IFLR 1000
The Guide to the World's Leading Financial Law Firms

Uruguay's group of financial firms remains fairly small, although there has been some expansion in recent years due to an extended period of relative economic prosperity and increased interest from investors in the region and from abroad. Specialisation is extremely uncommon, if not nonexistent, although some firms are definitely more prepared for specific types of transactions than others....

Uruguay's group of financial firms remains fairly small, although there has been some expansion in recent years due to an extended period of relative economic prosperity and increased interest from investors in the region and from abroad. Specialisation is extremely uncommon, if not nonexistent, although some firms are definitely more prepared for specific types of transactions than others.

The leftist government of Uruguay makes some investors slightly anxious, but the country's government remains reasonably pro-business despite its political ideology. Financial firms in Uruguay understand the dynamic between private business and government policies, and their attorneys are generally quite capable of navigating the political system. Many of those attorneys are bilingual or multilingual, although often not to the same extent as attorneys in some of the country's larger regional neighbours.

There are almost no international firms in Uruguay, although the occasional international firm desk or 'offshore' firm office does pop up. It is definitely worth considering that there are no laws prohibiting the marriage of legal and accounting services among Uruguayan law firms, so many financial firms employ accounting staff and even have partners dedicated to the accounting side of the firm's business. Almost every notable transactional firm in the country is located in Montevideo, the country's largest city, capital, and primary port.

CONTEXT AND TRENDS Uruguay is looking forward in a year in which the country witnessed the enactment of its first meaningful law regarding the formation of public-private partnerships (PPP) between private investors and the government last July. The country had other reasons to celebrate as well, namely the continuation of high global commodities prices and the return to 'investment grade' status for government debt....

Uruguay is looking forward in a year in which the country witnessed the enactment of its first meaningful law regarding the formation of public-private partnerships (PPP) between private investors and the government last July. The country had other reasons to celebrate as well, namely the continuation of high global commodities prices and the return to 'investment grade' status for government debt. In April 2012 Standard & Poor's adjusted Uruguay's status to BBB-, the lowest rating considered investment grade, which marked its first such rating since losing that status in 2002.

Speaking specifically about PPP formation, the law has not been put to much use yet, although it is expected to yield results similar to those seen in other countries in the region in coming years. Financial lawyers foresee a great deal of work originating from the new law in the near future: "We have a new framework for PPP's this year, but so far no project has been channelled through that legal frame," notes one attorney. "It will happen, but we will have to wait. It's likely a lot of investments will come into Uruguay through this framework, whether it's prisons, ports, roads, or similar projects. It should provide a lot of business for all of us".

Commodities prices continue to have a big impact on the economy, as well. Global demand, especially from growing economies like China, has created very high prices for many of Uruguay's agricultural exports. However, the commodities boom has affected Uruguay in other indirect ways, some of which have insulated the country from the global economic downturn to some extent: "Prices in real estate have multiplied by five or so in the last eight years," comments another lawyer. "The guys who bought land in 2003 or so are sitting on a lot of money right now. The price of commodities has driven the [real estate] prices, too. We don't see it stopping right now, either – it's still increasing, although not as fast as before. It can't last forever, but the problems in the rest of the world haven't really affected us yet".

Banking, too, has been a big topic over the past 12 months. As the country's economy continues to grow, it attracts investors from the region and from around the globe looking for places to invest money or resources that are more attractive than their own countries during this difficult period. "An area where we've seen significant activity in the last year or two involve the changes in the banking sector with the entry of new players, new entities," a partner at a financial firm explains, adding a prediction: "It looks like a trend that will continue will be concentration of banking entities in Uruguay. The market will grow, but the number of participants will probably be less. There will be several purchasers in the coming years in my opinion".

Another trend in Uruguay, one seen throughout the region, is the demand for energy generation. A practitioner remarks, "One of the highlights of the last 12 months has been work in the energy sector. There is an energy situation in the region mainly due to the increase in overall economic production in the last year, creating the biggest energy demands we've ever seen in the region and in Uruguay".

The same practitioner also offers an explanation as to how the increased demand is being dealt with from a policy standpoint: "What the government does is to offer a tax incentive scheme which is not exclusive for clean power, but extends to nearly all kinds of power production. Secondly, [the government] offers a twenty-year take-or-pay contract for all electricity generated, because in Uruguay there is a government monopoly in transmission and distribution, but not in generation".

Increased energy demand, though, represents a problem of luxury for the country. Regional growth, long periods of government stability, and problematic situations in other parts of the world have created a prosperous set of circumstances for Uruguay's economy. One lawyer summarises the situation, saying: "There is no smell of any crisis here, partly because there's been no slowdown in commodities prices. It's the first time in my lifetime when our country is doing well when other world economies are not".

MAJOR LATERAL HIRES

Jean Jacques Bragard
From: Sanguinetti Foderé Abogados
To: Bragard & Durán Abogados

Andrés Durán Hareau
From: Hughes & Hughes
To: Bragard & Durán Abogados

MAJOR LEGISLATION CHANGES

Public-private partnership (PPP) law
In effect as of July 2011