Germany – The New Legal Capital of Europe?

For centuries the United Kingdom has been considered the leader in the commercial legal market. While this isn’t surprising given the scale of the British Empire or the wealth it generated, Germany has been challenging that title in recent years, with the largest legal sector in the European Union.

For the more patriotic Brits, it may be slightly painful to hear the Germans have already overtaken us in terms of number of Lawyers with 162,995 compared to the UK’s 143,400. This also doesn’t show Transaction Lawyers which are non-German qualified Lawyers, who tend to be qualified in Central and South American countries such as Brazil, Columbia and Mexico or US-qualified Associates at firms such as Milbank or Latham & Watkins who advise on US matters for German clients and are based in Germany permanently.

Another indicator for Germany becoming the new leader for private practice is the news in 2021 that Magic Circle heavyweight Clifford Chance’s Associates based in their core German offices (Frankfurt, Munich, Dusseldorf) would be paid more than their London counterparts, with a starting Newly Qualified salary being €140,000 (£117,000). In London, these salaries started at £115,000.

This gap has now been reversed with news this year that the UK NQ salary has been increased to £125,000 and it seems likely that the gap will close even more, particularly due to finance migration from London to Frankfurt where the Central European Bank is based. Additionally, Germany is considered a world leader in sectors such as pharmaceuticals, automotive and construction which also supports their legal sector growth.

Market share is also another key figure to gauge who should be considered as the European leader. In 2020, Germany’s legal revenue was up by 6% to around €25 billion annually while the UK stood at an impressive £37 billion (€44.3 billion) which does quite a bit to dispel this notion. However, since then we are continuing to see growth in the German revenue and what really makes Germany such a unique case study in its growth is not just how it’s happening but also where.

There are six major cities and legal hubs in Germany, all with vastly different industries.

Frankfurt

The centre for finance as well as capital markets and M&A as it is the homeplace of the Central European Bank.

Munich

Known for Intellectual Property as it is the home of the European Patent offices as well as wealth management and private equity due to it being the second financial hub in Germany.

Hamburg

A port city, mainly known for shipping and transportation.

Berlin

The capital of Germany and known for Governmental affairs as well as tech.

Cologne

Currently has a burgeoning automotive and life science industry.

Dusseldorf

The main city for competition law.

In comparison, most other big European countries have one or two main hubs which limits their growth potential. With six entry points, large commercial full-service law firms may not be the only ones interested in setting up offices around Germany, with a variety of specialist areas around the country you may also find a number of boutique firms will set up a base within the country.

All in all, at present it is difficult to say that Germany has overtaken the UK as the true European leader for legal services but these figures do indicate a trend towards this becoming the case in the next few years if it continues with its consistent growth.

It appears top firms also hold that opinion as well. With six major hubs all ripe for expansion it seems like opportunities around the country are far more plentiful compared to the UK which has always been incredibly London-centric. Even with large scale economic growth in cities such as Manchester and to a lesser extent Birmingham, it isn’t significant enough to match what has been observed in places such as Dusseldorf, Hamburg or Cologne.