Madrid 2018 Madrid 2018 | Page 5

Madrid annual report major challenge for law firms, as is procurement in the sense that lawyers have to increasingly deal with procurement professionals. “You have to talk to people who don’t know you and who just have a budget,” Remedios said. He added law firms also face the How do you think the Madrid legal market will change in the next 12 months? “Madrid is a benchmark in terms of innovation in the Spanish legal sector. There will be mergers involving medium-sized law firms with a presence in the capital, in addition to the arrival of Anglo- Saxon firms that, until now, had no representation in Spain.” Alejandro Touriño, managing partner, Ecija “In-house legal departments are constantly reducing costs. As a result the legal market is more competitive – law firms will have to leave old-fashioned ways of practising law behind and become more business-like organisations.” Coral Yáñez, partner, Bird & Bird “Investors are ready to invest in Spain. Available funds may push prices up in M&A and real estate transactions and, therefore, investors will have to assess assets carefully to get the best value. There could be consolidation in the renewable energy, retail and healthcare sectors.” Rodrigo Martos, Madrid managing partner, Jausas “Digitalisation is a challenge – most firms will deal with the change in the near future. Blockchain and artificial intelligence will play a significant role in the way firms develop their technological strategy and cybersecurity will be key.” Adolf Rousaud, managing partner, RCD “Madrid firms will look to attract international business, with potential for absorbing UK-based activity due to Brexit. Most activity will be in real estate, energy and retail.” Lupicinio Rodríguez Jiménez, executive chairman, Lupicinio International Law Firm “The market will follow its growth path, with significant work for head hunters.” José Antonio Rodríguez, partner, Marimón Abogados www.iberianlawyer.com issue of having to make decisions about which technology to invest in – for example, when addressing the issue of cybersecurity – and such investment “can affect profitability”. With regard to the issue of major corporate firms doing less due diligence and using less junior lawyers, Remedios warned that if firms “reduce the base of the pyramid, it will impact negatively on profitability”. Law firms are benefiting from significant activity in sectors such as real estate and technology, said Pérez-Llorca senior partner Pedro Pérez-Llorca. He added law firms now need to invest the income they are receiving, and that not doing so involves many risks. “Partners should not overpay themselves,” he said. He added that, while law firms have chosen to invest in artificial intelligence, the “potential success of such investment is still questionable”. He also said the success of the ‘Big Four’ in the Spanish market has been limited and that they do not have major roles in the biggest deals. While law firms are increasingly using artificial intelligence, the impact of such technology has been slower than expected, according to Linklaters Madrid managing partner Iñigo Berricano. He added that artificial intelligence will probably mean law firms have to train young lawyers differently and that it could have an impact on how law firms hire people. He said, ultimately, firms will have fewer junior lawyers in future. Meanwhile, Berricano predicted that “agile working” will become a more common legal market trend in future as studies have shown law firm offices are often under-occupied. He also said there is certain to be more law firm mergers and added that Linklaters is “bound to have an alliance with a US firm” eventually. Deciding how to invest resources in a growing M&A market is a key issue for law firms, said Freshfields Bruckhaus Deringer Madrid managing partner David Franco. “There is a risk of trying to capture too much work and overlooking client relationships,” he said. Franco added he is sceptical about law firms’ ability to develop “proprietary artificial intelligence” that sets them apart from the rest. “Artificial intelligence is for the time being about training and using a tool in ways that not all other law firms will – AI doesn’t add the same value in all areas, though it can be particularly useful, for instance in antitrust investigations.” Franco says AI provides law firms with opportunities to improve service and increase profitability, but firms should ensure they do not offer commoditised AI-based services. What are the biggest management challenges law firms currently face? “Digital transformation and the use of artificial intelligence. Being at the forefront of this transformation will allow firms to be more competitive and focus efforts on added- value for clients.” José María Segovia, senior partner, Uría Menéndez “Building a proper route to partnership for woman and attracting talent because fewer law students (mainly on joint degrees) seek a law firm career.” Fernando Bernad, Madrid managing partner, Cuatrecasas “Law firms must achieve a balance between providing clients with added-value advice and good value for money but also delivering solutions for employees that promote work-life balance, diversity and inclusion.” Miguel Riaño, Madrid managing partner, Herbert Smith Freehills “The battle for talent. Attracting and retaining the best lawyers is essential for firms’ future sustainability.” Luis Fernando Guerra, managing partner (Spain), Deloitte Legal “The mentality of the new generation and greater competition will accelerate changes such as greater flexibility. Meanwhile, management should be transparent and socially responsible.” Francisco Palá, managing partner, Ramón y Cajal Abogados “Achieving efficiency and profitability with technology, while conserving the personal touch and maintaining trust.” Sonia Gumpert, managing partner, Monereo Meyer Marinel-lo Abogados May / June 2018 • IBERIAN LAWYER • 43