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

Chile still has a small- to medium-sized legal market, despite several years of brisk growth in economic terms. The field of financial firms is still composed of mostly local firms, with a very small number of meaningful international firm offices and some international representative offices mixed in....

Chile still has a small- to medium-sized legal market, despite several years of brisk growth in economic terms. The field of financial firms is still composed of mostly local firms, with a very small number of meaningful international firm offices and some international representative offices mixed in. Although there is an increasing degree of skill in certain industries or in specific areas of law, specialisation in a legal sense is still somewhat rare among Chilean firms. Most firms offer a full range of corporate services (although expertise may vary) and very few firms, if any, approach "boutique" status or cater to one or two kinds of clients.

That said, many of the financial firms in Chile are very sophisticated by world standards, all have attorneys that speak at least Spanish and English and most, if not all, are completely accustomed to doing business with firms and clients from abroad. Nearly every firm in the country has a department or a group of lawyers dedicated to mining work, as it has been one of the primary and most lucrative industries in Chile for some time. The mining skill often translates into similar or related fields such as gas and oil or environmental law.

Most firms, especially the larger ones, employ many lawyers who have studied, received an LLM, or actually practiced law abroad. Because of the many connections between the economic, political, and legislative situations of Chile, Peru, Colombia and Mexico, financial lawyers in Chile are generally very well-prepared to handle the legal aspects of doing business within the region as well as the country.

CONTEXT AND TRENDS The Chilean economy continues to grow nearly unchecked, driven largely by continuing high prices for key exports like copper, fish and paper-related products. The political environment has remained very stable, especially by regional standards, and president Sebastián Piñera has maintained his government's right-of-centre, pro-business approach....

The Chilean economy continues to grow nearly unchecked, driven largely by continuing high prices for key exports like copper, fish and paper-related products. The political environment has remained very stable, especially by regional standards, and president Sebastián Piñera has maintained his government's right-of-centre, pro-business approach.

Partially because of the prosperity, demand for consumer goods is higher than ever before. There is a sense that the middle class in Chile is larger than it has been and is still growing. Commodities prices have been excellent for Chileans, but carry some other implications that affect international investment: "Last year was a record year in terms of new automobile sales – it was a very good year," comments one lawyer. "We're enjoying the low [US] dollar value in Chile because of the explosion in our exports of copper and other commodities, which drives the value of the dollar down."

The high prices for those exports has meant that traditional economic areas like mining continue to be the most important forces in the economy. Those areas have pushed M&A interest to some extent in their own right over the past year, as have forces from abroad: "Most of the M&A activity in the last year has been driven by mining, electricity, and infrastructure," another attorney notes. "But because of the [global banking] crisis, many European companies need liquidity. Some Korean and some Chinese companies have started testing out the waters, too, because our market is better than most in the world right now."

So much investment is coming into what is, in relative terms, still a fairly small economy that there is also a belief that in some cases companies are running out of room to operate: "It hasn't been common having Chilean companies buy companies abroad, it's more common to see inbound investment," states a partner at one firm. "It's becoming more common, though, in industries like forestry and other fields where the Chilean market is becoming too small for some of the companies here. They're buying assets in places like Uruguay and Brazil."

All this expansion leads to questions about the environmental impact of growing industries, which leads to environmental work for law firms. A partner at another firm comments, "We've done a lot of environmental work in recent months. There is a new environmental tribunal to address those concerns, especially for things like mining or salmon production. They're creating a good legal framework for the coming years, although they sometimes fall into the trap of over-regulating some areas."

Because of the stringent investment regulations, pension funds in Chile are flush with cash right now and they've proven one of the perfect sources for the cash to finance burgeoning industries. Debt and equity offerings have been reported as being one of the biggest sources of financing in recent memory: "2011 was characterised by the reactivation of capital markets – particularly domestic capital markets," a market practitioner observes. "There is a lot of liquidity among Chilean investors for the last few years. There is a surprisingly positive response for the companies every time there is a new bond issuance or equity offering."

Although several different aspects of the energy production sector were stated as being very busy, many felt that the project finance market has not yet met the standard it needs to in order to satisfy the country's growing electrical needs, but may in the near future: "We are still optimistic and think that the Chilean banking and finance sector will remain active," mentions another partner. "We should see more project finance deals in the next few months. We've seen the fall of two important power deals in the last couple of months, but that doesn't mean that we won't see more in coming months – especially in clean power technology."

All in all, though, it has been a very positive year for the Chilean economy and its financial lawyers. The banking system is considered very sound, financing has been active, M&A work has been consistent and capital markets have reopened after a slow period in 2010. The MILA stock exchange (of which Chile, Peru, and Colombia are members, with Mexico potentially set to join) has increased an already-rising regional investment trend. There is even a fledgling market developing for derivative instruments. The only worry is that the country is too dependent on the current commodities boom to sustain a drop in prices. However, as one lawyer puts it: "We have a long way to go as a country but, if we keep moving like we are for a few more years, we may get to a point where we can remain viable in nearly any global conditions."

RISING STARS

Alcaíno Rodríguez Abogados
Rodrigo Muñoz