3 Nov 2015
Diverse life experience is an increasingly important asset when preparing global transactions, says Anders Carlberg, Managing Partner of Dittmar & Indrenius.
Don’t do anything stupid. Even though something is legally allowed, it is not necessarily wise. This advice given by a seasoned lawyer years ago was strongly imprinted on Anders Carlberg’s mind. Carlberg, Managing Partner at Dittmar & Indrenius, asserts that common sense is becoming an important asset in international business. “Decisions need to be backed up by views that stem not only from a solid legal background but also from diverse life experience. Ethical perspectives are playing an increasingly important role. Lawyers executing cross-border transactions must know what corporate social responsibility means in different cultures.”The tough times that started with the financial crisis have increased political and business-related tension in almost all Western countries. Politicians, authorities and civil organisations would rather tighten the operational leash of major corporations than give them more freedom. The pressure related to tax planning is only one example of this.The majority of Finnish companies has done a good job in predicting tax risks, some have identified risks but probably relied on maintaining the status quo, but some hit the mine field at full speed. “It is an obvious fact that overly aggressive tax planning is not ethically sustainable, even when it is within the limits of the law”, Carlberg says. “Recommendations based solely on the legal perspective are not sufficient in these cases. Our clients need insightful advice on what is in the company’s best interest over time. Structures that are planned today will be tested in, say 10 years, and the prevailing moral standards will have changed. We need to look beyond the apparent facts and address issues that haven’t occurred to the client.”
“Ethical perspectives are playing an increasingly important role. Lawyers executing cross-border transactions must know what corporate social responsibility means in different cultures.”
Pursuit of sustainable solutions
During a moment of silence, Carlberg looks out of the high window. The sturdy Tilia trees in the Esplanade park represent the same generation as the law firm run by Carlberg.
Dittmar & Indrenius has been serving customers in Helsinki since 1899. Times have changed, but many principles have remained steadfast and true. One of these principles is the pursuit of sustainable solutions. “Traditionally, lawyers concentrate on identifying risks and frightening the client”, Carlberg says. “Instead lawyers should try to find innovative solutions that open up undiscovered opportunities.”
Dittmar & Indrenius’ business has grown faster than the industry average during the 2010s. Carlberg and his colleagues have been particularly successful in handling difficult international transactions. The newest case is the Nokia–Alcatel-Lucent combination.
“Traditionally lawyers concentrate on identifying risks. Instead lawyers should try to find innovative solutions that open up undiscovered opportunities.”
Behind the scenes of Alcatel-Lucent deal
Nokia, Alcatel-Lucent and their respective counsels did their utmost to keep the combination secret. The risk of a premature leak to the media was high, since the preparations required extensive investigations in both parties’ home countries, as well as in their primary market regions. “All parties wanted to publish the combination in a controlled manner. Nevertheless, I was surprised that we actually succeeded in that”, says Carlberg. “The project was successful because Nokia and Alcatel-Lucent had an exceptionally good dialogue and because all preparations were made very carefully both in terms of authority relations and communications.”
Dittmar & Indrenius has served as Alcatel-Lucent’s legal counsel with regard to the preparations and execution of the combination in Finland. The team comprised 10–15 lawyers, depending on the situation. Due to the complexity and importance of the transaction, partners assumed an exceptionally large role. Carlberg says that the combination was prepared very thoroughly and for a long time. “I’m not at liberty to comment on the duration of the process, but I can tell you that it was more than a couple of days.”
Cross-border mergers have proven to be difficult due to such factors as cultural differences. Success stories are few. Carlberg believes that Nokia and Alcatel-Lucent will succeed with their joint effort. ”Nokia’s President and CEO Rajeev Suri has prior experience from the intersection of Nokia’s and Siemens’ network operations. I believe that it was a great lesson learned for him and that Nokia has its feet on the ground. Both Nokia and Alcatel-Lucent have been through a lot, and they hardly have any overlapping products or services.”
According to Carlberg, one of the key questions in the combination of the two giants was deal security. Alcatel-Lucent needed precise information on such matters as the powers of a Finnish company’s Board of Directors. For example, in the United States, company Boards have much more authority to agree than their Finnish counterparts. In Finland, the Annual General Meeting has the final say.
Further big questions dealt with taxation, labour law, intellectual property rights, disclosure obligation, and the specifics of corporate cultures. “Knowledge of the corporate culture is extremely valuable in these situations”, Carlberg says. Carlberg believes that the firm’s strong role as Alcatel-Lucent’s legal counsel will generate interest among potential Finnish clients. “We have extensive experience and accumulated insight into foreign parties’ ways of thinking. This expertise will surely benefit also our Finnish clients.”
Finland is an interesting target for buyers
In the past, business transactions between Finland and Sweden have been very common. Now, Carlberg believes that the wave of cross-border transactions in which a Finnish company joins forces with a European, American or Asian partner will continue or even increase in Scandinavia and Finland. Foreign buyers are interested in innovative and efficient Finnish companies, and the Scandinavian business environment is relatively stable compared with many other regions.
“Finnish companies are in good shape and specialised. They have cut out all non-core assets. However, this is not a one-way street. Dynamic Finnish companies are actively looking for foreign targets to buy, and they are looking further than Sweden.
“Recent developments in Russia and China have had a surprisingly small impact on corporate transaction activity in Finland. Some mergers may be delayed, though, due to the increased volatility and general caution in the markets.”
Always do your homework
According to Carlberg, clients are facing increasing challenges especially in the fields of environmental law, intellectual property rights and labour law. Typically, the biggest realised risks are related to tax issues and environmental responsibilities.
When a company transfers its production to another country, it needs to know the consequences of lay-offs in different countries. In addition, many industries are becoming increasingly information-intensive, which emphasises the importance of privacy protection. “For example, if a company was to buy a Finnish gaming company, it would need to thoroughly investigate matters related to the management and hand-over of information collected by this company of its customers”, Carlberg explains.
The likelihood of success increases when both parties do their due diligence. Carlberg favours an open process in which risks and benefits are balanced so that both parties can happily sign the deal. However, this is a rarely achieved ideal. “It is more typical that some homework is overlooked and the situation leads to a dispute.” The causes of disputes are quite human. Those making decisions on behalf of a company usually try their best, but they can also make mistakes due to pressure, hurry, carelessness or lack of expertise. Utilising the other party’s weakness can also prove to be a mistake.
Learning five years in three years
Dittmar & Indrenius currently employs approximately 50 lawyers distributed across 13 practices. Carlberg sees the company growing to comprise approximately 60–65 lawyers in two to three years.
“We want to offer our clients consistent quality with the one-stop shop principle, when dealing with transactions, dispute resolution, demanding financing arrangements, or compliance.”
According to Carlberg, the firm nurtures a company culture that emphasises consistent high quality. In order to achieve its ambitious quality targets, the firm needs an open sparring culture, the right balance between responsibility and freedom, and clear goal-setting. The firm strives to offer its juniors opportunities to grow quickly.
“We like to say that at Dittmar & Indrenius it takes you three years to learn what you would learn in five years elsewhere”, Carlberg says and adds “but this does not mean that you’d have to put in more hours. We just believe that professional competence grows faster when the person is trusted with responsibility and inspiring tasks.”
Dittmar & Indrenius fosters a good working climate by maintaining open internal communications and flexibility, among other things. The firm pays particular attention to ensuring that it can offer the industry’s best prerequisites for young lawyers to develop and further their careers even in the most hectic phase of their lives.
Carlberg finds it important that every employee feels able to influence their own working environment and everyday work at the office. “This is why we always engage the entire staff in all internal development projects. We want this firm to be the best place for all of our employees to grow, both professionally and personally.”
“We believe that professional competence grows faster when the person is trusted with responsibility and inspiring tasks.”