I was struck by an article in The Lawyer based on its annual European 100. (Don't rush, it costs nearly £600.)
The two top European law firms are Garrigues in Spain and FIDAL in France. Both law firms posted revenues of over €300m. Apart from that law firms in most of Europe face the same difficulties as elsewhere with declining partnerships, frozen hiring, etc.
What is of interest here is that both firms were hooked into accounting firms for a long time. FIDAL was part of KPMG and was essentially a tax practice. Tax is still a big part of its remit now. FIDAL left the KPMG network in 2002 and became independent. Some of KPMG's literature still shows a strong connection between the two.
It would be fair to say that prior to 2002 FIDAL was not awarded much distinction as a law firm, French or otherwise, but since then it appears to have thrived. It is a French firm with no international offices.
With Garrigues it was different. The firm always had a reputation as being a key Spanish law firm but in 1997 it merged with Arthur Andersen. This both shocked the legal world--why would a successful firm merge with a giant squid of a global accounting firm?--and then surprised them more when it went on to be successful in the merger. According to Garrigues' history its billing rose 130% and headcount doubled from 500 to 1,000. Clearly 2002 was a fateful year as Enron killed Arthur Andersen and Garrigues reverted to being a law firm alone again.
One enlightening item in the Garrigues history, tucked away, is that in 2005 it established a network of tax firms. It also internationalized in a big way--Latin America and Asia.
Certainly there is life--robust at that--after quitting the maw of the giant accounting firms. Both Garrigues and FIDAL prove that. But perhaps the crucial element is tax. Both are major players in tax advice across borders. They have invested huge resources in this area.
After attending the Tax and Reputation Conference at KCL yesterday, I've come to see just how important tax advice is for companies. Add to this the US Senate Permanent Subcommittee on Investigations accusing Apple of avoiding billions of dollars in tax by offshoring itself to Ireland (Apple's response here), the UK Public Accounts Committee taking Google, Amazon and Starbucks to task over unethically limiting its UK tax exposure, and we see that tax planning is at the core of business transactions. As cross-border business multiplies, the demands for tax accountants and lawyers grows considerably. Both the UK and the US have made corporate tax so complex that it is hard for any but an expert to understand and interpret the codes. It's a goldmine for "creative compliance".
So both Garrigues and FIDAL benefit from our desire to make the world a complicated and complex place. "Zen and the Art of Tax Planning" won't be appearing on Amazon yet, but if it did I'm sure they would donate free copies to Margaret Hodge and her colleagues on the Public Accounts Committee.
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