Generation Santander Spanish legal market Legal Business October 2004
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Generation Santander With 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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MADRID IS ON THE MOVE. SANTANDER Central Hispano, the jewel in Spain’s corporate crown, is settling into its new sprawling offices on the outskirts of Madrid – practically a city itself, housing 5,500 employees, replete with its own golf course. While Santander settles in, Uría & Menéndez, one of the bank’s closest advisers, is preparing to swap its ornate offices dotted around the Plaza de Colon for the grey office block previously home to Spanish energy giant Endesa. ‘We will swap elegence for technology,’ proclaims Uría managing partner, Rodrigo Uría. What’s more, if Santander has its way, the bank’s president Emilio Botin will soon
be calling the shots over the UK’s financial giant Abbey from his new office in Santander City. And as the likes of Santander, its banking rival BBVA and telecoms giant Telefónica have sought out new markets, so a collection of Spain’s leading law firms have expanded their horizons. All the big four – Cuatrecasas, Garrigues, Gómez-Acebo & Pombo and Uría & Menéndez – have expanded into Portugal and Latin America. Foreign investors and Madrid’s business >
3D model of Santander Group City, on the outskirts of Madrid
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> community now talk of an Iberian market, and the leading firms have been scrambling to be at the top of the Portuguese market. The united Iberian approach is paying dividends.
The Iberian market ‘We are an Iberian firm,’ stresses Uría & Menéndez partner Luis de Carlos as he sets out the Spanish giant’s market vision. The concept of a united Spanish and Portuguese market, with Madrid, Barcelona and Lisbon as its key centres, has been talked up by de Carlos: Uría is an Iberian firm the business community for some time. It has gained momentum through such deals as Electricidade de Portugal’s takeover of Hidroeléctrica de Cantábrico, Spain’s fourth-largest electricity generator.
‘It’s a reality that if a company considers investing in Spain or Portugal, they look at Iberia as one market,’ Rafael Fontana, deputy director general of Cuatrecasas, says. Gómez-Acebo & Pombo managing partner Manuel Martin emphasises that it’s a concept that’s gaining credence. ‘For a number of years we have been talking about an Iberian market in the main economic sectors,’ he says. ‘In the next three to five years I think that will be a reality.’ That reality has ensured that the big four of Spain’s legal market have all invested heavily in Portugal, either through forming an alliance, in the case of GómezAcebo; through merger, in the case of Cuatrecasas and Uría; or through establishing a greenfield practice á la Garrigues. Portugal has now
become the keenest battleground for Spain’s heavyweights. ‘The Iberian concept is one market but two lawyers,’ Fontana explains. Critical mass and Portuguese rainmakers are key.
Talking merger For Uría, its Iberian vision has recently gained credibility following its tie-up with Vasconcelos, F Sá Carneiro, Fontes & Associados in Lisbon. It’s a deal that has largely been applauded in both markets, but Uría has had a chequered history in Portugal. It had long been close to Morais Leitão, J Galvão Teles & Associados, one of the leading firms in Portugal. However, just as Uría turned its back on Linklaters’ merger advances in the late 1990s, Morais Leitão made it known
INTERNATIONAL STRATEGIES: THE BIG FOUR CUATRECASAS Portugal: Cuatrecasas merged with Gonçalves Pereira, Castelo Branco & Associados. Latin America: It has a small office in Brazil as well as an alliance with Machado, Meyer, Sendacz e Opice. In Argentina, the firm is allied with Perez Alati, Grondona, Benites, Arntsen & Martinez De Hoz. Europe/US: The firm recently opened an office in Paris and has a small outpost in New York. It remains close to the Herbert Smith, Gleiss Lutz and Stibbe alliance. GARRIGUES Portugal: The firm has established a greenfield practice here – Léonidas Matos & Associados – now officially known as Garrigues. Latin America: It is allied with Barbosa, Müssnich & Aragão in Brazil; Bruchou, Fernández Madero, Lombardi & Mitrani in Argentina; and Mijares, Angoitia, Cortés y Fuentes SC in Mexico.
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Europe/US: The firm has a small presence in New York and Brussels. GÓMEZ-ACEBO & POMBO Portugal: The firm is allied with Vieira de Almeida & Associados. Latin America: It is allied with Pinheiro Neto Advogados in Brazil and Becar Varela in Argentina. Europe/US: The firm has a small Brussels presence. URÍA & MENÉNDEZ Portugal: Uría has established a greenfield office here, and this year merged with Vasconcelos, F Sá Carneiro, Fontes & Associados. Latin America: The firm has a small office in Brazil, advising on Spanish and EU law, and has an association with Dias Carneiro Advogados. It is allied with Marval, O'Farrell & Mairal in Argentina and Philippi, Yrarrázaval, Pulido & Brunner in Chile. Europe/US: The firm has small offices in London, New York and Brussels, and is a Slaughter and May best friend.
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that it was not in favour of a Spanish takeover by Uría. Therefore in 2001 the Spanish firm picked up a small, principally real estatefocused team from Abreu & Marques, Vinhas e AssociaMarcos Araujo, Garrigues dos, under partner Duarte Garin, and launched a greenfield operation. At the time Uría knew VasJust as importantly, the Vasconcelos, but merger negotiations were not concelos deal levels the playing on the agenda. ‘I always thought that Vasfield with Uría’s rival, Cuatreconcelos was a potential merger partner but casas. Its 2003 merger with we didn’t approach them; we didn’t think Gonçalves Pereira, Castelo they would merge,’ Coloma Armero, former Branco & Associados gave Cuahead of Uría’s Lisbon office, recalls. trecasas one of the leading Suddenly a 20 fee-earner Lisbon office practices in Portugal and critical lacking critical mass has been transformed mass that Uría has only just into a 70-lawyer practice with excellent links achieved. The united Iberian to Portugal’s corporate finance community. vision has clearly caught on.
‘Our strategy is different to Uría. We think we have a more integrated practice in Portugal.’ ‘We present ourselves to our clients as an Iberian law firm,’ Fontana comments, echoing Uría’s de Carlos. In contrast to both Uría and Cuatrecasas, Garrigues has focused its efforts on establishing a Portuguese practice through organic growth. The greenfield practice known as Leónidas, Matos & Associados – the Portuguese Bar has only recently granted Garrigues permission to use its name in the local market – was launched in
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> 2000 and has grown to give Garrigues a practice of 40 fee-earners. ‘Our strategy is different to Uría,’ Marcos Araujo, Garrigues partner and member of the firm’s international expansion committee, says. ‘We think 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 alliance with Portuguese firm Vieira de Almeida & Associados. The alliance, which was formed in 1999 and also extends to firms in Argentina and Brazil, is not seen by Gómez-Acebo as a precursor to merger. ‘We have not looked at merger at any
time,’ Martin maintains. ‘We feel rather comfortable with the present situation. We value the independence of our friends at Vieira de Almeida, Pinheiro Neto and Estudio Beccar Varela as much as we value ours.’ Gómez-Acebo’s strategy has also been empowered, Martin claims, by the success that Europe’s independent firms have had in maintaining market share – think
SPANISH FINANCIALS: TOP 20 FIRMS RANKED BY TURNOVER Rank Firm Turnover 1. Garrigues €164m 2. Cuatrecasas €121.70m 3. Uría & Menéndez €92.98m 4. Landwell-PwC €68.60m 5. Ernst & Young €52.10m 6. Clifford Chance €43.60m 7. KPMG €39.50m 8. Gómez-Acebo & Pombo €37m 9. Baker & McKenzie €36.20m 10. P&A €35.73m 11. Bufete Barrilero €28.17m 12. Roca Junyent Advocats €18.26m 13. Linklaters €14.60m 14. Alzaga, Caro, G Palencia, Sánchez-Terán y Asociados €14.10m 15. Despacho Albiñana & Suárez de Lezo €13.79 16. Bufete Diaz-Arias €13.10m 17. Mullerat €10m 18. Práctica Legal Abogados €9.25m 19. Mazars & Asociados €8.7m 20. Sagardoy Abogados €8.3m
Equity partners
Non-equity partners
Total fee-earners
Fees per equity partner
62
80
1,258
€2.65m
66
20
551
€1.84m
56
3
288
€1.66m
25
0
595
€2.74m
27
8
359
€1.93m
10
12
140
€4.36m
19
0
294
€2.08m
25
10
170
€1.48m
20
9
153
€1.81m
34
0
237
€1.05m
12
0
133
€2.35m
24
0
140
€0.76m
6
2
54
€2.43m
6
5
57
€2.35m
8
6
125
€1.72m
6
2
150
€2.18m
10
0
70
€1m
15
0
127
€0.62m
4
5
60
€2.18m
5
0
49
€1.66m Source: Expansión and Legal Business
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Slaughter and May in the UK, Germany’s Hengeler Mueller and France’s leading independent boutique Bredin Prat. Despite the deals done by Uría and Cuatrecasas, GómezAcebo partners insist that they don’t feel under any pressure to merge in Portugal. Mergers between top-tier firms are rare, and growing an office organically to the sort of size of Vieira de Almeida would take too long. Welcome to the globalisation debate, Spanish style.
Latin spirit Portugal has not been the only focus for overseas growth among the big four. As Spanish multinationals such as Telefónica, SCH and BBVA have all invested heavily in Central and South America, so the big four of Spain’s legal firmament have established alliances on the continent. It’s a region
Martin: merger is not on the cards
where they have a clear USP. ‘Spanish growth is focused on Latin America,’ Eduardo
Rodríguez-Rovira, Uría’s Latin American head, says. ‘We don’t have any competitive advantage in, say, China or eastern Europe.’ Thus Uría has linked up with firms in Argentina, Chile, Brazil, Mexico and Peru through exclusive alliances. Brazil is the only country on the continent where the Uría nameplate actually appears, with a small team practising Spanish law. For Garrigues, Latin America was something of a trouble spot while the firm was part of Andersen Legal. ‘Andersen Legal wasn’t strong enough in Latin America,’ Araujo concedes. After the MDP collapsed in 2002, Garrigues sent two partners to scout for potential allies, and in February 2004 signed an exclusive alliance with firms in Argentina, Brazil and Mexico. Although it is still relatively new, it is clear that Garrigues has placed great stock
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> in having Latin American capability. Take the Spanish energy company Repsol, a significant Garrigues client with 50% of its assets overseas, including significant interests in Argentina. ‘You can’t just say to them, we have a friend in Argentina,’ Araujo insists. ‘You need to go with them and it’s the same with the likes of Endesa and Telefónica.’ Gómez-Acebo and Cuatrecasas have also followed the alliance route in South America, establishing associations with firms in Brazil and Argentina. Cuatrecasas also has close ties with Carey y Cía in Chile and Creel, García-Cuéllar y Müggenburg SC in Mexico. ‘We have alliances in the
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three markets that we think are critical to Spain: Brazil, Argentina and Portugal,’ Martin explains. But for the all the emphasis that the firms have placed establishing networks in the region, Latin America still contributes relatively little to the top line. For Uría, Latin American business accounts for between 5% and 10% of turnover – up to approximately €9m. Uría’s de Carlos is clear on the advantages to be gained from Latin American ties: ‘Our core business is Iberia,’ he says. ‘Latin America is crucial for our relationships with the Spanish multinationals and banks.’ For those firms in Spain’s mid-market that don’t have the same ties with Spain’s
multinationals and banks, international strategy is honed very much from their Spanish bases.
Mid-market moves While Latin America remains the focus of a handful of Spanish corporates and their advisers, the smaller players have focused predominantly on Europe and the US. As a result, a web of valuable referral connections is taking shape across the EU and America. Legalia, for example, a practice of over 100 fee-earners
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Montejo: market demands an international stategy
spread over five offices, established an international group in 2003 aimed at forging close links with a range of firms across Europe. ‘The aim is to make our international workload grow,’ Legalia partner Rafael Montejo reveals. ‘Spanish law firms are working more in the international arena and the market is conscious that you need an international strategy.’ Pérez-Llorca has followed a similar approach, so far shunning merger and exclusive alliances in favour of looser affiliations. This year the firm has seconded lawyers to both Slaughter and May and Dewey Ballantine as part of the process of forging links with both firms. Pérez-Llorca has become a port of call for Slaughters when Uría is conflicted on a deal or where the two firms have mutual clients. ‘We try to work with the best firms in each country,’ managing partner
Pedro Pérez-Llorca explains. ‘It’s an easier strategy to follow because there are more firms like Slaughter and May and Bredin Prat who have also adopted it.’ Instead of looking to formalise ties beyond Spain’s borders, several mid-tier firms have positioned themselves in a prime position to pick up referral work for clients and foreign firms looking to do business in Spain. Despacho Albiñana & Suárez de Lezo has arguably been the most successful in positioning itself in this part of the market. The ‘Spanish Macfarlanes’, and for some time Lovells’ preferred choice of merger partner, acts principally for mid-sized Spanish corporates but also a band of foreign multinationals including the likes of Deutsche Telekom, Merrill Lynch and Coca-Cola. The firm also enjoys close links with American firms. International relationships are falling into place, but it is the English and American firms that can often prove the most attractive to new recruits. It’s a point that Pérez-Llorca acknowledges. ‘Every year we recruit someone who decides they want to work for a multinational practice and go to Clifford Chance. We just have to make sure that we give our new recruits a good reason not to go elsewhere,’ he says.
calls it the ‘old-fashioned approach to internationalisation’, with satellite offices dotted in key financial centres such as New York, London and Paris. They’re akin to diplomatic outposts, chaperoning clients as required and keeping referral firms sweet. Sure they have made a success of expanding into Portugal, but several partners who have spent time at the big four and spoke to Legal Business for this piece commented that the flow of work between Madrid and Lisbon has largely been negligible. Instead it is the potential of a united Iberian market that most excites Spain’s legal community. Serious expansion overseas is still only the preserve of a handful of Spanish corporates. All it takes is for a few more Santanders and then those alliances will start paying off. LB richard.lloyd@legalease.co.uk
Spanish diplomacy For all their moves to expand in the past five years, there is no doubt that the international growth of the Spanish has been limited by Anglo-Saxon standards. ‘Local firms have internationalised to a very modest extent,’ José María Balañá, Lovells’ new man in Madrid and a former Cuatrecasas partner, comments. He
‘It’s a reality that if a company considers investing in Spain or Portugal, they look at Iberia as one market.’ Rafael Fontana, Cuatrecasas October 2004 Legal Business 71