Legal Market Overview
For a country as small as Luxembourg it punches considerably above its weight in terms of the input it has on the global financial services industry. Aided by an innovative and business-friendly regulator, its economy remains among the most competitive and stable in the world, recently placing twelfth in the Global Financial Centres Index, which ranks the leading financial centres. The stability of the country’s financial services infrastructure and its business-friendly regulatory framework has seen it robustly withstand the challenges placed on the global economy by the recent Covid-19 pandemic. Indeed, since the UK’s decision to leave the EU, a great deal of institutions, including global insurers such as AIG, Hiscox and Tokio Marine, have chosen Luxembourg as their EU base in order to continue to access the EU market.
It is, however the investment funds industry which remains the backbone of the country’s thriving economy, ranking as the second largest fund domicile in the world behind the US. The country is the uncontested leader in the Undertakings for Collective Investments in Transferable Securities (UCITS) field and has also successfully leveraged its position at the vanguard of the UCITS industry to establish itself as a prominent player on the alternative investment funds side.
The vibrancy of the funds industry, as well as the common use of a Luxembourg corporate vehicle to structure large cross-border M&A transactions, are the primary reasons for the jurisdiction’s popularity among international law firms, with “Magic Circle” firms Allen & Overy Luxembourg, Clifford Chance and Linklaters, all having long-established offices in the country and continuing to thrive in the market. The popularity of the jurisdiction among international firms shows no signs of abating, with US-based firm Goodwin being one of the most recent large international firms setting up a permanent base in the country, driven in no small part by the looming spectre of Brexit, and the attendant uncertainty surrounding the ability for European funds to be housed and managed in the UK and the consequential pull towards Luxembourg for the management of European funds vehicles. As well as international vereins, including Dentons, Baker McKenzie, DLA Piper and Norton Rose Fulbright, the Grand Duchy is also home to numerous Benelux firms, including Stibbe, Loyens & Loeff and NautaDutilh, which are particularly well-placed to advise on regional work with a nexus to Belgium and the Netherlands. Independent long-established heavyweights, Arendt & Medernach and Elvinger Hoss Prussen, also continue to thrive in the market and have the critical mass and breadth of knowledge to thrive across the gamut of business-law related legal disciplines.