Firms need a proven track record – PME Investimentos

Law firms willing to provide alternative fee arrangements will have an advantage with clients, but evidence of industry sector expertise is more important, says PME Investimentos´ André Nobre

Given that PME Investimentos outsources approximately 40 per cent of its legal work, the willingness of law firms in Portugal to provide alternative fee arrangements means that the company is able to keep a close eye on its legal spend, according to its legal officer and head of compliance André Nobre.
“The Portuguese economy has endured a difficult few years and endured fiscal cuts so, as a publicly-owned entity, we have to be efficient in our costs too,” Nobre remarks. “For us, the main asset we look for in our legal partners is a strong background and knowledge of the finance sector – costs are an additional consideration but it is a proven track record that is much more significant.”
Nobre says law firms are becoming increasingly flexible in terms of fees and provide alternative “cost solutions”. He cites the example of fee-capping and says the drafting of share purchase agreements, for instance, may be quite limited in terms of the work that needs to be undertaken by external law firms, so the firms need to instil confidence in the client that the job will not end up too expensive. Nobre adds that there are a number of factors that influence PME Investimentos’ decision to carry out the rest of its legal work in-house. These include the size and structure of its small and medium-sized enterprise (SME) investments as well as a need to streamline legal costs. Nobre declines to reveal which external law firms the company uses.

Becoming a specialist
Co-heading the legal function of a publicly-owned lender that focuses on financings for SMEs represents a career change for Nobre given his early background in the law. He previously worked in private practice at F. Castelo Branco & Associados and Abreu Advogados before moving in-house, a move, he says, that offered him “a greater opportunity to develop a specialism”.
Nobre says: “As a lawyer in Portugal, you have to be as diverse as possible and cover a number of different areas – but I was very keen to move into a more specialist area within the law so taking up a dedicated, in-house position meant I could concentrate on improving my skills.”
At PME Investimentos, he is part of the two-lawyer team that oversees the legal function of the business. The company was incorporated in 1989 and is exclusively owned by public entities. The business has a current share capital of €27.5 million and concentrates on generating or providing funding for SMEs through the management of special investment funds – it has approximately €1.5 billion in assets under management.
The company has a broad selection of interests – it is active in the debt market, currently managing 12 credit lines that have helped provide total funding of approximately €16 billion to SMEs, through partnerships with the majority of credit institutions and Mutual Guarantee Companies (Sociedades de Garantia Mútua) operating in Portugal.

Business Angels
PME Investimentos also has an interest in the venture capital (VC) fund business, specifically as the management company of FINOVA, which, among other investments, has participated in 22 venture capital funds and financed 56 ´Business Angel´ companies to help SMEs develop businesses or expand internationally. FINOVA also offers equity and debt financing options to SMEs, with its €1.3 billion in capital held by IAPMEI, Turismo de Portugal, IEFP and AICEP.
Nobre says that transactional work via these credit lines and VC investments represents the bulk of his department’s remit. “Most of the work we do in the legal function at PME Investimentos is related to financings, mainly equity financings, rather than loan or debt financings,” he adds. “The prime focus for our team relates to matters such as drafting share purchase or shareholders’ agreements and ensuring all the legal requirements of our funds’ investments are met, but there is also some reporting to various public bodies.” With regard to the latter, PME Investimentos is a financial company supervised by the Bank of Portugal, while there are also annual reports that must be submitted to other administrative bodies and departments, such as the Portuguese Treasury.
Meanwhile, Nobre believes the financial markets are shifting and that this will impact significantly on his work in the year ahead. He adds: “We will be looking at how we can develop new funding mechanisms so I think that will keep us busy in 2015.”

André Nobre is legal officer and head of compliance at PME Investimentos.