In recent years, the legal sector has undergone changes, gone through stages full of uncertainty, and is now reaching a relative normality, recovering its growth rate.
In one of our previous reports we presented a study on the main firms in Latin America . The study selected leaders in the practices that are among the most important in business law and those of greatest value to general counsel, CEOs of multinationals and other companies that contract legal services: Mergers and Acquisitions (M&A), Tax Law, Employment Law, Dispute Resolution, and Banking & Finance, country by country, in Spain, Portugal, and Latin America.
In recent months, various rankings have been published from the perspective of firm revenue, number of lawyers, or the rankings of different directories separately. However, what are the commonalities in the top bands of some of the most credible directories in the market? Which firms appear repeatedly and have the highest number of partners and ranked areas according to Chambers and Partners, Legal 500, and Leaders League?
In today’s report, we examine the Spanish legal sector, which, according to some of the leading international directories (Chambers and Partners, The Legal 500, and Leaders League), has the highest number of accolades in the top categories. The highest-ranked firms in their respective categories, according to these directories, are Allen & Overy; Baker McKenzie; Clifford Chance; Cuatrecasas; Garrigues; and Linklaters. Pérez – Llorca and Uría Menéndez. These firms share a dominant market position and also a commitment to international expansion.
For this edition we spoke with several leaders of these firms, specifically with the co-managing partners of the firm Baker McKenzie Spain, Bruno Domínguez and Rodrigo Ogea; Jaime Velázquez, managing partner of Clifford Chance Spain; Javier Fontcuberta, managing partner of Cuatrecasas; and Rafael García Llaneza, partner and management coordinator of Uría Menéndez.
For this special report, experts have reviewed how their firms have experienced internally during the first half of the year. They also offer a brief overview of the operations and economic sectors in which they have focused their efforts to date, and what they expect for the end of 2023.
According to Bruno Domínguez and Rodrigo Ogea of Baker McKenzie, “the balance sheet for the first half of 2023 is very positive. The international context, marked by an uncertain economic situation, coupled with the political instability we are experiencing in our country, is undoubtedly leading us to face new challenges and opportunities.”
Due to the geopolitical and inflationary tensions we have been experiencing since 2022, coupled with the general elections, the market is at a unique juncture. We have seen some reactivation after last year, particularly in matters related to tax, labor, regulatory, litigation, and refinancing. In terms of sectors, we have seen increased activity in energy, infrastructure, healthcare, hospitality, food, and real estate.
For his part, Jaime Velázquez of Clifford Chance stated that the year has started well: “We are maintaining a steady and intense pace of work advising the firm’s main clients on strategic and sophisticated mandates. Much of the activity has focused on advising listed companies and investment funds on mergers and acquisitions and all types of financing, as well as representing them in domestic and international litigation and arbitration.”
The most active clients continue to be private equity firms and large infrastructure funds, while the energy sector remains the most relevant at this time of year, although we have also participated in transactions in other sectors such as infrastructure, telecommunications, technology, entertainment or insurance, among others.”
Javier Fontcuberta, of Cuatrecasas, agreed with his peers that, despite the market’s lack of dynamism, their teams remain very active: “In M&A transactions, we perceive a greater presence of strategic buyers compared to 2022. We are very present in sectors similar to those of last year, mainly energy and infrastructure, healthcare and Tech M&A.”
We also observed increased activity in the mid-market, with less leveraged transaction structures primarily due to higher debt costs and greater difficulty in securing financing for asset acquisitions. Indeed, after a few months marked by increased uncertainty, we anticipate a rise in transactions exceeding €500 million (transaction value) across various sectors, including banking and insurance, concessions, technology, energy, and real estate. Furthermore, we perceive interest in public-to-private transactions and, within this context, note an appetite for accessing capital markets in 2024.
Rafael García Llaneza, of Uría Menéndez, pointed out that “despite the current global economic situation, Uría Menéndez is having a generally good first half of the year. This positive performance has been achieved despite delays in litigation during these months due to various strikes by court and tribunal staff. Mergers and acquisitions have also been less prevalent than usual given the geopolitical instability, rising interest rates, and uncertainty surrounding financing conditions. We expect the climate for mergers and acquisitions to improve during the second half of the year.”
So far in 2023, the most active sectors have been Real Estate and TMT, followed by Business & Professional Support and Travel, Hospitality & Leisure. Although not as dynamic as in 2022, the energy sector has also produced some significant deals in the first half of the year. However, all prospects are extremely volatile due to the economic and political situation, especially here in Spain. We will need to monitor, month by month, how this will affect our clients and therefore our performance.
Challenges and growth forecast
Bruno Domínguez and Rodrigo Ogea, from Baker McKenzie, believe that during the second half of this year and the beginning of 2024, “there will be a progressive strengthening of transactional activity in our country and there will be intense activity of reorganizations, insolvency proceedings and refinancings, with notable implications in the tax and labor areas, areas in which Baker McKenzie is highly recognized in the market.”
The firm’s co-managing partners are optimistic about growth and predict they will continue on the same path: “However, at Baker McKenzie we strongly advocate for and promote quality and excellence in our work, without focusing so much on quantity. Furthermore, our clients see us as a firm that offers seamless service worldwide, which is why we handle more cross-border matters than any other law firm, and that is something we will continue to cultivate, as we have done since our inception.”
We are very proud to say that our brand is unique. We occupy a prominent position in the market, as we have the combination of world-class practice and sector specialization, deep local knowledge and a global reach, which enables us to act as a single team and allows us to continue growing not only in Spain, but globally.”
Jaime Velázquez of Clifford Chance explained that they will remain cautious but optimistic in the second half of the year, considering the current pipeline of deals and other matters: “Our main objective continues to be to add value to our clients through specialized and sophisticated advice, delivered in the most efficient and competitive way—leveraging technology—to help them face the challenges presented by the still unstable macroeconomic environment and capitalize on the opportunities that remain. Environmental, social, and governance factors will also continue to pose challenges for both our clients and ourselves as a legal services firm.”
Jaime emphasized that, as a firm, their priority remains attracting and retaining talent by creating an inclusive and collaborative environment: “The quality of the lawyers and professionals who collaborate with us is key to achieving the performance that client satisfaction demands, as well as the commitment to emerging profiles such as project managers, pricing strategy specialists and market intelligence.”
Javier Fontcuberta of Cuatrecasas stated that they are still working in an international context marked by both geopolitical and economic uncertainty: “This situation, coupled with the major changes the legal sector will have to face, allows us to define a path full of challenges and opportunities in the short and medium term. This especially compels us to intensify our efforts to remain close to our clients and the market.”
Our strategy focuses on intervening in highly sophisticated matters where the firm’s contribution is decisive in providing added value. In line with this perspective, three main pillars define the most immediate challenges: (i) Attracting and retaining top talent, offering our professionals a solid career path enriched by highly complex technical matters, competitive compensation systems, flexible work arrangements, continuous training, and other benefits; (ii) Concentrating on offering effective legal solutions for our clients’ businesses, regardless of geographical barriers or the physical location of the best available talent throughout our global organization; (iii) We will continue investing in the best available technology for the legal sector, in which we aim to remain pioneers, and innovate—using both our own and third-party technologies—in tools that allow us to stay at the forefront of business law. Our goal is for clients to perceive that we truly work efficiently and sustainably to best defend their interests.Regarding the growth forecast, it is still too early to give figures, although the results to date are positive.”
Finally, Rafael García Llaneza, from Uría Menéndez, stated that they expect to “maintain the evolution of recent years in terms of our revenue and achieve our budget targets, offering the best service to our clients with value-added advice in a changing environment; attracting the best talent from the university, training them and offering them the best working conditions; and maintaining investment in innovation and technology applicable to all areas of the organization.
Our challenges for the future remain focused on serving our clients, training our professionals, and retaining talent, especially women. We continue to be concerned about the war in Ukraine, inflation, and high interest rates. In the medium and long term, the development and implementation of artificial intelligence solutions will require a significant adaptation effort from law firms. Having the best talent is the key to successfully navigating any new challenges we may face.
We invite you to read: Which law firms lead the market in Central America?
