‘Wish you were here…’ Dublin’s Gravitational Pull as an Investment Funds Hotspot

Since the UK voted to leave the EU in 2016, many international law firms have been seeking new outposts in order to maintain their access to the EU market. Among the most popular destinations for firms looking to retain that access is Dublin, Ireland. Post-Brexit restrictions have made it more difficult for UK-based lawyers to practice EU law from outside the EU, so Dublin’s status as not only a significant financial centre and a thriving domestic market, but also as an EU ticket- holder, has made it a very attractive destination for firms. Alongside a wider look at the Dublin landscape for law firms, this article will take a deeper look at the Investment Funds industry and how it has proved to be a new market entrant area of choice, and why it has been a hive of activity since the Brexit decision was made.

Why Ireland?

First, let us take a look at the primary reason for the rising popularity of Ireland as a jurisdiction of choice: Brexit. Law Gazette reported that in the six months leading up to the Brexit vote on 23rd June 2016, 186 solicitors from the UK had been admitted to practice in Ireland. This number amounted to more than three times the total at the same stage in 2015. A year later, 1,448 England and Wales solicitors have been admitted; a number that had swelled so significantly it prompted Ken Murphy, director general of the Law Society of Ireland at the time, to reference the “tsunami” of registrations they were receiving as “Brexit refugee solicitors”. Christina Blacklaws, former president of the Law Society of England and Wales explained the incoming registrations as a move on the part of law firms to do everything they can to “ensure they continue to meet their clients’ needs seamlessly when we leave the EU”.

Three years later, the Law Society of Ireland announced that dual-qualified lawyers must be physically based in or practising in Ireland to keep their practising certificates. This put a major spanner in the works for law firms who were hoping to continue advising clients on EU law with the benefit of legal professional privilege: they now had to open an office to enjoy the benefits of Irish qualification.

Shrewdly, various leading international law firms had already made the move to Ireland. Firms such as Pinsent Masons, Simmons & Simmons, Covington & Burling, Clyde & Co., DLA Piper and Fieldfisher had proactively moved to reap the benefits of the EU connection, as well as to build on their own international platforms. Only recently in 2022, Browne Jacobson chose Dublin as the destination for its first overseas office, highlighting its continued desirability. Back in 2017, however, Pinsent Masons and Simmons & Simmons both decided to launch with investment funds as a core aspect of their new offerings. Despite the Irish market being highly saturated with well-established domestic firms such as Arthur Cox, Dillon Eustace, Maples Group, Matheson and McCann FitzGerald, who already have bases in Dublin, the funds area was seen to have growing potential. This can be attributed to Ireland’s status as a leading hub for the investment funds industry across Europe, where the AUM (Assets Under Managements) figures continue to grow year on year. It remains one of the most popular locations for establishing fund structures in Europe, with over €6.6 trillion in assets under management reported by PwC at the turn of 2022.

Why Investment Funds?

This leads us onto the more technical aspects of why Dublin is a great place to do business; Ireland has become a pre-eminent global location for establishing and administering investment funds particularly due to its favourable regulatory environment, pro-business environment, and tax benefits. As an EU member state, funds established in Ireland as an Undertakings for Collective Investment in Transferrable Securities (UCITS) or an Alternative Investment Fund (AIF) benefit from an EU-wide passporting regime, and the country has an excellent reputation for robust and efficient regulation, with a proven track record in adapting to industry developments. Additionally, Ireland is an internationally recognised, open, and tax-efficient jurisdiction with a 12.5% corporate tax rate – which is significantly lower than the 25% figure the UK has (it rose from 19% on April 1st 2023) – and a favourable tax regime for funds or investors. While it is difficult to directly compare the UK and Ireland in this regard as the tax rules are complex, vary depending on a range of factors, and ultimately go beyond the scope of this article, we can be certain that Ireland has actively pushed to make itself a strong domicile of choice for investors. The CIB (Central Bank of Ireland) has developed a comprehensive legal and regulatory framework that is purposefully attractive to fund managers and investors alike. In recent years, Ireland has been decidedly proactive in introducing new legislation and regulatory initiatives designed to support the growth of the investment funds industry. For example, the Irish Collective Asset-management Vehicle (ICAV) was introduced in 2015 to provide a more flexible and tax-efficient structure for investment funds, while the country’s Investment Limited Partnership (ILP) regime was recently updated to make it more attractive to investors. So ultimately, while the market may have been handed a Brexit boost, it was more than ready to accommodate an influx of business; it’s popularity as a fund domicile of choice has been earned, with Irish luck playing only a very small role.

Jostling for space

Dublin is fast becoming ‘London by the Liffey’, writes Irish Times reporter Mary Carolan. And frankly, it is hard to argue with that title given that UK or international firms now make up seven of the top 20 firms in Ireland, with half of the top 30 UK law firms having now opened offices in Dublin. Of the more recent office openings chronologically, Linklaters, Ashurst, Hogan Lovells, Taylor Wessing, Addleshaw Goddard and Bird & Bird have opened offices in Ireland, with Squire Patton Boggs due to touch down shortly in May 2023. Notably, Addleshaw Goddard entered the market via a merger with local firm Eugene F. Collins, completing what is believed to be the largest ever merger between a UK-based legal business and an independent Irish practice. Carolan reports that this has had a directly adverse effect on regional firms who, according to a recent survey, have experienced a slowdown in growth. Of the 108 law firm respondents surveyed between September and October 2022, almost all respondents – and especially the larger firms located in Dublin – have pointed to recruitment and retention of staff as a major concern. One of the difficulties they face is retaining newly qualified solicitors who are attracted by the “eye-watering” six-figure salaries offered by firms based in London, alongside better prospects and access to working in an international law firm environment. About 50 partners in Irish firms joined UK and other international firms in the past five years, including the foremost market entrants Simmons and Simmons and Pinsent Masons, who led the way by poaching Fionan Breathnach, Head of Investment Funds, and funds partner Gayle Bowen from Mason Hayes Curran and Walkers, respectively.

It is worth noting that amidst the concerns of losing staff to international firms due to higher salaries, William Fry, an Irish law firm with offices in London, New York, and San Francisco, has successfully lured back one of its own consultants, Niall Campbell, from Pinsent Masons to work on business-critical matters in its flagship office. This shows that the brain drain from domestic firms to international ones may not be as one-way as it seems, and suggests that Irish firms still have competitive advantages to offer. At the same time, it shows how important a resource these international platforms are to Irish-based lawyers. There is no better place to hone your skills as a legal professional than in the biggest rooms at the biggest tables. Firms like Pinsent Masons, Simmons & Simmons, Eversheds Sutherland and the multitude of other international firms who now have a base in Dublin provide local lawyers with the perfect opportunity to elevate their own practices, advancing their own careers but hiring the standard across the board.

Talented Ireland

As a result of the influx of eager law firms into a fertile Irish market, the competitive ‘war for talent’ we have seen in the UK over the recent years has affected Ireland in an even more concentrated way. With the increased competition, law firms are continuing to use lateral hires as part of their growth strategies. The survey conducted by the Irish Times found that just over 70% of the firms surveyed have made more than five lateral hires in the past 12 months. It is worth noting that there has been significant growth in in-house legal and compliance teams as they seek to re-domicile in Ireland. We have also seen Irish expats returning home for better prospects.

As a direct result of the vast swelling of NQ salaries driven by this higher competition and thus higher demand for lawyers, a number of international firms with offices in Dublin are set to launch, or expand, the number of training contracts available. This is a move The Lawyer has referred to as “Phase Two of the international invasion. First, they came for your partners and associates…Now, they’re coming for the most promising graduate talent.”

In doing so, the firms are strategically going straight to source with the aim of pushing their organic growth and stepping away from the current melee that is talent acquisition. Both Bird & Bird and Taylor Wessing have affirmed their intentions to introduce training contracts into their Dublin offices. The firms that are already providing training contracts, such as Fieldfisher & Addleshaw Goddard, have opted to boost the number of contracts they offer each year. Fieldfisher Dublin’s managing partner, JP McDowell, stated that “recruiting and training new talent is an essential component of our strategy to facilitate our ambitious growth plans in Ireland.” Among international law firms in Dublin, DLA Piper is rumoured to offer the highest number of training contracts, with a maximum of 12 openings per year. It will be incredibly interesting to see how this unfolds as the year plays out.

It is clear that Ireland’s popularity with law firms in the post-Brexit era has remained strong. The ongoing push to open an office in Dublin, the appeal as a fund domicile of choice, and the second wave recruitment drive from firms looking to expand their training contract offerings are clear examples of this. The legal market in Ireland will certainly continue to grow and transform as international firms keep up the push to move in and fight for their market share of work. Going forward, it will be interesting to see how local firms respond to the external pressure, which will only increase from here on out.

Fides Search has supported a number of firms with their growth in Dublin. Please contact George Eves and Mathew Parker for more information.

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