The traditional legal market is currently under threat from so-called disruptive innovation. Not everyone is intimidated, however. "Law firms are in the best position to disrupt themselves. Rather than waiting for an outsider, we want to be the ones to disrupt the market, taking advantage of our experience," says Amir Bocayuva Cunha of BMA - Barbosa, Müssnich, Aragão.
It's a bold statement that shows exactly how elite Latin American law firms should be thinking. The Big Four, international players and artificial intelligence all represent challenges to the region's law firms, but with the right approach they can be turned into opportunities. Our conversations with the leaders of the Latin Lawyer Elite firms of 2018 showed how they are doing just that.
There is a myriad of ingredients required for a firm's longevity, but no magic recipe. Firm leaders need to invest significant amounts of time, thought and money into finding the right strategy. "It's not just about becoming a leader, but sustaining that position for a long time," thinks Guerrero Olivos' Roberto Guerrero. "You always have to be a critic and evaluate and be willing to change. If you do the same things all time, you will get the same results."
Our Elite leaders agree that looking after talent is top priority. As Pinheiro Neto Advogados' Alexandre Bertoldi notes, law firms need to fight hard to avoid losing their charm. "The moment we don't have the best professionals, then we are virtually done. Who will come to us if they are better than us?" he asks.
Talent retention has always been a priority for law firms, but it has become harder to achieve with the current generation of lawyers moving up the ranks. Their demands are different and harder to meet. Firms find it difficult to shed age-old policies in favour of the flexible approaches today's young lawyers require, but that's not to say they aren't trying. Rodrigo, Elías & Medrano Abogados is doing everything within its grasp to retain and enhance its talent pool, providing additional support for lawyers to develop their potential as much and as quickly as possible. As a retention tool, firms are investing in technology to make home offices function efficiently and providing flexible working schedules and continuous training in many areas. Some market leaders are thinking outside the box to give lawyers new experiences. TozziniFreire Advogados is part of various co-working initiatives in São Paulo, through which lawyers work in shared office space alongside members of tech companies and start-ups, which provides them with the opportunity to share ideas with people from other industries (as well as generate new business leads). "The idea is not just to be proactive and see what the market is doing, to but be the first to do something in innovation or elsewhere," says Fernando Serec.
Firms need to meet the needs of young lawyers without hurting quality of service. This begins with the recruitment process. Jones Day (Mexico)'s Manuel Romano notes the importance of very high hiring standards, and ensuring only the best candidates are considered. BMA has started to look for new attributes alongside the traditional priorities of excellent education and experience, bringing in outside help to train its HR team. "The way we have to select talent is to look at their potential … their curiosity, insight andcapacity to look at things from different angles," says Bocayuva Cunha.
Diversity is also at the forefront of our Elite leaders' minds. Gender committees and flexitime policies are now commonplace in law firms and there is widespread awareness of the business case for promoting more women to the partnership; but the gender divide remains stubbornly wide. Law firm leaders don't pretend they have an easy answer to this complex issue (out of 40 Elite firms, only three have female managing partners), but some of our Elite firms have reached a point where policies have been in place long enough to be evaluated. "We have had women lawyers who have gone on flexitime and now their children are older and they have returned to a full working schedule. That's something people were sceptical of, so it's good to see empirical evidence," says Jaime Carey of Carey. Trench Rossi Watanabe has already achieved gender parity in its partnership and two of its three managing partners are women. Now, it is using its flexitime programmes as a recruitment tool to attract the best talent from law school.
As Galicia Abogados' Manuel Galicia says, achieving true gender diversity could require a law firm to amend its structure and fee models: "One of the main challenges we have identified is how much pressure women lawyers face, even in our firm where we don't have performance bonuses. This relates to the business model and we need to make adjustments and communicate that." Gender dominates much of the conversation about diversity, but it has widened to include other types such as racial diversity, particularly in Brazil, where a number of firms have taken it into their hands to create change. They are implementing measures to give black law students better chances of working in corporate law firms, usually by sponsoring them through law school.
As our survey with last year's Elite firms showed, AI is top of the agenda. Firms are looking for ways to harness cutting-edge technology to improve efficiency. Rather than be limited by the fact that most existing software is English-language, some are taking matters into their own hands. BMA is in discussions with a local software company about a potential partnership; TozziniFreire is already testing technology and inviting technology companies to speak at events. As Gómez-Pinzón's José Luis Suárez Parra notes it's about more than finding the right technology; law firms need to change their working practices to make the most of it. "How do we change our mental chip to provide services in a different way, so we are prepared to take advantage of technology in the fastest way possible?" he asks. Law firm leaders need to train their lawyers and consider whether extra staff are required. They are also mindful of the impact on lawyers in the long term. "If eventually a big percentage of that [due diligence] work is going to be done through computers, that is going to take away from the growing process of lawyers," says Michell Nader of Nader, Hayaux & Goebel.
Artificial intelligence and diversity may be in vogue right now, but law firms have other pressing concerns that are critical to their survival. One of the biggest is succession. "Some Latin American firms have very strong family structure profiles and backgrounds. I see that as a continued challenge, compared to more mature firms in more developed markets. I look at it very closely on a daily basis," says Javier Petrantonio of M & M Bomchil Abogados.
A number of elite firms are going through this process. In Central America, Armando Arias is handing over the reigns of his regional law firm Arias. He is still managing partner, but the firm has created a three-partner management committee that will take over after a three-year transition period. Agustín Mayer has recently taken over at Ferrere after the retirement of Andrés Cerisola. Mayer must now put his own touch on the leadership and he is keen to draw on other members of the partnership rather than imprint his own personality on the firm. Whereas strong personalities enabled Ferrere to get where it is today, he says a different approach is required for its current size. "I believe strongly we are now different and need more leaders inside the firm," he says.
Building a true institution that is not beholden to a small handful of partners is easier said than done, and that is something the heads of most of these firms would attest to. Leaders need the skill to drive through change and get the entire partnership on board. As Santiago Carregal – Marval, O'Farrell & Mairal's new leader – notes, "The partnership is key, but it's not always a good instrument through which to channel innovation, as lawyers are naturally risk-averse."
A number of Elite firm leaders stress the importance of culture to their success. Guerrero Olivos is heavily focused on encouraging young lawyers to participate. For example, the firm provides its lawyers with a legal challenge and asks them to come up with a solution. "Many times, they get a wrong answer or don't a write report how we expect but they learn how to do it by trial and error. We are very systematic from the beginning so they can get self-confidence and they can go higher quickly," says Roberto Guerrero. Veirano Advogados has taken a similar route to increase productivity. The firm's strategy is built on two pillars: an open-door policy and looking people in the eyes. This is to foster a sense of trust and belonging. "We are very professional about business while working on the psychological side," says Ricardo Veirano.
As part of this, leaders recognise that their law firms have a role to play in society, which has a knock-on effect of improving satisfaction among lawyers. Pro bono work and social responsibility are part of Gómez-Pinzón's DNA, says Suárez. "It becomes more important with every year. It gives us a sense of purpose. In terms of being able to contribute to better society in Colombia, if we can be of help, it makes our existence worthwhile." Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados has just launched an independent institute tasked with expanding access to justice and legal education in Brazil, which has the financial backing of its partners. Others like BLP have very effective pro bono foundations.
Taking care of business
Lawyers might be the number-one driver for quality of service, but their talent is worthless if there are no clients to serve, which is why Elite firms are meticulous in their handling of new and existing clients. "We always focus on the client," says Barros & Errázuriz Abogados' Pablo Guerrero. "We try to be alert to what clients are demanding in terms of service type and practice areas and try to respond to that. When we promote a new partner, we look at the characteristics of a person, but also ask if they are in a practice area where the clients need more support."
As Pablo Berckholtz of Estudio Echecopar member firm of Baker McKenzie Internationalnotes, companies are changing the way they hire legal services and staff their own legal departments. "That changes what we do and what services we provide. It has an effect on talent competition and pricing too," he says.
In a fiercely competitive industry, firms need to do all they can to win new business. Here, technology can help, which is why the firms on this list have spent so much on sophisticated CRM systems that help them map clients and promote cross-selling. Some firms are finding ways to serve new segments of the market – like Gómez-Pinzón, which has created a product to serve small start-up companies that would typically avoid expensive law firms, in a bid to understand their business. BLP has set up a separate unit to handle less complex work that is staffed separately and provides certain services on a fixed-fee basis. While it may not bring in the lion's share of revenue, it does allow the law firm to serve clients on all their needs, rather than risk losing business. Others determinedly only focus on the top slice, turning less complex work away because they are convinced of the power of specialisation.
Elite firms universally favour high-value transactional work, but they operate in an industry where the pressure on pricing is very high and it has proven difficult for firms to put together profitable fixed-fee proposals. The key is to improve efficiency, but that often requires a fundamental change to law firms' structure and working practices. "Clients are always looking for the best value they can get," says Demarest Advogados' Paulo Rocha. "If there's a piece of work the client has that a lot of people can do, it's about the way you deliver." Rocha says that means harnessing effective project management and technology. Several firms are hiring non-legal professionals to improve their pricing capabilities as well as training their partners and getting the right software.
But effective project management can only go so far. Elite firms also need to show they are worth the premium price. It's a matter of perception, thinks Nader, who took a decision to concentrate on showing clients the difference in value, rather than competing on price. "The Nader firm is unique, but the challenge is how do we think clients and the market know that?"
Consolidation – opportunity or threat?
Most of our Elite firms are independent, although some are now part of global firms or at least have formal relationships with international peers. All of them are watching the consolidation of the legal market closely.
Central America appears to be the testing ground for all models: local firms are largely in agreement that regionalisation is the way forward, but they now find themselves competing with international firms and the Big Four, which are also scrambling to establish themselves in all five Central American countries. BLP's Luis Castro says there are several ways to look at the influx of new players. "From certain perspectives we've lost a competitor for referrals from major international firms, but in another way we pay close attention because there are certain segments of our work where they will be formidable competitors. Will they compete better in some areas – do we need to adapt?" he asks.
Against this backdrop, each firm must weigh up the best strategy for itself. Multiple top-tier firms across the region have decided that, for now, they will remain independent and work with major international firms that don't have local presences. To preserve those valuable relationships, they hone their service offering to ensure they remain the first choice for sophisticated mandates. "In our view the only way we can compete is to get more specialised and collaborative as the type of deals that we want to take part in arevery complex and require a multidisciplinary service," says Galicia.
When setting out their strategy for the future, law firms must factor in external influences. Latin America is known for its boom-and-bust cycles, which means law firm leaders need to be skilled in dealing with uncertainty. The region's political pendulum has a big swing and 2018 is an important election year for several countries, including Mexico and Brazil.
Mexicans watched with alarm when Donald Trump was elected as US president, but the country's Elite law firm leaders were not deterred, having navigated unpredictable periods before. "The year 2017 started with concern about Trump's rhetoric, but things started heating up very quickly… All the areas we have been investing in – energy, antitrust, labour – grew dramatically. We invested at the right time. We were very adventurous," says Enrique González Calvillo of González Calvillo, SC.
Hogan Lovells (Mexico)'s Juan Francisco Torres Landa says his firm is well prepared because it learned long ago that having a diversified practice is helpful to withstand challenging scenarios. "We want to create a way to withstand those pressures and be better prepared than others," he says.
Meanwhile, Brazil has been gripped by a political and economic crisis in the face of one corruption scandal after another. The presidential election in October could send the country in one of two divergent directions: one that would benefit corporate law firms, the other that spells bad news. "How do you prepare your firm? For very fast growth, or play it safe for a year that might not be as good as hoped?" asks Bertoldi. He is feeling optimistic and hiring accordingly.
At the other end of the spectrum, Argentine law firm leaders are feeling bullish thanks to a revival of activity after years of stagnant growth. A number have considered it the right time to move or update their offices and rebrand their image and website. Chile is also enjoying a period of economic health, and firms are making the most of the favourableheadwinds since President Macri's election.
With so many issues to contend with, the job of a law firm leader becomes a delicate balancing act. The slightest misjudgement could tip a firm off its top spot. "The parameters are changing all the time," says Beccar Varela's Horacio Beccar Varela. "You have all the problems that are always around which are not minor – talent, profitability, etc – and then new things. We may face competition from abroad, but we don't know yet. ... The world is more global than ever and new issues are appearing – like minorities, diversity, etc. We have to deal with them and see it as threat or as an opportunity. I think it's an opportunity."
Excellence in many forms
Latin Lawyer has closely followed the Latin American legal market for two decades. The Latin Lawyer 250 is now in its 20th year of listing the leading firms in the region. Over the many years of our extensive research into the region's legal markets, the concept of institutionalisation has grown in importance. The discussion of how to ensure a firm's longevity inevitably comes up in our conversations with law firm leaders – as does the need to adapt to the changing face of the profession. Firms know that to compete today, they need to have an eye on the future, but finding the right strategies to get there is a daily challenge.
There is a group of firms in the region who are investing significant amounts of time, thought and money into finding the right strategy for them – and largely succeeding. This is the crux of Latin Lawyer Elite: it describes a group of leading Latin American law firms that are not only excellent in the work they do and the service they provide to clients, but whose leaders also give care and attention to creating a strong institutional law firm. These firms are performing the cutting-edge legal work in their countries today and building a law firm for tomorrow.
The 2018 Latin Lawyer Elite firms are profiled over the next few pages. As the individual spider charts illustrate, they have each carved out their own paths towards excellence and demonstrate unique areas of strength. This shows there is no "correct" answer to the conundrum of success and longevity.
Latin Lawyer Elite firms are compared with peers in their own jurisdiction, in recognition of the different make-up of each country's legal market, economy and political and social landscape. It would be wrong to compare the M&A activity of a firm in Mexico with that of peers in Venezuela, while Brazilian firms have generally made more headway in gender diversity than the Chilean market, and so on. Nevertheless, firms have all been measured according to the same criteria, albeit on a different scale. They are all members of the Latin Lawyer 250 guide of leading law firms, which means they have a proven excellent service offer. They are also at the top of their markets according to other indicators such as institutional strength, international outlook and social responsibility. To compile the list of firms, Latin Lawyer has drawn on data compiled through our own leading independent surveys into management practices, including diversity, international experience and pro bono; our research into each legal marketplace as part of Latin Lawyer 250; our ongoing news coverage of the leading deals and cases across Latin America; and our research with clients, including through LACCA (Latin Lawyer's sister association, the Latin American Corporate Counsel Association). Latin Lawyer's senior editorial team has also assessed the make-up of the list, bringing their accumulated years of detailed, on-the-ground knowledge of firms and the markets in which they operate.
We have used this data to award firms points in six areas of excellence. The range of points in each category is divided into three bands, and firms are given a score of one, two or three according to the band they fall into when compared to other top firms within their jurisdictions, with three being the best. Points are illustrated in the spider graphs on the following pages. (See further explanation in the key below.) While the graphs illustrate multiple routes to excellence, they also show that numbers don't tell the whole story. Some firms have created that wow factor through a blend of culture, visionary leadership, history and a powerful brand that's hard to measure.
In creating Latin Lawyer Elite in 2016, we hoped to foment discussion around standards across the Latin American legal profession and produce content that helps firms identify their best fit in this changing market and find ways to add value, by drawing on the experiences of those who are at the top of their game. To fulfil that goal, we hold biennial roundtables of Elite managing partners from around the region, to discuss issues affecting them, such as talent management, succession, business development and value definition. We also conduct surveys into their strategies for confronting specific challenges such as artificial intelligence.
The selection process to identify the group of Latin Lawyer Elite firms is designed to enable firms to move on or off the list each year. By allowing more firms to contribute, we hope to keep the conversation fresh and introduce new ideas. The 2018 list of firms is not exhaustive, but the selected firms are there for good reason. They all bring successful, innovative strategies and experiences to the table, which are profiled in brief over these pages. We hope that some if not all of these approaches will resonate with our readers, who will take away useful information.
We have focused on the region's largest economies – Argentina, Brazil, Chile, Colombia, Mexico, Peru, Uruguay and Venezuela – as well as Panama and the Central American region. Our intention is to roll out the group to include other countries in the future.
We have included law firms that are part of international firms but note that they all have local roots. The inflow of international firms is a reality; having the participation of local firms that have chosen to go down that route is necessary to help other firms understand how to remain competitive in this changing market, whether independent or not. Meanwhile, other Latin American firms are pursuing interesting regional strategies independently, be it through cross-border mergers or increasingly integrated alliances.
Bruchou, Fernández Madero & Lombardi
M & M Bomchil Abogados
Marval, O'Farrell & Mairal
Pérez Alati, Grondona, Benites & Arntsen
BMA - Barbosa, Müssnich, Aragão
Machado Meyer Advogados
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Pinheiro Neto Advogados
Trench Rossi Watanabe
Aguilar Castillo Love
Barros & Errázuriz Abogados
Cariola, Díez, Pérez-Cotapos
Claro & Cía
Philippi Prietocarrizosa Ferrero DU & Uría (Chile)
Philippi Prietocarrizosa Ferrero DU & Uría (Colombia)
Posse Herrera Ruiz
Creel, García-Cuéllar, Aiza y Enriquez SC
González Calvillo, SC
Hogan Lovells (Mexico)
Jones Day (Mexico)
Mijares, Angoitia, Cortés y Fuentes SC
Nader, Hayaux & Goebel
Arias, Fábrega & Fábrega
Estudio Echecopar member firm of Baker McKenzie International
Miranda & Amado Abogados
Rodrigo, Elías & Medrano Abogados
Guyer & Regules