News Focus move imminently , possibly before the end of 2016 . But the market does not anticipate that KPMG will make any move into the Portuguese market any time soon . When contacted by Iberian Lawyer for comment , a KPMG spokesperson said : “ We do not provide legal services [ in Portugal ].”
The Spanish conquest The entry of the ´ Big Four ’ into the Portuguese legal market is causing concern among lawyers at traditional law firms in Lisbon . Given the impact of MDPs on the neighbouring Spanish legal market , it ’ s not hard to see why . The most recent data shows that PwC Tax and Legal Services ( with 2015 billing of € 144.8 million ), KPMG Abogados (€ 100.4 million ), EY Abogados (€ 91.1 million ) and Deloitte Abogados (€ 89.8 million ) are the third , fourth , fifth and sixth biggest firms in Spain by revenue . Indeed the only bigger firms in Spain are the traditional heavyweights , Garrigues , Uría Menéndez and Cuatrecasas Gonçalves Pereira . Furthermore , of the 20 biggest law firms in Spain by revenue , the firm to experience the most significant growth in 2015 was EY Abogados , whose billing increased by 14.5 per cent .
Could the ‘ Big Four ’ have a similar impact on the Portuguese market ? “ Potentially yes ,” says one
Taxing issue It ´ s argued that ´ Big Four ´ have an unfair advantage over Portuguese law firms when it comes to paying tax . When Portuguese law firms make a profit , each of the firm ’ s partners must pay individual income tax on the profit , which including surcharges , can effectively be as high as 53 per cent . However , MDPs only pay corporate income tax on their income , which is only 21 per cent in Portugal . One founding partner at a law firm in Lisbon says : “ MDPs will be a reality in Portugal - maybe the Portuguese Bar association will change its rules [ to accommodate them ]. I think it ’ s only a matter of time before law firms in Portugal are given the option of being taxed on a tax transparency basis [ where partners pay individual income tax on law firm profits ] or on a corporate basis .”
EY in Portugal Established in 2016 , twelve-lawyer Lisbon law firm RRP Abogados has joined the EY global law network . RRP includes a group of lawyers who joined from Linklaters earlier this year . The firm focuses on banking and finance , corporate and M & A , tax , real estate , labour , public law and infrastructure .
partner at a Lisbon law firm . “ They may have a lot of investment coming from the network and if lawyers are willing to participate in the project , then it could happen .”
The worries of partners at traditional law firms regarding the arrival of the ‘ Big Four ’ typically revolve around the impact on fees as well as the effect it could have on firms ’ ability to retain talent . Abreu Advogados partner Ana Sofia Batista says that the “ eventual direct presence ” of the ‘ Big Four ’ in the Portuguese legal market will have an impact on legal fees . “ If clients hire the ‘ Big Four ’ it will decrease prices – also having a single contact person for transactions involving many jurisdictions is attractive to clients ,” she adds .
Draining talent The arrival of the ‘ Big Four ’ will change the dynamics of the Portuguese legal market . MLGTS partner Ricardo Andrade Amaro says their presence “ could increase mobility in the Portuguese market and make it more difficult for law firms to retain talent .” Andrade Amaro also says that for the new generation of Portuguese lawyers , the entry of the ‘ Big Four ’ into the market could provide international career opportunities and lead to the relocation of young lawyers “ to countries where Portuguesebased law firms cannot offer similar positions ”. Moray McLaren , a director at Redstone Consultants who advise both the ‘ Big Four ’ as well as Portuguese firms , says the arrival of the Big Four will contribute to a “ midmarket squeeze ”. He adds : “ They [ the ‘ Big Four ’] have the systems and approach to deliver the standardtype legal work at both a high quality and low price , putting a downward pressure of fees .” McLaren says that the presence of the likes of Deloitte ,
EY , PwC and KPMG could also lead to a flurry of lateral hires , or possibly law firm mergers . “ Gaining critical mass is an important part of the Big Four model ”, he says . “ This could play out in one of two ways – either their Lisbon offices are the Trojan horses that will be looking to grow quickly , or alternatively , the next stage will be merger talks with the large local firms , more likely led from Madrid .”
However , some lawyers argue that the prospects of success for the ‘ Big Four ’ in the Portuguese market are limited . Vieira de Almeida partner Paulo Trinidade Costa says risk management [ in relation to potential conflicts of interest ] is a concern for the MDPs , so it “ limits
Deloitte in Portugal Deloitte Abogados has taken a stake in the share capital of Portuguese law firm CTSU , a firm of six partners and seven associates . CTSU ’ s expertise includes : corporate and commercial ; mergers and acquisitions ; banking ; labour ; competition ; TMT ; industrial and intellectual property ; real estate and construction ; pharmaceutical ; litigation and arbitration . The CTSU website states : “ CTSU – Sociedade de Advogados is an independent law firm member of Deloitte Legal Network .” Though Deloitte Abogados has taken a stake in CTSU , a source close to Deloitte in Spain says the firm has “ no real intention to extend its services into Portugal ” and that the acquisition of shares in the Portuguese firm was in order to “ get them involved in the Deloitte legal network ”.
the scope of their work ”. SRS Advogados partner Nuno Miguel Prata shares this view : “ Quite often , the ‘ Big Four ’ have complex conflict of interest issues in relation to deals , so for large companies , traditional law firms are still in play as clients are demanding comprehensive scrutiny when it comes to conflict of interest .” He adds that , rather than posing a danger to the traditional law firms in Portugal , the MDPs could boost the whole of the country ’ s legal market . Prata says : “ The ‘ Big Four ’ are not a threat , but they are an interesting challenge , as the legal market will grow for all of us .”
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