Legal market overview
The difficult economic climate currently afflicting Argentina is nothing new for what was once a very wealthy nation. The country is now facing a complex scenario: a depletion of the Central Bank´s reserves, increasing inflation and the most severe depreciation of the peso since 2002 (more than 18% in early 2014). Meanwhile, the current administration continues regulating many sectors of the economy, maintaining strict foreign exchange controls, implementing restrictive import/export policies and enforcing stern price controls. While Argentina is a commodity and natural resources rich country, the harsh economic situation, limited juridical security and political tension has discouraged foreign investment. Some of the largest foreign investment projects in the mining sector, for example, have been suspended (i.e. Vale’s potash project and the Pascua-Lama mine), due to the uncertainties of the regulatory and legal climate. Another headline issue has been the energy crisis, derived, among other factors, from a combination of long-term underinvestment and a series of unfortunate policy decisions taken by this and preceding administrations. The freeze in electricity prices has compounded under-investment and the complexity of market-distorting cross-subsidies suggests there will be no ‘quick fix’ to the sector’s difficulties.
Notwithstanding all of the above, a sense of optimism has started to emerge as a result of the October 2013 legislative elections where the governing party was soundly defeated. There is a feeling the country is about to turn a corner and embark on a more dynamic future with the possible election of a more market-friendly government in the 2015 Presidential elections. In fact, the current administration appears to have loosened up after recently announcing a series of policy changing measures – including a cut in subsidies in utilities (gas, water and energy consumption). Likewise, the recent compensation deal with Repsol with regard to its loss of YPF has gone some way to ameliorating the damage done by the original expropriation and may be the boosting factor for more investment in the energy sector. Certainly the interest stirred by the vast shale oil reservoir in the province of Neuquén (Vaca Muerta) is already making great progress. The government has revealed a series of possible investment projects and alliances to exploit Vaca Muerta. In this sense, the preliminary agreement with Malaysian oil giant Petronas, and the involvement of Chevron and Dow with YPF, are excellent signs. As for the much-needed investment in infrastructure, there is evidence that Chinese companies are looking to invest.
All of the above has certainly caught the attention of investors who are already seeking legal advice and preparing for better economic prospects.
In this context, the legal market has maintained its activity with complex and sophisticated transactions and remains highly competitive. Commanding the market is full-service colossus Marval, O’Farrell & Mairal. With more than 300 lawyers, it dominates in many areas of practice and remains one of the largest and most competitive firms in the region. However, there are other titan firms of over 100 lawyers, including corporate expert Pérez Alati, Grondona, Benites, Arntsen & Martínez De Hoz, Jr, renovated traditional player Estudio Beccar Varela, and financial and transactional linch-pin Bruchou, Fernández Madero & Lombardi.
Also remarkable are medium-size firms like Estudio O’Farrell, Allende & Brea, M & M Bomchil and Mitrani, Caballero, Ojam & Ruiz Moreno, all of which have managed to maintain their position in the market in several areas of expertise. Marginally smaller but nevertheless notable are Zang, Bergel & Viñes Abogados, top-notch real estate frontrunners, and Tanoira Cassagne Abogados which has become a consistently relevant player.
Boutique firms have confidently marked their territory in the market. They are preferred by clients in areas like environmental law, in which the key players are Estudio Bec and Rattagan, Macchiavello, Arocena & Peña Robirosa Abogados; tax, where Bulit Goñi & Tarsitano and Teijeiro & Ballone, Abogados are impressive; and labour law, where Funes De Rioja & Asociados remains at the forefront.
New firms have also arrived on the scene, albeit, in a slow market. Lawyers from Bruchou, Fernández Madero & Lombardi and Bazán Cambré & Orts formed Tavarone, Rovelli, Salim & Miani – Abogados, focusing primarily on banking and finance transactions. In the energy sector, former Marval, O’Farrell & Mairal senior associate Nicolás Eliaschev is advising clients at his recently established boutique firm Helian Powering Projects. More recently, Lisandro Allende and Gustavo Ferrante, a former partner and of counsel at Brons & Salas respectively, started Allende & Ferrante. The new firm is said to continue assisting clients in the litigation and labour areas and will offer services in additional areas through alliances with other firms.