Madrid annual report
Competition in Madrid legal market increasing as
more international firms consider openings
Spanish market not comparable to London or New York in terms of fees – law firms find it difficult to
charge domestic clients the rates they charge in other jurisdictions
Alejandro Fernández de Araoz
Competition in the Madrid legal market
is intensifying with an increasing
number of international firms
considering opening offices in the city,
says Alejandro Fernández de Araoz,
partner at Araoz & Rueda.
“Madrid has a highly concentrated
legal market for big-ticket corporate
and M&A work,” Araoz says. He
adds that the fierce competition in the
market shows little sign of letting up,
with a number of foreign firms having
opened offices in the Spanish capital in
recent times. “We are still seeing other
international firms sniffing around for
opportunities,” says Araoz, who adds
that more firms may open in Madrid in
the near future.
The intensely competitive Madrid
market – which, in addition to being
home to traditional Spanish firms, also
includes the legal arms of the ‘Big Four’
and US and UK-headquartered global
firms – means clients have an excellent
range of options when choosing legal
advisers. Meanwhile, the largest Spanish
firms are following their clients into
international markets, most notably
Latin America. According to Araoz, the
increasingly competitive market has
a positive impact: “I believe in choice,
competition keeps everybody on their
toes.” However, international firms face
considerable challenges, says Araoz.
“The Spanish market is by no means
comparable to London or New York in
terms of fees – it is exceedingly difficult
to charge domestic clients the rates you
might charge in another market.”
“Diversity is not just healthy but
absolutely necessary,” Araoz continues.
However, diversity in the Spanish legal
community should go beyond different
types of law offices. Of equal importance
is the combination of younger and
older lawyers, according to Araoz.
“The job of a good law firm is to offer
clients the seniority and experience of
older partners and combine it with the
drive, energy and knowledge of new
technology brought by the younger
generation.”
Asset prices increasing in Spain, while new sources
of finance emerge
Carlos Blanco
Asset prices are going up in Spain as
investors compete to make acquisitions,
an environment that has led to the
emergence of new sources of finance,
says Carlos Blanco, Madrid managing
partner at Roca Junyent.
“In terms of M&A, both private
equity and industrial companies are
competing for attractive assets in
different sectors, such as infrastructure,
energy, healthcare and technology,”
he explains. “The high liquidity and
the growth of our economy is pushing
up EBITDA [earnings before interest,
taxes, depreciation and amortization]
multiples and prices.” And while over
the last few years, international investors
have played a significant role in the
recovery of the M&A sector, Blanco
says there is an increasing amount
of interest from domestic funds and
Spanish companies too. “We do expect
the good times for M&A and real estate
to continue,” he says. “Not only is the
44 • IBERIAN LAWYER • May / June 2018
economy doing well, but the business-
friendly government means that this
stable framework for investment will
continue.”
In addition, Blanco says sources of
finance have become more diverse.
“The market is now a sellers’ market
and this is reflected in trends such as
quick deals, or the return of the auctions
we saw in the boom years,” he adds.
Blanco explains that there is now a
greater range of potential financing
available, citing an increase in direct
lending vehicles and a surge in equity-
debt vehicles, some of which offer
‘venture debt’, as examples.
Meanwhile, technology-related law
is becoming a growth area for law firm
as the economy becomes increasingly
digitalised, Blanco says. In response to
this trend, he argues that lawyers need
to better understand concepts such
as big data or blockchain, which are
dramatically changing many industries.
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