It was hardly the most promising start. When Shearman & Sterling launched its first German office in Düsseldorf in 1991, the local lawyers association took the firm to court over using the U.S. firm’s name in the city. After some courtroom wrangling, the Shearman shingle eventually stayed, but the legal community had made its point. No one was rolling out the welcome mat for the New York firm.
From that inauspicious beginning, Shearman went on to enjoy a level of success in Germany that arguably no other U.S. firm in Europe has reached in a domestic European market. Firms such as Latham & Watkins; Skadden, Arps, Slate, Meagher & Flom; Sullivan & Cromwell; Weil, Gotshal & Manges; and White & Case have prospered around the Continent, but none has racked up the same kind of record of high-end mergers and acquisitions generated locally as Shearman’s German practice has, particularly in the late 1990s and early 2000s.
In the last two years, some of that gloss has started to come off. Shearman has seen a succession of high-profile partners leave, including former co-head of the global M&A practice Hans Rolf Koerfer, who left for Allen & Overy, while the nine-partner Mannheim office split off last year to go it alone. The German practice — now spread across offices in Düsseldorf, Germany’s industrial capital; Frankfurt, the country’s financial center; and Munich, another hotbed of German corporate might — has shrunk from a total of 120 attorneys, including 30 partners, in 2007, to 90 attorneys and 20 partners in March of this year. Shearman now looks more like a high-end corporate boutique, closer to Cleary Gottlieb Steen & Hamilton‘s 70-lawyer German practice than a direct competitor to Freshfields Bruckhaus Deringer and Hengeler Mueller, the two undoubted leaders in the market (Freshfields has 560 attorneys in Germany; Hengeler, around 250).
“The practice is becoming more direct,” insists Georg Thoma, co-head of Shearman Germany and the practice’s chief M&A rainmaker. “More direct” is a euphemism for “leaner, with more partner involvement in deals.” Thoma’s message, which he keeps coming back to, is that Shearman Germany is a “refreshed place,” a more collegial practice than it has been for years. “We’ve achieved a lot, and our successes over the last 18 years give us solid ground to build on, especially in times of recession,” he stresses. The firm’s revenues in Germany have also proved remarkably resilient. Last year, the firm says, its German gross was up 5 percent, to 105 million euros ($139 million), despite a stream of partner departures and worsening economic conditions. But the long-standing problem for Shearman remains: Has the firm built a sustainable practice or a big stage for a single star?
