Polls Apart: Latin America
Although many Latin American countries are suffering from adverse economic conditions, the region also draws eager investors. Due to the strength of the dollar and decline of many Latin American currencies, assets are cheap, which incentivises M&A. The energy and infrastructure sectors, in particular, create opportunities for project development and foreign investment. If global financial and corporate players are not there already, many are eying the region.
And as financial and corporate players look to develop a global presence within Latin America, financial and corporate law firms look to do the same. Firm movement has been active over the past couple years, both with global firms looking to enter Latin America and local Latin American firms merging with other local Latin American firms.
Several global firms have entered Latin America by merging with existing firms. Still, depending on the jurisdiction, merging with local firms can be difficult. They are often hesitant to give up their independence, and it is not easy to find offices that are both top players in their domestic market and willing to go global.
Sometimes, instead of merging with an entire entity, global firms will form a new office through a breakaway team from a local firm, as DLA Piper did in Puerto Rico recently.
Alliances and associations
Some global firms have successfully set up alliances or associations with local firms. In Peru, Estudio Echecopar has been a member firm of Baker & McKenzie since 2012. In Brazil, where foreign firms are forbidden from practising local law, Mayer Brown has an association with Tauil & Chequer. Many global firms have also set up offices in Brazil where they only advise on international law.
Two South American firms stand out as something that is very unusual: a South American regional firm. Philippi Prietocarrizosa Ferrero DU & Uría has offices in Chile, Colombia and Peru, while Ferrere has offices in Uruguay, Bolivia, Ecuador and Paraguay. These mergers have allowed local firms to have larger regional presences.
Although regionalisation is unusual in South America, in Central America some law firms believe that local firms will soon be obsolete, particularly for larger financial and corporate transactions. In El Salvador, Guatemala, Honduras, Nicaragua and Costa Rica, regional firms like Consortium Legal, BLP and Arias & Muñoz dominate the market.
Many investors looking to enter Central America are looking to enter the entire region. Some therefore find it easier to go to a single firm for their Central American transactions.This has led some to speculate that in the years to come local firms will either go regional or cease to exist, at least in global financial and corporate transactions.
As of now, however, many local firms remain leading players in the market. Romero Pineda & Asociados in El Salvador, Alvarado & Asociados in Nicaragua, and Carrillo & Asociados in Guatemala all play a significant role in their respective jurisdictions.
Many local firms in Central America (and outside Central America) still maintain some global presence through networks like LexMundi. Joining such networks entail no formal commitment and allows them to retain their independence. Given that several regional firms in Central America operate more as a tight-knight network of independent firms than as a single entity, some question whether a local firm in a larger network is really at any disadvantage.
Given the multifaceted nature of the Latin American legal market, the IFLR1000 is asking its readers which model they consider to be the most appropriate for international firms look to establish a presence in the region and how the local markets should react to the growing influence of global firms. Over the coming weeks we will be publishing a series of online polls giving you the chance to have your say on this vibrant region, all of which can be found here: