Flying high at Rembrandt: Norton Rose’s entry into the Dutch market, 2002

Just over a year ago, the partnership of Norton Rose decided to open up a greenfield operation in the Netherlands. The office has since grown into a 32-lawyer strong operation, and is fully integrated into the Norton Rose network. In this article, the operation’s managing partner, Arent van Wassenaer, explains what it took to take the office blueprint into the physical result.

Why the Netherlands?

The Netherlands is the fifth largest economy in the European Union after the UK, Germany, France and Italy. Its economic importance is enhanced by its infrastructure, most notably a system of motorways, two very large ports and Schipol airport. The Netherlands is also home to several giant corporates including Shell, Philips and Unilever. Through some ingenious tax treaties, the country is often used as a base for holding companies, making it an important investor abroad. Besides these advantages, the Dutch are well known for their mastery of languages and ability to do business across many different channels. It was therefore only natural that a law firm with global aspirations such as Norton Rose should seriously consider establishing a presence in the Netherlands.

The Dutch legal market

When establishing one’s presence in another jurisdiction, merger is often the most natural method to choose. Provided one is able to find another firm with a similar culture and a shared vision, a merger can ensure a running business, sound client base and a shared vision from day one.

However, in reality it is not always that easy. UK firms have been on the ball much longer than their Dutch counterparts and, as such, the level of strategic thinking that has developed in the UK over the past 10-15 years has been light years ahead of similar developments in the Netherlands. There, the trend has been expansion: Amsterdam, Rotterdam, The Hague. The four biggest firms in the Netherlands have more than 200 lawyers, the largest exceeding 400. Traditionally, Dutch firms have been growing by adding partners to their specific practices. Although most firms do have departments, the level of client sharing, cross selling and knowledge sharing has been much lower than in the UK. The concept of marketing legal services is relatively new and underdeveloped in the Netherlands, making merger between large UK and Dutch firms potentially difficult.

In order to be a suitable candidate, the prospected merger firm must not be too big. Pouring too many Dutch partners into an international partnership will generally lead to dilution of profits and voting rights, and often the practices of such firms do not generally align with the structure and strategy of the larger UK firms. Insurance defence litigation, supreme court litigation and large civil notary practices, no matter how profitable within the Dutch setting, are not the areas of choice for the more internationally oriented portfolios of UK firms.

Another issue is rates. Prior to the current recession, traditional Dutch firms have been looking hard at the staggering level of fees the UK firms have been charging to their Dutch clients. They felt that, were they ever forced to merge with such firms, their clients would simply walk away, too concerned over the anticipated rise in fees for apparently the same level of services.

In the Dutch culture, the term “partner” in the word “partnership” is emphasised. This means that partners in Dutch firms traditionally consider each other as their partners, for better and worse, until retirement does them part. Sensitive issues such as performance management are reluctantly being dealt with, with particular focus on personal billings, rather than on the value-adding capacity of certain individuals.

All these factors have combined to make it difficult to merge UK firms with the traditional larger Dutch firms. Over the past years, we have seen the entry of Freshfields (greenfield), Allen & Overy (merger), Clifford Chance (off-shoot of a joint venture), Linklaters (greenfield after an ill-fated merger attempt with De Brauw), Lovells (merger) and Simmons & Simmons (merger). In late 2001, Bird & Bird opened a small but dedicated greenfield office in The Hague. From the USA, Baker & McKenzie has been in the Netherlands for more than 20 years through its joint venture with Caron & Stevens. 2003 has seen the arrival of Greenberg Traurig and of IT/competition boutique Howrey Simon Arnold & White, both greenfield. The successful example of Allen & Overy was only possible after their merger-to-be partner Loeff Claeys Verbeke decided to split-up, after which the other half joined the well known tax law firm, Loyens & Volkmaers to create the very successful Loyens & Loeff. In 1999, Freshfields was the first and it made a very strong greenfield entry on the Dutch market by attracting some very well respected partners from some of the better Dutch firms. Simmons & Simmons merged with half of former Trenite van Doorne, Lovells merged with Ekelmans den Hollander, a relatively small firm which, as a model for merger, appeared to be less complex. Linklaters was not successful in securing a merger with De Brauw and is now considering growing its greenfield operation.

Personal considerations

When Norton Rose’s management decided to investigate whether the greenfield option might perhaps be the key to a successful landing on Dutch ground, I happened to be in between jobs. I had just decided to step down as managing partner of my former firm, and was reflecting on my life and future career. I was enjoying my time, gardening, going on bicycle rides, playing cello and travelling around, and did not react overly keenly to approaches by possible employers. Then I was approached by Norton Roses’s now CEO, Peter Martyr, whom I had come to know through dealings with the firm in my former capacity. I listened to what he had to tell me with great interest and excitement.

His proposal that I start a new office with Norton Rose was a proposition that deserved careful consideration. I hinted to Peter that Norton Rose should first investigate with its Dutch client base whether they would be interested in having parts of their legal work carried out in the Netherlands, by Dutch and UK-qualified lawyers and at local rates, before taking that specific route.

As for me, I was still not really ready for such a project as I rather aspired to become a consultant, preferably to law firms, or perhaps even a manager. However, during the time when I was in discussion with Peter Martyr, I came across Edo Groenewald, whom I knew very well.

Edo had left his former firm a year earlier in order to obtain a PhD, and, after finishing his thesis, was preparing his re-entry into the legal profession. We became very enthusiastic about the idea of doing something together and soon had a clear vision of the office we wished to build, with the aim of it being “fun work with fun people”. Doing that within the framework of one of the top UK firms seemed to us like a dream come true.

Just before the end of 2001, Edo and I agreed to start a very small firm, Groenewald/VanWassenaer advocaten, with a 120 square feet office in the Regus centre in the Amsterdam Atrium building. Since it was just the two of us, we scribbled our partnership deed on the back of a cigar box (Hajenius Cigars: “The Dutch leading cigar” as my late grandfather used to put it). Our newly published website, www.gvanw.nl, carried the following message: “We are a small ‘boutique’ law firm providing high-value services in the fields of corporate finance, major projects, boardroom counselling, litigation and ADR. We also provide management-consultancy services to the professional-services industry.”

We were the only ones who knew at that time that the latter piece of information referred to our very first and launching customer, Norton Rose, for whom, in the last week of 2001, we had agreed to provide consultancy services. The aim of providing these services was to discover whether we could develop a business plan and put together a team to merit the start of an office, worthy of carrying the name Norton Rose, in the Netherlands.

Starting an office

There are, of course, many aspects to the start of such an office: finding the right partners, moulding an office culture that fits well within the overall firm culture, timing, market analysis, making the necessary risk analyses, recruiting support staff, housing, facility management, funding, Law Society regulations, talking to the press, developing a business. Simultaneously, both of us were extremely lucky in finding chargeable work for our infant practice. We found ourselves working on very interesting chargeable projects, while at the same time we were preparing the launch of our new venture. In those days, Edo and I were often referring to our daily practices as a great adventure. Of course, the looming recession seemed at times like a real threat to us. We were and still are, however, both firm advocates of the Norton Rose strategy, part of which was based on the perceived wisdom that in times of recession one should invest and, if possible, enlarge one’s footprint.

We did not have too much of a problem assembling a core team of partners. The aim was to start with a small corporate finance team as well a banking team, consisting of Dutch partners to be supplemented by a Norton Rose partner. A small but well communicated focus on financial services and corporate finance would in our view distinguish us from most other UK firms.

Such a team would surely be able to market itself, both for recruitment purposes and for exploring new markets. Norton Rose already had a large Dutch client base and many of those clients had told us that they would be very interested to see whether we could provide them in the Netherlands with the level of services they were used to from Norton Rose in general.

We also decided that, at least initially, we would not aim to develop a full-service practice as this would deprive us of the possibility of fully integrating the practices of the team. Rather, we would aim at outsourcing the type of work we could not deploy at partner level to well reputed local firms. Our role was to act as transaction managers. Thus, we found ourselves extremely lucky to attract very talented people, many of whom came from our former firms, where they had been somewhat unhappy and were waiting for any international opportunity that might arise. Of course, in attracting people from other firms, issues such as restrictive covenants are of great importance.

We decided on a strategy for the Amsterdam office that would set us apart from those former firms, and began marketing ourselves in areas of business that were more international than those in which they operated so we would not be hurting them. Our market was going to be carved out by the UK firms with a presence in the Netherlands, rather than the by Dutch firms already there.

On the evening of 11 March 2002, the Norton Rose partnership gave us the green light to establish a new office in the Netherlands, with a team of seven partners and a solid budget in support of the operation. With hindsight, I must say that we blew the horns of our arrival so boldly that our former firms must have felt it.

At that time, we felt we did not have much choice. Norton Rose needed the publicity. And for us, we just could not help feeling exhilarated about this new stage in our careers. Boy, did we feel like heroes when on 1 May 2002, a total of 20 new partners and employees joined us on a special canal cruise, with English breakfast, in celebration of the formation of a brand new office. All of those people were joining us from highly respected firms.

Hurdles

Since the invasion of UK firms in the Netherlands was well under way when we arrived, one of the issues was how we could carve out our niche in the Dutch market. After all, the prospect of opening an office like this, without a steady flow of high value annuity work, is not appealing. In this respect we decided that it would be helpful to present ourselves not as any other international law firm, with full service capability, but rather as a unique boutique, drawing upon the resources of the fully integrated Norton Rose network and focusing on high level corporate finance, project finance, asset finance, structured finance, energy and tax. We would make use of the services of highly specialised firms in the areas of employment, IP and notarial services. In our view, this set-up, combined with a more realistic approach on rates, would give us a unique selling proposition.

Another hurdle was the shadow of a recession climate. The question is whether this is the right time to invest? At Norton Rose we believe, however, that recession time is by far the best time to commit to investments such as these. The aim is to enlarge the footprint, so that when the recession is over, the competing edge over the non-investors will have dramatically increased.

A further challenge was the approach to team building. Using sports as an example, we decided it would be of paramount importance to find a group of people that would be eager to work together, sharing the same goals, rather than a group of Maradonna’s excelling in certain areas of practice but difficult to fit within the team. By working along those lines we were reasonably certain we would require minimum “change management” and maximum output.

Looking back – success factors

In 2001, when I attended a course organised by The Hildebrandt Institute and Columbia Business School, “Managing and Leading Law Firms in the 21st Century”, Hildebrandt’s Maryan Heeda defined success as follows: “Success is when your strategy enables you to build on your values and draw on your culture such that you are able to attract and retain the right talents in order to develop and retain the right work from the right client base, all resulting in revenue growth.”

When testing these criteria against the Amsterdam office, my conclusion is that the last year has been a success.

Strategy: The Norton Rose strategy is to become a global elite law firm delivering top-level banking, corporate and business law services in key financial, industrial and commercial sectors from a network of offices around the world. Clearly, the opening of the Amsterdam office fits well within that picture.

Values: The firm’s values firstly relate to our attitude towards clients: they come first. They see us as being “on their team” and we respond commercially to their needs. People are integral to the Norton Rose operation – we work as a team by collaborating and cross-selling across disciplines and global markets to achieve the best results for our clients and for the firm while at the same time encouraging the individual to excel within this framework of co-operation. Knowledge is key to our business, and, as such, we are committed to promoting and investing in a culture of shared knowledge, be it of a technical, commercial or social nature. Finally, we act with integrity and professionalism, and aim to deliver work that meets the highest professional standards. In Amsterdam we work hard at retaining those values.

Culture: An important characteristic of our office is that we are relatively young. The mindset of our staff is highly entrepreneurial, committed and team focused. We celebrate new matters collectively on our Monday morning office meetings and we mourn the pitches we lost. We enjoy our well deserved weekly Friday office cocktails. We feast on our table football competition but we work hard on new projects, transactions and matters that find us either through the Norton Rose network, or through our own newly established reputation. We really experience how it is to do “fun work with fun people”. We are very much aware that teams consist of individuals and we therefore pay a lot of attention to individual development. One of our first staff members was a career advisor. She is of extreme importance to the individual well being of our associates. Also, we feel it is important to pay attention to the families of our staff and had a very nice Sinterklaas-celebration (a traditional Dutch custom) for the children, which was well received.

Management books stress the following: if you are working within an organisation with a strong culture, it requires less management time. Now that I find myself back in practice, fee earning accounts for more than 80 per cent of my time. In my view, this is only possible because of the great sense of responsibility carried by all our newly acquired staff and, of course, because of the support staff we were so lucky to attract.

Talent: We have been able to build an office employing over 50 people. The lawyers come from highly respected Dutch and international law firms, and some of our support staff have been hired from very different companies. The advantage is that they can help teach us to be better businessmen. They highlight any strange lawyer habits that we should abandon, for example, why should lawyers not have lunch with non-lawyers? Also, the strategy to start-up with interim managers on key positions rather than fully-employed specialists proved to be a good choice. Thus, we were able to work with heavy hitters when it was required but now we are doing quite well with a well balanced staff.

Clients: Through the Norton Rose network and through our own contacts, we have been reasonably successful in raising our profile. Thus far we have managed to attract some very interesting deals and projects, and have been asked to pitch for a growing number of high-profile ventures. We are delighted to see that we are meeting the targets as set out in our original business plan.

All of this is possible because we belong to a significant international law firm, which has a clear vision and strategy, and excellent support in the areas of finance, marketing, IT, know-how, personal development and training. We find ourselves in the rather luxurious situation where the rest of our firm has enjoyed our development as much as we have. To us, the wonderful experience is the sense of sharing. Everyday, we share market knowledge, opportunities, successes and losses with all members of our firm, and refer business to other offices as it arrives.

In conclusion, I must say greenfield really does have its advantages. But only if it is developed within a well-established and effectively-managed firm, with a game plan that sticks.

Arent van Wassenaer is managing partner of Norton Rose’s Amsterdam office. He can be contacted at: arent.vanwassenaer@nortonrose.com.