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Despite its worst recession in decades, Portugal’s recent privatisation programme has sparked renewed investment interest. LB asks whether selling off the country’s prized assets can cure the woes of its legal market JULIAN MATTEUCCI

ith Portugal’s GDP expected to fall by 4.5% in 2012 and a series of hikes on VAT, corporate and individual W income tax included in the 2012 Portuguese state budget, the country’s economy hardly appears inviting. Following its 2011 €78bn bailout (the Troika Memorandum) by the European Commission, the European Central Bank and the International Monetary Fund, Portugal has been forced to introduce a comprehensive privatisation programme that includes the energy and airports sectors, as well as the insurance and media industries. Crucially, interest in the country’s crown jewels has been strong. ‘As the country implements the bailout plan, companies are being privatised and foreign investors are ﬂ ocking in,’ says João Vieira de Almeida, managing partner at Vieira de Almeida & Associados ( VdA). A headline privatisation involving a competitive bid for one of the most important companies in Portugal was the December 2011 €2.7bn sale of almost u

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u all of the state’s shares in Energias China Three. Portuguese fi rm Serra Lopes, de Portugal (EDP), which is owned by Cortes Martins & Associados was local NO VACANCY Parpública – a state-run management counsel to China Three, led by partner Luís In most legal markets around the holding company of the Portuguese Miguel Cortes Martins. world, the downturn has prompted the Republic – to China Three Gorges As a regular adviser to the government, offl oading of transactional lawyers. Corporation (China Three), a developer Morais Leitão, Galvão Teles, Soares da Silva Portugal is no different. But where of hydropower projects. EDP is active in & Associados (MLGTS) has picked up Portuguese law fi rms differ from their the fi eld of electricity generation, supply the lion’s share of roles throughout the Anglo-Saxon counterparts is their and distribution, and the supply and privatisations, with partners Nuno Galvão reluctance to admit to such measures. distribution of gas. China Three – which Teles and Rui de Oliveira Neves leading the ‘So far, fi rms have been generally trumped competitive bids from Germany’s representation of Parpública and EDP. ‘We reluctant to announce redundancies E.ON, Brazil’s Eletrobrás and Companhia have been active in energy for over 15 years but they are looking at themselves Energética de Minas Gerais (Cemig), all so we were the obvious choice as counsel internally and implementing changes of which presented and negotiated a for the government’s privatisations,’ says de in their structures, both at partner strategic project for EDP – acquired a 21.35% Oliveira Neves. and associate levels,’ says Martim stake in EDP, representing the largest-ever Naturally the privatisations also produced Morgado, a partner at Campos Chinese investment in Europe. Skadden, work for fi rms acting for unsuccessful Ferreira, Sá Carneiro & Associados. Arps, Slate, Meagher & Flom corporate bidders or for clients that showed interest ‘How effective these measures will be partner Gregory Miao, who divides his time in the early stages. PLMJ partner Jorge de is yet to be seen.’ among the US fi rm’s Shanghai, Beijing and Brito Pereira led the advice to Eletrobrás, Unlike Linklaters, which publicly Hong Kong offi ces, led the team advising Linklaters’ Lisbon partner Jorge Bleck announced the departures of a number acted for E.ON, of lawyers from its Lisbon offi ce in and Cuatrecasas, 2010, transparent communication of Gonçalves Pereira’s redundancies and selective layoffs Lisbon co-managing of lawyers does not exist in Portugal, partner, Diogo according to Raposo Bernardo’s Perestrelo, represented managing partner, Nelson Raposo Cemig. Campos Bernardo. Redundancies do happen Ferreira, Sá Carneiro though. ‘Just compare the number & Associados’ (CS of fee-earners in each law fi rm Associados) partners year-in, year-out, to understand the Francisco Sá Carneiro attrition levels,’ says Rui Amendoeira, and Bernardo Abreu managing partner at Miranda Correia Mota, and VdA’s Amendoeira & Associados. partners João Vieira Unsurprisingly, hiring policies have de Almeida, Pedro become even more rigid. ‘We have Cassiano Santos and to be conservative towards staffi ng Vanda Cascão advised levels right now,’ says Diogo Leónidas another European Rocha, a partner at Iberian fi rm utility company that Garrigues. ‘If somebody leaves, we ultimately decided do not necessarily replace them. We against submitting an are also being more aggressive than offer. ever about taking on only the best Next in line lawyers.’ was the second Interestingly, some large fi rms are privatisation phase receiving more CVs now than at any of the national time in the past. This is because there power grid, Redes are more lawyers out of work who are Energéticas available to join the big fi rms, which Nacionais (REN). are often seen as safer harbours. In February 2012, There is also dissatisfaction among the government associates at some fi rms, who have sold a 40% stake been passed over for partnership and in REN for an whose remuneration levels have been aggregate price fl at – if not reduced – for at least the of almost €600m, last three years. with China’s State

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Diogo Plantier Santos represented SGID, ‘As the country while Iberian fi rm Gómez-Acebo & Pombo – which opened in Lisbon in 2010 – led the implements the advice to OOC through partners Fermín Garbayo Renouard and Luisa Carrilho da bailout plan, Graça. These privatisations were particularly companies are complex because of the various goals that the government wanted to achieve being privatised and and the parallel negotiations with several bidders. In particular, MLGTS’ Teles and foreign investors are de Oliveira Neves had to ensure that they achieved a level playing fi eld between the fl ocking in.’ bidders so that they could put forward the best offers. ‘The legal structuring of the João Vieira de Almeida, VdA project and the negotiations proved to be very demanding exercises,’ says de Oliveira Neves. Grid International Development (SGID) stake. MLGTS’ Teles and de Oliveira Neves Teles and de Oliveira Neves also had acquiring a 25% share and the Oman again acted for Parpública, and PLMJ’s to take a strategic view on behalf of Oil Company (OOC) purchasing a 15% Pereira advised REN. Linklaters’ Bleck and these state-owned companies. The u

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STILL THEY COME Despite Portugal’s woes, certain international UK-based Kennedys, best known for Almeida envisages the fi rm to keep law fi rms still regard the country as an litigation and dispute resolution, likewise growing in Portugal. Nonetheless, Kennedys important place to establish operations. In descended on Portugal in 2011 when it is not seeking to become the largest legal October 2011, full-service Portuguese fi rm merged with local fi rm Almeida & Athayde, practice in the country. ‘We wish to stay fairly Rui Pena, Arnaut & Associados (RPA) signed with whom it was associated for the previous low profi le,’ he says. ‘Our priority is to keep up to the CMS network, with the local six years. It was not a decision taken lightly. clients satisfi ed through high-quality legal outfi t now known as CMS Rui Pena & Arnaut Almeida & Athayde and Kennedys held a services.’ (CMS-RPA). great number of talks before coming to an The response to the new entrants has been From RPA’s perspective, António Payan agreement. ‘But Kennedys is one of the best warm. Pedro Pais de Almeida, a partner at Martins, a partner at CMS-RPA, says that fi rms in the UK,’ says partner Paulo Cruz Abreu Advogados, welcomes the newcomers: the tie-up is the result of a strategic move Almeida. ‘It has been both an honour and a ‘In terms of transparency, I believe that it that aims to offer its international clients challenge to team up with them.’ is important for independent law fi rms, like based in Portugal an integrated solution It is early days but from Almeida’s ours, that the international affi liations of for internationalisation in Europe and in perspective, the merger will help the Portuguese fi rms are publicised and well other geographies. ‘We also felt that, as Portuguese offi ce to tap into markets that known in the market.’ an independent Portuguese law fi rm, we are new to it – such as the UK – and new types As to whether more foreign legal practices needed to have more depth and reach, of clients. As for emerging markets such as are likely to follow suit, some believe that as well as more Iberian and European Angola – expected to grow by 9% this year CMS and Kennedys’ arrivals were drive.’ Furthermore, the union marked an – and Brazil, it is expected that the Lisbon opportunistic moves, rather than a trend opportunity for the Lisbon offi ce to act as an offi ce’s knowledge of such countries will add of international law fi rms set to invade the access point to Portuguese-speaking Africa value to Kennedys. Portuguese legal market. ‘Most international for European companies. ‘CMS was the ideal So far, expectations of the merger have law fi rms interested in this country establish partner for this strategy. The integration been met. Although transactional work is alliances or best friends networks and the within CMS’ legal organisation has been slow, Kennedys has been especially busy with only non-Iberian international legal practice smooth, as well as a tremendous success,’ debt collection work for banks and litigation that actually runs a local law offi ce is he says. matters. Linklaters,’ says Rui Amendoeira, managing

u privatisations were not just about getting their success was important in leading the to the Portuguese subsidiary of Angolan cash in, but also concerned the future way for the remainder of the privatisation bank BIC. MLGTS, led by Teles and de of the companies once the government programme. Oliveira Neves, was again selected by became a residual shareholder, and At the end of March 2012, another state Parpública. Cuatrecasas’ partners Maria which bidders best suited the companies’ sale was sealed when the European João Ricou, Duarte Abecasis and Maria prospects. Additionally, these were the ﬁ rst Commission gave its blessing to Portugal’s da Glória Leitão advised Caixa Geral de privatisations that the government had €40m disposal of debt-ridden nationalised Depósitos (CGD) as selling shareholder. PLMJ conducted under a new legal framework so bank Banco Português de Negócios (BPN) partners de Brito Pereira and Magda Viçoso represented BIC. Because of the quality and strategic nature of the assets involved, the appetite ‘Although labour of foreign investors has been particularly keen, especially from economies that are reform in Portugal in growth mode or are culturally similar to Portugal. PLMJ’s de Brito Pereira believes was long needed that inbound investment from China is growing and that this will be a trend for the the workforce’s forthcoming years. With low or stagnant growth for several mentality may take Portuguese law ﬁ rms, and with practices competing for prime work by cutting their longer to change.’ fees, the privatisation programme could not have been better timed. But Portugal’s top Inês Reis, lawyers are also realistic about the limited opportunities presented by the programme. pbbr They know that once the state’s most prized

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partner at Miranda Correia Amendoeira & Associados. Although Portuguese fi rms tied to exclusive legal networks/international fi rms will benefi t from the international experience, Abreu Advogados’ de Almeida also believes that, ultimately, the Portuguese legal market will not be overly affected by either CMS’ or Kennedys’ presence. ‘The number of players is still the same,’ he says. Portugal’s Azevedo Neves, Benjamim Mendes, Carvalho & Associados (ABBC) entered into an exclusive agreement with DLA Piper at the start of 2011. Orson Alcocer, a Madrid-based partner at DLA, suggests that ABBC is one of the most dynamic fi rms in the Portuguese legal market, and shares DLA’s commitment to providing the highest quality business advice and service to clients. ‘Over the last 15 months, the association has proved to be very successful, both in relation to Portugal and to other Portuguese-speaking countries,’ he says.

assets have been sold off, the law ﬁ rms with enhanced survival prospects will be those that have not only invested properly in alternative service areas such as litigation, insolvency, restructuring, employment law and taxation, but that have also carved out a winning international strategy (see ‘Getting away’, page 78).

REALITY BITES With several law ﬁ rms invited to participate in the privatisation beauty parades, a great deal of legal work has been up for grabs. Diogo Leónidas Rocha, a Lisbon-based partner at Garrigues, believes that it is important to be on the privatisation deals as they boost the credentials of ﬁ rms. But he also says that the work in itself is not especially challenging from a legal perspective. ‘When the privatised company is already listed, it is simply a matter of buying the shares of another company. Ultimately, Garrigues is more interested in investing long-term in its existing client relationships, rather than one-off deals.’ u

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u The pace of the privatisations has disappointed some legal advisers. ‘A few law SIDE STEP fi rms will be kept busy for a while but only Despite the economic crisis and the conservative nature of Portugal’s legal market, some a small part of the privatisation programme fi rms have recently invested in lateral hires. In June 2011, Manuel Magalhães joined Sérvulo has been implemented with speed,’ says & Associados as a senior partner from Cuatrecasas, Gonçalves Pereira’s Lisbon offi ce, Rui Amendoeira, managing partner at becoming – together with Paulo Câmara – co-head of Sérvulo’s fi nancial and governance Miranda Correia Amendoeira & Associados department and bringing with him a team of fi ve associates. (Miranda). The arrival of Magalhães’ team has signifi cantly heightened Sérvulo’s international It is also important to distinguish practice, as well as its banking and fi nance work. ‘Almost a year after this last move, between the foreign investors attracted I can say that Sérvulo’s fi nance team offers clients a unique synergy in transactional by the privatisation programme in the and regulatory work, covering all fi nance and corporate governance areas, in particular hope of buying good companies and those banking, capital markets and insurance,’ says Lino Torgal, an executive partner with who do not wish to invest in Portugal’s real Sérvulo. economy due to the current uncertainty From Cuatrecasas’ perspective, Lisbon co-managing partner Diogo Perestrelo tells LB plaguing market confi dence. The state that the departures had no relevant impact. ‘Co-managing partner Maria João Ricou had a sell-offs aside, Pedro Pais de Almeida, a strong fi nance group and was easily able to lead the fi rm’s banking practice,’ he says. partner at Abreu Advogados, says that Occasional spin-offs have also occurred. In 2011, fi ve-partner fi rm Pares Advogados more foreign investors have recently was launched by corporate partners Luís de Gouveia Fernandes, João de Freitas e Costa closed down their businesses in Portugal and Rita Maltez, who all left Abreu Advogados. Abreu additionally lost competition – and are leaving the country – than new partners Miguel Mendes Pereira to Vieira de Almeida & Associados, and Rui Pereira de investors have started up new enterprises. Melo, who founded RPM Advogados. For example, Japan’s Nissan announced the ‘The departure of the fi ve partners did not affect last year’s activity in any way,’ says suspension of its lithium ion battery factory Abreu’s managing partner Miguel Castro Pereira. ‘On the contrary, it resulted in an increase in the revenue earned per partner.’ Additionally, 2012 saw the establishment of MC&A, which was founded by Vítor Marques da Cruz after he left F. Castelo Branco & Associados.

project in December last year, which would companies and other assets. ‘In particular, have injected €156m into the national we are seeing a new kind of investor coming economy. There have also been cases where from emerging markets such as Brazil, large Portuguese holding companies have Angola, South Africa and Asia (especially redomiciled their holding companies to China), and they are asking: “Can we really Luxembourg or other jurisdictions in order buy such assets at these prices in an EU to reduce their tax burdens. country?”’ he says. Consensus is that the privatisation programme has proved interesting for UNDER ATTACK stimulating outside investment. ‘Foreign For some law fi rms a recent series of investors held back for a while,’ says high-profi le takeover bids has been Duarte Garin, a Lisbon-based partner at more interesting than the privatisation Iberian fi rm Uría Menéndez – Proença de programme. At the end of March, ‘We have to be Carvalho (Uría Menéndez). He believes that Portuguese company Brisa – Auto-estradas investors were waiting to see what the fi rst de Portugal, one of the largest private conservative towards signals would be once the current austerity motorway operators in Europe, announced programme was set in motion. ‘The signs a €700m offer for its shares by Tagus staffi ng levels right are positive in so far as most of the harsh Holdings, a tender offer vehicle led by measures were implemented without any Portugal’s José de Mello and Arcus now. If somebody social unrest,’ Garin says. ‘It is evident that European Infrastructure Fund, which Portugal is prepared to do what it takes to together already hold 53.81% of Brisa. leaves, we do not extract itself from the situation into which it Led by partner Maria Castelos, CS has fallen.’ Associados is advising Arcus, and necessarily replace Many contend that Portuguese assets Linklaters partner António Soares is currently represent a buying opportunity. representing Tagus. Sérvulo & Associados them.’ Diogo Leónidas João Caiado Guerreiro, a partner at Caiado is Brisa’s sole legal adviser, led by corporate Guerreiro, is seeing certain clients acquire partner Fernando Ferreira Pinto and Rocha, Garrigues real estate, as well as a variety of solid fi nance partner Paulo Câmara; José de

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Mello has been advised by VdA partner Pedro said it would sell its 9.6% holding in Fernando Campos Ferreira and Martim Cassiano Santos; and MLGTS partner Luís Cimpor to Camargo if Votorantim, Morgado now lead the team advising on the Branco advised the bank syndicate that is Brazil’s largest cement producer and ongoing bid for Cimpor. fi nancing the tender offer. owner of 21.2% of Cimpor, agreed to end Some Portuguese companies have a shareholders’ agreement under which TRADITIONAL TRANSACTIONS come under attack from overseas because Votorantim has a right of fi rst refusal to buy Away from the world of privatisations and Portuguese shareholders have struggled with CGD’s stake. takeover attempts, conventional M&A activity punishing debt and have liquidity issues. ‘Cimpor is defi nitely one of the most remains slow. Nonetheless, impressive deals Consequently, it is easier to buy up their attractive, listed Portuguese companies and are occurring. In November 2011, VdA’s shares. ‘It is an excellent time to bid for good this is one of Portugal’s most relevant capital partner Cassiano Santos led the team advising Portuguese companies, whose prices are low,’ markets deals of the last few years,’ says Uría Deutsche Bank (Portugal) in a cross-border says Lino Torgal, an executive partner at Menéndez’s Garin. merger with Deutsche Bank (Hungary) Sérvulo. PLMJ banking and fi nance and capital when Deutsche Bank converted these two Portugal’s largest cement producer markets partner Viçoso is representing subsidiaries into branch offi ces as part of a pilot Cimpor is a recent, high-profi le example. Cimpor. Uría Menéndez is acting for Camargo, transaction. The deal involved the transfer It is currently on the receiving end of its led by partner Daniel Proença de Carvalho. of €1.6bn total assets from Deutsche Bank third takeover attempt in recent times. CS Associados, which advised Votorantim in Portugal incorporated into Deutsche Bank In late March, Brazil’s second-largest the acquisition of its qualifi ed shareholding Germany. VdA also advised on the Portuguese construction group, Camargo Corrêa in Cimpor from Lafarge in 2010 and the regulatory banking, capital markets and made a €2.48bn offer for the remaining shareholders’ agreement with CGD, has since insurance law aspects of the deal. Corporate 68.1% it does not own in Cimpor. CGD continued to advise the company. Its partners partner Daniela Favoccia of German fi rm u

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u Hengeler Mueller represented Deutsche (Brasil) in the Banif Financial Group’s sale of Bank Germany, while Allen & Overy’s a majority shareholding in brokerage house Budapest offi ce acted for Deutsche Bank Banif Corretora de Valores e Câmbio (Brazil) to (Hungary). CGD, through a capital increase and the sale of Abreu Advogados has also picked up shares. In March, led by Perestrelo, Cuatrecasas high-profi le mandates. Led by Miguel de advised CGD and the Ministry of Finance Avillez Pereira, the fi rm is advising Brazilian in the reorganising of Galp Energia (Galp)’s company Embraer, one of the world’s leading shareholder structure. This was necessary aircraft manufacturers, in an investment because Eni wished to sell its remaining 5% into manufacturing aeronautical parts and stake in Galp to Amorim Energia, but such sale structures. The deal concerns the building was prohibited by the shareholders’ agreement. of two factories for the manufacturing of AAA Advogados partner Gabriela Rodrigues aeronautical parts and structures. This Martins acted for Amorim. is ongoing and represents the largest investment ever made in Portugal’s CHANGE FOR THE BETTER aeronautical sector. Portugal’s bailout is also likely to prove Likewise, Cuatrecasas has been very active. an indirect source of legal work. The In February 2012, capital markets partner government has pledged to pass several André Luiz Gomes acted for Banif – Banco de reforms in areas such as labour, tax, civil ‘It is important Investimento and Banif-Banco de Investimento procedure and insolvency practice. These are for independent law fi rms that the international CAIADO GUERREIRO affi liations of Portuguese fi rms are publicised and well known in the market.’ Pedro Pais de Almeida,

PortuPortugalgal Abreu Advogados

Cape Verde Macau likely to give rise to legal needs and to make up for the general dearth of M&A activity. Guinea S. Tomé and Principe Timor Labour law reform is a current hot potato, Brazil imposed on Portugal as a consequence of Angola the EU ﬁ nancial bailout. Portugal has been Mozambique compelled to amend its employment rules to render them more ﬂ exible and to lower its employment costs in a bid to increase the country’s competitiveness. The meat of the reform is currently in draft form, with the government expected to approve it later this year. However, “The group is valued to adapt quickly to the urgent pace of our business, lead multijurisdictional some changes related to contract periods, matters perfectly and deliver an in-depth or succinct advice as and when required” 2011 BYC R OR A P Chambers & Partners E O redundancy compensation, unemployment Y R E A

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Legal 500 F

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L A T N I O conditions have already been introduced. ‘Although labour reform in Portugal was long needed the workforce’s mentality may take longer to change,’ says Inês Reis, a

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founding member and head of Pedro Pinto, arbitration venue, particularly in relation signifi cant recent piece of litigation Bessa Monteiro, Reis, Branco, Alexandre to cases involving companies with ties to is its ongoing assistance to LDK Solar – Jardim & Associados’ (pbbr) employment Portuguese-speaking countries such as the world’s largest producer of solar wafers – in team. ‘Therefore, any amendments to the law Brazil, Angola and Mozambique. a multijurisdictional international arbitration must be accompanied by a persistent and Unsurprisingly, dispute resolution against Itarion Solar over an alleged breach of clear message.’ For example, the anticipated practices are currently busy. CS Associados an $800m contract. Abreu’s Pereira, together reform will alter certain aspects that were set itself the challenge of launching a new with partners Guilherme Santos Silva and previously considered untouchable, such as litigation practice just one year ago, but its Duarte de Athayde, are leading LDK’s case. the 40-hour working week. team has already been involved in complex Latham & Watkins’ Paris-based Rachel Thorn pbbr has been investing in its labour and arbitration and insolvency cases. Generally and Bär & Karrer’s Geneva-based Saverio employment practice for some time. The work all of them involve the issues currently Lembo are also involved. currently being generated for its team includes affecting Portugal’s economy, such as the New restructuring-related legislation is raising clients’ awareness of these changes lack of liquidity and public cuts. also on the cards. The current insolvency/ and showing how they can benefi t clients’ Abreu Advogados identifi ed the restructuring law favours insolvencies businesses, but also helping them implement opportunity for dispute resolution mandates over restructurings in order to protect changes in the smoothest way possible. back in 2008. It invested in a mass litigation creditors. However, the reforms will Since March this year, the new department that carries out debt collection expand the restructuring options available Arbitration Law has been in force. Created and insolvency proceedings for fi nancial and are designed to avoid insolvency where to simplify domestic and international institutions, insurance companies and car possible. arbitrations, the legislation intends to leasing companies. Managing partner Even without some reforms fully live, market Portugal as an international Miguel Castro Pereira says that the fi rm’s most restructuring and distressed sales u

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u mandates have increased. Traditional airport authority, Aeroportos de Portugal private equity funds appear to have (ANA); national airline Transportes Aéreos suspended activity, but fund restructuring Portugueses (TAP); state-owned postal work is buoyant. In response to increased operator, Correios de Portugal (CTT); one work levels, Garrigues created a Portuguese of Rádio e Televisão de Portugal (RTP)’s insolvency and restructuring team as part of television channels; water operator Aguas de its worldwide insolvency and restructuring Portugal; and rail freight company CP Carga. practice. Caixa Seguros, the insurance company Recent examples of signifi cant owned by state-controlled bank CGD, is restructuring/insolvency mandates also set to be part of Portugal’s privatisation have included Abreu Advogados’ advice, programme. Plus, the government is poised led by Pereira, to Portuguese private to sell its remaining 7% in Portuguese oil co-operative fi nancial group, Caixa de and gas company Galp Energia, which sold Crédito Agrícola Mútuo de Alcobaça, on its Brazilian assets to Chinese oil giant, the fi nancial restructuring and insolvency China Petroleum & Chemical Corporation of several civil construction companies. (Sinopec), for $5.2bn in November 2011. And in November 2011 MLGTS partner MLGTS’ Teles and de Oliveira Neves have Segismundo Pinto Basto led the representation again been selected to advise Parpública. ‘It is evident that of Portugal-based aviation group Omni But once the privatisation programme and its shareholders in a €70m corporate is concluded, one of the great challenges Portugal is prepared restructuring of the group’s presence in for law fi rms will be to fi nd alternatives Portugal (and Brazil) that separated the group’s to the traditional way that legal services to do what it takes fi xed-wing and helicopter businesses. The are provided, notably by reorganising and restructuring also prepared the group for the resizing teams in practice areas that no to extract itself from arrival of pan-European private equity fi rm longer bring the workfl ow. Stirling Square Capital Partners as fi nancing the situation into partner to its helicopter business. Stirling, CASH-STRAPPED which invested €40m into Omni Helicopters A constant challenge for Portuguese law which it has fallen.’ International in December 2011, was fi rms has been how to operate in an represented by VdA’s João Vieira de Almeida economy with liquidity issues. Naturally, Duarte Garin, in the structuring and implementation of billing policies have had to change the investment alongside VdA’s best friend in signifi cantly. In the past, Miranda Uría Menéndez Brazil, Pinheiro Neto Advogados. automatically raised all billing rates at the start of each January. For the last few years, ENJOY IT WHILE YOU CAN the fi rm has only introduced modest fee In the short-term, Portugal’s top legal hikes every two years. advisers will have further privatisation ‘Clients are obviously very sensitive to mandates to look forward to. On the fees, especially in the current market horizon is the privatisation of the national conditions,’ says CS Associados’ Martim

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Morgado. Yet Morgado’s experience view is that it takes time to build up a good have a large number of partners in relation tells him that clients are willing to make reputation and only a second to jeopardise it,’ to the number of associates, those who have the investment in fees if they believe that says Pedro Pais de Almeida, a partner at Abreu a concentration of more than 50% of their the value is there. One of the fi rm’s Advogados. turnover in less than 20 clients, and those principles is to stay close to the client. This Some Portuguese law fi rms have focused who are just starting to get involved in also means keeping a keen eye on billing considerably on the diversifi cation of their activities outside Portugal.’ matters. practices. Aside from non-cyclical service Sérvulo’s Torgal is optimistic about what Clients have also become creative in lines such as labour law, certain niche areas lies ahead: ‘The government announced that their demands. These days they ask for that demand high levels of expertise merit there are already signs of recovery. One can all sorts of fee structures, from fl at to investment. pbbr’s Reis says that energy, IP/ probably expect the return of confi dence by capped. Fortunately, this happens less with TMT and life sciences have consistently been the beginning of next year.’ longstanding clients, than with clients developing, and are areas where the markets’ Nor does Miranda’s Amendoeira feel instructing fi rms on one-off projects with a interest and demand have grown. like complaining. ‘We’ve continued to fi xed duration. Other market commentators believe that enjoy modest growth in terms of new Some believe that law fi rms should in diffi cult times it is crucial to achieve the clients, fee-earners and revenue,’ he says. be fl exible, but only up to a certain point – correct partner-associate ratio. ‘We have a ‘ Miranda has not suffered any major that it is preferable to lose a bid rather ratio of 1/10 between partners and associates, trepidation, and it has been greatly assisted than endure a large loss on a deal, or to feel which is excellent for a market like Portugal,’ by the success of its overseas strategy. We feel compelled to put a younger or less specialised says Nelson Raposo Bernardo, the managing confi dent that we have adapted well to the legal team on a specifi c assignment, thereby partner at Raposo Bernardo. ‘The fi rms that new realities.’ LB risking the quality of the legal service. ‘My are suffering from the crisis are those which [email protected]

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GETTING AWAY In response to a struggling domestic market, Portugal’s leading law ﬁ rms are increasingly seeking opportunities in former Portuguese colonies. LB assesses the different international strategies being employed by the country’s top legal practices JULIAN MATTEUCCI

side from a spate of short-term privatisation work (see ‘Going private’, page 66), Portugal’s transactional lawyers continue to bemoan the demise of their nationalA M&A pipelines. In order to bolster growth, the country’s major law ﬁ rms are venturing to Portuguese-speaking jurisdictions where the legal systems are similar and investment is ﬂ owing. Certain countries of Lusophone Africa, such as Angola, have been an obvious investment draw for Portugal’s major corporations and their legal advisers for some years. But with an economy forecast to grow by 7.5% this year, Mozambique is sparking great interest, primarily because of its recent natural gas discovery. In the medium term, the country is expected to become a serious player in this sector. It is also on the brink of a coal boom. Meanwhile, Macau is proving to be an increasingly important link for Chinese investors into Portugal and Portuguese- speaking countries. This former Portuguese colony is also becoming a hub for companies from Portuguese-speaking countries u

78 Legal Business June 2012 Illustration/Photograph ARTIST’S NAME

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u that are interested in mainland China’s of partnerships in Portuguese-speaking domestic market. countries through the PLMJ International For example, around 60% of Abreu Legal Network (ILN), and in the main Advogados’ turnover derives from Portuguese investment target markets. international clients. Since 2005, about 40% ‘This network provides cross-border legal of Raposo Bernardo’s turnover has been services with cost-effectiveness, knowledge generated outside Portugal. Caiado Guerreiro’s of local markets, know-how, and a high international practice also represents a level of specialisation,’ says partner Jorge signifi cant portion of the fi rm’s revenue. It de Brito Pereira. boasts a large project management practice Others have tested foreign waters in that advises clients on signifi cant projects in response to the crisis. Lino Torgal, an executive Africa. ‘Year on year, our international practice partner at Sérvulo & Associados, says that his is becoming even more important for the fi rm,’ fi rm implemented a strategy that aimed not says partner João Caiado Guerreiro. only to diversify its lines of service, but also to With more and more of Portugal’s law establish an international practice, mainly in fi rms looking to grow overseas practices, it Brazil, Angola and China, which it considers to is crucial that their strategies are executed be the three most promising markets in terms with care. Such expansion may also trigger ‘Year on year, of Portuguese investment. fi nancial investments and expenses that some law fi rms are currently unable or unwilling our international INTO AFRICA to withstand. Furthermore, with increased Africa – especially Angola and Mozambique competition and routine fee undercutting, both practice is – remains the most profi table market according the established players and new contenders to Nelson Raposo Bernardo, managing partner at need to ensure that they maintain the same becoming even Raposo Bernardo, as it is where Portuguese law service levels that clients would expect from fi rms can undertake activity of a certain size. the Lisbon headquarters. more important ‘The African market is where the involvement of Portuguese law fi rms is more signifi cant CLIENT LEADS for the fi rm.’ and where the fees can ultimately refl ect their Unsurprisingly, the law fi rms go where clients leading positions in these markets,’ he says. fi rst fear to tread. Portuguese companies were João Caiado Guerreiro, Mozambique, in particular, has Portuguese once happy just exporting overseas, believes law fi rms fl ocking in. In 2011, PLMJ Domingos Cruz, a partner at CCA Advogados, Caiado Guerreiro invited Maputo-based fi rm Gabinete Legal but those same companies are now planning Moçambique (GLM) to join ILN, while Abreu to be more present in foreign markets, and Advogados established an exclusive association to canvas new clients abroad more actively. in Mozambique with Ferreira Rocha & ‘There has been a signifi cant move on the Associados. As for Morais Leitão, Galvão Teles, part of Portuguese companies to expand Soares da Silva & Associados (MLGTS), it internationally over the last two years,’ says enjoys an association with Mozambique fi rm Miranda Correia Amendoeira & Associados’ SCAN – Advogados e Consultores, which is part (Miranda) managing partner Rui Amendoeira. of the MLGTS Legal Circle of associated fi rms. ‘Every large Portuguese company has an According to CCA Advogados’ Cruz, his fi rm international plan!’ hopes to open an offi ce in Mozambique in 2012, According to partner Pedro Pais de Almeida, starting with an association and progressing to Abreu identifi ed a triangle of economic an offi ce. interests connecting Portugal, Brazil and ‘Mozambique is now a fashionable Angola some years ago. Consequently, it destination for foreign investment and launched its international expansion plan for Portuguese investors are ahead of the game,’ Portuguese-speaking countries in 2000. Duarte says Abreu’s de Almeida, who is one of the Garin, a partner at Iberian fi rm Uría Menéndez heads of the fi rm’s Mozambique desk. – Proença de Carvalho (Uría Menéndez), says Standout deals involving Portuguese law that Uría Menéndez’s international strategy fi rms in Mozambique include the 2011 Banco was also designed and set up several years ago. Espírito Santo (BES) €7.1bn acquisition, ‘We realised how important it was to have through its subsidiary BES Africa, of 25.1% of either a direct presence or very close ties with Mozambique’s Moza Banco from transatlantic leading fi rms in other countries.’ venture capital fi rm Geocapital. This was the PLMJ is also an established international fi rst time that a Portuguese law fi rm led an player. The fi rm has built up a solid network M&A acquisition project for a Portuguese bank

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Angola has offered terrifi c opportunities ‘In some to Portuguese fi rms for some time, whether for banking work such as leasing; or roads, jurisdictions, hospitals, housing programmes and general infrastructure. Major Portuguese investors we are more include the Sonae Group, a leading distribution group in Portugal, which recently announced closely integrated it would be opening in Angola. MLGTS acts for Banco Comercial Português (BCP), Banco than others.’ Português de Investimento (BPI) and Energias de Portugal (EDP), as well as international players Rui de Oliveira Neves, like Vale and Rio Grande, on Angola matters. Examples of law fi rm tie-ups in Angola Morais Leitão, Galvão include Gabinete Legal Angola’s membership of PLMJ’s ILN; Sérvulo’s 2012 partnership Teles, Soares da Silva with general practice law fi rm António Penelas & Associados, a fi rm that advises on investing into a local Mozambique bank that Associados (VdA), with the support of its then transportation, real estate and IT matters; also involved the acquisition of existing shares Maputo partner Furtado, Bhikha, Loforte, Popat and Abreu Advogados’ exclusive association and share capital. Led by Pedro Cassiano Santos, & Associados. Linklaters’ Lisbon-based partner in Angola with FBL Advogados. MLGTS has a BES Africa was advised by Vieira de Almeida & António Soares advised Geocapital. strategic alliance with Angolan law offi ce u

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GOING EAST As an investment gateway for Portuguese- speaking businesses into China, and a bridge for Chinese investments into Portuguese-speaking countries, Macau has prompted Portuguese law fi rms to establish their own links to China. Macau practice DSL Lawyers joined PLMJ’s ILN in 2009, MLGTS has a formal alliance with Macau-based MdME, and in 2012 Abreu Advogados agreed an exclusive association with Macau-based C&C Macau Lawyers. In addition, PLMJ has headed straight for mainland China. It formed a partnership with Dacheng Law Offi ces, China’s biggest law fi rm. Likewise, in response to the growth seen in ‘The African this part of the world, Sérvulo established an agreement in April 2012 with Shanghai-based market is where fi rm Cenlaw & Partners. Cenlaw’s focus includes managing international investments into the the involvement construction and real estate sectors, as well as complementary areas of law such as fi nance, of Portuguese capital markets, corporate, employment, IP, litigation and arbitration. China is also proving law fi rms is more lucrative for CCA Advogados, which has had a presence in Shanghai since 2010, and the signifi cant.’ country has played an important role in Uría Menéndez’s international strategy. It set up an Nelson Raposo Bernardo, offi ce in Beijing at the beginning of 2010, which often acts as a bridge between Asia, Iberia and Raposo Bernardo Latin America. Also there are important restrictions on the But not all lawyers are getting overexcited amount of work that foreign fi rms can do in about China. Nelson Raposo Bernardo believes São Paulo in 2011. And late last year, Sérvulo Brazil, thanks to onerous Bar rules (see ‘Latin that apart from the recent large-scale Energias consolidated its existing relationship with Moves’, LB224, page 56). de Portugal (EDP) and Redes Energéticas Brazilian law fi rm Manesco, Ramires, Perez, Nacionais (REN) privatisations in Portugal that Azevedo Marques. Sérvulo’s Torgal regards the DIFFERENT STROKES involve Chinese players, the Chinese market partnership as a great opportunity for both Staking so much on their international for Portuguese law fi rms is still virtually non- fi rms to develop their practices within the two practices, it is only natural that each law fi rm existent. jurisdictions. prepared to tackle the foreign markets will But for the moment, the traffi c is unlikely vary in its approach. LATIN LINKS to be exactly two-way. Diogo Leónidas Rocha, Different markets require different Like Angola, Latin America has been a favourite a partner at Iberian fi rm Garrigues, says that solutions, believes MLGTS partner, Rui de destination for Portuguese law fi rms for some from a Portuguese perspective, Garrigues’ Oliveira Neves. ‘In some jurisdictions, we time, particularly Brazil. In 2004, PLMJ entered representative offi ce in São Paulo helps the are more closely integrated than others,’ he into partnership with Brazil’s TozziniFreire fi rm serve its Brazilian clients doing business says. For example, in Brazil, the fi rm enjoys a Advogados, which continues today, and Iberian in Portugal, rather than Portuguese clients partnership relationship with Mattos Filho, fi rm Cuatrecasas, Gonçalves Pereira opened investing into Brazil. Veiga Filho, Marrey Jr. e Quiroga Advogados, its São Paulo offi ce in 2001. ‘It acts not only as Brazil can also be a tough market. but there is no level of integration. an entrance door for clients willing to start ‘Portuguese law fi rms do not have access Miranda also employs different models operating in Brazil,’ says Lisbon co-managing either to large-scale operations or to premium for each overseas offi ce. Some are more partner Diogo Perestrelo, ‘but also as a bridge for customers,’ says Nelson Raposo Bernardo. fully integrated than others, such as Houston, Brazilian companies willing to invest in Portugal ‘Brazilian law fi rms are highly developed, Cape Verde, São Tomé and Príncipe and and in other Portuguese-speaking countries.’ and Portuguese legal practices face a highly Timor-Leste. In some cases the fi rm’s local CCA Advogados has also invested a great competitive and large market in which they partners are also partners of the Lisbon deal of effort in Brazil, opening a new offi ce in can play minor roles, but no more than that.’ offi ce – Mozambique for example – while

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Brazil and China, it is these jurisdictions. Plus we can communicate because clients have in English, French, Spanish and Portuguese. driven the openings. That’s why our clients keep coming back to us.’ Working with the people in those WINNING STRATEGY jurisdictions, rather than exporting the work Venturing into back to Portugal is paramount to MLGTS’ emerging markets strategy. ‘We develop top local lawyers, does not always training them up to European standards and run smoothly. ensuring that they best suit the type of work ‘Internationalisation, generated,’ says de Oliveira Neves. particularly in Africa Time will tell if expansion into other and Latin America, is countries, either through a direct presence or a big challenge,’ says through alliances and networks of a different Caiado Guerreiro’s nature, will be the panacea needed to cure João Caiado Portuguese law ﬁ rms’ domestic difﬁ culties Guerreiro. ‘Many long term. João Vieira de Almeida, managing things that you take partner at Vieira de Almeida & Associados for granted in Europe, says: ‘Foreign jurisdictions are the big hope and such as electricity this is true for all industries, not just the legal and tap water are market.’ LB not always there. [email protected]

other offi ces are run more along the lines of Knowing the law is an association. This is the case with Angola, not suffi cient.’ as well as with Gabon and the Republic of According to Congo, where the fi rm opened in 2010 and 2011 Guerreiro, lawyers respectively. have to understand It is not always necessary for the the people and internationalised law fi rm to open new offi ces culture: ‘Africa’s large or establish itself directly in other countries, energy projects are according to Martim Morgado, a partner at very interesting, and Campos Ferreira, Sá Carneiro & Associados (CS clients will accept Associados). Part of CS Associados’ overseas high fee levels, but strategy is to remain independent in Portugal, only if they feel and develop best friends relationships – both secure, and we keep with international fi rms and practices in other them out of trouble jurisdictions – so that it may either cross-refer – which of course clients or work together with other fi rms on we do!’ multijurisdictional projects. Explaining the Garrigues does not see the need to open success of Miranda’s offi ces in every single jurisdiction that forms strategy, Amendoeira part of its international practice. ‘We don’t says: ‘We’ve been have offi ces in Angola or Mozambique but overseas for a long the laws there are easy for us because of the time. We know the historical ties,’ says Rocha. Garrigues brings law, the institutions, in local counsel when it needs to, and when the people, and how the fi rm does decide to open offi ces, such as in to do business in

June 2012 Legal Business 83

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