The Swiss legal market has a rather decentralised structure, mirroring Switzerland itself. Zurich, the country’s largest city and location of the principal stock exchange, is home to the majority of leading banking and capital markets lawyers. It is located in Switzerland’s German-speaking region, in which Basel and the capital Bern are also significant legal centres. Geneva, the country’s second largest city, with its many private banks and international organisations, is home to many leading banking and international arbitration lawyers. It is located in the French-speaking West, where Lausanne is another important legal centre. Also noteworthy is Lugano, the third most important financial centre in Switzerland and legal centre of the Italian-speaking region in the Southeast.
Among the seven law firms that achieve the most top tier rankings in Switzerland, only Bär & Karrer AG is well established in all three language regions. Baker & McKenzie, Lenz & Staehelin, and Schellenberg Wittmer Ltd have offices in the German and the French-speaking parts, while Homburger and Niederer Kraft & Frey AG are based in Zurich only. Walder Wyss Ltd, which has several offices in the German speaking region, opened a Lugano office in 2013 and entered the French-speaking region in 2016, with the opening of new offices in Geneva and Lausanne and lateral hires from Froriep.
The Swiss legal market, which is usually notable for its stability, has also seen some other movement recently: Kellerhals, with offices in Basel, Bern and Zurich, merged with Carrard, with presences in Lausanne and Sion, to form Kellerhals Carrard and cover the German and the French-speaking regions. Python & Peter experienced several departures, some of which went to Pestalozzi, strengthening the latter’s presence in Geneva. International law firms Orrick, Herrington & Sutcliffe LLP and White & Case LLP opened new arbitration practices in Geneva in 2015.
CLIENT INTELLIGENCE REPORT 2015
Between March and May 2015, over 4,700 corporate counsel were interviewed. Their responses have created the world’s largest legal market survey analysing the pressures, concerns and future demands of GCs.
Here we present an overview of the findings of the Swiss market. For more information on the survey please visit www.legal500.com/cir2015.
The Legal 500’s GC Powerlist publication has recognised corporate counsel who are driving the Swiss legal business forward. With achievements ranging from facilitating major transactions to leading operational change, general counsel in Switzerland have impressed with their decision making and commercial drive.
The stand-out lawyers from our GC Powerlist research have taken their companies and their profession to new heights, but some of their peers have not had quite as much joy.
The 2015 Client Intelligence Report gained feedback from 4,700 legal professions and clients, to provide a comprehensive picture of the legal market, from in-house teams to private practice firms, investigating service delivery from both sides of the fence.
With feedback from over 300 legal professionals with responsibility for Switzerland, across the full spectrum of the business world, the Client Intelligence Report has been able to offer further insight into the in-house legal market in the country.
Essential business alignment
The outlook for Switzerland’s in-house legal market is somewhat ambiguous. On the one hand, post 2008, an abundance of multinational companies have begun to choose Switzerland as a home to their international operations. There has been an exponential growth of the number of in-house legal divisions appearing within these organisations making Switzerland a key European hub for legal departments. On the other hand, the inherently hierarchical business culture in Switzerland, with a clear preference for formal communication lines between business units and employees, makes it somewhat difficult for Swiss in-house lawyers (particularly those in junior level positions) to effectively interact with their business counterparts and demonstrate commercial value.
Our research has revealed that has been a significant change on that front, with a staggering 85.5% of our survey participants stating that their legal team has deepened its interaction with the rest of their business within the last 12 months. It is worth noting that the increase is slightly lower than the rest of Europe and some other regions (US, Asia, etc.), but is still highly significant in absolute terms.
This deepening in interaction can partially be attributed to changes in regulation. As the regulatory landscape evolves and certain businesses get squeezed with regulations taking hold, the role of the lawyer as a trusted adviser has a growing significance. Different teams and functions, including Finance, Treasury and Risk Management among others, have to proactively work with the Legal department on a daily basis to solve certain compliance issues.
This effect is particularly strong in Diversified Financials, Banks, Industrials and Food, Beverages & Tobacco, due to the traditional susceptibility of these sectors to changing compliance requirements. An interesting trend has also been that a noticeably higher proportion of legal teams in large multinational corporations have experienced increased interaction in the past year, in comparison to their counterparts working in smaller enterprises (those with revenues below $1 billion).
The somewhat traditional perception of the in-house lawyer as a support function is reflected by the relatively low (in comparison to other countries in Europe) proportion of in-house lawyers that are part of senior management structure of their companies. Only a small proportion of Swiss lawyers in our research sample are part of the management structure or executive committee, compared to 40.4% in the rest of Europe. This points to a slightly lower level of integration of in-house lawyers with their business, and hence a lower level influence on strategic decision making. Still, that level of influence is quite significant, as illustrated by the impressive impact of general counsel in our GC Powerlist on their respective organisations.
1. Has your legal team increased its interaction with the rest of the business over the past year?
2. What form does your interaction with company management typically take?
As the legal regulatory environment is becoming increasingly complex every year, compliance is growing in importance within Swiss businesses. The unpredictable nature of future regulation has led to further concerns about how to manage compliance-related risks in the face of changing rules and requirements. This has led to an increasing number of in-house legal teams in Switzerland gaining responsibilities for compliance work. That said, the effect is milder in Switzerland than the rest of Europe, perhaps due to less of exposure to the tighter regulatory demands in the EU.
3. What are your main areas of responsibility?
This growing overlap between compliance and legal in Switzerland is captured by a high amount of lawyers responsible for regulatory functions in the GC Powerlist. Lawyers in the Powerlist have been responsible for training and setting up competent compliance teams, as well as introducing innovative compliance structures.
The Client Intelligence Report has also demonstrated that as well as compliance, a significant amount of legal teams in Switzerland have gained responsibilities for governance, risk management and secretarial work, with the amount of lawyers gaining responsibilities for secretarial work slightly higher than the rest of continental Europe.
4. What is the nature of the advice you offer your company?
Smaller enterprises with revenues below $1 billion tend to have more lawyers that are gaining responsibilities for compliance issues, while larger enterprises have a higher proportion of lawyers that have become responsible for secretarial work. Privacy and data security is another area of focus for lawyers working at small companies, while a disproportionately high amount of lawyers have gained responsibilities for compliance in the energy sector.
Multi-functional Swiss army knife
Another trend captured by the Client Intelligence Report sees the in-house function no longer operating just as a legal department in the ‘classic’ sense; a department that would just work on contracts or legal clauses, without trying to understand the products behind them. In-house lawyers are expected to spot issues within both commercial and other operational functions. They do not provide isolated legal services and are part of decision making, establishing partnerships across the company that increase the efficiency and safety of the whole company.
5. What are your main areas of responsibility?
The graph above clearly illustrates that a very high proportion of Swiss lawyers in our research sample have demonstrated value to their company in areas other than pure legal advice. A significant proportion of our respondents have selected commercial and business advice as the area in which they have demonstrated most value to their company. This is followed by managing regulatory change, risk mitigation and operational change or reorganisation.
This trend is particularly true in some of the larger multinational businesses: there is a high proportion of counsel that have demonstrated value through commercial and business advice. The additional tranches of advice are becoming expected, and the mindset of in-house lawyers is changing to adapt to the necessary commercial mentality. There are many lawyers in the Swiss GC Powerlist that are exemplars of this trend, holding a variety of executive committee memberships, and in some cases pure commercial roles.
Interestingly though, not all industries were found to demonstrate the value of their work in the same way. Unsurprisingly most lawyers in the Diversified Financials sector have demonstrated value by managing regulatory change, something high on the agenda for companies operating in that space.
Crystal ball gazing
To gauge the strategic direction in which key decision makers are taking their legal teams, we asked our survey participants to comment on key objectives for their departments in the coming year. While our findings for Switzerland were not significantly different from other countries, it is worth noting that a relatively small number of lawyers, compared to the rest of Europe, selected influence on business strategy as an important thing to achieve in the following year. It also appears that Swiss decision makers are focusing mainly on growing efficiency in processes, as well as team and individual development, while driving their departments forward.
What catches the eye when looking at the breakdown of our results by revenue, is the importance that small- and medium-sized enterprises place on process efficiency. Lawyers at larger companies, on the other hand, tend to focus more on having an impact on the performance of their companies and influencing business strategy. This will largely be due to the devlelopment and established nature of the legal teams at larger companies, with most already have processes in place to free up their time for more strategic work.
A lot has already been done by Swiss General Counsel to achieve these key strategic objectives. As recognised by the Powerlist, legal decision makers in Switzerland have implemented initiatives that have resulted in significant improvements in efficiency. These range from key policies in the field of social responsibility and competition to impressive billing, compliance and contract management systems. Showing strong leadership merit, Swiss General Counsel have developed strong legal teams that have received wide professional acclaim and recognition.
The role of an in-house counsel in Switzerland has developed significantly in the past two decades; from the back-office role of a passive service provider, to the forward-looking nature of major compliance work and business development. In-house counsel have evolved in their responsibilities, and their profile has developed significantly. Although, according to the Client Intelligence data, this trend has been slightly slower in Switzerland than the rest of Europe and some other regions, we can clearly see positive signs in the Swiss in-house market. General counsel and other senior level lawyers are keen to develop their departments by implementing process and operational improvements and as seen in the GC Powerlist are proactively undertaking new initiatives that genuinely add value to their business in a wide-ranging manner.
More about the Client Intelligence Report
The Client Intelligence Report gathered unique feedback from over 4,700 unique clients covering 120 geographies. The anonymised information from this research can be used to assess challenges, changes and best practice across jurisdictions, regions or company size, offering a useful resource for in-house teams to benchmark themselves against peers. Further information on the Client Intelligence Report can be found on the dedicated website, which hosts the interactive survey data. If you wish to register for access to this website, please visit:
Firms in the spotlight
Bär & Karrer AG
Bär & Karrer is a leading Swiss law firm with more than 150 lawyers in Zurich, Geneva, Lugano and Zug. Our core business is advising our clients on innovative and complex transactions and representing them in litigation, arbitration and regulatory proceedings. Our clients range from multinational corporations to private individuals in Switzerland and around the world.