The quiet Americans
With little of the noise of some of its US competitors Jones Day has nonetheless built an enviable and truly Spanish practice, the success of which is now seeing Madrid placed at the centre of the firm’s global strategy
While Madrid is alive with speculation over the next US law firm arrival, one such firm that is already well established though more discreetly is Jones Day. One of the reasons for this may be that during its seven years in Spain it has preferred to focus on organic growth rather that the high profile hires of more recent arrivals, such as Latham & Watkins.
The perception of Madrid as a key international commercial and legal junction is one of the factors behind its quiet success, says the partner-in-charge, Luis Riesgo. The firm may have arrived intending to focus on the needs of its Fortune 500 client base, but it is increasingly facilitating the international expansion of Spanish corporates.
Such success has been recognised in a firmwide strategic review, leading to a renewed focus, and new hires, intended to place the Madrid office at the heart of the firm’s global offering. Apolicy that its competitors say they intend to follow closely – but which Jones Day feels uniquely placed to implement.
Industrial origins
Jones Day is one of corporate America’s favourite law firms. Its origins dating back to 1893, when founding partners Edwin J Blandin and William Lowe Rice established a practice in Cleveland, Ohio, catering initially to the needs of America’s Midwest industrial giants – clients that have subsequently expanded across the US , around the world and taken Jones Day with them.
The firm opened in Madrid in January 2000 absorbing Tena & Muñoz, a ten-lawyer boutique specialising in mergers and acquisitions, private equity, international arbitration, and finance, in what after all these years is still the largest opening in the Spanish market of a US firm.
The merger was well timed. The Spanish market was starting to boom, generating a lot of work, notably in the telecoms, energy and financial sectors and inward investment was increasing dramatically. Jones Day therefore found itself well-placed to support the transactional, finance and litigation needs of its US and global industrial client base – which includes 60% of the Fortune 500.
Tena & Muñoz added to the mix a highlyrespected local operation, with strong relations with many of the most important Spanish corporations.
In line with Jones Day’s preferred strategy however, once established, the Madrid office opted for steady growth. Even so, under the leadership of Juan Tena, the firm attracted quality local as well as European clients including Banco Santander, Royal Bank of Scotland, Lafarge and ABN Amro. It was therefore a significant blow to the firm when he died from cancer in February 2006, aged 54.
New management
It was corporate specialist Luis Riesgo, a founding member of Tena & Muñoz, that Jones Day managing partner Steve Brogan selected to take on the considerable challenge of succeeding Tena, and to build on the office’s established M&A, finance and litigation strengths.
“A significant part of the Madrid office’s work is M&Adriven, and we have been well placed to gain from the current boom and increase in private equity investment,” says Riesgo.
Jones Day’s Madrid office now comprises four partners (all formerly with Tena & Muñoz), four of counsel, and 20 associates, offering both Spanish and US capability.
Riesgo’s emphasis is on M&A, advising on one of the firm’s recent corporate successes – assisting France Télécom on its € 6.4 bn acquisition of Amena’s mobile telephone business, in a deal that Financial News selected as The European M&ADeal of the Year. Jones Day continues to represent France Telecom as legal counsel in all corporate matters in Spain.
Fellow partner Federico Merino, meanwhile has his emphasis towards private equity, including advising Vista Capital on the acquisitions of toy manufacturers Famosa and Play by Play, Impala Capital and Charterhouse on the purchase of Grupo Levantina, and Impala again on the sale of Mivisa, the leading Spanish can manufacturer.
While Luis Muñoz heads the banking and finance team, with an emphasis on project, acquisition, lending and structured finance as well as debt restructuring. Mercedes Fernández leads the litigation and arbitration practice.
The firm’s local client base has expanded noticeably and now also includes Santander, BBVA, Banesto, Banco Sabadell, Endesa, ACS, Acciona, La Caixa, Ferrovial, Cajamadrid, Sacyr, OHL and FCC.
New practices
Afurther strategic review, has highlighted what Riesgo sees as the office’s continuing strengths as well as potential new opportunities for the firm. “We have a really strong team where all new entrants would like to be: high-end M&A, private equity and finance, and we want to focus our growth on those practices”, says Riesgo. “Year after year, Jones Day has the largest M&Apractice, in terms of the number of deals, in the world, so our mix here in Madrid is a perfect match for the firm.”
Akey gap in the firm’s Spanish capability for too long, he says, was the lack of real estate expertise, particularly for international clients. “Jones Day has one of the largest real estate practices in the world,” he says. “We saw many of our most important global clients making deals in Spain without our assistance because we did not offer the capability to represent them, and we were losing out the Spanish side of large global or pan-European real estate deals.”
After a lengthy search the gap was filled in May with the hire of construction, planning and environment specialist, Víctor Casarrubios. Formerly a partner at Gómez-Acebo & Pombo he has joined Jones Day as Of Counsel, and will initially work with two associates. “The opportunity was too good to miss,” says Riesgo.
New opportunities
A further outcome of the strategic review has been to recognise the global opportunities presented by the success of its Spanish practice, and to reassert the importance of Madrid within Jones Day’s international network.
The original focus of the office was two-fold: to advise on in-bound work, assisting global clients entering the Iberian market, and to represent Spanish corporations in their domestic transactions. Now the strategy has developed in something much bigger than expected, to cover the needs of major Spanish companies with an appetite for global expansion, says Riesgo.
“The value of Jones Day in Spain is not only the work we do but our capacity to add value to our clients in all the places where we operate. In the last year we generated almost as much business for the network as we received, and this year it will be substantially more.”
Riesgo is confident that the firm has a unique story to tell. “We really feel we have something different to offer – having a strong Spanish presence compared with other US firms, a truly global international operation compared with the Spanish firms and a unmatched US capacity in comparison with the London firms.”
And now, Latin America
In an unprecedented move, Jones Day has entrusted Riesgo with the development of its Latin America practice – placing the Madrid office at the heart of a new and emerging world view. While Jones Day is well established in Asia, Europe and the US, Latin America therefore provides a new opportunity, and Riesgo a new challenge.
“For many years, US firms have considered that a Latin America practice is a capital markets practice based in New York working for big Latin American companies. Our focus is different: of course we would like to have access to that Latin American capital markets work, but what we really would like to do is to expand our relation with our current base of clients doing business in Latin America.”
While most of the direct investment of the 1990s was linked to privatisation, the opportunities are now different.
“Although there will be some operations over formerly privatized assets, particularly in telecommunications and energy, we will see a lot of work related with development of the region’s infrastructure, such as logistics, transportation, sewage and water systems and energy.”
He believes that the investment will likely be done mostly by US and Spanish companies. “Banks, private equity investors, major international corporations are doing business in the area, and those are our clients.”
Nobody would question the size of the market: the region’s total estimated GDP is $2.6 trillion for 2006, roughly the same as China’s and three times India’s, and Mexico and Brazil represent almost two thirds of that figure. “If we want to be consistent with the firm’s approach to new markets such as China, there is no way we can afford to be out of Latin America.
Given that Jones Day already is one of the top three law firms in Asia, he believes in the firm’s distinctive position.
In fact, recent economic studies predict that Spain will play an increasingly important role in trade between Asia and Latin America. Using ten case studies from Spanish and Asian corporates – including Soluziona, BBVA, Telefónica, Altadis, Samsung and Sony – the economist Jacinto Soler Matutes points to the ‘triangulation’ of Latin American and Asian business along the Spain’s European axis.
With seven years of cross-selling behind him, Riesgo is naturally interested in how the major Spanish firms are now looking to establish their own Latin American networks rather than rely on alliances and best friends. As he notes, “While it is relatively easy for Spanish firms to operate in Portugal, it is far more difficult for them to succeed in other jurisdictions, particularly to become law firms of reference. I can certainly understand that some major Spanish firms open offices abroad, but I see it as a reactive measure, to protect their domestic client base.”
While he doesn’t envisage in the immediate future opening Jones Day offices in Latin America, or merging with local ones, he is now actively working on the relation with firms in each market who work and operate in a similar way to US or European firms, and developing the relationship of the firm with global clients doing business there. “One-stop shopping can be one of the drivers of our growth in the area,” he says.
Riesgo is surprised that the leading English law firms, while focused on Asia, and China in particular, seem to be passing Latin America by. While some suggest that the political wind is blowing against the US in Latin America he states nonetheless: “If an American company wants to raise a Latin American real estate fund, or wants to develop a hotel complex in Mexico, politics don’t matter. Business is business.”
The future
It is clear that Jones Day, the largest US law practice in Spain – aside from the primarily local practice of Baker & McKenzie – has reached a stage of maturity in the market that may allow it to change gear. The launch of real estate capability and parallel opening and practical support for managing Latin American business opens new doors for Luis Riesgo’s team.
When asked how he would like Jones Day to be seen in the Spanish market, Riesgo smiles: “Well, for many years we have been the best US firm in Spain, but that was an easy contest, being almost alone! We now want to keep that position, and challengers are welcome. Sure, we need to grow a bit, maybe to reach 40 or 45 lawyers, but definitely keeping the same working culture as we now have.”
Given the success of the firm to date in Spain, with so few lawyers, competitors say that a Jones Day team of over forty would certainly make it a much louder force to be reckoned with.
