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Lawyers rise to the challenge of corporate boom Back  
The need for speedier deals, increased regulatory complexity and the increasing relevance of the requirements of other jurisdictions were important factors for the last 12 months says Ronan Molony.
The first year of the New Millennium has been an interesting and busy time for Irish corporate lawyers. The volume of corporate activity that calls for the skills and experience of corporate lawyers - mergers and acquisitions, takeovers, equity raisings, joint ventures, new start ups - was greater than ever. Not just that, the time frames within which transactions have had to be completed seems to get ever shorter, as increased market volatility makes speedier execution an ever more pressing imperative. With the regulatory and fiscal backdrop becoming more far reaching and detailed, not only in Ireland, and with business becoming increasingly international, the legal dimension, itself just one of many influences affecting the shape of corporate transactions, becomes more complex. These features - increasing need for speedy execution, greater regulatory complexity, increasing relevance of the requirements of other jurisdictions - coupled with a significant increase in the volume of activity, have caused significant growth in the market for specialist corporate law firms which have a breadth of relevant expertise and experience and the capacity to respond to these changes.

For the firms concerned, attracting and retaining the right people and investing heavily in training and technology have been key to meeting these demands, as has building strong international capabilities through foreign branch offices and collaboration with leading law firms in key jurisdictions. Broadening the skill base to be in a position to offer creative solutions in areas such as tax, pensions and competition has also been an important strategy.

The recent past has been characterised by extreme volatility in certain sectors. The fashion for dot.com companies pushed valuations way beyond anything that seemed justifiable using traditional yardsticks such as price:earnings ratios, on the basis that the new paradigm would make sense of valuations that focused on sales rather than profits or that increased as losses grew since losses were supposedly consistent with investment in acquiring market position and as such had to be good. A lot of these valuations have crashed spectacularly since.

The trend internationally has been towards greater shifts in corporate territory leading to some businesses divesting non-core assets and concentrating on areas of actual or potential market leadership while others seek to broaden their product offering through acquisition or adopt other strategies; a common theme has been the focus on international expansion, so called globalisation, and almost every business player seems to be trying to position itself for the e-world. Changes in sentiment, positive or negative, can be dramatic and rapid and with them can come the desire for consolidation, repositioning, divestiture, downsizing or whatever - corporate activity that is meat and drink for the corporate lawyers.

The telecoms sector has moved from darling of the markets to one where concerns about debt levels incurred to acquire 3G licences in the UK, Germany and elsewhere have prompted a rethink. Within Ireland, we have had a busy year ourselves in the telecom sector, among others, with the British Telecom acquisition of ESAT now being followed by Vodafone‚€ôs interest in Eircell and the fixed line business of Eircom also in play, as NTL settles down as new owner of Cablelink and proceeds to show us the kinds of new voice, data and television services that will be available through our TV cables. To date, the focus has been on access to broadband and the emphasis is now shifting to exploiting commercial applications for these expensively built and acquired networks. As foreshadowed by the AOL Time Warner merger, content is becoming the next battleground where further market development is likely to concentrate.

Our own indigenous technology sector has been showing its potential with companies like Baltimore, Parthus, Conduit, Cognotec and Datalex, among others, coming into some prominence, and this has been a lively area for many of us.

Ireland‚€ôs business friendly tax environment has been a major boost to corporate activity in this country, and the 20 per cent capital gains tax rate has acted as a spur to consolidation and reorganisation in indigenous owned businesses, enabling them to reshape for more challenging times.

The recognition within Government and the civil service of the advantages of private sector involvement to optimise the allocation of scarce resources and to drive innovation has been reflected, not only in the privatisation programme and the moves to force greater competition, but in the willingness to embrace public private partnership as the model for new and badly needed infrastructural investment. We have seen quite a significant advance in this area in the course of 2000.

The trends currently shaping the corporate legal market, some of which are touched on here, seem set to continue, though it may be something in the Irish psyche that prompts so many of us to ask when the optimism that seems so prevalent now will turn to gloom!

Ronan Molony is a partner of McCann FitzGerald.

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