This year again, international law firms are settling in Luxembourg. Pierre-Alexandre Degehet, partner of leading Luxembourg firm Bonn Steichen & Partners, decodes the attractiveness of the local legal market and what will happen after the Brexit.
Leaders League. An increasing number of UK and US based law firms are opening offices in Luxembourg. Does this threaten independent local law firms?
Pierre-Alexandre Degehet. The Luxembourg bar, which has seen the number of registered lawyers constantly increase in the past three decades, is characterized by a high density of law firms, which are polarized around seven major law firms, including magic circles firm, accounting for more than a quarter of the lawyers currently practicing in Luxembourg.
For foreign law firms the attractiveness of Luxembourg is undeniable and is not recent; some of those international law firms present in Luxembourg have been here for several years, and their presence, alongside well established local independent firms, as well as the arrival of several new actors does not threaten previously established situations.
The new arrivals certainly impact the orientations and strategy of local independent law firms which may result in a decrease in their business. This situation requires a new and thorough review of its business model.
However, this research of innovative ways to create business and new means of providing legal services – which are adapted to the evermore demanding standards set by clients – may well prove to be a blessing in disguise. However, Independence and globality are not mutually exclusive. Those independent local law firms developing an international strategy will develop a strong and efficient knit network of key contacts and “best friends polices” whether exclusive or not, allowing them to provide the highest level of legal service to a client in its jurisdiction whilst liaising with a reliable, high-level, contact in any other jurisdiction.
In conclusion, this is more of an opportunity for local law firms than a threat.
Leaders League. Will the Brexit affect the Luxembourg legal market?
P.-A. D. Let’s be honest, as of today, we do not know where we go and what the potential consequences might be. The Brexit will likely impact Luxembourg, the entire question is to determine whether this will be in a detrimental way and if yes, to which extent.
For instance, funds of British origin represent approximately more than 16% of domiciled funds in the Grand Duchy and Brexit might hinder the creation and management of such funds in Luxembourg. Moreover, Brexit may also impact many other areas of the legal market such as contractual dispute resolution, M&A and antitrust. There is still some uncertainty related to how the UK is going to handle the already integrated EU law.
However, the scale of the potential repercussions on Luxembourg is still difficult to assess because the situation greatly depends on how the relations between the UK and the EU will evolve.
Leaders League. What are the latest legal innovations in Luxembourg?
P.-A. D. Two recent legal innovations are worth mentioning, namely the modernization of RCSL and the bill n°6777 on S.à r.l.- S (“société à responsabilité limitée simplifiée”) was passed on July 13th by the Chambre des Députés.
On May 10th 2016, Luxembourg’s Chambre des Députés adopted a new legislation regarding the Luxembourg Register of Commerce and Companies (RCSL). Amongst its stipulations, one could point out the abolition of the well-known Mémorial C that will be replaced by the RESA (“nouveau Recueil Electronique des Sociétés et Associations”) and the fact that costs for late filing of annual accounts can now reach up to €500 after a delay of four months. The institution of the S.à r.l.- S stems from a 2008 European Commission recommendation called “Small Business Act” already followed by Belgium (SPRL-Starter) notably. By reducing the cost of creation, the goal is to stimulate the creation of businesses. The costs of setting up a S.à r.l.- S will be €191 (minimum share capital: €1; registration fees: €75; registration at the RCSL: €15; publication at the Mémorial: €100). This initiative has however received mixed responses from the Conseil de l’Ordre des Avocats du Barreau de Luxembourg and from the Chambre des métiers.