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In the corporate law arena, besides the constant demand for corporate housekeeping, German firms saw an increased need for advice particularly due to regulatory changes. One such notable topic was the Market Abuse Regulation, which came into effect in July 2016, an EU regulation for the combating of insider dealings and market manipulations. The interpretation of the regulation, which replaces significant parts of the German Securities Trading Act, is still not entirely clear. Another current and high-profile subject was the Volkswagen emissions scandal; some firms continued to give comprehensive advice to automotive manufacturers, boards and investors.

In the M&A market, which in 2016/2017 again was a sellers’ market, there was a rising demand for warranty & indemnity insurance, protecting against transactional risks. Chinese companies and investment funds’ interest in German targets was strong, as was interest stemming from the US and a few European neighbours. Some multi-billion deals stood out in the market, notably the $66bn takeover of Monsanto by Bayer and Mideas’ $5bn takeover of KUKA.

Demand for advice on financial transactions remains high, although the German market continues to be a mid-cap market with only a limited number of large-cap deals. The credit market is still characterised by high liquidity; the large availability of equity and debt financing means companies get good offers for financings and refinancings and expectations are that the market will become even more borrower-friendly. Strong competition prevails in bidding procedures, the pressure to invest is high and conditions for borrowers are consistently improving. A market in which supply overtakes demand also explains the increase in and shift towards covenant-lite and covenant-loose loans, which since the financial crisis have only seen a re-emergence in Germany in the last few years. Moreover, financial activities are moving from banks to non-banking entities, including investment funds, capital market constructions, securitisations and project loans. Particularly debt funds and direct lending have gained in significance and are now considered accepted market participants in Germany, although they still make up a comparatively small market share compared to the UK or US.

Banking and finance practices also continue to see heavy workloads in the context of regulatory matters, including the implementation of MiFID II and MiFIR, CRR and CRD IV, and the banking landscape is already seeing challenges in implementing CRD V and CRR II. Furthermore, it was time for a mid-term review of the Capital Markets Union planned by the EU commission by the end of 2019, which aims at facilitating access to the capital markets especially for small and mid-sized companies and infrastructure projects.

In the area of investment funds the largest change in the coming years will be seen in the context of the investment tax reform, which came into effect in January 2018 with a wide-ranging impact on the taxation of income realised through an investment fund.

2016 and 2017 were also markedly shaped by Brexit: Many have high hopes for the strong financial centre of Frankfurt, which may gain in further significance both as a location for financial institutions and law firms.

With the General Data Protection Regulation (GDPR) coming into force in May 2018 advice on data protection has very much moved into focus for many firms and has meant the bolstering of IT teams with experts in the field. This also goes hand in hand with the digitalisation of the economy: Technological innovations and the transformation of structures and value chains are affecting nearly all market players. While the automotive, financial and healthcare industries were the trailblazers on the wave of digitalisation, now also insurance companies, the energy sector, cities and municipalities and housing developers are pursuing digital transformations. Besides hot topics such as FinTech or MedTech, LegalTech too has become a prevalent area of discussion and engagement at many firms, as the shift towards artificial intelligence within the legal sector is drawing closer and the gradual mutation of the legal profession increasingly seems inescapable.

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