In many ways, the Norwegian legal market looks like any other; a mixture of large full-service firms and smaller boutiques simultaneously jostling and working together to gain as much work as possible from the national industries they rely upon, while also feeling the impact when those same industries struggle. Upon closer look, however, you begin to notice what separates Norway’s markets from many other open and developed jurisdictions: standing alone in a sea of ø’s and æ’s, DLA Piper is the sole flag bearer for global firms in Norway.
This has always struck me as slightly odd. In my time at The Legal 500 I have covered more international jurisdictions than I can remember and every single one has had some significant international firm presence. So why is Norway so devoid of global firms?
Market size
Per Andre Dagslet, transaction group head at Arntzen de Besche, believes ‘the Norwegian market is deemed rather small’, which is why ‘larger players simply don’t find it attractive enough’. Norway as a country is quite autonomous, relying on a few significant markets to draw in the majority of its legal work; primarily oil and gas, energy, shipping and fishing. However, there are other markets much smaller than Norway that have their fair share of international firms.
As an example, during my last visit to Leeds, in March 2018, I visited Addleshaw Goddard, Pinsent Masons, Squire Patton Boggs, DLA Piper, and Eversheds Sutherland. That’s five international firms for a Northern UK market with a population of roughly 800,000 people, a GDP of around $83bn, and sector strengths which are far less international. Moreover, Manchester, Liverpool, Newcastle, and elsewhere in the UK, have attracted a plethora of big name firms for clients to choose from.
Comparatively, Norway has a GDP of just under $400bn, a population of 5.3m people (thank you Wikipedia), and sectors which are arguably more global in scale and offer significant inbound opportunities for firms hoping to benefit from on-ground advantages that come with a base in the region. This is particularly the case in Norway where local firms quite openly admit that having additional offices in Stavanger, Trondheim, and Bergen provide them easier access to the local economies of shipping, aquaculture, and oil.
Fully established market
Five firms – BAHR, Schjødt, Thommessen, Wiersholm, and Wikborg Rein – particularly dominate Norway’s legal market. However, at all levels of the sector, there is an extensive number of full-service firms covering every aspect of the market from banking to intellectual property law and everything in between. ‘The Norwegian legal market is well developed,’ says BAHR managing partner Morten Smørdal, ‘and it is perfectly possible to get high-quality legal representation from Norwegian firms.’
Offshore and oil and technology sector specialists Christopher Sveen and Arne Byberg, both partners at Haavind, agree: ‘There is nothing to suggest that the existing firms are falling short of catering for the current market needs and there is already significant competition between the existing firms. A new player entering the market would need to bring something entirely new to the table to even compete. There is a lack of imminent need for international firms in the market.’
The largely still fjord that is Norway’s legal market was briefly stirred a few years ago when several boutique firms sprung up in Oslo, most notably construction boutique Glittertind and oil and gas outfit Michelet & Co. However, this market ripple quickly dissipated and the sector has now returned to an even keel. It is possible to draw parallels between this unnerving stability and Norway’s self-sustaining nature and sustainable development focus, which (when paired with its national wealth) reduces the reliance on outside help. It is hardly a reach to suggest that this has a subsequent knock-on effect on the legal sector and the firms that practice there.
Looking outwards
International firms’ perception of the Nordic regional market should also be considered. All other Nordic countries (except Iceland) have a far higher percentage of international firms established in their individual markets, with Stockholm seemingly being the preferred choice for most. ‘Many view the Nordic market as a single market and feel that the entire Nordic region can be covered by a presence in Stockholm,’ says Dagslet.
The relationship Norwegian firms enjoy with the international market and the volume of global work those firms attract is also of relevance. Several of those I spoke to believe an international brand wouldn’t necessarily add value and may subsequently damage relationships with affiliated firms. This may also explain why so few Norwegian firms have moved outbound and established themselves in other jurisdictions; essentially a sense of not wanting to step on your best friends’ toes.
Yet, this isolationist approach is not pervasive across every firm and a handful of Norwegian firms have looked beyond their own borders and established international offices. Thommessen now benefits from a presence in London, while Schjødt gained an oil and gas-focused London office following its merger with Oslo boutique outfit Michelet & Co in January 2019. Wikborg Rein, however, has gone a step further, with offices in London, Singapore, and Shanghai alongside its Norwegian footholds in Oslo and Bergen.
Asked why his firm choose to expand outwards and whether this decision has reaped its expected rewards, Wikborg Rein’s managing partner Finn Bjørnstad was unequivocal: ‘Absolutely, this strategy has been very beneficial. Initially the move was to follow our clients in their international business but it is now more to compete in the international market within our key business segments of shipping, offshore, and energy. Our strategy is not to make any big investments but to build stone-by-stone and not compete with any relationship firms on local law.’
The Lone Ranger
All that being said, I was intrigued to hear what DLA Piper thought about being the only global firm in the region. Acknowledging the market is not an easy one to crack, managing partner Kaare Oftedal states: ‘Opening up in Norway gave a first-mover advantage and a strong foothold within the Nordic region. Along with an increasingly globalised economy, the international platform DLA Piper can offer is well received from both clients entering into the Norwegian market and vice versa.’
When asked what the main challenges has been in establishing itself in the region, Oftedal replies: ‘Norway has a strong established local market with local magic circle firms with long traditions and credibility making it a challenge to penetrate the market. However, we see that has changed over the last ten years. In DLA Piper Norway, business is better than ever, and we are really benefitting from the cross-border approach.’
The future?
If Norway’s legal market is to change it is unlikely to do so from new, larger entrants, according to the local firms I spoke to. Other factors, however, may drive change and increase the international focus on Norway. Sveen and Byberg, for example, believe the legal tech revolution will have a big hand to play in the evolution of the marketplace.
‘The injection of technology into legal services can provide an opportunity for an international firm to the extent that it can improve the quality of services or reduce cost. However, there is nothing suggesting that Norwegian firms are any less tech savvy than their international competitors, hence a first-mover advantage in tech would likely be equalised swiftly.’
The pair also observe a greater willingness for lawyers to seek new opportunities, which is beginning to cause a ripple effect in the market. ‘There have been signs over recent years that the traditional loyalty to “the firm” is weakening and headline names have been moving around more than before. This may open up the market for an international firm to be able to recruit for a successful establishment. The most likely game changer would be an international firm acquiring a local firm.’
Smørdal agrees: ‘The main challenge will be to attract a top team of Norwegian lawyers over local firms. There is room for all. You never know what could happen. If there are future entrants they might adopt a more niche approach targeted at specific industry segments.’
And yet, Norway’s domestic firms can’t afford to spend too much time navel gazing or expecting the relationships built with international firms to remain steadfast. ‘There is increased competition from international firms despite no feet on the ground,’ says Dagslet. ‘In the old days, international firms would ask for help and the next person you would talk to would be the client. Now the global firms will do most of the due diligence and drafting themselves and ask local firms for advice on specific local law elements.’
Whether more international firms will choose Norway as their next outpost remains to be seen but, surprisingly, Oftedal is keen for some new neighbours. ‘While you might think it is a nice position to be the only global law firm in the market, we welcome international competitors,’ he says, highlighting the opportunity to ‘change the conventional mind-set in the market to start seeing the benefits of using law firms with an international platform and a global presence.’