A View from Spain

Peter Cornell is European managing partner at Clifford Chance and is based in Madrid.

Along with much of Europe at the moment, Spain is experiencing a surge in economic activity. While the legal market has been robust for the last few years, it has been particularly active for commercial firms in Madrid and Barcelona over the last six months.

Spain has increasingly become part of the international investors’ portfolio and there is increasing confidence from business and investors.

To a degree, Spain was neglected in the past as many investors gave priority to northern Europe. Some of these investors now feel that there have been missed opportunities in Spain and that there is a need to make up for lost time.

The fact that the recent general election is out of the way has helped to foster a feeling of economic stability.

In finance and corporate work in particular, there is an increasing demand for sophisticated legal services. For example, project financing work was relatively obscure a few years ago but the frequency and complexity of those types of deals is considerable.

Likewise, in corporate work, the market is beginning to witness more aggressive transactions as a more Anglo Saxon approach is adopted in a number of acquisitions.

There has also been considerable growth in the number of IPOs, where international firms that are able to offer any appropriate US capability in-house can have an advantage.

However, there is some evidence that this work largely continues to be done by Spain’s magic circle firms and there does not seem to be any new entrants into the arena to handle the highest quality work.

But Spanish firms have not been slow to react to a changing environment. As Spanish institutions themselves become more international, and as more and more corporate work is international and cross-border in nature, law firms are conscious of how best they should react to the challenges that this represents.

A number of local firms are looking to grow in order to achieve a critical mass as broad-based firms. Others are going further and seeking alliances or other forms of cooperation with international firms. Some have taken strategic initiatives in Latin America in order to service the considerable investment carried out there by significant Spanish clients.

At the same time, a number of the large accounting firms have made successful inroads into the legal market and represent a growing threat to many of the traditional law firms.

As a result of the current market, many of these firms are very stretched and consequently there is, no doubt, a much greater demand for the best legal talent.

Finding the right talent is a real challenge, in response to which Spain, in the last couple of years, has begun to see a growing number of specialist legal recruitment agencies and headhunters.

To add to this pressure, other UK firms which have made a relatively recent entrance into the market will, I have no doubt, continue to grow and will be very attractive to young up-and-coming Spanish lawyers.

Inevitably, the cost of lawyers has also risen, with senior associates now able to command between Pta20 and Pta30m (£71,500 to £107,000). While this may not sound much compared to the London market, it represents a significant increase in what the market has traditionally offered.

So these are very exciting times for the Spanish legal market, with every sign that recent activity levels will be sustained.

This, though, brings its own challenges, and what McKinsey referred to as the “war for talent” in relation to recruiting and retaining the best lawyers will play a crucial role in determining the success of Spanish law firms going forward.