Open For Business: SGR Opens European Office
Effective January 1, 2006, Smith, Gambrell & Russell, LLP opened its first office outside the United States, in Frankfurt, Germany. The Frankfurt office is a natural outgrowth of SGR's active international practice that, for many years, has represented clients from around the world, but particularly from western Europe, in pursuing business opportunities in the United States.
Effective January 1, 2006, Smith, Gambrell & Russell, LLP opened its first office outside the United States, in Frankfurt, Germany. The Frankfurt office is a natural outgrowth of SGR’s active international practice that, for many years, has represented clients from around the world, but particularly from western Europe, in pursuing business opportunities in the United States.
Earlier this summer, Trust The Leaders (TTL) sat down with Hans-Michael Kraus, the head of SGR’s international practice group, and Stefan Tiessen, who now manages and practices out of SGR’s Frankfurt office, to discuss the impetus behind the opening of the European office and how the new office has been received thus far. Hans-Michael and Stefan are German nationals licensed to practice law in both Germany and the United States. However, neither is practicing German law. Instead, each is focused on the needs of his foreign clients under U.S. law.
TTL: Prior to Smith, Gambrell actually opening its European office, tell me how frequently you each were traveling to Europe and for what purposes.
Tiessen: The purpose of our visits to Europe and specifically the German-speaking countries — although we should not forget about the rest of Europe as countries with potential investments with the possibility of locating in the United States — is twofold. One is to visit with existing clients; the second is to pursue marketing, which both Hans-Michael and I have been doing at a rather heavy pace. In my case it is sometimes 10 to 12 times a year.
Kraus: My experience is very similar. I’m going to Germany on average maybe 10 times a year, once a month in spring and fall, and then there is a break in the summer — people are on vacation — and a break around Christmas. The purpose of the trips is visiting clients, giving speeches and conducting seminars. Usually trips are a week or sometimes a little longer but there is also the occasional day trip to Europe for client purposes.
TTL: How would you characterize the practice that we are talking about? Is it an international practice? Is it a European practice? Is it a German-speaking-countries practice?
Kraus: In my case it’s a domestic U.S. practice because we mostly represent foreign companies in the United States. There are exceptions — I’ve been conducting a couple of acquisitions and negotiations for joint ventures in India, China, Australia and other Pacific Rim countries, but generally we represent inbound corporate investors, be they from Germany in many cases, other European countries, or Asia.
Tiessen: Not to the exclusion of others, but a typical client would be a mid-market company — in German it’s called Mittelstand; the French call it petites et moyennes entreprises (PMEs) — that is a leader or a market force in its particular market and because of the forces of globalization has to be and wants to be in the United States. They need legal counsel — what type of legal entity should they form? What are the tax ramifications? What are their intellectual property rights in the United States? There are a host of other legal ramifications that are new to these European investors because of the huge differences in the legal cultures.
TTL: How does the Smith, Gambrell international practice work? In other words, how many attorneys are there and what is the interplay among them?
Kraus: Besides Stefan and myself as partners with dual licenses, we have Simone, my wife, who is also a dual licensee, “dual license” meaning Georgia and Germany. We have two other attorneys with U.S. licenses and native or close-to-native German-language capability. We have a number of German support staff — in total, four secretaries who are completely bilingual — and we have also other attorneys in the firm who speak the German language very well. We have another partner who speaks French and Dutch as native languages. We equally cover Spanish, Portuguese and Italian in our practice and have a Chinese attorney with native language skills. Generally speaking, we are centered on Europe on one side but we are also expanding to the East and are definitely focusing on the Pacific Rim side. We just hired an attorney from a Tokyo law firm with extensive experience in Japan.
**Tiessen: **We are fairly unique, I think, in terms of our concentration of particularly German lawyers, German-speaking lawyers. And of course all of that is buttressed by our very capable immigration department, which is instrumental in helping to secure the particular entry permits — working permits, visas — to enter the United States and be lawfully employed.
**TTL:* What principally are the legal needs of the companies you serve?
Kraus: Typically, in case of a smaller local presence we represent the company initially in corporate work, some tax work, determining the most effective structure. As the business grows, you may want to send employees from abroad — immigration — and we will have employment and labor issues. We may have litigation issues from time to time. Lately, we also see patent litigation on the rise and, of course, other specialty matters, be they environmental or mergers and acquisitions. In the past 12 months we have also been very active in the M&A field, helping our clients in acquiring U.S. businesses or also, on occasion, in entering into joint ventures with U.S. businesses.
TTL: What do you see as the central driving force for actually having an office in Europe?
Tiessen: It’s an old rule in the world of business that, in order to achieve higher market penetration, you want to be as close as possible to your target market, your target customers. So, that is what we are doing by establishing this office in Europe. We are in Europe because we believe that there is great potential of more in-depth advice to existing clients as well as creating more visibility — having an actual stepping stone as you step out of the airport in Frankfurt to be in the heart of Europe and use that base for our various counseling and marketing activities.
TTL: Was opening a European office a hard sell to firm management?
Tiessen: Not at all. Hans-Michael and I toyed around with the idea for a long time. We always thought that it would make sense from a business and marketing standpoint, but the issue of staffing was unresolved. We had a window in time about a year ago where the opportunity was presented to me to actually physically relocate to Europe and staff that office. When we approached management of the firm they were quite receptive to the idea and very supportive.
TTL: What can you accomplish with an office in Europe that you cannot accomplish from afar?
Tiessen: We have at our disposal now the ability to serve our clientele on an around-the-clock basis. We are closing the time gap of six, sometimes seven, eight or nine hours that is presented by the continental time zones in the United States, so we now are available when people get up in Europe. We are available as well in the afternoon and evening hours through our offices stateside so we can avail ourselves of marketing and other activities really all day long both in Europe as well as in the United States.
TTL: What kind of response are you receiving from clients and potential clients to the fact that the firm now has a full-time presence in Europe? Is this making a difference in client service and client development?
Kraus: The response has been very receptive and our formal office-opening celebration in Frankfurt in late April was well received. Many clients and friends attended that function. One thing we should mention is that this office is for European clients who do business in the United States and it is not an office that is going to focus on rendering services in Europe. We made it very clear to our attorney friends in Europe that we are not competing with them; we have merely established a presence in Europe so that we are closer to our clients who do business in the United States.
Tiessen: I think that is a very important feature of our European presence — unlike most of our friendly competitors that have set up shop in Europe, we, at least for the time being and the foreseeable future, don’t intend to practice national or European law, or EU law for that matter.
TTL: Have you encountered any skepticism or cynicism either here or abroad about just what it is that SGR is doing setting up an office overseas?
Tiessen: Not at all from my standpoint. On the contrary, it has been received enthusiastically with open arms. People are welcoming us to the European neighborhood, and I think they especially like the fact that, again — unlike many of our colleagues — we are not competing with European lawyers. We would like to stick to what we know which is to practice U.S. law in all of its shapes and forms that are relevant for European investors. But we value our relationships with our European friends, be they lawyers or accountants or others in the legal consulting area, and will not get into their business.
TTL: Are you seeing competition from other Atlanta- and U.S.-based law firms to set up offices in continental Europe?
Kraus: Not to any degree of significance. Obviously there is competition locally. There are other good firms in the Atlanta area that do good work but again I don’t think there is anybody — at least not in the Southeast — and perhaps with the exception of Manhattan that has the focused capacity on the German market that we have.
TTL: What are the determining factors that firms would look at in deciding where to set up an office in continental Europe?
Tiessen: Well, the obvious one is logistics — how easy it is to reach the European markets, and you really have only a very small choice of locations. The other one is, of course, closeness to your target market. I think our decision to locate in metropolitan Frankfurt was driven by those factors and was an excellent one.
TTL: Each of you has been meeting with clients in Europe for many years. What, if anything, is different about the expectations or requirements of European clients today than it was, say, 10 years ago?
Kraus: I think things have gotten a lot quicker– the demand to be reachable almost around the clock has become much more imminent and clients expect faster service now than 10 years ago.
Tiessen: Reachability is key, hence our opening of an office in Europe. When people need lawyers it’s not dissimilar to patients needing medical advice: there is a problem to be solved and usually people want solutions quickly to their problems. Not only quickly but also a high expectation of quality, and that’s what we strive to deliver.
TTL: Finally, what are the general perceptions in Europe of Atlanta and the Southeast? More specifically, is Atlanta viewed as a first-tier point of contact for business in the United States or does it lag behind other cities, such as New York?
Kraus: It depends on which market you are focusing on. If you are purely focusing on the financial industry then obviously New York is the choice. If you are purely focusing on computer-related issues then you want to be in Silicon Valley. But when it comes to businesses that we typically represent — mainly medium-sized manufacturing and distribution companies — then Atlanta is absolutely a first-tier community and area to get started in. There is an excellent distribution network, well placed in the country at still relatively reasonable rates when it comes to labor rates, general lease rates and costs. So, the Southeast — not only Atlanta but the Southeast — is an important focus. Having said that, both of our practices are by no means southeastern United States practices. I would say that from my clients about 40 percent are located in the Southeast. There is also a heavy concentration in the Chicago and Detroit areas. My two largest clients are in Pennsylvania, and we have client relationships on the West Coast as far away as Washington state, so it is a nationwide practice. We happen to be located in Atlanta, which is a good location to be, but it is not by any means a limited Georgia/Southeast practice.
Tiessen: By now, Atlanta’s reputation as a top-quality place and point of entry for European companies to enter the United States is undisputed. Our practice is of a national scope; where companies finally locate is often a matter of the result of different parameters. The fact that we are based in key locations on the East Coast and now in Frankfurt plays a major role as companies are selecting counsel.