Lisbon Annual Report
Wave of litigation
The recent collapse of Banco
Espírito Santo will
lead to the biggest
flood of law suits
in Portugal for 40
years. Does this
mean things are
looking up for
the nation´s law
firms?
It is difficult to overestimate the impact
the collapse of Portugal´s second
largest bank – Banco Espírito Santo
(BES) – has had on the Portuguese
economy. To quote Linklaters´ Portugal
managing partner Pedro Siza Vieira, the
bank´s demise represents the “biggest
destruction of value and capital in the
history of the country”.
In attempt to tidy up the mess,
the country´s state bank, Bank of
Portugal, has said it will spend €4.9bn
recapitalising a new bank, Novo Banco,
which will assume BES´ healthy assets.
Meanwhile, the toxic assets will be
hived off to a bad bank. This debacle
will create a mountain of work for
lawyers – very few of Portugal´s leading
firms do not have some involvement
in this mammoth restructuring job.
In addition, it is anticipated that
lawsuits will soon start flying around
as the finger of blame is pointed.
Consequently, the nation´s lawyers are
bracing themselves for the biggest wave
of litigation since the aftermath of the
revolution in the 1970s.
While BES dominates the headlines,
the fact that the Portuguese economy
is enjoying something of a revival.
Transactional work is on the increase
as investors look to pick up assets at
competitive prices. However, it should
be pointed out that the countries of
Lusophone Africa still offer the greatest
potential for law firm growth. The
fees that can be earned by lawyers in
Angola and Mozambique are twice
what they are in Portugal. It should
26 • IBERIAN LAWYER • September / October 2014
be noted though that some lawyers
are anticipating moderate increases in
legal fees in the Portuguese market.
While an increase fees is one thing,
actually getting those fees paid is
another. Lawyers say that getting paid
is one of the biggest challenges they
face, particularly since the onset of the
financial crisis.
The good news is that deals are
on the rise. “We´re happy to see
transactional activity back in earnest,”
says Linklaters´ Vieira. “We were in
a depressed market but now there is
an abundance of liquidity.” He adds
that there are now new hedge funds
and private equity funds showing an
interest in Portugal, particularly in the
financial services, insurance and real
estate sectors. There is a feeling in the
market that such investors are turning
to Portugal because assets in Spain are
becoming more expensive.
Fees on the rise
Duarte Garin, head of Uría Menéndez´s
Lisbon office, says that although
the fundamentals of the Portuguese
economy have improved they have not
changed that dramatically. Though he
adds investors are showing a greater
interest in the country´s assets. “In
some cases, we see several bidders for
certain assets and we find ourselves
having to reject requests for assistance
due to client conflict,” he adds. Some
lawyers argue that the increase in
transactional work is having little
impact on fees. However, Garin
says: “Fees are picking up due to an
abundance of work; the number of
transactions involving international
investors has had a positive impact
on fees.” Isabel Martínez De Salas,
Garrigues´ Portugal managing partner
says that she expects growth this year,
both in revenue and profits.
Manuel Santos Vitor, managing
partner at PLMJ says “we are at the
first stage of a recovery and foreign
investors are coming in”.
Meanwhile, Bernardo Abreu Mota,
partner at Campos Ferreira, Sá Carneiro
& Associados, says there is “a gap
between legal fees in Portugal and those
in other jurisdictions”. Another partner
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