When London-based insurance firm Clyde & Co opened an office in Madrid in 2013, some people in the legal sector wondered why. With the Spanish economy going through a tough period, there was a view that it was not the best time to be trying to establish a new operation. But as Partner Ricardo Garrido points out, the insurance industry – which Clyde & Co internationally has partly built its reputation on serving – is counter-cyclical, so, in fact, it was a good time to launch.
“There is more litigation now and there are a lot of insolvencies – leading to more disputes.” This is a strategy that is well established at the firm. Fellow Partner Ignacio Figuerol says Clyde & Co Chairman, and former Senior Partner, Michael Payton, holds the view that the best time to enter jurisdictions is when the economic conditions are not quite at their best. So what other opportunities exist for the firm in Spain? Figuerol highlights professional indemnity as one of the key growth areas for the firm.
“There is more and more compulsory insurance being introduced,” he says. He highlights the example of compulsory insurance schemes being established for mediators. According to Figuerol – who specialises in professional indemnity and directors and officers cases – there is now a greater tendency towards litigation in Spain. “The claims mentality is increasing,” he says. This is a view shared by Garrido. “Ten years ago, Spain was not a litigious country – it was not in the culture, but this is changing,” he says.
Clyde & Co opened the Madrid office on May 27th last year. Immediately, the new partners began seeing opportunities for new lines of business, according to Garrido, who focuses on engineering, product liability and environmental law. “On the first day, we had an instruction from Shanghai, which was something new for us,” he says.
The office opened with nine lawyers, including four Equity Partners and two Partners. They had all joined from DAC Beachcroft. “This was our first move and we would expect it to be our last,” says Garrido. Meanwhile, Figuerol explains that it was a big step for the team to leave its previous firm.
The four Partners to move to Clyde & Co were: Figuerol, Garrido, Miguel Relaño and Pablo Guillén. Clyde & Co´s London-based management team said it had wanted the four Partners to join the firm because of their “extensive experience advising Lloyd´s syndicates and Spanish and international insurance and reinsurance companies on a wide range of complex contentious, transactional and regulatory matters”.
The four were joined at Clyde & Co by Partners Ana Emparanza and Jesús Iglesias and Associates Sofía García-Ollauri, Luis Enrique Rodríguez and Alejandra Llobera. Since then the team has increased by three lawyers (Associates Sara Aylagas, Eva Fuerte and Laura Ochoa) to make a total of 12, and Figuerol says a further two lawyers will join the firm shortly.
Does the Madrid office have a Managing Partner? Figuerol says there is not one as such and that all the partners try to share management responsibilities.
Garrido explains that the appeal of Clyde & Co was that it had an international reach. “The big attraction for us was that it was a leading worldwide insurance and liability firm,” he says. But there was another reason for the move, which, according to Figuerol, was the “preeminent position of Clyde & Co in the insurance market, particularly after the merger with Barlow Lyde & Gilbert”. He adds: “Clyde & Co’s profile fitted very well with the practice of the lawyers who moved.”
Figuerol describes the specialities of Clyde & Co´s Madrid office as: insurance industry risk, including product liability, construction, energy, corporate and regulatory for insurance clients, directors & officers, and professional indemnity. But the next step will be to move into aviation and transport, as these are areas in which the firm´s London office has expertise, he adds.
So how exactly does Clyde & Co benefit from having a Madrid office? “Spain is an important insurance market,” says Garrido. “And there is the obvious link with Latin America – this business can be led from Madrid.” Garrido explains that there are a lot of construction projects taking place in Latin America and many of the firm´s Spanish clients are getting involved in the relevant tenders.When Clyde & Co recruited Figuerol, Garrido and the rest of the team, Senior Partner James Burns said that Madrid provided a “strong base” for insurance activity and added that it was an opportunity to establish a Madrid presence with a team of lawyers that were the “pre-eminent insurance litigators in Spain”.
Market insiders say while partners may be on message saying there are opportunities in the insurance market, there is a view that this was an opportunistic move by the firm, which had wanted to open in Madrid for sometime.
Upon joining Clyde & Co, Figuerol said that he was impressed by the firm´s focus on “complex multi-jurisdictional matters” – so why did this appeal? Garrido says: “This type of work is more exciting, more challenging and more diverse – we wanted to do more of this and, you have to be an international firm because the insurance industry is becoming increasingly global.”
Not for the big boys
Figuerol claims that all of the firm´s practice areas are growing. “We are very thankful that we have kept the support of our clients,” he says. “So many have followed us and this makes us feel extremely grateful.” How has the insurance legal market developed in Spain over the last year? “It´s been pretty static,” says Garrido. “About seven years ago, Kennedys and Hogan Lovells entered the market, but since then little has changed. This is because insurance firms do a very specialised type of advisory work, explains Garrido. “It doesn´t fit well with the big boys, the major global firms, because their corporate partners could fall into conflicts.”
Garrido says some law firms have tried to launch in Madrid but have been unsuccessful in their attempts. He adds that this is because, if you have major banks as clients for example, it is difficult to represent major insurance companies who may be involved in litigation with those banks. “We are known for litigation and defending insurers,” Garrido says, which, he adds, makes it difficult to represent other clients who may be in disputes with the insurers.
Though international law firms do make enquiries about opening in Madrid, they can find it very challenging to break into the Spanish market, according to Garrido. “Spain is not the most difficult market to get into, but it is not the easiest,” he says.
“There is the cultural gap – attracting lawyers from traditional Spanish firms can be difficult because they may not be used to working in the`Anglo-Saxon´ way.”
An eye on aviation
So what next for Clyde & Co´s Madrid operation? Following the recent move to new fifth-floor office space in Plaza Marqués de Salamanca in the heart of Madrid´s Salamanca district, Figuerol says that the team will be focusing on expanding into the aviation market, as well as on growing its insurance corporate and regulatory practice.
Meanwhile, expansion in Latin America is also on the agenda. Clyde & Co currently has an office in Venezuela and an associated office in Brazil, but the firm is also sniffing for opportunities in other countries where Spanish companies are doing business, according to Figuerol, but the challenge is to find the “right team fit” in those countries.
There is also potential in the Middle East, according to Garrido. “There are opportunities to serve Spanish marine and construction companies there,” he says. Garrido adds that Spanish companies are involved in energy projects in the region, and with 150 lawyers in its Dubai office, he believes that Clyde & Co is well placed to serve them.
To illustrate the point, Garrido says one of the firm´s clients used to do all their work in Spain, but now the client’s work is all in Iran. But there are also opportunities further afield, according to Figuerol. “We´re also helping Spanish companies with their expansion plans in India,” he says.
Garrido says the ultimate aim of Clyde & Co´s Madrid office is to replicate the range of services offered by the firm´s London office. Figuerol adds: “That is the long term goal – we want clients to know that they can go to any Clyde & Co office in the world to solve a problem.”
While the firm benefits from clarity on the insurance opportunity, developing a wider practice brings it face-to-face with the domestic leaders. Time will tell, whether the Spanish legal market requires another full-service corporate firm.