Christina McKeon Frutuoso | 10 March 2020
Things are never plain sailing in Latin America. As 2019 demonstrated, even the most stable jurisdictions are not immune to crisis. In the latest edition of LACCA’s landmark research, Who Represents Latin America’s Biggest Companies, we reveal the most popular law firms among the 100 largest corporates operating in the region, during that period.
Competition between law firms is tough. With so many options to choose from, window shopping has become the norm for many GCs looking for external counsel in Latin America. Loyalty is important to GCs, but legal teams are not afraid to shake things up and shop around for the best fit for their company.
To win mandates, firms are having to find new ways to differentiate themselves from the rest of the pack. LACCA’s research into which firms represent the region’s biggest companies indicates that the most popular firms are those that go beyond simply giving legal advice; it is a holistic, business-savvy approach that makes a good firm an excellent one, and this is reflected in the list of the most popular firms among those clients across countries in the region. Law firms that fundamentally understand the business needs of their clients can help them navigate the economic, political and social hurdles faced by companies in today’s Latin America. In practice, this means GCs want to partner with external counsel who have a demonstrable track record of achieving results in any given area. “The client-attorney partnership still makes a difference, but I believe the key decision-making drivers are the level of expertise offered by the professional who will handle the case and the consistency of results delivered by the law firm being hired,” says Pinheiro Neto Advogados’ managing partner Alexandre Bertoldi.
The top 10 firms in the region
This year’s findings shake up the list of the 10 most popular law firms among the biggest corporates in the region, but it’s no surprise that Brazilian firms still dominate. Their prominence can be explained by the sheer size of the Brazilian market, as well as the high number of Brazilian companies that are among the region’s most profitable businesses. For the third year in a row, Pinheiro Neto Advogados has taken the top spot, representing nearly two-thirds of the region’s largest 100 companies. The firm’s clients include the likes of German healthcare group Bayer, US agribusiness company Bunge, American Airlines and Brazilian oil giant Petrobras. The firm’s popularity is long-standing; it has been been around since the formation of the country’s legal market, and since then it has garnered a reputation for often being the first firm in Brazil to break new ground in any given practice area. “The real challenge for firms lies in understanding the specific needs of each client. This is only possible when you know the business deeply,” says Pinheiro Neto’s Bertoldi. “We encourage our professionals to have this in mind so that we may deliver exactly what each client needs and expects from us.”
There are 13 firms in the top 10 positions, because several firms worked with the same number of companies. While the top four spots of the 2019 survey remain unchanged from the previous set of results, Brazil’s Lefosse Advogados has jumped from seventh place to fifth place (joint with Machado Meyer Advogados). Uruguayan top tier firm Guyer & Regules has gone from fifth place to joint ninth place with Brazil’s BMA - Barbosa, Müssnich, Aragão, while Argentine heavyweight Marval, OFarrell & Mairal has appeared for the first time, taking sixth place jointly with international firm Milbank. Cleary Gottlieb Steen & Hamilton LLP, which occupies fourth place, is the only other international firm to make the top 10.
Corporate clients in Latin America are becoming increasingly sophisticated and are demanding more highly specialised counsel from their law firms. There is perhaps no place in Latin America where this is truer than Brazil. The Brazilian legal market is one of the most competitive in the region and contains several big firms with powerful market shares. “As legal services are costly, a law firm must understand that clients will come to it only when extremely relevant and strategic issues are involved. The law firm should live up to their expectations and give to each case the importance it deserves,” adds Bertoldi.
Brazilian titan Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados is the second most popular Brazilian firm, according to our research. It advises almost half of the region’s most profitable companies. AB InBev, Telefónica and Enel are some of the big names that depend on the firm for its elite full-service repertoire. Azevedo Sette Advogados secured third place in the list and was enlisted by 41 companies, followed by Machado Meyer Advogados and Lefosse Advogados who take joint fourth place with 36 companies each. Bichara Advogados – which is best known for its tax practice – is the next most popular Brazilian firm, advising 34 of the region’s biggest companies. It was followed closely by Veirano Advogados, which advised 33.
2019 was President Jair Bolsonaro’s first year in office. The year began with signs of continuing political uncertainty – with the president fostering controversy around many issues, including human rights, the environment and gender equality – but the hotly-anticipated pensions reform, passed in October, renewed confidence in the market. Privatisations are taking centre stage and some of the most high-value deals from 2019 were generated by Petrobras’ divestment programme, including the sale of its subsidiary TAG – the largest gas pipeline company in Brazil – for US$8.6 billion, in what was Brazil’s largest ever privatisation. Lawyers anticipate further bureaucracy-cutting reforms from Bolsonaro in the year to come, which could inspire confidence from the business community.
They also recognise the ever-increasing need to specialise. “Clients are growing increasingly sophisticated in Brazil. In-house legal departments are more and more well prepared and, by extension, are more demanding than ever in terms of excellence in legal services,” says Pinheiro Neto’s Bertoldi. “Today, clients look to the best professional for each issue when resorting to law firms, as the less complex cases are mostly handled internally.”
Competition is also fierce in the market for international firms in Latin America. Some of these firms have – especially in the past five years – concentrated on building local law offices to compete, while others have taken a different tack. Of the top 10 most popular international firms, half have offices in more than two jurisdictions in Latin America and all 10 – except Spanish firm Uría Menéndez – have a presence in São Paulo. Cuatrecasas, Garrigues and Uría Menéndez are the only firms on this list to have offices in at least three jurisdictions in Latin America. The remaining seven firms only have a presence in Brazil, except Cleary Gottlieb Steen & Hamilton LLP, which has an office in Buenos Aires, and White & Case LLP, which is present in Mexico City too.
Of the top 10 most popular international firms, six were born in the US, three are from Spain, and one – Clifford Chance – is from the UK. (Linklaters, another UK firm, which ranked seventh in last year’s results, takes eleventh position this time around).
Clients typically turn to international firms for cross-border work that requires a bird’s eye perspective as well as any deals with an international law component, such as New York or English law. Cleary Gottlieb comes out on top as the most popular international firm, representing 41 out of the region’s top 100 companies. According to partner Nick Grabar, an increasing proportion of the firm’s work in the region has centred on Latin American clients’ concern about environmental, social and corporate governance (ESG) advice. “More public clients in Latin America have some sort of ESG recordings, and they’re caring more and more about sustainability in the activities they carry out,” he says. “That’s why we’ve seen an increase in green bonds work, especially in Brazil and Chile. This is all bringing more investment banks onto the scene, and traditional banks will have to quickly learn to keep up with these new players.”
Another trend Grabar has observed is an increase in the number of special purpose acquisition companies (SPACS), a vehicle that raises money for investors without any specific investment objective. They can be an innovative way to fund future acquisitions that go on to become listed and are an alternative to private equity. They are proving increasingly popular in Mexico, Argentina and Brazil, and while not all local firms have experience in this level of specialisation, international firms can fill the gap. There are other market trends creating work for international firms with a focus on the region. “A growing number of Latin American companies have listed on US – or non-local – markets over the last decade; in recent months, we’ve especially seen this in Brazil,” says Cleary Gottlieb partner Paco Cestero.
According to our research, the second most popular international firm is Milbank, which we measured advising 35 of the largest companies. Cuatrecasas comes next, with 27 companies, followed by Skadden, Arps, Slate, Meagher & Flom LLP, which advises 21.
The most popular multi-jurisdictional firms
Over the past five years, the composition of the Latin American legal market has evolved to include more multi-jurisdictional firms with offices in more than one country in the region. Some of these entities have their roots in the region, while others have come about as a result of international firms’ expansion strategies. With an increasing number of cross-border deals taking place across Latin America, it’s no surprise that many big companies with operations in more than one country appreciate being able to tap into a network of offices under the umbrella of one firm.
There are several models firms can adopt for offices across multiple jurisdictions, be it a Swiss verein or a fully-integrated office where partners share the same profit pool, and for that reason it is difficult to draw direct comparisons between multi-jurisdictional firms. However, it’s still interesting to see how many of the region’s biggest companies gravitate to firms that seek to provide a one-stop shop in the region’s key markets. Our research suggests Philippi Prietocarrizosa Ferrero DU & Uría and Ferrere have been most successful in providing this service to top Latin American corporates. Both regional firms had very strong reputations in local markets before their expansion across borders.
Our research shows that Philippi Prietocarrizosa Ferrero DU & Uría’s Chilean, Colombian and Peruvian offices combined advised a total of 33 of the region’s top 100 companies. This rises to 39 when taking into account the six companies advised by Spanish firm Uría Menéndez, which has a 30% stake in the regional firm. PPU’s Armas says many clients prefer to hire a regional firm because it means they only have to work with one partner, who can coordinate with lawyers in other jurisdictions, rather than having to hire several separate firms. “Negotiating with one firm – that has presence across the region – rather than several firms means clients can hold one firm accountable for their legal services, and they prefer this as it’s less of a headache for them,” says Armas. Fifteen of the biggest 100 companies – including Falabella, Telefónica and Femsa – are advised by PPU across all three Latin American countries in which it is present.
Ferrere’s regional offices combined are also enlisted by 39 of Latin America’s biggest companies. The firm has presences in Bolivia, Ecuador and Paraguay, as well as its home country Uruguay, amounting to 12 offices. Three of the region’s biggest companies – Nestlé, Cargill and Petrobras – rely on Ferrere across all four jurisdictions, while eight companies rely on it in at least three.
Baker McKenzie LLP’s offices outside Latin America advise seven of the region’s biggest companies, but this number rises to 20 when you also consider the companies that work with its Argentine, Chilean, Colombian, Mexican, Peruvian and Venezuelan offices. The total increases to 31 companies if Brazil’s Trench Rossi Watanabe – which operates in cooperation with Baker McKenzie – is included, too. Brazilian law prohibits international firms from practising Brazilian law, so some internationals work under non-exclusive association agreements with local firms. Baker McKenzie has the broadest and longest-standing local law presence in Latin America of any international firm, having been in the region for more than 60 years.
DLA Piper LLP’s non-Latin American offices advise four companies from the list, but this jumps to 16 companies if you combine this figure with the other companies its Argentine, Chilean, Colombian, Mexican and Peruvian offices advise.
Garrigues helps 18 of the region’s biggest companies – 17 of which take counsel from offices outside of Latin America, while one hires the Chilean branch of the international firm, according to our research.
The survey results show Spanish firm Cuatrecasas advises 28 of the region’s top companies, all from international offices outside Latin America. The firm has a foreign law consultancy in Brazil; a growing office in Mexico City; an outfit in Lima that opened in 2019; and an evolving presence in Bogotá, where the firm has recently moved to offer local law services having terminated a three-year strategic alliance it previously held with Colombian firm Posse Herrera Ruiz.
Eight of the region’s biggest companies instructed international firm Dentons’ Colombian, Uruguayan, Costa Rican, Panamanian and Venezuelan offices, according to our research. The firm’s regional reach goes beyond the offices hired by these companies: it also has a presence in Chile, Guatemala, Honduras, Mexico, Nicaragua and Peru.
It was election year for Argentina in 2019, a factor that contributed to a difficult business environment – although the country’s economic crisis would likely have caused that with or without elections. President Alberto Fernandez was elected in October and took office in December, with former president and leftist Cristina Kirchner serving as his vice president. Upon entering office, Fernand