The passionate revolutionaries

Despite its conservative veneer, the continued ability of Morais Leitão
Galvão Teles Soares da Silva & Associados to remain at the very top
of the Portuguese legal market is a result of its commitment to
constant reinvention.

A pesar de su imagen
conservadora, la
habilidad del
despacho luso Morais
Leitão Galvão Teles
Soares da Silva &
Associados de
permanecer en lo
más alto del mercado
jurí­dico portugués es
una muestra del
compromiso a
reinventarse
constantemente,
afirman sus socios
António Pinto Leite,
codirector del Consejo
Directivo y Nuno
Galvão Teles, Director
de Corporate
en esta entrevista.

The marble façade that welcomes visitors
to the offices of Morais Leitão Galvão
Teles Soares da Silva & Associados
(MLGTS), and which bears the firm's
weighty name, is certainly impressive. But it is
more than mere decoration, it is intended to
emphasise the firm as an institution.

'The origins of this law firm go back to the
1960s, and the strong impression given by the
stone is on purpose – it says we have been here
for decades,' says Nuno Galvão Teles, the firm's
Head of Energy and Corporate practice groups.

The calibre of the firm is also evidenced by its
consistent appearance among the very top tier of
Portuguese dispute, commercial and corporate
transactions. The past two years alone have seen
MLGTS take a lead role in Sonaecom's €11.9bn
bid for Portugal Telecom (PT), and Millennium
BCP's €4.3bn bid for Banco BPI – the largest
public takeover attempts in Portuguese corporate
history.

More recently it has been retained by Energias
de Portugal (EDP) to manage the estimated €8bn-
€11bn IPO of its renewables subsidiary, EDP
Renováveis, and by Millennium BCP to handle its
proposed €1.3bn rights issue – Portugal's largest
capital markets transactions of this year and the
largest ever IPO.

Alongside these clients, MLGTS is also
perceived by many to be the de facto outside
counsel for Rede Eléctrica Nacional (REN), íguas
de Portugal and Banco Espí­rito Santo, and is
regular counsel for international players such as
Santander Group, Goldman Sachs, Deutsche Bank
and the European Investment Fund.

Modern

But despite the shine of the marble, the weight of
the MLGTS brand, and the name recognition of
its most prominent partners, the firm is in many
respects a very modern institution. The present
incarnation is the result of a firm coming to terms
with generational change and two major mergers
in as many years.

'At the heart of this firm is a discernible
culture instilled in it by the founding fathers, who
above all demonstrated and demanded a passion
for the law, a business approach, and a
willingness to absorb new ideas,' says António
Pinto Leite, Head of Litigation and Co-Head of
the Board of Directors.

February 2004 saw the union of Morais Leitão
J Galvão Teles & Associados and prominent
corporate firm Miguel Galvão Teles João Soares
da Silva & Associados, combining full-service
capability with premium transactional work to
create the then 85-lawyer MLGTS. The same
drivers also promped the January 2006
integration of Porto's 30-lawyer Osório de Castro
Verde Pinho Vieira Peres Lobo Xavier & Associados.

'Any lawyer that joins this firm knows that
they have become a part of something much
bigger than they alone can bring,' says Pinto Leite. Passion is a word that features
heavily in his talk.

Both he and Galvão Teles are fresh from a
Management Board meeting, and the announcement
of the previous year's results. 'Despite not seeing
deals on the same scale as 2006, last year was
nonetheless the best ever for this firm,' he says.

Comfortable

Both emphasise however that the firm's strategic
choices are not entered into lightly. MLGTS has
purposely sought to lead the market – to be the first
Lisbon firm to enter Madeira, and subsequently Porto
– and to offer the first nation-wide practice.

'The story of MLGTS is really a story about the art
of merger,' says Pinto Leite. MLGTS has almost
trebled in size since 2004, and now numbers close to
150 lawyers.

quote

'The impact of the past few years has clearly been
significant. We have experienced transitional issues
and mergers, but the definition of strategy is not
luck,' says Galvão Teles. 'Any merger has to produce
more than the sum of its parts – one and one must
always equal at least three.'

Galvão Teles admits however that the firm's
decision to enter Porto, Portugal's second city, was
not without its critics. 'People undoubtedly
questioned our need to have 30 lawyers there, but we
have been proved right. We foresaw that Porto could
no longer be regarded as a regional market, and that
a firm with a national approach, and fee levels,
would be accepted.'

The merger with Osório de Castro has proved
positive on many levels. Also courted by PLMJ, it
was already the preferred counsel of the Sonae Group
– and its integration proved vital in MLGTS winning
the lead role in its protracted PT merger bid.

The decision to enter into the merger a full two
years after the initial Lisbon tie-up, was also
deliberate explains Pinto Leite. 'We needed time to
adjust, and to get our structures right. Indeed one of
the most important outcomes of the past year has
been to consolidate the material changes that we have
experienced since opening in Porto.'

Changing times

For a firm with such a strong emphasis on internal
cohesion, Pinto Leite admits that the departure from
Morais Leitão J Galvão Teles & Associados in 2001 of
five partners, led by Jorge Bleck, to launch the Lisbon
practice of Linklaters was a blow but related to
specific issues.

'The loss was significant to us, particularly on a
personal level, but related to the transitional process
we were undertaking at the time – as we moved
away from the founding partners to a second
generation of managers – but I think that we have
now dealt with that.'

Some suggest also that in seeking to please its
biggest clients, MLGTS takes on too much work that
it should not do.

'Alongside the major transactions, the firm also
takes on much of the housekeeping work of its major
clients,' says a senior partner at a rival Lisbon firm.

'It is work that is clearly unprofitable, and which
makes little use of the very evident skills that many
in the firm have.'

For Pinto Leite, all of the work that the firm does
is a constant demonstration of the importance placed
on getting to know clients, their businesses, and their
business needs.

'Everyone must of course know the law, but they
must also know the client. This firm is all about
having a passion for what we do. That the partners
here bill in excess of 2,000 hours each year
demonstrates the importance we place on leading by
example.'

Galvão Teles agrees: 'We cannot just be lawyers in
the old and traditional sense of the word, if what we
do is really that simple then anyone could do it. Clients must understand that
we are really important
to the outcome of their matters, and that in any
transaction we are always adding value to the client.'

Recruitment

The number one priority for the firm going forward,
says Pinto Leite, is the continuing unity of the firm. The Lisbon market
has recently seen significant high profile departures, including of five partners
and
their teams from PLMJ to form new firm AAA, and
more recently from Sérvulo & Associados, with the
firm's highly-rated administration partner Bernardo
Diniz de Ayala moving across to Urí­a Menéndez.

Key to the stability of MLGTS, and the legacy firm
before it, says Galvão Teles, is the operation of a tight
lockstep remuneration system – another first in the
Portuguese market – which was adapted to a
mitigated lockstep at the start of the decade.

'Unlike other firms there is no internal
competition between partners or practice groups. We
compete only with the outside,' he says. 'We have a
very meritocratic remuneration system, which
enables us to be comfortable with each other's
performance, but which also instils sufficient pressure
for us to continue to try to be number one in the
market.'

Fundamental to the firm going forward is the
investment also being made in developing its young
lawyers, he adds.

Pinto Leite admits however that, from the outside,
the firm's recent merger strategy may not sit
obviously with its insistence on internal organic growth. 'Mergers we felt have
been necessary to
build the bones of the firm, but on which we must
ourselves hang the flesh,' he explains.

The firm prefers to recruit relatively few trainees
compared to some others in Lisbon but to be honest
with their prospects, says Galvão Teles. 'We can only
ensure that we retain our culture by developing our
own people. The last round of partner promotions
comprised lawyers who had spent their entire careers
at this firm.'
He admits to having been pleasantly surprised
also by how deep the firm's brand reaches among
university law students.

'It is increasingly difficult to find the best and the
brightest people, and the choice is now much more
on the side of the student than the firm – we are not
picking them, they are choosing where they want to
go. But we have been doing pretty well, and in the
last few years we feel we have been able to attract the
best people in the market.'

International

An obvious other key issue, says Pinto Leite, is how
to react to the internationalisation of the global
economy. MLGTS has to be in the minds of
prospective investors into Portugal, and must also be
able to demonstrate to its own clients that it can add
value as they expand internationally.

'We know that we have to be innovative, but
there are several pieces to our international strategy –
first, we have to ensure that among the international
companies and law firms that have high value work
here that they know we exist, and what we can offer
them.' The firm is therefore placing emphasis on its
membership of the global 160-firm Lex Mundi
network, he says. 'Through it we feel that we are
already all over the world, and very comfortable with
the feedback we receive from other member firms.'

Of importance also is the need to ensure that the
firm's younger lawyers maintain the necessary
international mindset. 'They have to think
internationally and to put pressure on management
to help them do so – and we will encourage them to
put more pressure on us than they expect,' he says.

The markets in which MLGTS is currently seeing
increased client activity include East Europe, Angola
and notably Brazil, says Pinto Leite. 'It is a market in
which there is growing economic, social and political
predictability, which is very relevant to international
investors – including Portuguese investors – but there
are also now Brazilian companies looking to expand
internationally and that is something that we clearly
have to prepare for.'

Both Pinto Leite and Galvão Teles speak highly of
MLGTS' Brazilian referral firm, Mattos Filho Veiga
Filho Marrey Jr e Quiroga, with which it signed a
strategic partnership agreement in 2007 for corporate
law, M&A and capital markets issues.

Galvão Teles has previously highlighted the
potential of Angola for both firms, and where it
might make sense to combine efforts. 'Angola is a
very new market and as a result not so predictable, so
our approach there is currently based on principles
rather than our own investment money,' adds Pinto
Leite.

The US is also of growing importance and where
MLGTS last year helped EDP in its €2bn acquisition
of Houston-based Horizon Wind Energy from
Goldman Sachs, aided by referral firm Skadden Arps
Slate Meagher & Flom.

It is however a market in which MLGTS is content
to observe from the outside. 'It makes no sense for us
to even consider to open in the US, but it is important
that we are able to give our clients access to the best
firms there,' says Pinto Leite.

Passionate

More immediately, Pinto Leite sees competing with
the Spanish law firms present in Portugal as the
current major challenge for his firm – MLGTS notably
maintained a referral relationship with Urí­a
Menéndez (also a Lex Mundi member) until it chose
to open in Lisbon.

'We are very attentive to the new profile of the
competition. We feel that the Spanish and Portuguese
economies tend towards increasing integration and
we respect very much the three major Spanish firms
here. But I think that we can deal with that – I prefer
to be where I am than where the other firms are!'

Galvão Teles moves on to a client meeting – 'If I
miss it I will be crucified,' he says – while Pinto Leite
announces that he has another management meeting
to attend, the firm's quiet revolution of the
Portuguese legal market must continue.

'I am very passionate about being a lawyer, like
the rest of the lawyers here I want to be with clients. I
enjoy it. But I am also very passionate about
management issues – we have to assume leadership,
to deflect the human and operational pressures from
the other partners,' he says.

And with that he leaves to debate the future
direction of the firm with the firm's Board. 'It is
important that we find the correct structure to deal
with the issues and objectives that will face us – in
the current climate an hourly lawyer utilisation rate
of 90% would be ideal, at MLGTS our figure last year
was 121%.'

Despite appearances, and other than the passion
that clearly drives its lawyers, it seems that there is
actually very little about Morais Leitão Galvão Teles
Soares da Silva & Associados that is truly set in stone.

The passionate revolutionaries

Garcia-Sicilia

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