Global annual report
Shaken up
Brexit has rocked Europe to its
foundations, but it will present
opportunities for law firms if they
can spot them – meanwhile, though
clients from China are potentially
a rich source of work, they can be
tough negotiators when it comes to
fees
Exactly how the international
business of Spanish and Portuguese
law firms will be impacted by Brexit
is, as yet, unclear. As clients muddle
through amid the uncertainty, law
firms are expected to receive a wave
of advisory work as businesses
explore their options and consider
whether their UK headquarters
would be better located elsewhere
in Europe. However, any surge
in advisory work will likely be
overshadowed by a significant drop
in transactional matters – some
estimates say that, in the event
of the UK undergoing a slow,
protracted separation from the EU,
the deficit in global M&A activity
could be as much as $1.6 trillion.
Beyond the tumult of Europe,
lawyers talk of the “staggering”
potential of the Chinese market.
With foreign direct investment
from the country reaching new
heights, law firms are refining
their strategies for cashing in on
the potential for major instructions
from the Far East. Singapore is also
highlighted as a major centre for
dispute resolution and arbitration
work, but the US market remains
one that many European firms
still struggle to penetrate. From a
Portuguese perspective, Lusophone
Africa remains the bedrock of many
law firm’s international business,
though they also identify Latin
America, Francophone Africa, and,
perhaps a little surprisingly, Iran as
potential hotspots.
Companies to leave UK?
“Brexit could be a big opportunity,”
according to Hogan Lovells
partner José Luis Huerta. “Many
thought Brexit was not possible
and overlooked reports, but now
some Asian and Latin American
companies, for example, are
seriously considering relocating
[from the UK].” However, Baker &
McKenzie partner Enrique Valera,
says it is “too early to describe the
30 • IBERIAN LAWYER • July / August 2016
result of the UK referendum as a
big international opportunity”.
He adds: “There is a question
about whether it [the result of
the referendum] will be followed
through – the application [to leave
the EU] may have to be ratified by
parliament.” Valera says it is too
soon to tell whether Brexit will be a
“huge fee driver”.
Some senior partners at law
firms in the UK said that Brexit
wouldn’t happen, according to
Allen & Overy partner Antonio
Vázquez-Guillén. He adds that it
remains to be seen whether the UK
government will act on the result of
the referendum. “We’ve had many
client enquiries and our regulatory
finance people are very busy,” says
Vázquez-Guillén. He continues: “It
is unclear whether material adverse
change [MAC] clauses in contracts
have been triggered, it depends
on the context of the transaction.”
Vázquez-Guillén believes that,
if companies in the UK decide
to move their headquarters into
Europe, among the cities that
could benefit are Frankfurt, Paris,
Amsterdam and Madrid. “UK has
got instability, but Spain has got
stability,” he says. One partner
remarks that his firm recently
conducted studies for a number of
US companies to help them make
a decision on where to base their
European headquarters. “They
[the companies] decided to go to
the UK, but that decision may now
be revised [due to Brexit],” the
partner adds.
Deal slowdown
The result of the referendum in
the UK will result in a “slowing
down” in the making of decisions
on UK-related deals, says Ashurst
partner Eduardo Gracia. “In some
cases, bidders have decided they
are not going to file their bid by the
deadline [because of Brexit] – some
companies are now wondering
‘should we keep bidding for UK
assets?’” One partner argues that
investment funds that were about
to submit a bid for a UK company
before the referendum may now
be reconsidering, and this may
present an opportunity for Spain.
The partner adds: “Investment
funds have money to spend and
Spain will see probable political
stability. The Brexit issue triggers
the Northern Ireland and Scotland
issue – [investors will think] ‘what
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