Editorial Mar/Apr 09

El presidente del IBA, Fernando
Peláez Pier, que participó
recientemente en un desayuno
organizado por Iberian Lawyer,
sugirió que los abogados
internacionales estaban sufriendo –
aunque la medicina necesaria para
la enfermedad de la profesión
difiere tanto de país a país como de
despacho a despacho.

El centro del debate es si España
y Portugal van a tener la necesidad
de reducir costes, por ejemplo, de
la misma manera que se están
viendo despidos por todo el mundo,
o si los socios compartirán el dolor
y renunciarán a sus beneficios.

La incógnita para todos reside
por supuesto en saber cuándo se
recuperará el mercado. Y cuando lo
haga, ¿será diferente para siempre?
¿Los despachos de abogados
necesitan reorientarse hacia el
asesoramiento de alto nivel
(actualmente en gran demanda) y
dejar atrás el ritmo frenético de las
operaciones de los últimos años?

IBA President, Fernando Peláez Pier, speaking at a recent Iberian Lawyer
leadership breakfast, suggested that lawyers throughout the world are
currently suffering – although the medicine needed to cure the ills of the
profession will differ not only from country to country but also from firm
to firm.

Central to the debate is whether Spain and Portugal will see the need for
major cost reductions, i.e. the redundancies seen around the world, or whether
partners will be sharing the pain with junior lawyers by forgoing their own

From a US and personal standpoint, Todd Crider, a corporate partner at
Simpson Thacher in New York, told participants that keeping profitability at
market level is a prerequisite for maintaining the reputation of a firm.
However, in Simpson Thacher's case, layoffs would be the last resort; presently
it is successfully out-placing lawyers, for example, to pro-bono projects.

Juan Picón, who leads DLA's EMEA corporate group, argued that it was
only a matter of time before Spanish firms would have to consider partner
redundancies (which is now, of course, becoming a reality). Miguel
Klingenberg, who leads Freshfields in Spain, considered that high leverage
would work against some Spanish firms – any reduction in work, however
small, reduces profitability quite dramatically at a time when the cost of last
year's pay increases is now being felt.

In Iberia, managing partners agree that cash flow remains the biggest issue.
Some clients are doubling the time they take to pay which means law firms are
having to cover the funding gap of three or four months. For some firms their
bank credit facility is already running into millions of euros.

Some are better placed – Gómez-Acebo & Pombo says it has a €14m cash
reserve which, given its reported 2008 income, means three months´ working
capital. Others are not so lucky. The Madrid office of at least one London firm
has already been turned down for a local bank loan.

The great unknown for all, of course, is when the market will recover. And
when it does, will it be changed forever? Do law firms need to reposition
themselves towards high end advisory services (currently in demand in this
crisis) and away from the transactional locomotion of recent years?
While many see the Iberian firms finding it easier going than their
international peers, some managing partners say the greatest challenge is yet
to come. Others believe it will simply be a case of turning back the clock to
pre-boom years.

Either way, strong leadership will be required. As Manuel Martín of
Gómez-Acebo & Pombo expressed clearly, it would be dangerous to make
short-term decisions without the benefit of a longer term vision for the firm.

Moray McLaren