track record of excellence.
  • Sweet Smell Of Success - Serbian Sugar Industry Consolidates Its Forces

    After more than a four months and a Phase II (in-depth) investigation, the Competition Commission gave conditional approval, to Sunoko's acquisition of the Star Šećer company and its subsidiary Te-To - the owner of the sugar factory in Senta. No divestments have been required from Sunoko.
  • New Bridge Over Danube To Be Built In Belgrade

    News reports are informing us that Belgrade will gain another bridge over the Danube river in the near future – this one at the Ada Huja island and over three kilometres long.
  • Nikola Tesla Airport To Acquire Sava Centar?

    Media outlets have recently been reporting on the possibility that Nikola Tesla Airport will acquire Sava Centar (SC), with the purpose of turning it into its company headquarters. This acquisition would be followed by an investment of over EUR 30 million in the next three years for the building's reconstruction and adaptation. Such a decision would result in Sava Centar changing its name to "Congress Centre Nikola Tesla Airport", with an expanded array of facilities, including a tower, a shopping mall, and a hotel. The funds for the investment in question will be hailing from the Airport's own assets.
  • Too Big To Hide – European Commission Sanctions Truck Cartel

    Global competition law circles have recently been shaken by the European Commission's record-setting fine of EUR 2.93 billion for collusion on the automotive market, imposed against Volvo, Daimler, Iveco and DAF trucks. The sanctions in question varied amongst the accused parties, with Daimler facing the largest penalty in the amount of more than EUR 1 billion on its own. Iveco's fine was set at EUR 494 million, DAF's at EUR 752 million, and Volvo's fine has been set at EUR 670 million.
  • Cartel Office ensures greater competition in rail sector

    The German railway company Deutsche Bahn must allow for more competition. The Bundeskartellamt, Germany’s Federal Cartel Office, found that the company had abused its dominant market position with respect to the sale of rail tickets.
  • ETERNA LAW IS PLEASED TO ANNOUNCE START OF THE COOPERATION WITH PUBLIC ASSOCIATION "ACADEMY OF PREVE

    Eterna Law (representative office in Almaty) announces the beginning of co-operation as a legal adviser with the Public Association "Academy of Preventive Medicine of Kazakhstan."
  • LAG Sachsen-Anhalt on video surveillance at the workplace

    Video surveillance at the workplace does not inevitably give rise to claims for damages. That was the verdict of the Landesarbeitsgericht (LAG) Sachsen-Anhalt [Regional Labour Court of Saxony-Anhalt] (Az.: 6 Sa 301/14).
  • Final stretch for loan withdrawal

    Those who still want to withdraw from real estate loans concluded between 2002 and 2010 should take action now while the right of withdrawal is on its last legs. This get-out-of-jail-free card is set to lapse shortly.