US legal group Simpson Thacher is opening an EU office in a sign of the disruption Brexit may cause corporate law firms that had previously relied on a London base to conduct business across the 27-member bloc.
The New York-based law firm is establishing an office in Brussels this summer after finding that the UK’s exit from the bloc was impeding its ability to advise clients on EU antitrust, competition and regulatory law.
The end of the UK’s transition period with the EU has had “a pretty immediate impact on one of our core practice areas (antitrust and competition),” Bill Dougherty, chairman of the firm’s executive committee, told the Financial Times. Clients faced “continued challenges in navigating an evolving legal framework” as a result of the trade deal Britain struck with the EU before leaving, he added.
Founded in 1884, Simpson Thacher is one of Wall Street’s elite “white shoe” firms and known for its private equity practice. The group employs more than 1,000 lawyers across 10 offices, including New York, Beijing, Hong Kong and Palo Alto, California.
Under the terms of the UK’s post-Brexit trade deal with the EU which came into force on January 1, solicitors who qualified in England can only advise on UK and public international law when they are in the EU, while some member states have imposed their own additional rules.
The restrictions have proved particularly difficult for Simpson Thacher’s London-based lawyers without EU qualifications, who had previously travelled frequently from the UK capital to Brussels to advise clients on EU law regarding competition, antitrust and trade.
Antonio Bavasso, who will head the Brussels office and qualified as a lawyer in both in Italy and England, said: “You need to be EU-qualified to provide [EU law] advice in Europe and that’s an issue that a number of firms have had to contend with.
“That old paradigm of lawyers being able to travel freely has some grit in it now,” Mr Bavasso added. “A number of firms have had to strengthen the EU-qualified contingent in their ranks and vice versa.”
The move to open an EU office by Simpson Thacher, whose partners took home an average of $4.4m in pay in 2019, is the first by a big law firm since the UK left the bloc. However, several groups have set up footholds in the EU since Britain voted for Brexit in 2016.
As well as throwing up practical hurdles, Brexit has also created new demand for competition lawyers as some corporate transactions will now be reviewed by regulators in Brussels and the UK’s Competition and Markets Authority.
According to Mr Bavasso, before Brexit some of the firm’s work was simplified by the “one-stop shop” principle, whereby Brussels regulators had exclusive say over many deals and national competition authorities did not have a role.
“Brexit means a duplication of the work, because there will now be parallel investigations in the UK and Brussels,” said Mr Bavasso. “And the CMA has already taken a very prominent role on the world stage” he added, referring to signals from the UK regulator that it was prepared to toughen regulations on Big Tech.
The volume of mergers to be examined by the CMA is expected to increase by as much as 50 per cent, as it handles complex probes that would previously have been only dealt with by Brussels.
Mr Dougherty said that rising demand from companies for advice on UK competition law meant Brexit had not dented London’s standing. “The centre of gravity for our European practice will remain in London,” he said. “It is our second-largest office and is growing at a faster rate than any other.”
Headcount at its London office rose 17 per cent between 2019-20.
He said he would not rule out opening other EU offices “in areas where the trade deal has an impact”, but said the firm had no current plans to do so.