Private Construction

Firms in this chapter provide advice on traditional private construction, including contracts, architects' and engineers' law, fees and liability issues, brokerage law, rent and leasing law. Advice is provided for construction projects and representation of the interests of contracting bodies and construction companies both in and out of court. Firms which deal with these issues, but where activities focus on complex project developments and comprise a large proportion of transactions and/or finance, can be found under ►real estate.

Developments

The construction trade saw growth rates once again in 2007-08. This was partly thanks to a backlog in developments which has built up over the past few years, especially in infrastructure projects. The increasing interest of foreign investors in new construction projects also played its part. The first consequence of this is: construction lawyers are reporting that for some projects, especially in the public sector, barely anyone is bidding for contracts. Berlin major airport, for example, was just as unsuccessful in finding a contractor as the ECB. "The industry has enough to do – especially abroad – and is no longer prepared to bid any price and any terms," said one lawyer summarizing the situation. But there are other problems as well: in the wake of the credit crunch in the US, many investors have had to put their projects on hold – financers were hard to find. Those involved increasingly sought solutions in the form of partnering models for mutual project control, which sometimes go so far that the general contractors take a stake in the project themselves. "For these types of contract more creativity is called for" were the words of one lawyer. A string of firms already have contractual models drawn up or are working on developing them. But there is another trend as well: many large construction companies have started having the majority of work handled by in-house lawyers. "The future for us advisors is among the large Mittelstand" were the sentiments of one experienced construction lawyer.

The market

Consequently, most firms are modest with their fee demands. While rates of around €300 can be charged nowadays for advice to contracting bodies on large projects, a partner hour still costs on average a maximum of around €250, as has been the case for years in the construction sector. The legal market itself is also steady, for the most part. However, it has become noticeable that the large real estate firms have been focusing more on real estate clients in recent years. As a result, some clients, particularly from the Mittelstand construction sector, have turned their backs on these firms because they have the impression that their importance as customers has dropped. The construction boutiques have reaped the benefits of this and generally report rises in turnover in the single digits. Having said that, it is clear that it is the large firms who are profiting from the current upturn in the project development market. The purely construction-oriented teams at Gleiss Lutz and Nörr Stiefenhofer Lutz, for example, may be small, but they have overseen a long list of complex projects, with advice often going beyond construction. This development increasingly raises the question of the future of smaller boutiques. Large project developments frequently go to large teams, partly because they can often offer broader setups. Prof. Wolfgang Heiermann has now withdrawn from his firm HFK Rechtsanwälte as a partner, but is still active in an advisory capacity. On the whole, however, the age pyramid at highly regarded construction law firms is often unhealthy. Examples of firms that have so far succeeded in steering away from this include Leinemann & Partner, Kapellmann und Partner, Kraus Sienz & Partner and CBH Cornelius Bartenbach Haesemann & Partner.