Homburger's partners : “the Swiss legal market is well-covered by domestic law firms”

Daniel Daeniker is managing partner of the swiss independant law firm Homburger. Frank Gerhard is partner in the Corporate practice. They both practice corporate law with an important focus on mergers & acquisitions, and  have answered Leaders League's questions about the swiss legal market.

Posted Monday, July 20th 2015
Homburger's partners : “the Swiss legal market is well-covered by domestic law firms”
Leaders League. Switzerland’s legal market is unique in Europe due to the few number of international law firms. How do you perceive this situation?

Daniel Daeniker.
You are right; there are a few international law firms or networks operating in Switzerland. We see two main reasons. First of all, Switzerland is a mid-sized market. Switzerland’s situation is close to the one happening in the Nordic countries. The volume of M&A activity is contained and there are no signs that it will explode in the near future. At the same time, the Swiss legal market is well-covered by domestic law firms providing high quality work. International law firms generally serve their clients through a local partner to carry out their business in Switzerland while independent firms forge a better connection with companies, governments or regulators through their day-to-day contacts. International law firms cannot therefore be considered as competitors.

Leaders League. Homburger was associated with Baker & McKenzie. Why did you choose to leave the alliance?

D. D.
I started my career with Homburger when it was part of Baker & Mckenzie alliance. In 1991, 8 out of 12 partners decided to quit the alliance and get back to the original independent roots of Homburger. The main reason was that the key strength of the alliance—serving mid-size international clients—did not work in the world's major financial centers. Today we are serving our clients both on a domestic and international scale. For international matters, since we are not involved in any network or alliance, we remain free to choose, which leaves us free to decide and choose the most suitable advisors for a specific case.
Leaders League. Switzerland is preparing the end of banking secrecy for 2018. How will it affect the attractiveness of the country?

Frank Gerhard.
For a country like Switzerland, which is one of the most developed banking centers around the world, the end of the banking secrecy is a tough time. Since 2008 banks have continuously been facing new regulations and this will not end in the near future. By 2020 the banking landscape will be totally reshaped. The rise of regulations also comes with a more important pressure on banks’ margins, which will automatically lead to concentration in the sector, especially in private banking. This is already ongoing, but one can expect that once the DoJ program is closed, this trend will even accelerate. This will certainly bring to law firms some domestic or cross-border deals. By 2018, banks will also face new regulations with Basel III. This in turn will bring law firms more work on regulatory, compliance or even financing matters for their clients. However, transparency and tax compliance of assets is a worldwide trend, so we believe that in the long run Swiss banks will get stronger after this catharsis.

Leaders League. There are two major financial centers in Switzerland: Zürich & Geneva, somehow competing each against other. Where should an international investor choose to sit?

F. G.
The Swiss landscape is divided in several areas: Zürich first, which is the economic capital of the country with great incentive for international clients to land here: capital markets, financing and of course investors. Some other regions also have some assets like Geneva, which has a strong historical international position for private banking, and has also attracted investors operating in commodity trading, due essentially to tax optimization possibilities. Further, the Geneva region has a strong portfolio of start-up companies due to the presence of major institutions of higher education. However, the entry into force of the Corporate Tax Reform III (by 2019) will make certain tax regimes disappear, which might affect commodity traders in Geneva. It will still be an interesting place for Private Banks and attract some wealth, especially from middle-eastern countries. Last but not least, Basel is also attractive for technology or life sciences companies. There they can enjoy an innovative ecosystem helping large companies (Roche and Novartis HQ is in Basel area) to start-ups.

Leaders League. Could you briefly describe your international strategy?

D. D
. We have been advising clients for more than 20 years now on international matters, both on inbound and outbound deals. However we have no intention to establish outside of Switzerland. We prefer to conserve our ability to choose the right advisors for our clients, and are not and will not be part of any exclusive networks. In the U.S for example, we do have some great relationships with peers such as Cravath, Swaine & Moore, Sullivan & Cromwell and other top New York firms.  These relationships of course depend on the specific activities of the activity requested by our clients.
Leaders League. You only have an office in Zürich, why have you made that choice?

F. G.
We are historically based in Zurich and at the moment have no intention to establish in other regions of Switzerland. Of course we have thought about it in the past and it will come to the table again in the future. Each time we are assessing the necessity of expansion by analyzing the potential value added for us and our existing or prospective clients regarding the services that we can offer. Until now, we have been quite efficient with a single office out of which we can serve all Swiss or international clients for all matters all over Switzerland.