Some readers may know that González Calvillo has uninterruptedly partnered with The Legal 500 in sponsoring the Private Practice Powerlist: US-Mexico for several years. Looking back, each of the issues from 2017 onwards contained widely distinct business messages from our firm, ranging from record-breaking transactional work and law firm profits on 2017, to the forced adaptation of the Mexican economy to geopolitical changes in 2018, and finally the stagnation of our economy in 2019 due to a series of erratic decisions by President Andres Manuel Lopez Obrador and his administration. Market uncertainty and increasing concerns for investors were well underway at the outset of 2020. But cliché as it may be, nothing could have prepared anyone for what was about to happen this year.
Here we are, then, in the midst of 2020, facing what is now clearly the most severe global economic debacle since the Great Depression, let alone the vast human tragedy. By the time we write these words, we already know Mexico will not fare well from COVID-19. While developed countries across Asia, Europe and North America have already installed rescue and recovery plans of inconceivable dimensions -mostly aimed at saving small business who are primary sources of employment-, our government has opted to stay stale, basically. Experts have already pointed to the potential loss of Mexico’s investment grade by 2021, likely depending on the results of the midterm legislative elections coming next summer.
So where does this leave us lawyers besides working from home during many months? Well, this depends on whether one sees the glass half full or half empty. Truth be told, our profession has been and continues to be one of sustained privilege; most of us have been able to continue serving our clients and attending each of our affairs without serious interruption and mostly seamlessly. All from the safety of our homes.
All of a sudden, a hefty chunk of clients to law firms were forced to alter their strategies, radically. The legal industry had to adapt swiftly to new needs; the experience accumulated in years of deal-making had to be abruptly applied to helping longstanding clients, with many of whom we have developed close friendships, survive. Those firms lucky enough to have invested in insolvency litigation and restructuring are now beyond busy. Sadly, expectations are that there will be an incalculable number of bankruptcies in Mexico as a consequence of the virus, exponentiated by the lack of robust economic assistance directives and support by the current administration.
But not all is lost. In addition to insolvency work, we are proactive witnesses of the notable uptick in revenue stemming from our technology practice group. Big-Tech companies, led by GAFAM, have evidenced that the world is accelerating towards technological solutions in most if not all of the components of our daily lives; the NASDAQ index is trading at all-time highs while fintech and ‘app’ companies are showing no signs of deceleration. Who had heard about Zoom just a few months ago? This appears to be welcome news for fund formation, private equity and M&A generally. Even during the pandemic, there have been substantial transactions announced between traditional banking institutions and technology companies, unimaginable just a few years back. Most of these deals imply considerable regulatory hurdles, so law firms carrying demonstrable sophistication and experience in banking, securities, pension funds and insurance are likely to be involved to sort these obstacles. Given the size of some of these deals and the potential competitive overlapping effects that they may have on the relevant markets, antitrust counsel to help navigate these challenges becomes critical.
It seems humanity is not likely to disappear as a consequence of this sad episode. If we concede to this premise, then we can safely assume that demand will pick up on homes, schools, and entertaining generally; leisure travel is already on the rise. In addition, valuations on infrastructure assets have been impacted in ways that can hardly be described. Those investors with longer horizon expectations are probably pleased to detect business opportunities in this jurisdiction that had not been available in decades. This is where solid real estate and hospitality legal teams can and should be tapped. We are especially optimistic on tourism prospects, where substantial investment has been made in our country and, with some long-term tweaks perhaps, it will be back stronger than ever. All of these enterprises typically come paired with strict ESG principles so expert advisors on these issues are additive to transaction outcomes.
We are optimistic, then, as we have been since our firm was founded. We may be working from home and may have had to learn a few tricks to safeguard full team communication and 24/7 availability, but interestingly we have had a chance to share more of our personal side with our team members, both colleagues and co-workers, and make it less a mechanical machine and more a human organization. We have learned and gained from each other in ways we never thought possible. We hope this ultimately derives in enhanced working experiences with our clients, to whom we are devoted.