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Law firms have been discovering that there’s far more to Spain than Iberian business stereotypes would suggest. Since a fiscally conservative government took power in 1996, the country has been transformed from Europe’s economic stepchild to one of its hottest economies. The metamorphosis has sparked a radical shakeout of the sleepy Spanish legal market. Once bit players in that scene, the Big Five accounting firms now control nearly half of the top-end business. Meanwhile, several leading U.K. firms have expanded aggressively there. Linklaters & Alliance arrived most recently, opening a Madrid office in 1999. It joined other, more long-established Magic Circle firms, such as Allen & Overy and Clifford Chance. So far, however, few American firms beyond Squire, Sanders & Dempsey and Jones, Day, Reavis & Pogue, both based in Cleveland, have opened offices in Spain. The demand for legal work in Spain exploded after the new government set in motion a slew of telecom and utility privatizations four years ago. The biggest Spanish law firms weren’t structured to handle the volume. Most were small, young (less than 50 years old), family-run, and “not especially profitable,” says Javier Cremades Garcia of Madrid’s Cremades Abogados, a highly regarded 50-lawyer telecom and technology firm in Madrid that has represented Sprint Corporation and LM Ericsson. So when the accounting firms began making generous merger offers to the Spanish firms, many accepted. Arthur Andersen’s 1997 merger with Madrid’s then-200-lawyer J & A Garrigues (now Garrigues & Andersen), was the first and most notable union. Besides being the country’s largest firm, Garrigues was also widely thought to be the country’s most profitable. The decision to link up with Andersen came easily, says firm founder and managing partner Antonio Garrigues Walker: “The synergy was very good. They were tax, and we were legal.” Other Spanish lawyers apparently had similar thoughts. PricewaterhouseCoopers acquired Madrid’s 60-lawyer Estudio Legal last year. And Ernst & Young International and KPMG International have hired laterally to build up their own legal service networks. The result is that only two top-tier Spanish firms remain independent: Barcelona’s 446-lawyer Cuatrecasas Abogados and Madrid’s 224-lawyer Uria & Menendez. The Americans, or more precisely, the Clevelanders, have also joined the fray. Squire, Sanders opened in Madrid in 1997. Jones, Day opened there in January 2000. Wesley Johnson, Jr., head of Jones, Day’s Paris office, explains that, as “a eurozone country where there’s a very strong back and forth of investment flow,” Spain was a place the firm wanted to be. The Jones Day Madrid office is rapidly expanding to serve such clients as Banco Santander Central Hispano S.A. and Endesa S.A., the Spanish utility, Johnson says. Firms are also attracted by the Spanish market’s spectacular growth in corporate and transactional work and its shift away from privatization. And while Spain’s ongoing, aggressive liberalization of the telecom industry provides a continuing source of work for lawyers, partner Juan Picon of Squire, Sanders notes that there has also been “huge activity” in the technology sector, a sector his firm is targeting. Garrigues of Garrigues & Andersen is equally optimistic about the Spanish technology scene. “Telecom, and especially e-commerce and e-business — those are the areas where we’re expecting tremendous growth, similar to what has happened in the U.S.,” he says. Lawyers in Madrid seem almost unanimously confident that the expansion will continue, at least as long as the Spanish economy powers ahead. “We certainly intend to expand our office radically from where it is at the moment,” says Terence Kyle, chief executive officer of Linklaters & Alliance. Certainly, the perception is that there’s more than enough work to keep everyone — and then some — busy. “Now every British firm has an office in Madrid,” says Picon. “But the market is still growing.” That future potential has fueled the Madrid gossip mill. Picon says the legal community is buzzing with rumors that White & Case, Weil, Gotshal & Manges, and Cleary, Gottlieb, Steen & Hamilton intend to open offices in Madrid. Cleary, Gottlieb managing partner Peter Karasz and Weil, Gotshal managing partner Stephen Dannhauser both say that their firms have no plans to go to Spain. White & Case managing partner Duane Wall is more equivocal. “We’re watching Spain very carefully, both [because of] its importance in Europe and its importance right now in Latin American practices,” he says. “We have no plan under consideration at the current time. We are trying to assess whether we should develop such a plan.”

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