Inevitably, as elsewhere around the globe, Covid-19 impacted firms’ practices over the past year in Germany. While some experienced a momentary pause in business, particularly with regards to cancelled or postponed transactions in spring and summer of 2020, most departments reported that the pandemic led to increased activity, new or shifted areas of practice, or has left few traces. The German legal market proved itself robust and adaptable, and downsizing and other staff measures were the exception rather than the rule.
A key theme, spurred by the pandemic, has been the big push in the drive towards digitalisation. On the one hand, as working from home became the norm, lawyers themselves have more heavily relied on technology and increasingly implement new and existing legal tech. On the other hand, lawyers have kept busy advising in connection with digital technologies and transformations. In IT law, autonomous driving, big data analytics and IoT remained some of the hot topics, while transport law practices saw increased matters related to new traffic systems, drone transport and e-scooters. Cryptocurrencies and tokenisation are current themes in the growing fintech space. In employment law, the digital transformation has necessitated legal advice around a more flexible workforce.
One of the main questions asked by German litigators centred around the digitalisation of justice and how German courts (which in Germany are often criticised for being a bit too conservative and slow) will handle the crisis. Indeed, courts were finally forced to take steps towards digitalisation in order to be able to ensure that work processes and legal proceedings continued to run smoothly. Similarly, for public law practices a main topic has been the sped-up drive towards digitalisation in public administration.
Although the M&A sector was hit hardest by the pandemic, the market has not suffered as much as elsewhere. Unsurprisingly, the pharmaceutical and medical sectors have profited from the crisis, and the TMT market also mastered the pandemic with practically no damage. Overall, the total value of transactions fell by around 50 percent in the first half of 2020 compared to the same period of the previous year. Yet Germany saw some mega deals, such as the takeover of US competitor Varian by the Siemens subsidiary Healthineers for an impressive €16.4bn. In the private equity space, a consortium led by Advent, Cinven and the RAG-Stiftung achieved the largest leveraged buyout in 2020 with the takeover of the elevator division from ThyssenKrupp; the financial investors paid €17.2 bn. Overall, the transactions market remains optimistic and is already showing signs of recovery in various segments.
Although the obligation to file for insolvency was originally suspended until October 2020, subsequently until January 2021 and now until the end of April 2021, needless to say, restructuring and insolvency practices are expecting a continued steep increase in their work load. The aviation industry, which was already under pressure before the Covid-19 crisis, has seen numerous consolidations and bankruptcies, for instance.
Insolvency and litigation departments are working more closely together, and disputes are keeping lawyers extremely busy. To name a few, this includes cartel damages litigation, increasingly also proceedings in connection with data protection breaches, and now a growth in a wide variety of pandemic-related contentious cases is expected. Besides Volkswagen’s “Dieselgate” emissions scandal and the “Cum-Ex” tax fraud scheme, a special mention also goes to Wirecard, which has evolved into the largest case of accounting fraud in German post-war history. Demonstrably, compliance, internal investigations and white collar crime remain highly relevant practice areas.
The e-commerce and online distribution boom has kept trade law practices in Germany incredibly busy, as have production freezes and supply bottlenecks. The Covid-19 pandemic exacerbated the already tense international situation with export restrictions or even export bans imposed in many places, as Germany too switched its focus to securing self-sufficiency, especially in the area of medical products and personal protective equipment. Increased national thinking is also noticeable in the extension of foreign investment control in the country, accelerated by the pandemic. The amendment was aimed primarily at the health sector, but also includes, for instance, communication infrastructures. Overall, the goal seems to be to make direct investments from abroad, especially from China, more difficult.
Another noticeable theme in the market revolves around the environment. Overall, renewables and the departure from coal remain hot topics. Renewable and environmentally-friendly propulsion systems, e-mobility and the future of transport also requires legal advice across various departments. In the finance sector, firms report increasing advice on green and sustainable finance which, however, remains unregulated. In Germany too, environmental, social and corporate governance (ESG) is emerging as a key area of importance for businesses.
Lastly, a special mention goes to antitrust practices in Germany. The days of antitrust law as a side issue in the country are long gone. Over the past few years, this practice area has steadily gained in relevance and become more fast-paced. This can also be seen in the fact that more and more international law firms are entering the market and local players are setting up their own antitrust law departments.
The trend towards spin-offs also continued in 2020, despite the pandemic, although most moves took place either at the start of 2020 or towards the end of the year. Numerous lawyers founded their own law firms, among them Annerton Rechtsanwaltsgesellschaft mbH, which split from Aderhold and specialises in regulatory law in the financial sector; Boehmert & Boehmert spin-off Nordemann, which focuses on IP and IT; real estate boutique REUIS., which split from Latham & Watkins LLP; and two new media boutiques: HÖCKER spin-off BROST CLAßEN and UNVERZAGT Rechtsanwälte Partnerschaftsgesellschaft mbB spin-off Von Have Fey.