Spain’s largest law firm broke its ties with a local firm to go solo in the region. The other law firms are following suit. What are their strategies?
Garrigues, - the most important law firm in Spain - changed course and the Spanish American legal community felt a powerful shock. The firm announced that it has left its partnership with the Affinitas law firms – which it created in 2004 – to go it alone in the region. This decision has encouraged the most important law firms on both sides of the Atlantic to join the field of battle. There are many questions that need answering, but one thing is certain: Latin America is the place to start, and to strengthen in some cases, the internationalization of Spanish law firms.
Garrigues exemplifies this progressive process of internationalizing law firms.
“The idea was that through the alliance, Garrigues would better integrate with the Latin American member firms, but at the end of the day, integration wasn’t possible. After talking it over for a long time with the alliance members, Garrigues decided in May 2013 to leave Affinitas and establish itself in Latin America on its own, through its own offices, and to contract local lawyers in several of the most important countries in the region where the local legal consulting doesn’t encounter regulatory obstacles.” That’s how Javier Ybañez Rubio explains it. Ybañez Rubio is the managing partner for Garrigues in Latin America. Having taken that step, its new stage begins with the opening of offices in Colombia, Mexico and Peru, offices that will be in addition to those already operational in São Paulo, where it has been since 2011.
Ybañez Rubio poses the big question that faces law firms that intend to enter Latin America: should they work with local partners or open their own practices?
Pros and cons
Ybañez Rubio recognizes that the strategy of working with local firms didn’t produce the desired results. “We think an alliance doesn’t resolve certain key issues that concern us and that are essential to being able to provide first-class support for our clients,” he says. “Issues such as quality control, the homogenization of counsel, conflicts of interest, and professional advancement require our own independent presence if we want to achieve an integrated and coordinated practice in the region.”
In spite of those challenges, he maintains that integration with a local firm makes the path easier in that you don’t have to start from zero, and you start with a structure attuned to working in the local market. “Nevertheless,” he adds, “there are difficulties in integrating new members to already formed teams can be especially complicated in the legal market.”
The law firm that could be said to be the pioneer in the region is that of Uria Menendez, which established itself in Latin America in 1998, arriving with its clients when it started up in the region. The firm chose a mixed strategy, in which it has its own offices in Mexico, São Paulo, Santiago, Lima and Buenos Aires, but also, according to the managing partner for Latin America, Eduardo Rodriguez-Rovira, “We maintain very direct relationships with firms in other jurisdictions such as Colombia, Uruguay, and Venezuela, and we also collaborate closely with the best law firms in each jurisdiction where we have our offices.”
Cuatrecasas, the other Spanish giant in the legal market, rivals Garrigues in size and strategy. Jaime Llopis, a partner in the firm and managing partner in Latin America, explains that the firm’s business model consists of maintaining a special relationship with a large firm and close relationships with a series of local practices. They have, as Llopis puts it, “a short list of friends.” What does that mean, exactly? “It’s very important,” he replies, “to have a road map of the local market. If one of our clients has a complex matter before him, we send it to a large firm; if it’s a small matter, to the smaller ones, and in that way we do excellent business at low cost.”
For Julio Veloso, the partner responsible for internationalizing Broseta, there is no good or bad strategy. “You choose what you think is best for the firm. You can always change strategy if it doesn’t bring the expected results, as Garrigues did,” he says.
More than a few of those who normally work in and around the Plaza de Castilla, the seat of Madrid’s courts, have serious doubts about the decision taken by Garrigues. Quietly they comment that opening offices in the region could weaken the brand because, unless they make a very important investment, these markets will cost them their place among the top five firms in Spain and Europe.