Over the past year or so there has been an increasing number of international firms moving into Spain. Mobility among lawyers is on the up and the recruitment of high-calibre practitioners is becoming increasingly difficult.
The Spanish legal market has become more attractive to major legal firms in the past few years. Simmons & Simmons, SJ Berwin and Linklaters have all set up a local presence and Stephenson Harwood has a highly focused strategy for its Madrid office. So far the tendency has been for the new arrivals to concentrate on banking, capital markets, telecoms and corporate finance work. But in order to retain valuable clients it is becoming necessary to develop a full-service firm.
However, while the UK firms have clearly earmarked Spain as an area of development, we are yet to witness any significant foray into the Spanish market by the US firms. The recent merger of Baker & McKenzie with Briones Alonso y Martin has served to underline this fact. The only other US firm to form a Spanish alliance is Jones Day Reavis & Pogue, which merged in 1999 with Tena Munoz y Asociados. Some of the leading US firms have been active in the capital market and telecoms sector and have managed to service Spanish needs from abroad, but with increasingly lucrative legal work becoming available we will no doubt see a growing presence of US firms in the short to medium term.
The Spanish economy continues to offer excellent business opportunities and is expected to continue to grow for at least the next couple of years, albeit at a slightly more restrained rate. The only real cloud on the horizon is the problem of Basque terrorism, which continues to be a politically sensitive issue and the number one priority for the government. However, the frequent bombings and attacks do not appear to have affected international investment into Spain, so the economic fallout from the prolonged terrorist campaign has been minimal.
At a regional level, however, the Basque authorities have sought to alleviate the downturn in local investment by offering imaginative solutions to businesses. The region enjoys a great deal of autonomy and so has been free to make it fiscally advantageous for companies to invest in the region by offering significant tax breaks and concessions. While many companies have taken advantage of such solutions, the Basque’s concessions have antagonised central government and certain measures have been constitutionally challenged. It remains to be seen what the outcome will be.
Another interesting trend, and one that the City firms seem to have been slow to react to, is some of the larger Spanish practices’ recognition of the tremendous legal opportunities in Latin America. As a result, some leading Spanish firms have developed strong ties with local Latin American firms and in some instances have established a local presence. Such a move has largely been prompted by major Spanish companies and banks venturing into Latin America and developing a substantial business presence there. Only time will tell if others will follow.
The developments in the Spanish marketplace are arguably a reflection, on a somewhat smaller scale, of the events and developments in the London legal market and that of other leading European cities. However, in a fast-moving market such as Spain, it is essential to constantly evaluate one’s strategy, anticipate market trends and react and adapt accordingly.
Kenneth Bonavia is the managing partner of Stephenson Harwood’s Madrid office.