The pan-European ‘Best Friends’ network of elite law firms excelled during the pandemic. A result not all observers expected.
The network of five top EU firms posted a strong performance in European M&A for both 2020 and for 2021, the two years in which the world was shaken by the coronavirus pandemic. The data, supplied by Dealogic and Mergermarket, shows that the concept of uniting as a collective of smaller, informally linked firms helped at a time firms were consolidating practices and redeploying lawyers to busier areas.
In 2020, the network—which includes Slaughter and May in the U.K., Bonelli Erede in Italy, Bredin Prat in France, De Brauw Blackstone Westbroek in the Netherlands, Hengeler Mueller in Germany and Uría Menéndez in Spain—undertook $206 billion worth of deals across 128 transactions, representing 17% of the total market, according to data from Dealogic.
Similar data from Mergermarket put the network in top position for 2020, ahead of Freshfields Bruckhaus Deringer and Latham & Watkins, and in second position for 2021, behind Freshfields.
The network’s generally strong performance throughout the two pandemic years has surprised some.
“Having a local network and being able to deliver at scale has become super-important for people [when choosing a law firm],” says a debt fund managing director. “The smaller houses are definitely struggling to keep up.”
“I think that kind of joint venture network has come under quite a lot of strain because those law firms in their local markets are probably pretty busy,” they add about the best friends specifically. “How do [the EU firms in the network] prioritise the work for Slaughter and May in London versus the work that they can probably get locally, and has that meant that, frankly, they have not been able to deliver?”
But that hasn’t been the case. A partner at a large German firm said: “What the network is able to do is show that, in uncertain times, what is valued above all else is expertise. And if that means spending a little more money, then it’s worth it.”
Explaining how the network has been able to pull through the pandemic, Slaughter and May practice partner David Wittmann said: “We have significant and long experience of working together with colleagues at our relationship firms. These long term relationships mean that we have continued to deliver high quality efficient deal teams with the right mix of deal skills, country specific expertise and knowledge of the client [during the pandemic].”
The Private Equity Question
One of the key drivers of the currently booming European deal market is private equity. But this important area of European dealmaking is arguably a weakness for Slaughter and May. While its best friends are mostly highly ranked by legal directory Chambers & Partners for domestic private equity in their own countries, Slaughter and May is not. And no member of the network appears on the Chambers and Partners pan-European private equity rankings.
When asked to comment on this topic, a spokesperson for Slaughter and May said: “Increased private equity activity in M&A is a trend and one where we are active on both the private equity fund and corporate side; a recent example would be our Fortress work in relation to Morrisons.”
Slaughter and May advised the private equity firm on its bid made in July this year for the U.K. supermarket chain, which was ultimately bought in October by another private equity firm, Clayton, Dubilier & Rice.
Nevertheless, one industry commenter said there was still a “dearth of PE talent” available at Slaughter and May and its best friends, and that this gap in pan-European PE expertise “could see it shrink its market size in the years to come, as PE grows in significance to European markets”.
“It’s been a bugbear for those firms. How can they line up against say a Freshfields, a Latham or a Kirkland, which have such solid bench strength.”
The commenter concludes: “But the focus on European and domestic M&A puts them in a strong position for now. I just wonder for how long.”