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

The Argentinean legal market is significantly larger than most in South America and, as such, features a large pool of firms that handle corporate and financial matters. There are a number of large branches of international firms in the country in addition to the many local firms that do transactional work....

The Argentinean legal market is significantly larger than most in South America and, as such, features a large pool of firms that handle corporate and financial matters. There are a number of large branches of international firms in the country in addition to the many local firms that do transactional work. All of the firms that would be considered for large investments, cross-border transactions, or any kind of sophisticated financial work have lawyers who are at least bilingual (most firms have lawyers who speak several languages collectively) and have studied or practiced abroad. Additionally, nearly every financial firm in the country is based in its capital and financial centre, Buenos Aires.

Due to the size and structure of both the legal market and the economy, there is a fair amount of specialisation among the country's financial firms. There are firms that focus on a single type of transaction or financial sector, although there are few, if any, firms that only do one type of work.

Lawyers in Argentina have been dealing with regional and foreign clients for decades, so the risk of finding a firm that cannot handle an international transaction is very low. Legal services in Argentina can be more expensive than in other countries in the region, but the sophisticated nature of both the attorneys and the work they are accustomed to doing can easily be worth the added expenditure.

CONTEXT AND TRENDS It is nearly impossible to address any aspect of the Argentinean economy, legal market, or social landscape in recent months without first talking about the government nationalisation of the country's largest oil company YPF. The country's Congress and its president, Cristina Fernández de Kirchner, both approved the expropriation of majority control in YPF from the Spanish oil conglomerate Repsol in May 2012....

It is nearly impossible to address any aspect of the Argentinean economy, legal market, or social landscape in recent months without first talking about the government nationalisation of the country's largest oil company YPF. The country's Congress and its president, Cristina Fernández de Kirchner, both approved the expropriation of majority control in YPF from the Spanish oil conglomerate Repsol in May 2012.

The seizure was ostensibly executed to address the country's intense energy need and to increase exploration in order to decrease spending on imported oil. However, the YPF nationalisation is part of what is perceived as a rash of regulatory restrictions and government incursions into the private sector that is seriously limiting investment in Argentina. That perception only exacerbates many investors' view of a country that is less attractive than regional neighbours and near-neighbours such as Peru, Chile, and Colombia in terms of profit potential.

The country is also faced with a near-runaway level of inflation that most attorneys estimate at between 20 and 25%, while access to international financial markets remains all but nonexistent since its external debt default in 2002. The picture all of these factors paint is not a pretty one and it has had an effect on the legal market in the last 12 months: "In the Argentine system now, maintaining size is difficult – the majority of firms are losing size because the legal market is shrinking," says one partner. "Basically, what we have here is a clear consolidation at the top end of the market. You'll have certain firms among which you'll see their market share maintained or even increased, but you're going to see cannibalisation between medium and small firms and some of them may even disappear."

Again, the recent nationalisation is considered symptomatic of a larger, more disturbing trend in Argentina rather than representing the entirety of the problem in and of itself. Getting deals done has become increasingly difficult in a general sense because of rising government involvement in the economy: "As opposed to the 1990s, now the regulations and government intervention have increased dramatically, so now helping a client in an M&A deal requires a firm that has invested a lot into keeping up with the changing economy and government policies," remarks a market practitioner. "It is not just a matter of drafting an SBA, now there is foreign exchange, anti-trust, environmental and various other considerations to take into account with almost every deal."

Although that regulation makes traditional financial practices more difficult, there is a benefit for transactional firms, albeit one that is not entirely pleasant. Another attorney notes, "What we're seeing and this is a trend of a few years, is a litany of legal work that is essentially regulatory work. By regulatory work, I mean arbitration, labour, public law, customs and administrative law – all of those areas are inundated with work. It's not happy work – it's either the government is fighting you or you're fighting the government – but it keeps us busy."

The difficult environment has also placed severe limitations on the amount of financing that is available from foreign banks or financial institutions. Despite all limitations, though, the country's economy is growing, so companies have to find financing somewhere: "We are still unplugged from the international finance market," explains a lawyer. "All the transactions involve local banks – mostly funding infrastructure and public works. There are no syndicated loans or international bonds or anything like that, but corporations and projects still need financing, so they're getting it locally."

The one area that has so far escaped the government's scrutiny, according to market attorneys, is mining. The mining sector has generated a lot of work for financial firms in the past year, and many in the market are cautiously anticipating continued benefit from the industry in the future: "The mining business has been and will continue to be very busy for the next few years," predicts a partner. "That is a business sector that the government has a very good relationship with. They haven't gotten overly involved in regulating mining to the point where it's no longer profitable, and we expect to have lots of mining work for the next few years – at least that's our hope."

Many firms have also turned to different types of transactions in the absence of some of the "blockbuster", high-value deals that have been available in the past. One lawyer addresses one of those areas, saying: "The result of all of the regulation has been a reduction of investment, either domestic or foreign, in areas that are more regulated. So you've seen in Argentina this year M&A in areas like medium-sized transactions in non-regulated sectors like durable and consumer goods. $30-40 million is a really good size for a transaction right now, so a lot of firms are looking for those types of deals."

In an indirect sense, the declining market has opened up some opportunities by lowering the prices for companies and business assets. There is a sense that there is a lot of opportunity in Argentina, but only for those investors with the stomach for what is, in reality, a very risky investment landscape: "I think we'll start seeing M&A on the electrical side and in other industries after some of these companies get their footing and the values of other companies continue to drop," says another attorney. "The upside is so big, and there is a lot of value right now for investors with courage."

Growing energy demands, high inflation and political uncertainty will undoubtedly plague Argentina in at least its immediate future. A shrinking market for financial work and increasing competition for what transactional work there is will likely also continue to trouble the country’s financial firms. However, the country’s middle class is growing, demand for consumer goods is up, and soaring commodities prices continue to shore up even the weakest economies in the region. For the country, the outlook may be a little dim, but some financial lawyers are looking towards the future as a chance to better their fortunes by maintaining the right approach: “This is no time for competition between partners, there is enough competition just for work right now,” says one of those lawyers. “The next couple of years are going to be rough and, instead of feeling bad about it, we have to focus on looking for opportunities. I believe there’s an opportunity to become important in Argentina if we have the right attitude and commitment as a firm. Our spirits are high, and we have great people.”

BANKING AND FINANCE: MAJOR LATERAL HIRES

Cristian Rosso Alba
From: Mitrani Caballero Ojam & Ruiz Moreno
To: Rosso Alba Francia & Asociados

Gerardo Francia
From: Mitrani Caballero Ojam & Ruiz Moreno
To: Rosso Alba Francia & Asociados

José Luis Galimberti
From: Brons & Salas
To: Fernandez Quiroga Ayarragaray & Ocampo