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Generation Santander Spanish legal market Legal Business October 2004

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64 Legal Business October 2004

Spanish legal market

GenerationSantanderWith Banco Santander’s bid for the UK’s Abbey, Spanish business

is firmly in the spotlight. So too are its advisers. Legal Business

assesses the increasing international presence of Spain’s top firms

RICHARD LLOYD

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October 2004 Legal Business 65

MADRID IS ON THE MOVE. SANTANDERCentral Hispano, the jewel in Spain’s corporatecrown, is settling into its new sprawlingoffices on the outskirts of Madrid – practicallya city itself, housing 5,500 employees, repletewith its own golf course. While Santandersettles in, Uría & Menéndez, one of the bank’sclosest advisers, is preparing to swap itsornate offices dotted around the Plaza deColon for the grey office block previouslyhome to Spanish energy giant Endesa. ‘We willswap elegence for technology,’ proclaims Uríamanaging partner, Rodrigo Uría.

What’s more, if Santander has its way,the bank’s president Emilio Botin will soon

be calling the shots over theUK’s financial giant Abbey fromhis new office in Santander City.

And as the likes of Santander,its banking rival BBVA andtelecoms giant Telefónica havesought out new markets, so a col-lection of Spain’s leading lawfirms have expanded theirhorizons. All the big four – Cua-trecasas, Garrigues, Gómez-Acebo& Pombo and Uría & Menéndez –have expanded into Portugal and Latin America. Foreigninvestors and Madrid’s business > 3D model of Santander Group City, on the outskirts of Madrid

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‘It’s a reality that if acompany considers investing inSpain or Portugal, they look atIberia as one market,’ RafaelFontana, deputy directorgeneral of Cuatrecasas, says.Gómez-Acebo & Pombomanaging partner ManuelMartin emphasises that it’s aconcept that’s gaining credence.‘For a number of years we havebeen talking about an Iberianmarket in the main economicsectors,’ he says. ‘In the nextthree to five years I think thatwill be a reality.’

That reality has ensured thatthe big four of Spain’s legal market have allinvested heavily in Portugal, either throughforming an alliance, in the case of Gómez-Acebo; through merger, in the case of Cuatre-

casas and Uría; or through estab-lishing a greenfield practice á laGarrigues. Portugal has now

community now talk of anIberian market, and the leadingfirms have been scrambling to beat the top of the Portuguesemarket. The united Iberianapproach is paying dividends.

The Iberian market‘We are an Iberian firm,’ stressesUría & Menéndez partner Luis deCarlos as he sets out the Spanishgiant’s market vision. Theconcept of a united Spanish andPortuguese market, with Madrid,Barcelona and Lisbon as its keycentres, has been talked up bythe business community forsome time. It has gained momentum throughsuch deals as Electricidade de Portugal’stakeover of Hidroeléctrica de Cantábrico,Spain’s fourth-largest electricity generator.

become the keenest battlegroundfor Spain’s heavyweights. ‘TheIberian concept is one marketbut two lawyers,’ Fontanaexplains. Critical mass and Por-tuguese rainmakers are key.

Talking mergerFor Uría, its Iberian vision hasrecently gained credibilityfollowing its tie-up with Vas-concelos, F Sá Carneiro, Fontes& Associados in Lisbon. It’s adeal that has largely beenapplauded in both markets, butUría has had a chequeredhistory in Portugal. It had longbeen close to Morais Leitão, JGalvão Teles & Associados, oneof the leading firms in Portugal.However, just as Uría turned itsback on Linklaters’ mergeradvances in the late 1990s,Morais Leitão made it known

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de Carlos: Uría is an Iberian firm

CUATRECASASPortugal: Cuatrecasas mergedwith Gonçalves Pereira, CasteloBranco & Associados. Latin America: It has a small office in Brazil as well as analliance with Machado, Meyer,Sendacz e Opice. In Argentina, thefirm is allied with Perez Alati,Grondona, Benites, Arntsen &Martinez De Hoz.Europe/US: The firm recentlyopened an office in Paris and has asmall outpost in New York. Itremains close to the Herbert Smith,Gleiss Lutz and Stibbe alliance.

GARRIGUESPortugal: The firm has establisheda greenfield practice here –Léonidas Matos & Associados –now officially known as Garrigues.Latin America: It is allied withBarbosa, Müssnich & Aragão inBrazil; Bruchou, FernándezMadero, Lombardi & Mitrani inArgentina; and Mijares, Angoitia,Cortés y Fuentes SC in Mexico.

Europe/US: The firm has a smallpresence in New York and Brussels.

GÓMEZ-ACEBO & POMBO Portugal: The firm is allied withVieira de Almeida & Associados. Latin America: It is allied withPinheiro Neto Advogados in Braziland Becar Varela in Argentina.Europe/US: The firm has a smallBrussels presence.

URÍA & MENÉNDEZ Portugal: Uría has established agreenfield office here, and this yearmerged with Vasconcelos, F SáCarneiro, Fontes & Associados.Latin America: The firm has a smalloffice in Brazil, advising on Spanishand EU law, and has an associationwith Dias Carneiro Advogados. It isallied with Marval, O'Farrell & Mairalin Argentina and Philippi, Yrar-rázaval, Pulido & Brunner in Chile. Europe/US: The firm has smalloffices in London, New York andBrussels, and is a Slaughter andMay best friend.

INTERNATIONAL STRATEGIES: THE BIG FOUR

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Just as importantly, the Vas-concelos deal levels the playingfield with Uría’s rival, Cuatre-casas. Its 2003 merger withGonçalves Pereira, CasteloBranco & Associados gave Cua-trecasas one of the leadingpractices in Portugal and criticalmass that Uría has only justachieved. The united Iberianvision has clearly caught on.

that it was not in favour of aSpanish takeover by Uría.

Therefore in 2001 theSpanish firm picked up asmall, principally real estate-focused team from Abreu &Marques, Vinhas e Associa-dos, under partner DuarteGarin, and launched a green-field operation. At the time Uría knew Vas-concelos, but merger negotiations were noton the agenda. ‘I always thought that Vas-concelos was a potential merger partner butwe didn’t approach them; we didn’t thinkthey would merge,’ Coloma Armero, formerhead of Uría’s Lisbon office, recalls.Suddenly a 20 fee-earner Lisbon officelacking critical mass has been transformedinto a 70-lawyer practice with excellent linksto Portugal’s corporate finance community.

‘We present ourselves to our clients as anIberian law firm,’ Fontana comments,echoing Uría’s de Carlos.

In contrast to both Uría and Cuatrecasas,Garrigues has focused its efforts on estab-lishing a Portuguese practice throughorganic growth. The greenfield practiceknown as Leónidas, Matos & Associados –the Portuguese Bar has only recentlygranted Garrigues permission to use itsname in the local market – was launched in

‘Our strategy is different to Uría. We think wehave a more integrated practice in Portugal.’ Marcos Araujo, Garrigues

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2000 and has grown to give Garrigues apractice of 40 fee-earners. ‘Our strategy isdifferent to Uría,’ Marcos Araujo, Garriguespartner and member of the firm’s interna-tional expansion committee, says. ‘Wethink we have a more integrated practice in Portugal.’

The final member of Spain’s big four,Gómez-Acebo & Pombo, has thus far stuck

rigidly to its exclusive alliancewith Portuguese firm Vieira deAlmeida & Associados. Thealliance, which was formed in1999 and also extends to firmsin Argentina and Brazil, is notseen by Gómez-Acebo as aprecursor to merger. ‘We havenot looked at merger at any

time,’ Martin maintains. ‘We feel rathercomfortable with the present situation. Wevalue the independence of our friends atVieira de Almeida, Pinheiro Neto and EstudioBeccar Varela as much as we value ours.’

Gómez-Acebo’s strategy has also beenempowered, Martin claims, by the successthat Europe’s independent firms have hadin maintaining market share – think

Rank Firm Equity Non-equity Total Fees per Turnover partners partners fee-earners equity partner1. Garrigues€164m 62 80 1,258 €2.65m

2. Cuatrecasas€121.70m 66 20 551 €1.84m

3. Uría & Menéndez €92.98m 56 3 288 €1.66m

4. Landwell-PwC€68.60m 25 0 595 €2.74m

5. Ernst & Young€52.10m 27 8 359 €1.93m

6. Clifford Chance€43.60m 10 12 140 €4.36m

7. KPMG€39.50m 19 0 294 €2.08m

8. Gómez-Acebo & Pombo €37m 25 10 170 €1.48m

9. Baker & McKenzie€36.20m 20 9 153 €1.81m

10. P&A€35.73m 34 0 237 €1.05m

11. Bufete Barrilero€28.17m 12 0 133 €2.35m

12. Roca Junyent Advocats€18.26m 24 0 140 €0.76m

13. Linklaters€14.60m 6 2 54 €2.43m

14. Alzaga, Caro, G Palencia, Sánchez-Terán y Asociados €14.10m 6 5 57 €2.35m

15. Despacho Albiñana & Suárez de Lezo €13.79

8 6 125 €1.72m

16. Bufete Diaz-Arias€13.10m

6 2 150 €2.18m

17. Mullerat€10m

10 0 70 €1m

18. Práctica Legal Abogados €9.25m 15 0 127 €0.62m

19. Mazars & Asociados €8.7m

4 5 60 €2.18m

20. Sagardoy Abogados €8.3m

5 0 49 €1.66m

Source: Expansión and Legal Business

SPANISH FINANCIALS: TOP 20 FIRMS RANKED BY TURNOVER

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Slaughter and May in the UK, Germany’sHengeler Mueller and France’s leading inde-pendent boutique Bredin Prat. Despite thedeals done by Uría and Cuatrecasas, Gómez-Acebo partners insist that they don’t feelunder any pressure to merge in Portugal.Mergers between top-tier firms are rare, andgrowing an office organically to the sort ofsize of Vieira de Almeida would take toolong. Welcome to the globalisation debate,Spanish style.

Latin spirit Portugal has not been the only focus foroverseas growth among the big four. AsSpanish multinationals such as Telefónica,SCH and BBVA have all invested heavily inCentral and South America, so the big fourof Spain’s legal firmament have establishedalliances on the continent. It’s a region

Rodríguez-Rovira, Uría’s Latin Americanhead, says. ‘We don’t have any competitiveadvantage in, say, China or eastern Europe.’

Thus Uría has linked up with firms inArgentina, Chile, Brazil, Mexico and Peruthrough exclusive alliances. Brazil is theonly country on the continent where theUría nameplate actually appears, with asmall team practising Spanish law.

For Garrigues, Latin America wassomething of a trouble spot while the firmwas part of Andersen Legal. ‘Andersen Legalwasn’t strong enough in Latin America,’Araujo concedes. After the MDP collapsedin 2002, Garrigues sent two partners toscout for potential allies, and in February2004 signed an exclusive alliance with firmsin Argentina, Brazil and Mexico.

Although it is still relatively new, it isclear that Garrigues has placed great stock

where they have a clear USP.‘Spanish growth is focused onLatin America,’ Eduardo

Martin: merger is not on the cards

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three markets that we think are critical toSpain: Brazil, Argentina and Portugal,’Martin explains.

But for the all the emphasis that the firmshave placed establishing networks in theregion, Latin America still contributes rela-tively little to the top line. For Uría, LatinAmerican business accounts for between 5%and 10% of turnover – up to approximately€9m. Uría’s de Carlos is clear on the advan-tages to be gained from Latin American ties:‘Our core business is Iberia,’ he says. ‘LatinAmerica is crucial for our relationships withthe Spanish multinationals and banks.’

For those firms in Spain’s mid-marketthat don’t have the same ties with Spain’s

in having Latin American capability. Takethe Spanish energy company Repsol, a sig-nificant Garrigues client with 50% of itsassets overseas, including significantinterests in Argentina. ‘You can’t just say tothem, we have a friend in Argentina,’Araujo insists. ‘You need to go with themand it’s the same with the likes of Endesaand Telefónica.’

Gómez-Acebo and Cuatrecasas have alsofollowed the alliance route in SouthAmerica, establishing associations withfirms in Brazil and Argentina. Cuatrecasasalso has close ties with Carey y Cía in Chileand Creel, García-Cuéllar y Müggenburg SC in Mexico. ‘We have alliances in the

multinationals and banks, inter-national strategy is honed verymuch from their Spanish bases.

Mid-market movesWhile Latin America remainsthe focus of a handful ofSpanish corporates and theiradvisers, the smaller playershave focused predominantly on Europe and the US. As aresult, a web of valuable referralconnections is taking shapeacross the EU and America.

Legalia, for example, apractice of over 100 fee-earners


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spread over five offices, estab-lished an international group in2003 aimed at forging closelinks with a range of firmsacross Europe. ‘The aim is tomake our internationalworkload grow,’ Legalia partnerRafael Montejo reveals. ‘Spanishlaw firms are working more inthe international arena and themarket is conscious that youneed an international strategy.’

Pérez-Llorca has followed asimilar approach, so farshunning merger and exclusivealliances in favour of looseraffiliations. This year the firmhas seconded lawyers to bothSlaughter and May and DeweyBallantine as part of the processof forging links with both firms.Pérez-Llorca has become a portof call for Slaughters when Uría is conflicted on a deal or where the two firms havemutual clients. ‘We try to workwith the best firms in eachcountry,’ managing partner

Pedro Pérez-Llorca explains. ‘It’s an easierstrategy to follow because there are morefirms like Slaughter and May and BredinPrat who have also adopted it.’

Instead of looking to formalise ties beyondSpain’s borders, several mid-tier firms havepositioned themselves in a prime position topick up referral work for clients and foreignfirms looking to do business in Spain.

Despacho Albiñana & Suárez de Lezo hasarguably been the most successful in posi-tioning itself in this part of the market. The‘Spanish Macfarlanes’, and for some timeLovells’ preferred choice of merger partner,acts principally for mid-sized Spanish corpo-rates but also a band of foreign multination-als including the likes of Deutsche Telekom,Merrill Lynch and Coca-Cola. The firm alsoenjoys close links with American firms.

International relationships are fallinginto place, but it is the English andAmerican firms that can oftenprove the most attractive tonew recruits. It’s a point thatPérez-Llorca acknowledges.‘Every year we recruit someonewho decides they want to workfor a multinational practice andgo to Clifford Chance. We justhave to make sure that we giveour new recruits a good reasonnot to go elsewhere,’ he says.

Spanish diplomacyFor all their moves to expand inthe past five years, there is nodoubt that the internationalgrowth of the Spanish has beenlimited by Anglo-Saxonstandards. ‘Local firms haveinternationalised to a verymodest extent,’ José MaríaBalañá, Lovells’ new man inMadrid and a former Cuatre-casas partner, comments. He

calls it the ‘old-fashioned approach to inter-nationalisation’, with satellite offices dottedin key financial centres such as New York,London and Paris. They’re akin to diplo-matic outposts, chaperoning clients asrequired and keeping referral firms sweet.

Sure they have made a success ofexpanding into Portugal, but severalpartners who have spent time at the bigfour and spoke to Legal Business for thispiece commented that the flow of workbetween Madrid and Lisbon has largelybeen negligible. Instead it is the potential ofa united Iberian market that most excitesSpain’s legal community.

Serious expansion overseas is still onlythe preserve of a handful of Spanish corpo-rates. All it takes is for a few more San-tanders and then those alliances will startpaying off. LB

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October 2004 Legal Business 71


Montejo: market demands an international stategy

‘It’s a reality that if a companyconsiders investing in Spain orPortugal, they look at Iberia asone market.’ Rafael Fontana, Cuatrecasas

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