PROFILE

Riding the highs and the lows

Despite the experience of an almost overwhelming first year, and the subsequent demise of big-ticket M&A, nothing yet requires change in the Latham & Watkins business plan for , says managing partner José Luis Blanco.

he last few years have seen There is no denying that Latham has at considerable speculation least found initial success in Spain. surrounding likely new US “As much as I wish it wasn’t true, they corporate law firm arrivals in Spain. have clearly had an unbelievable first year,” TWith interest surrounding not only who says one senior partner at the office might arrive and the relative market of a competing Anglo-Saxon firm. demand for a new legal player, but also the Despite only officially opening in January suitability of the US law firm model in 2007, Latham & Watkins has already Spain, and the ability of any firm to recruit a featured prominently among some of credible local figure to launch their Iberia’s largest deals of the past year. operation. The firm acted for US private equity (PE) White & Case, Shearman & Sterling and giant, and established Latham client, The Orrick are often among those most Carlyle Group last July on its debut Spanish regularly suggested as potential new €1.48 billion leveraged buy-out of Applus arrivals so it was perhaps surprising that it Servicios Tecnologicos – the largest single was Latham & Watkins that opened its investment yet undertaken by a PE fund in doors in Madrid and Barcelona in January Spain. It also acted for , another 2007. More surprising still, say some, was established client, in the series of the firm’s ability to recruit big-ticket M&A acquisitions it undertook last year, and more partner José Luis Blanco, Head of Corporate recently for – previously one of at Cuatrecasas, to lead its Iberian entry. Blanco’s clients – in February’s $2.2bn La entrada de Latham Many in the market have since (€1.5bn) sale of a stake in its Latin American & Watkins en enero questioned Latham’s ability to make a subsidiary Repsol YPF to industrial operator de 2007 fue quizás significant local impact, and to establish a Peterson Group, by size the most significant una sorpresa para el practice capable of riding out the highs and Argentinean M&A deal in recent years. mercado jurídico lows of the Iberian economy. Eighteen “Without a doubt we had a first year that español, así como months on, however, and Blanco is happy to exceeded all of our expectations, and many también lo fue el report on the firm’s initial success, and to of these deals were planned and executed fichaje del exdirector demonstrate that predictions of Latham’s directly from our own offices,” says Blanco. de F&A de demise in Spain have been greatly Willingness Cuatrecasas, José exaggerated. Prior to taking the lead at Latham in Spain, Luís Blanco, como Project Gillespie Blanco was at both Cuatrecasas and socio director de las The business case for Latham & Watkins’ Garrigues so he is well placed to assess the oficinas de Barcelona Spanish practice was compiled over a relative merits and demands of the different y Madrid. Tras un weekend in late 2006 to the soundtrack of styles of practice. primer año Dizzy Gillespie’s classic Have Trumpet Will His position at Cuatrecasas, he admits, excepcional, José Luís Excite, reveals its author and now managing was very comfortable on both a professional confiesa que el partner, José Luis Blanco. and personal level and that he had no proyecto es todo un “Gillespie envisaged a top-tier greenfield problem rejecting early advances from reto y que consiste en legal practice with a core focus on M&A, Latham & Watkins. consolidar el private equity and acquisition finance, “When I was first approached I had been posicionamiento de la which could capitalise on the increasing recently promoted and I truly felt that I was firma, crear un sophistication of the Iberian business contributing to the success of the firm in equipo, y adaptarse a market. And that remains the position,” he conquering the very highest levels of the un entorno de negocios cambiante. says. Spanish legal market,” he says.

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Nonetheless it was while undertaking a Since launching, in Spain, the firm has review of Cuatrecasas’ own strategic position targeted only what he regards as the key that he began to seriously consider the strategic corporate and finance issues. Ancillary potential of a start-up operation, he says. “The areas such as employment, intellectual attraction of something completely new, with property, and real estate continue to be the brand recognition of Latham, was clearly outsourced as required. appealing. But nonetheless I still told them ‘I Blanco is keen to emphasise also that am not your man.’” Latham has not opened off of the strength of But the idea stuck and when Blanco was one or two major clients, such as Carlyle, and again approached he was asked to draw up an that it is looking to build a practice advising ideal law firm entry scenario. It was a meeting top-tier local clients also. and an outcome that was to eventually lead “The top end of the market clearly has him to formulate his Gillespie plan. barriers to entry, but success is based to a large “I was unexpectedly struck by the degree on individual lawyers with a solid track willingness I found in Latham to be prepared to record of deals. In addition, internationally- come into the market without any pre-defined minded clients now want a law firm with a ideals, and to be ready to listen to outside global reach and strong US law capabilities.” opinions,” he says. The firm’s entry in Spain, say some, was Target greatly facilitated by the work of former Banco Latham’s evolution from a Los Angeles-based Santander Head of Legal for firm, and subsequent national and international and formerly London based Counsel Juan expansion, has instilled within it a flexibility Manuel de Remedios – who suggest some, laid and ability to adapt to circumstances, believes the ground work for the firm’s entry and Blanco. helped target its current team. The firm officially has no headquarters. Latham in Spain now counts two partners Latham’s Managing Partner, Robert M Dell, is (Blanco and Antonio Morales) and around 20 based in San Francisco, the Chief Operating other lawyers, most located in Madrid. What Partner, Mark Newell, is located in Washington was important for Blanco however was the DC, and Leeam Black the firm’s Chief ability to do deals from the outset and to prove Operating Officer is resident in . the firm’s place in the market. “Our own clients and those of Latham clearly took a gamble but Without a doubt we had a first year that exceeded all it gave us the chance to show that we were “ capable of doing what was required.” of our expectations. Latham in Spain is looking to succeed only ” on prestige and reputation, he says. “We will But despite the West Coast origins he insists grow to the size that we feel is necessary for that there is certainly no laid-back California the type of work we want to do and the type of air. “Latham is not a law firm in which the clients we wish to serve. We’re not looking to partners can sit back and wait for work. bring in teams of lawyers.” Internal reporting is measured not along Latham has however made no secret that it geographic or even practice lines but on is willing to compete on salary and to offer individual performance.” remuneration packages at the top end of the Only two partners are released of any client market. For a law firm with reported 2007 work targets, Bob Dell and Mark Newell. The profits per equity partner of $2.2 (€1.4m) Spain remainder must aim for around 1,800 client remains a relatively inexpensive market for hours per year. junior lawyers, particularly when compared to “We have a very strong work ethos,” says the UK or Germany. Blanco. “That helps to support a very flat “The Latham & Watkins brand is management structure. There are very few undoubtedly an attractive one. We offer layers. If there is an issue you are almost defined career paths and have made it clear to immediately talking with the Managing our junior lawyers that we are not going to Partner.” bring in lots of lateral hires and limit their professional development,” says Blanco. Strategy Nonetheless some suggest that Latham is The firm’s willingness to adopt a very narrow still missing important pieces of the practice practice emphasis in Spain is what has helped jigsaw, notably credible tax, finance and Latham attain the recognition it has achieved so competition expertise. Since launching the only quickly, believes Blanco. senior hires have been of energy partner “It was key for the rest of the network that Antonio Morales from Lovells, and corporate we offered credibility. It would not be in the Of Counsel Lorena Vázquez from Clifford firm’s interest to be unable to offer a first-tier Chance. local practice, and to do that we had to be The lack of specific tax and finance focused.” capability is something that Blanco accepts. He states however that such expertise has always The top end of the market clearly has barriers to been a requirement of the Latham plan and that “entry, but success is based to a large degree on the firm is already out looking for talent. “We individual lawyers with a solid track record of deals. are not looking for dramatic growth, but we ” expect lawyer numbers to rise to around 25 by 24  IBERIAN LAWYER  MAY / JUNE 2008 PROFILE

the end of this year.” it is important not to send out mixed messages Despite the premium currently being placed to the market. on competition expertise among many “We want to keep doing top quality work. transactional firms this is not however an area Size is not the determining factor in whether in which Blanco says he is placing significant we undertake a deal, and we will of course recruitment emphasis. “We are able to draw on advise on mid-cap deals if it is of strategic the expertise of the firm’s Brussels practice, importance to the client.” which already includes Spanish qualified Among the recent assignments, he lawyers.” highlights, the firm’s involvement in the Pace restructuring of -based, and longstanding Latham private equity client, Blanco is measured therefore about the firm’s Electra to create Cognetas. prospects in Spain, but others suggest that the prevailing international economic climate is not Sophistication a kind one for the type of transactional and The ultimate goal however is to capitalise on private equity-focused practice that he is the growing sophistication of the Iberian looking to build. business market which, believes Blanco, will “I imagine that Latham is suffering from the demand greater specialisation and lead to downturn as much, if not maybe more than the further segmentation of the legal market. rest of us,” says one competitor Madrid “So long as the domestic law firms retain the managing partner. glue that holds them together they will keep The firm was very lucky in the success of its their share of the market because they are so launch but eighteen months on the deal market linked to the economic success of the country. has certainly changed, agrees Blanco. “If They have brilliant lawyers, but predominantly anyone tells you that the same level of M&A servicing local clients locally, and these are not activity will occur in 2008 as in 2007 then they models that are easily replicated are not telling the truth. The outlook is very internationally.” different.” In any event, he sees increasing The firm would in any event struggle to opportunities as clients work with a wider repeat the pace of last year, he says. “I do not range of law firms, particularly as conflict think that we could have got where we are any issues become more evident. It is an issue that faster. Last year will go down as a record one Latham’s total 2,100 lawyers must also face. for Latham & Watkins in Spain, I believe – it In the Iberian energy sector alone Latham proved to me that the project was possible. But has represented Iberdrola, Repsol and Italy’s even if the credit crunch hadn’t come, the long (alongside Cuatrecasas in its €35 billion hours we were working and the strain of joint bid for ). “Conflicts are a constant creating a new team meant that we would have and difficult issue. We align to Latham’s had to calm down.” strategic goals worldwide and so accept that if He insists however that his lawyers are not we have particularly deep penetration with one sitting idle, and that the ability of the team client it makes it difficult for us to work with means that it can adapt to the prevailing others in the same sector,” says Blanco. economic environment. “An anti-cyclical practice for me is not one We are content to be able to do two or three deals that has large teams of lawyers competing for “ dominance, but one in which individual at any given moment, and to grow with the experience lawyers can change from doing acquisitions to of the lawyers. Size is not an issue for us. restructuring or refinancing. I do not see a need ” to expand beyond what we are currently capable of undertaking.” It is believed that the firm is nonetheless well placed to capitalise on continuing cross- Mid-size deals border opportunities, and Blanco is clearly Despite such flexibility a key demand placed confident that his plan is playing out as he had on Latham’s lawyers is to go out and find work, hoped. For the time being he sees no need for says Blanco, and the current market slowdown change. is a good time to increase both client “We are extremely confident with both the opportunities and practice efficiency. current size of the firm in Spain and our model. Alongside consolidating relationships with We are not looking to develop full-service current and potential clients, and taking the practices or to replicate the models of other time to build the firm’s internal know how, his global firms, but neither are we a boutique. We lawyers are still doing deals for the same target are content to be able to do two or three deals clients, he says. at any given moment, and to grow with the “We make clear that we have a cost, that we experience of the lawyers. Size is not an issue are not looking to enter into discounts, or to for us.” move outside of our defined focus. There is The success of Blanco’s project, like that of always an element of trial and error but we its namesake, will be determined ultimately have to be content to set limits below which we therefore by Latham’s ability to combine will not go.” influences and to capitalise on a hopefully He is coy however about whether the firm increasingly more discerning audience. IBL will now target mid-size deals, saying only that

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