The pain in Spain

Law firms are doing their bit to help ease the country’s financial crisis

About a month ago, the Spanish government announced the results of a tender for one of the most significant pieces of legal work going on in the jurisdiction at present. Cuatrecasas Gonçalves Pereira was the winner, picking up the mandate to lead a €35bn (£28.3bn) injection into the regional
Spanish economy, the fondo de financiación de pago a proveedores (fund for financing payments to suppliers, or FFPP).

As anyone who’s picked up a paper over the past couple of weeks will be aware, such measures are crucial right now. Spain must do all it can to rescue itself from crisis amid estimates that its banking sector needs a €70bn injection and a downgrade by Moody’s.

But it has emerged that law firms, too, are doing everything they can to help. Sources confirm that Cuatrecasas will be paid just €1 for the highly technical work involved in the injection. Funds will be channelled into local authorities and autonomous regions through a syndicated bank loan, with the whole process designed to vastly reduce regional debt.

Cuatrecasas was not alone in bidding so low for the work, with the other firms tendering – Clifford Chance, Garrigues and Uría Menéndez – also believed to have cut their prices right down.

The Spanish firms did not have a great 2011, with fee income essentially flat for all the big three. They cannot afford to lose money on transactions – but then, their country’s economy needs even more help. The prestige and legal challenges involved will have to be payment enough for Cuatrecasas.