Germany > Legal market overview
In 2011, ‘the new normal’ for law firms meant increasing instructions on contentious matters in the wake of the financial crisis: these included D&O liability claims, compliance matters, antitrust investigations or matters relating to the new restrictions for financial institutions and the insurance sector. Additionally, several areas of business came under scrutiny from tax authorities. All of this happened in the context of clients facing the much talked-of ‘maturity wall’, a mountain of corporate debt that will have to be paid off or refinanced over the next four years.
However, there are positives to be seen including the real estate market providing law firms with transactional instructions that are growing in number and value, and banks beginning to lend again albeit with higher rates than in previous years.
2012 and the next several years will see acquisition financings with a value of $73bn become due, with Germany being the second most significantly affected European market after the UK. Consequently, finance, high-yield and restructuring experts are expected to be in high demand for advice on the inevitable restructuring and renegotiation of credit lines,and on the conversion of debt into financial instruments such as high-yield bonds.
Private equity structures have come under more intense scrutiny by tax authorities, leading to greater instructions on tax structuring, management participation programmes and tax audit risks.
In the investment space, investors and funds have been looking at investing remaining capital facing investment expiry deadlines, but relatively few large-cap transactions took place in 2011 against the backdrop of economic uncertainties. The market expects an imminent rise in upper mid-cap transactions. Corporate bonds have attracted interest as a viable alternative to external credit finance.
Antitrust lawyers have seen a substantial increase in instructions seeking advice regarding antitrust disputes, compliance and investigations as well as secondary litigation arising from initial investigations.
More contentious and compliance work seems to lie ahead, with the coming into force of German regulations regarding both the remuneration requirements on major financial institutions and insurers, opening up a new field of advice for law firms with clients seeking advice on the alignment of their remuneration structures.
The media sector remains an area of activity with firms providing regulatory advice to media companies and acting on a number of cross-border transactions. E-commerce strategies also continue to gain significance, providing regulatory and transactional work for firms with strong IT practices.
Insolvency work continues to be a huge area and many young administrators are being added to the pre-selection lists of several insolvency courts, and firms are preparing for implementation of the Restructuring Simplification Act.