Legal market overview
The overall mood in Mexico in 2015 is best characterised as ‘cautiously optimistic’; however, the market is not in exuberant spirits. Even though the country has the second largest economic output in Latin America, performance remains sluggish – despite the much-heralded ‘Mexican moment’. At only 2.1%, economic growth in 2014 fell far short of expectations that had been heightened with the reforms initiated by President Peña Nieto since his inauguration in late 2012. According to World Bank statistics, manufacturing exports account for a large portion of the country’s current economic performance, mainly resulting from a double-digit increase in the automobile sector. To date, the reforms’ costs have outweighed their benefits, with consumption and investment largely stagnant due to higher taxes, regulatory uncertainty, limited wage growth and overall low consumer confidence. On the positive side, private investment has more recently been on the upswing.
The opening of the energy industry to private sector participation, triggered by the government’s reforms, prompted many to speak of a Mexican energy revolution, and nowhere can this be seen more clearly than in the mid-stream oil-and-gas segment. A case in point is the Los Ramones gas pipeline project, which will connect Mexico with the US gas pipeline network and is expected to form the spine of a planned 10,000km, bi-national natural gas transport network. As a consequence of the reforms an ever-growing number of law firms are increasingly involved in energy-related work: to name just a couple of examples, young boutique firm Ibarra, Del Paso, Gallego y Berezowsky S.C. has built a notable energy and environment practice in recent years; and one-stop energy shop Woodhouse Lorente Ludlow is acting for the government on the implementation of the reform. Apart from US companies, Chinese, Spanish and Canadian firms are also pushing into the Mexican energy market.
Reforms implemented in 2013 also impacted upon competition regulations, remodelling the regulation of the sector with the formation of two autonomous agencies: the Federal Economic Competition Commission (Cofece), and the Federal Institute of Telecommunications (IFETEL), the latter now being in charge of all antitrust issues involving the telecoms sector. This development has kept many competition and TMT practices busy in recent months.
The tumult that has affected the Mexican tax sector shows little sign of abating with inter-firm recruitment continuing apace. Arguably the most notable new trend is the decision of full service firms to invest in significant transactional tax practices. If Jones Day and Creel, García-Cuéllar, Aiza y Enríquez, S.C. are at the forefront of this curve, then it is also notable that Nader, Hayaux y Goebel, SC (with the hire of Adalberto Valadez Hernández from Chévez, Ruiz, Zamarripa y Cía SC) , White & Case S.C. (with the hire of Guillermo Aguayo from Santamarina y Steta) and Haynes and Boone, L.L.P. (with the recruitment of Edgar Klee from Turanzas, Bravo & Ambrosi) have all embarked on similar strategic investments. Bucking the trend towards more sizeable service offerings, Manuel Tron has left Ernst & Young (although he retains a role as Counsel) to return to a boutique set up, Manuel Tron SC, where he frequently works in conjunction with firms including Arias, Meurinne y Rodríguez, S.C., SMPS Legal and Cuevas y Pueblita Abogados. (Since research concluded, Manuel E Tron has joined SMPS Legal.)
International trade and customs practices, like those in the associated tax sector, have been affected by increased competition for staff: cases in point have seen Baker & McKenzie S.A.S. lose regional practice head Edmundo Elías, and Basham, Ringe y Correa, S.C. see retiring practice head Gerardo Hernández, along with former head of tax Luis Ortiz, take a number of staff with them to establish new boutique firm Ortiz, Hernández y Orendain, S.C..
Foreign (primarily US) firms continue to play an increasing role in the Mexican market, the most prominent example being Hogan Lovells BSTL, which was formed when long-established full-service firm Barrera, Siqueiros y Torres Landa (BSTL) merged into Hogan Lovells in 2014, a move that gave the new firm a considerable boost. Greenberg Traurig, SC, which opened offices in Mexico City in 2011, benefitted from the dissolution of now-defunct Raz Guzmán Abogados but also saw five partners depart to Jones Day. Market leviathan Baker & McKenzie S.A.S. welcomed an entire team of corporate experts from DLA Piper Mexico (Carlos R Valencia being the most high-profile figure) – whose team was revamped in turn with its local merger with longstanding Gallastegui y Lozano to form DLA Piper Gallastegui y Lozano. Other notable international firms include Haynes and Boone, L.L.P. and Holland & Knight, which have both steadily built their local market share; leading corporate player White & Case S.C.; and labour specialists Littler, De la Vega y Conde SC. Spanish heavyweight, Garrigues opened a Mexico office in 2013.
Local players with a small but increasing participation in the market include firms such as Chávez Vargas Abogados, COMAD, S.C., Cuesta, Llaca y Esquivel, as well as traditional name Noriega y Escobedo, A.C..