Accountancy-linked firms clean up in Spain

Landwell and KPMG outperform Spain's top three; Clifford Chance looks over its shoulder as Linklaters makes its mark

Following Enron and the departure of top Spanish firm Garrigues from the Andersen network, accountancy-tied law firms are starting to become deeply unfashionable in Spain.
But looking at how well the accountant's law firms fared in Spain last year, it will be hard for many Spanish lawyers to turn away from the concept completely. Unarguably, it is a concept well suited to the Spanish market.
Landwell, Ernst & Young Abogados and KPMG Abogados do not only enjoy places in the Spanish top 10 in terms of turnover; Landwell and KPMG's revenues per partner, at e2.3m (£1.42m) and e1.96m (£1.21m) respectively, show them to be making more than the top three Spanish firms.
In 2001, KPMG and Landwell made more money per partner in Spain than Clifford Chance, which is a serious player in the Spanish market. But after the Enron saga and this year's ruling in Luxembourg against multidisciplinary partnerships, it will be interesting to see the progress of Spain's accountancy-tied firms in 2002.
Of the UK magic circle, Clifford Chance is still making the most money in Spain, both in terms of turnover and partner revenue. But things are slowing down. In 2001, the firm's turnover grew by a mere 4 per cent. Market sources cited a downturn in Spanish capital markets work as a reason for the firm's slow growth. Clifford Chance's turnover grew by 40 per cent in 1999 and 39 per cent in 2000, so consolidating growth could also be a reason for its seemingly poor performance in 2001.
After a slow 2001, Clifford Chance needs to watch its back. The firm is in a comfortable position regarding the larger Spanish firms, which will never steal most of its US and UK clients. The real threat comes from Linklaters, which entered the Spanish market only two years ago.
In 2001, Linklaters' turnover grew by a staggering 83 per cent, even though its number of fee-earners grew by only around 55 per cent. This made the magic circle firm the highest-growing firm in Spain last year in terms of revenue, a fact which complements the international firm's position at the top of the M&A tables in Spain. Linklaters is still only eighteenth on the Spanish table, with ambitions to be in the top 10 with Clifford Chance in the next two years.
“We hope to grow turnover by at least 35 per cent this year and the number of lawyers by 24 per cent,” said Linklaters Madrid managing partner Miles Curley.
Linklaters has also utilised its London connections in Spain, and the international nature of its practice is what will really threaten Clifford Chance. One of its biggest deals last year was for longstanding London client Vodafone in its acquisition of 92 per cent of Spanish mobile operator Airtel.
Of course, Clifford Chance is dominant in finance while Linklaters' natural home lies in corporate, but this is not enough to keep them poles apart in Spain. While Clifford Chance and Linklaters may have enough work in London to stay in their specialist areas, neither can afford to be that focused outside the City.
Like Clifford Chance, Uría & Menéndez, the corporate heavyweight that is best friends with Slaughter and May, also underwent a period of consolidating growth last year. Both 1999 and 2000 saw the firm increasing its turnover by a massive 50 per cent; in 2001 the firm managed a 20 per cent increase. The average turnover increase of Spanish law firms last year was 22 per cent, so there is no doubt that if Uría's largest instruction of last year – advising on the merger of Spain's four stock exchanges – had completed in 2001, things would have looked very different.
Of the other City firms in Spain, Allen & Overy fared well, with the turnover of its small five-partner office growing by 52 per cent. Not included in the figures is Ashurst Morris Crisp, which after its 2001 merger with half of local corporate firm Arino & Almoguera, is definitely improving.
But the main question on everyone's minds will be: who is Bufete Barrilero?. This firm, which specialises in tax, corporate and planning, made more per partner than any other firm in Spain last year. Definitely one to watch.