When Fernando Vives took over as managing partner at Spain’s biggest law firm, Garrigues, in September 2009 the country had just entered recession. “At that time, everyone, everywhere, was just beginning to understand the scale of the largest financial crisis in history,” he says.
It may have seemed an inauspicious time to start as leader, but in the decade since, the firm not only survived, but thrived. “They were tough years, but we came out of it stronger than ever: we are now more profitable and robust than a decade ago,” says Mr Vives.
By many counts, the Spanish legal industry is a success story. In some respects, it is a model for law firms elsewhere in Europe. Spanish law firms have been successful in growing their businesses at home and overseas. Of the large legal markets around the world, Spain is also the one where the Big Four professional services firms are strongest — a threat that lawyers in many other countries are only recently having to face.
Garrigues is now the largest law firm headquartered in continental Europe by annual revenue (€364.6m internationally and €316.6m in Spain in 2018), and two other Spanish firms, Cuatrecasas Gonçalves Pereira and Uría Menéndez are in the top 10. These firms dominate domestically despite the entrance of many international law firms. “It’s an open market and very competitive and it has probably helped Spanish law firms to be better,” says Luis de Carlos, managing partner at Uría Menéndez.
On another measure, Spain is one of the most innovative legal markets in Europe. In the FT’s Innovative Lawyers index for Europe in 2019, six of the top 50 were from Spain, more than from any other European country, except the UK.
One of those firms is 20-year-old Ecija, which grew rapidly on the back of a strategy to dominate technology, media and telecoms work in Spain. “For us innovation was not a choice, but an obligation. We needed to innovate and differentiate ourselves from the others,” says managing partner Alejandro Touriño.
“When I started 10 years ago, our clients were TV producers and musicians. Now they are financial institutions, pharma and insurance companies, because technology is present in all those sectors,” says Mr Touriño.
Corporate and banking law firms in Spain have been busy over the past decade advising on government bailouts and the restructuring and consolidation of its banks. Today the economy remains sluggish, but the top Spanish law firms have seen strong revenue growth.
A growing portion of that revenue is from outside Spain. Spanish law firms have established a strong presence in Portugal, as many large companies treat Iberia as a single region. Increasingly, however, their focus is on Latin America.
Revenue from the Garrigues’ Latin American offices grew 38 per cent in the past two years, from €18.6m in 2016 to €25.7m in 2018. Income from the region now accounts for just over 7 per cent of the firm’s total revenue.
Cuatrecasas opened an office in Peru, its fourth in the region. “The market trend is internationalisation. I believe that Spanish law firms will be the market leaders in Latin America,” says Jorge Badía, managing partner.
Clients and company in-house legal teams have also grown, modernised and internationalised. At Santander, the bank, the legal team is managing an increase in lawsuits relating to distressed banks at the same time as new regulations come into effect requiring them to review and redraft tens of thousands of legal agreements. General counsel Oscar Garcia Maceiras says the changes have driven banks to implement new technologies, develop new skills and transform how they think of their in-house roles.
PwC Tax & Legal, Spain’s fourth largest law firm, has been busy working for some of the Spanish banks to help them handle the influx of new claims. David Mellado, partner at PwC Legal believes that being part of a Big Four firm gives them an advantage. “First we are multidisciplinary. We are used to working with our colleagues from consulting or other areas. And we invest a lot of money in technology because we see it as part of the service we offer to the client,” he says.
Spanish law firms will need to continue to evolve to maintain their positions. Competition from different types of firms, such as PwC Legal and its Big Four peers, as well as a class of more sophisticated, tech-savvy and demanding clients may be the spur they need.
“One thing I know for sure is that digital transformation is not optional for law firms; it is a vital step that our clients demand of us,” says Mr Vives. “But I steer clear of harbingers of doom and those who proclaim the end of the profession. The eruption of technology and the appearance of new players help us to keep moving forward, to be better.”
