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Despite being home to one of Europe’s largest legal markets, Spain has been hit hard by the economic crisis
It may come as a surprise, but Spain is one of Europe’s largest legal markets. Of Europe’s top 10 law firms by turnover, three are Spanish: Garrigues, ranked number one; Cuatrecasas Gonçalves Pereira at number four; and eighth-placed Uría Menéndez, which is Slaughter and May’s Spanish ‘best friend’.
Spanish-based firms in The Lawyer European 100 brought in a combined turnover of €870.3m (£730.9m) in 2012.
But this figure is dropping as Spain and neighbour Portugal have been among the hardest hit EU economies since the start of the financial crisis.
Although Spain has avoided a bailout, it has had no economic growth for most of the past three years. The third quarter of 2013 was the first quarter in the past 10 with GDP growth.
Unemployment has soared, hitting a high of 27.2 per cent in the first quarter of 2013. That has now dropped to 26 per cent, but unemployment remains much higher among the young. Over 55 per cent of Spanish 15- to 24-year-olds are out of work.
Against this backdrop, Spanish firms have had a tough time in the past few years. In 2012, Garrigues, Uría and the country’s fourth-largest firm Gómez-Acebo & Pombo all reported a decline in turnover. Cuatrecasas, however, managed a very slight increase.
The biggest firms have mostly been busy with restructuring work in the banking sector, as the Spanish government tries to sort out its financial services sector.
However, this work has not always been profitable – in summer 2012 Cuatrecasas accepted work on a major financing deal for a fee of just €1. Uría, Clifford Chance and Garrigues also tendered for the work, but the latter two pulled out after Uría proposed the €1 fee.
Since then, firms have indicated things have picked up a bit. Activity levels are, anecdotally, on the rise.
But Garrigues’ 2012/13 financial results, released at the end of October, were not the good news that many had hoped for.
Turnover for the 2,135-employee firm was down by 1.7 per cent compared with the previous year’s €331.9m. Granted, this was a smaller decrease than between 2010/11 and 2011/12, but it means the firm brought in less money last year than it did in 2008/09.
The rest of the Spanish market reports its financial results in the New Year, and they will be hoping that the pickup in activity in the second six months of 2013 flows through to revenue.
The big firms in the country have mostly frozen hiring in the past couple of years, even if they have avoided the redundancy programmes of their UK counterparts, so continued financial decline would not help them start recruiting again.
It is unlikely that the Spanish market will bounce back to normal activity any time soon, but the country’s lawyers will be crossing their fingers that Garrigues’ results are not replicated by the rest of the market.