LATINAMERICA SPRING 2014

Best of Friends International firms have been building strong ties to local players in Latin America—and the connections are paying dividends with clients.

By Chris Johnson

Legal business is all about relation- finance cochair at Mayer Brown. “Any ships. Nowhere is this more true than in firm looking to do business here needs to Latin America. understand that you have to put the time With legal markets in the United in to build and maintain those personal States and broadly flat, leading relationships. This isn’t a market you can international firms have been increas- just do on your Blackberry.” ingly eager to tap into the region’s vi- One of the main tools international brant and growing economy. But gaining law firms have used in developing re- access to these dynamic markets is not lationships with local firms—and indi- so simple. rectly with clients—is foreign associate More than two dozen international programs. These initiatives see associ- firms have bases in Brazil and a growing ates seconded from independent firms, number are also present in Mexico, but usually for a period of between three most Latin American economies are in- and 12 months. During this time, the dividually too small to justify a global law attorneys become full employees of the firm having a permanent base. international , which provides For firms, that fact puts the empha- them with training, support and experi- sis on developing and maintaining close ence. The idea is that they then return relationships with local counterparts. home with a favorable impression of the These domestic law firms still hold the host firm, which subsequently results in cards when it comes to market knowl- referrals. Many of the partners at lead- edge, client contacts and, in the case of ing Latin American law firms and the Brazil, the ability to practice local law. general counsel of some corporations “In Latin America, more so than in are alumni of international firm foreign the United States or Europe, personal associate programs. relationships are crucial,” says Douglas “Latin American law firms put a lot of Doetsch, Latin America head and global value on these visiting programs,”

Illustration By Dave wink and Cabanellas teamed up to advise the underwriters on the $300 million New York Stock Exchange offering of Banco Mac- ro—at the time the first Argentine institution to list internation- ally for almost a decade. (See ‘Coming Together’ for examples of other M&A deals where international firms teamed up with local counsel in Latin America.) Cleary Gottlieb Steen & Hamilton says that more than 220 alumni of its half-century-old foreign associate program are current- ly working at law firms and as in-house counsel in Latin America. “The legal communities in these countries are quite small, so relationships can be very viral,” says Antonia Stolper, Latin America group head at Shearman & Sterling, which has almost 30 partners active in the region. “You can do a deal for a com- pany and someone on that board knows somebody on the board of the next company that is thinking of doing a deal. I’ve had a whole series of deals where the reason I got hired all traced back to one initial relationship.”

The movement of between local and international firms is not entirely one way. Some firms, such as Spain’s Uría Menéndez, also regularly send associates on secondment to local practices. Uría’s international strategy primarily revolves around a network of so-called “best friends”—an alliance of leading in- says Sergio Galvis, head of the Latin America practice at Sullivan dependent firms that also includes Wachtell, Lipton, Rosen & & Cromwell. “They’ve been a real positive in the development of Katz and -based . Latin American firms. They’ve become so much more sophisti- Uría has an active foreign associate program that Latin Amer- cated and international in their perspective.” ica practice head Eduardo Rodríguez-Rovira says has more than Sullivan & Cromwell’s visiting lawyers program has been in 250 alumni, of which approximately 40 are now working at cur- place for more than six decades, and the firm says it receives rent or potential clients of the firm. But unlike most interna- several hundred applications for the eight-or-so spots it offers tional firms, Uría has for more than 15 years also systematically each year. Of the nine foreign associates currently practicing at placed senior associates with its Latin American best friends— the firm, three are from Latin America. (One is from Pinheiro Dias Carneiro Advogados in Brazil; Mexico’s Galicia Abogados; Neto Advogados in Brazil, one from Mexico’s Von Wobeser y Si- top Argentinian firm Marval, O’Farrell & Mairal; Philippi, Yrar- erra, another from Aninat Schwencke & Cia in Chile.) The firm rázaval, Pulido & Brunner in Chile; Peruvian outfit Payet, Rey, says that about half of the foreign associates become partners Cauvi, Pérez, Mur; Brigard & Urrutia and Prieto & Carrizosa at their home firms after completing the program, with half of in Colombia; and D’Empaire Reyna Bermúdez Abogados and those ultimately moving into management roles at those firms. Araquereyna in Venezuela. Uría recently worked alongside Dias Around 20 percent of its alumni go on to take senior positions as Carneiro in advising ’s Shandong Luneng Taishan Football in-house counsel. Club on its acquisition of a training center in Sao Paulo—the

“The legal communities in these countries are quite small, so relationships can be very viral,” says Shearman’s Stolper.

That was the case for one of the Latin American alumni of first investment by a Chinese football club in Latin America. ’ foreign associate program, Bruno Ferla, who spent Uría initially sent its associates to Latin America for up to eight months with the firm from March 1997. Ferla went on to three years at a time to establish the firm within the region, but become general counsel at Brazilian conglomerate Camargo as its relationships with local firms and clients have deepened, Correa S.A. and is now a partner at Brazilian firm Veirano. In that has dropped to two years in Mexico and one year every- 2008, Linklaters was appointed as project counsel on the $1.85 where else. Uría typically has between six and eight associates on billion Mphanda Nkuwa hydroelectric power plant in Mozam- secondment in Latin America at any one time—a relatively sig- bique, which was developed by Camargo Correa. nificant investment for a firm of just 120 partners. While away, its Similarly, Marcelo Etchebarne, a member of Simpson lawyers generally become employees of their host firms, who pay Thacher & Bartlett’s foreign associate program between 1996 the lawyers’ salaries—and collect their billings. (The disparity in and 1998, is now a name partner at Argentine firm Cabanellas, associate salaries between the United States and Latin Ameri- Etchebarne, Kelly & Dell’Oro Maini. In 2006, Simpson Thacher can countries means the practice is less common among U.S. Sowing the Seeds: Prominent Latin American alumni of foreign associate programs at international firms

Name Foreign Associate Program Dates

Jaime Robledo Allen & Overy September 2002 - January 2004

Manuel Echave Pintado Allen & Overy June 2001 - July 2002

Pilar Duarte Allen & Overy June 2001 - August 2001

Juan Pablo Schwencke Cleary Gottlieb Steen & Hamilton 1997 - 1998

Daniel Muñoz Díaz Cleary Gottlieb Steen & Hamilton 2002 - 2003

Daniela Anversa Sampaio Doria Cleary Gottlieb Steen & Hamilton 2003 - 2004

Fabiane Pereira Ortiz Cleary Gottlieb Steen & Hamilton 2011 - 2012

Maria Luisa Petricioli Castellón Cleary Gottlieb Steen & Hamilton 2004 - 2005

Nicolas Piaggio Linklaters September 1997 - November 1998

Bruno Ferla Linklaters August 1997 - March 1998

Marina Bericua Linklaters September 1998 - July 1999

Roberto Guerrero Simpson Thacher & Bartlett 1994 - 1995

Rodrigo Hinzpeter Simpson Thacher & Bartlett 2000 - 2001

Ricardo Coelho Simpson Thacher & Bartlett 1996

Santiago Gutierrez Simpson Thacher & Bartlett 1996 - 1997

Pablo Iacobelli Simpson Thacher & Bartlett 1998

Marcelo Etchebarne Simpson Thacher & Bartlett 1996 - 1998

Clara María Bozzo Mayer Brown 1997 - 1997

Roberto Paes Mayer Brown 2001 - 2003

firms, although Simpson Thacher will shortly send an incoming more than 50 lawyers from its best friend firms, including repre- first-year associate on a secondment to Mexican firm Mijares, sentatives from nine Latin American firms. Angoitia, Cortés y Fuentes.) One exception is Argentina, where Uría has its own branch office. If the firm plans to send a lawyer to Argentina for more than a year, the attorney will remain with Most international firms prefer to retain nonexclusive the firm and work from its base in Buenos Aires. (Uría always has relationships with a selection of firms in each jurisdiction in at least one associate based in the office full time.) For shorter Latin America. Doing so allows them to gain access to a greater stints, will be seconded at Marval. number of potential referrals; provide existing clients with in- “Law is something where local knowledge—knowing the lo- troductions to lawyers with the right expertise and experience cal practices and the right people in the right places—is very im- for any given mandate; and to more effectively manage conflicts. portant,” says Rodríguez-Rovira. “Latin America isn’t something This, however, is not true of all firms. In 2002, Spanish firm that we assign to a specific partner or practice group—it’s a core Garrigues founded the ‘Affinitas’ alliance, bringing together Ar- part of our business. We have relationships with [the local firms] gentina’s Bruchou, Fernandez Madero & Lombardi; Barros & we consider to be the best in each location—doing that on our Errázuriz in Chile; Colombian firm Gomex Pinzon Zuleta; Mex- own by establishing local offices and starting from scratch would ico’s Mijares, Angoitia, Cortés y Fuentes; and Miranda & Amado be too much effort.” in Peru. But Garrigues quit the network last May after its plans Rodríguez-Rovira says that Uría provides its local best friends to merge the member firms were thwarted. with support in areas such as training and development to ensure “The idea was to have one associated firm in each relevant they “meet the right standards.” Immediately after an interview country in Latin America, and ultimately to integrate all of in early April, he travelled to Chile to host a training event for the firms,” says Javier Ybáñez, Garrigues’ Latin America head. “From our side, we wanted the integration of all the firms or at The American Lawyer’s inaugural Global Legal Awards for its none of them. Some of them didn’t want to integrate, so we de- work advising health insurer and hospital operator Amil Partici- cided to finish the alliance and establish our own offices.” paçoes on the $4.9 billion sale of a majority stake in the company Garrigues wasted no time in proceeding with a newly devised to UnitedHealthcare Group.) Latin America strategy, opening offices in Mexico, Colombia and Despite the seeming uncertainty surrounding international Peru, and relocating Ybáñez from to Bogotá to spear- firm tie-ups in Brazil, three retain local associations in the coun- head the firm’s expansion in the region. try: DLA Piper with Campos Mello Advogados; Baker & McK- Ybáñez says the new strategy is also a reflection of changing enzie with Trench, Rossi e Watanabe Advogados; and Mayer client demand. While Garrigues initially established itself in Brown with Tauil & Chequer Advogados. Latin America to advise European clients active in the region, Douglas Doetsch, Mayer Brown’s Latin America head and co- he says the firm is seeing increasing levels of purely domestic chair of the firm’s global banking practice, says the local bar in Rio work involving local clients—a workflow that already accounts de Janeiro, where its ally Tauil & Chequer is based, has proved for more than a third of Garrigues’ revenue in Latin America. more relaxed than its counterpart in Sao Paulo when it comes to Garrigues still works with its former Affinitas allies on a nonex- such arrangements. (Campos Mello is also based in Rio.) clusive basis, and because of strict practice restrictions in Brazil— “It’s fair to say that the Sao Paulo bar association has had as in China, international firms are not permitted to advise on local a stricter view of what is possible than the Rio bar,” Doetsch law—it maintains an alliance with Brazilian firm CFA Advogados. says. “We have had some clashes with the Sao Paulo bar; we just haven’t had those issues in Rio. At this point, we feel comfortable with our arrangement.” International law firm alliances in Brazil have of late been subject to intense scrutiny by the local bar, the Ordem dos Advogados do Brasil. Its rules state that foreign lawyers may act Although no such practice restrictions exist elsewhere in only as consultants; they are not allowed to join a Brazilian firm Latin America, most international firms choose not to handle or practice Brazilian law. local law matters. Outside of Brazil and Mexico, other Latin In 2012, Linklaters was forced to terminate its more-than- American countries do not consistently generate enough work decade-long association with Lefosse Advogados following a to justify having dedicated practices, and acting on local law is- clamp down on international alliances. (At around the same sues tends not to be profitable enough for an international firm time, Squire Sanders closed its Rio de Janeiro office, having anyway. Perhaps more importantly, practicing local law would abandoned its association with local firm Derraik Advogados also risk damaging the firm’s relationships with local lawyers. the previous year.) “We don’t want to be competing in the region with the lo-

“You can’t just Show up and think that your name Is going to magically Translate,” says Proskauer’s Martinez. “You’re dealinG with local firms that Have been there for decades.”

“We were very careful to stick to the rules. We were in the cal law firms,” says Carlos Martinez, who joined Proskauer Rose same building but on different floors, we used different servers, from Rogers & Wells in 2000 to launch the firm’s Latin America and we kept our finances separate,” Linklaters Latin America co- practice. (Proskauer now has three partners based full-time in head and U.S. comanaging partner Conrado Tenaglia says of the its Sao Paulo office, which opened in 2007, and has two other tie-up. “It worked very well, but then other firms started com- partners working exclusively on Latin America matters.) “You ing into Brazil without following the cautious steps that we had can’t just show up and think that your name is going to magically taken, so the local bar got worried and decided that cooperation translate in Mexico, Peru or Colombia as a top local firm,” Mar- agreements were no longer allowed. It was clearly not what we tinez adds. “You’re dealing with local firms that have been there were hoping, but it was what we had to do, so we did it.” for decades—they have very entrenched relationships. And if Tenaglia says the alliance was terminated on “very civilized you start practicing local law, you would never get referrals from and friendly” grounds and that the firms continue to work to- anyone as they’d see you as a competitor.” gether on a nonexclusive basis. Linklaters moved into separate When Cleary Gottlieb launched its Argentina office in 2009, premises from Lefosse following the split, as it “didn’t want to Andres de la Cruz, who heads the practice, says the firm “went take any chances of doing anything that might be criticized or out of [its] way” to explain to the local attorneys that it would not challenged,” and relocated New York corporate partner Alberto be competing with them or practicing local law. Juan Giraldez, Luzárraga to São Paulo to head the firm’s office there. who heads Cleary Gottlieb’s practice in Brazil, says that as much Tenaglia says the move did see Linklaters tweak the focus of as 50 percent of the firm’s M&A work in Latin America comes as its practice in Brazil: It is now geared toward M&A work, rather a result of referrals from local firms. than capital markets, which the firm now primarily handles from “Argentine lawyers are very qualified and able to work [in] New York, and on developing relationships with local compa- economic conditions that make it unattractive for a client to hire nies. (Linklaters last year won Brazilian M&A Deal of the Year us when they can use local lawyers and pay much less,” de la Coming Together: International and Latin America firms team up on big ticket M&A

DATE DEAL ADVISORS

February 2014 $10.57 billion merger of Brazilian phone company Oi SA and Advising Oi: White & Case; Barbosa, Müssnich & Aragão (Brazil) Portugal Telecom SGPS SA. Advising Portugal Telecom: Simpson Thacher & Bartlett; Garrigues (Spain); Souza, Cescon, Barrieu & Flesch Advogados (Brazil)

February 2013 Constellation Brands, Inc.’s $2.9 billion acquisition of Brazilian Advising Constellation: Baker & McKenzie; Nixon Peabody. brewery Compañia Cervecera de Coahuila from Anheuser- Advising Anheuser-Busch: Skadden Arps Slate Meagher & Flom; Sullivan & Busch InBev NV. Cromwell; Mijares, Angoitia, Cortés y Fuentes Abogados (Mexico); Von Wobeser y Sierra (Mexico) November 2013 Brazilian state-run oil company Petroleo Brasileiro SA’s $2.6 Advising PetroChina: Vinson & Elkins; Miranda & Amado Abogados (Peru); billion sale of its Peruvian oil and gas assets to Chinese oil Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados (Brazil) and gas company China National Petroleum Corp. (PetroBras used inhouse counsel.) Advising Bancolombia: Sullivan & Cromwell; Tapia, Linares & Alfaro (Panama)

February 2013 Leading Colombian bank Bancolombia S.A.’s $2.23bn acquisi- Advising HSBC: Linklaters; Arias Fabrega & Fabrega (Panama) tion of the Panama banking and insurance operations of Advising Coca-Cola FEMSA: INTERNATIONAL FIRMS; Tozzini Freire Teixeira e HSBC Latin American Holdings (UK) Limited. Silva Advogados (Brazil)

August 2013 Mexican soft drink bottler Coca-Cola FEMSA, S.A.B. de C.V.’s Advising Spaipa: Cravath, Swaine & Moore; Pinheiro Neto Advogados (Brazil) $1.86 billion acquisition of Brazilian bottling company Spaipa Advising MetLife: Skadden Arps Slate Meagher & Flom; Perez, Bustamante & S.A. Industria Brasileira de Bebidas. Ponce (Ecuador); Prieto & Cia (Chile)

February 2013 MetLife Inc.’s $1.809 billion acquisition of Chilean pension Advising Provida: Davis Polk & Wardwell; Morales & Besa (Chile) fund administrator AFP Provida S.A from Spanish bank Banco Advising BBVA: Sullivan & Cromwell; Carey (Chile) Bilbao Vizcaya Argentaria SA.

November 2013 The $1.588 billion acquisition by Chinese meat processor Advising Shuanghui: Paul Hastings; Cuatrecasas, Gonçalves Pereira (Spain); Shuanghui International Holdings Ltd and Mexican food Commerce & Finance Law Offices (China); Maples and Calder (Cayman Islands) company Sigma Alimentos SA de CV of Spanish food proces- Advising Sigma: Linklaters sor Campofrio Food Group SA. (Campofrio used inhouse counsel.)

November 2013 French phone company Orange SA’s $1.435 billion sale of its Advising Orange: Jones Day; Jimenez Cruz Peña (Dominican Republic) Dominican Republic unit to cable and telecommunications Advising ALTICE: Ropes & Gray; Franklin Associes (France); Castillo y Castillo investor ALTICE VII SA. (Dominican Republic)

Cruz explains. ‘Building a true Argentine practice that would be a possibility to do that in another market, why wouldn’t we? We able to compete effectively with the local firms would be a very have a lot of faith in the Mexican economy and think it is going significant investment for any international firm,” even if the to grow significantly over time, so we do want to be a significant work became more profitable, he says. presence on the ground.” Not everyone agrees. The influx of international firms into If local law grows in prominence and starts challenging New Mexico has seen a number develop local law practices in the York law’s dominance over transactions in Latin America, other country. Baker & McKenzie, DLA Piper, Greenberg Traurig, firms may begin to reassess their approach. But for now, the ma- Jones Day, and White & Case all provide local law advice in jority of international firms believe having strong relationships Mexico. (For a more detailed analysis of the Mexican legal mar- with lawyers throughout Latin America to be a prerequisite to a ket, see “Land of Opportunity,” p. 14.) credible practice in the region. “We serve clients on a global basis and they want a seamless As Sullivan & Cromwell’s Galvis says, “Local relationships are ab- service,” says Stuart Berkson, DLA Piper’s Latin America chair. solutely critical in Latin America. You just can’t do it on your own.” “We practice local law in the U.S., we practice local law in the U.K., in , in France, the Netherlands, Italy. … If there’s Chris Johnson can be contacted at [email protected].

Reprinted with permission from the Spring 2014 edition of FOCUS LATIN AMERICA an ALM Supplement to THE AMERICAN LAWYER © 2014 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 or [email protected]. # 001-06-14-02