When Baker & McKenzie broke the news earlier this year that it was launching an office in Peru, managing partners at other international firms across the world were no doubt nodding their heads silently in agreement.
Peru, as with many other Latin American countries, has had a bad rap in recent years, with political tensions and mining conflicts tending to be pretty much the only news from the country that makes headlines in the Western media. But as Raymundo Enríquez, Baker & McKenzie executive committee member and Latin America chair told The Lawyer, Peru is just another jewel in the region’s crown.
“I don’t think it was a great surprise to the market [as] we already have a lot of clients operating in Peru and our rationale for opening in any market is that we follow our clients. Peru is the fastest growing economy in the region and the expectation is that it will continue at that pace as the middle class continues to grow and the country further develops its infrastructure and services. It also has a great wealth of natural resources,” he said.
As Enríquez notes, Peru has both regional and international benefits: “China is Peru’s largest trading partner, so we can leverage our China and Asia-Pacific presence and Peru is also part of the Andean triangle and has an integrated stock exchange with Colombia and Chile, where we already have a longstanding presence.”
Having been born, bred and now based out of Mexico, Enríquez is used to defending Latin America’s reputation in the international markets. “The international press has a very bad view of Mexico and too often it focuses on drug wars and related crimes, but the reality is that this happens in isolated areas of the country,” he explained.
While Mexico’s potential as a global car manufacturer continues to attract household names to the country, Enríquez is all too aware that there is still much more that both the Mexican government and Mexican businesses can do to help calm concerns from foreign investors.
“Businesses in Mexico need to be more prepared to showcase their strengths and the good work they’re doing,” he said. “We have a well-trained labour force and share a border and an ever-growing volume of trade with the US. New labour laws are being introduced, which are modernising our businesses and bringing us into line with other developed countries. With the new president about to be sworn in, we’re optimistic that this will bring new opportunities for Mexico and help change how the country is viewed internationally.”
Mexico, like Brazil and Argentina, has been a key source of the rising multilatinas (Latin American-based multinational), and the investment is outbound as well as inbound, stresses Beatriz Pessoa de Araujo, executive committee member and head of the firm’s London Latin American Centre.
“We’re increasingly seeing major deals both ways, into and out of Latin America,” she said. “Sometimes these deals are entirely high growth to high growth or emerging market to emerging market deals. One of the standout transactions in recent years was Bridas’ $7bn acquisition of BP’s 60 per cent interest in Argentina’s Pan American, on which we advised CNOOC.”
As Araujo notes, compliance has also become a hot topic in Latin America, as investigations into bribery scandals and compliance violations at companies such as Siemens and Walmart have become increasingly commonplace.
“Compliance is a huge growth area in Latin America, particularly for global companies, and you cannot advise on it by flying people in. You really have to have local lawyers on the ground who understand not only the local customs, but also the standards to which such global companies have to operate to.”
Although Bakers now has 72 offices across the globe, the firm’s commitment to Latin America was clear even in the early days since its second-ever office, which opened in the mid-1950s was in Caracas. By 1959 the firm was also resident in São Paulo via an association with local firm Trench Rossi e Watanabe Advogados.
Although Bakers has such long-standing roots in Brazil, like most other firms it shies away from commenting on the ongoing issues created by the Brazilian Bar Association (OAB) clamping down on formal alliances between foreign-trained lawyers and local law firms.
Yet in spite of this elephant in the room and more recent concerns that Brazil’s economy may be struggling, Enríquez is keen to point out that Brazil is still doing a lot better than other markets: “There’s been a lot of talk about the bubble in Brazil and stringent banking regulations, but one result of tight financial reins is that Brazil did not suffer as much as the rest of the world.”
What’s more, the recent announcements that Norton Rose Fulbright plans to target Brazil and that Hogan Lovells and Baker Botts are both set to launch in Rio de Janeiro clearly show that firms’ interest in the sixth largest economy in the world is far from wavering.
Does this concern a firm like Bakers though? “Not really,” said Enríquez. “As the markets across the region continue to grow in size and complexity, there will no doubt be room for new law firm entrants, but it’ll take some time for another global law firm to achieve the depth of presence that Baker & McKenzie has in Latin America.”
Having local lawyers on the ground across 15 jurisdictions has been key to Bakers’ success in the region and the firm regularly seconds associates from London and other offices to Latin America and vice versa.
As Brazil gears up to host the Fifa World Cup in 2014 and the Olympics Games in 2016, Enríquez believes that taking the problems associated with the OAB, compliance violations, political upheaval or even drug trade, the opportunities in Latin America by far outweigh the challenges.
“I’m very positive about Latin America’s continued growth. Inevitably there will be challenges to it but I think that the opportunities that Latin America represents are greater,” he said.
“As we’ve been there for so long now we’re in a good position to spot the difficulties, we employ only local lawyers, who have grown from our ranks and operate in a very coordinated fashion across the continent and beyond.”