UK law firms are among the largest and most well-regarded firms in the world. Yet, outside of a few “Magic Circle” firms, their footprint in Latin America is faint, especially when compared to the Yeti-like tracks made by their US counterparts.
US legal dominance in the region reflects a time when US investors held a significant, if not a predominant, role in inbound foreign direct investment (FDI). According to the US Department of State, Argentina (my country of residence) currently hosts 500 US companies. Nonetheless, the Argentine Government has taken several actions in recent years to dampen the investment climate and to make the business environment challenging.
This means that FDI is increasingly sourced elsewhere and the almost reflexive look toward the US for legal counsel is no longer the case. Because London, like New York, offers an excellent source of law and dispute resolution forum for international transactions, the question of whether UK firms can grow their business in Latin America is answered, I think, with a resounding “sí.”
Three Sources of Opportunities for UK firms 1. Build on Existing Expertise: UK firms should take advantage of the depth and breadth of the London legal community’s international experience and expertise. UK firms should capitalize on their connections with investors in countries—like China and India—whose participation in Latin American FDI is rapidly increasing. As many of Latin America’s economies move through the current stress cycle, the horizon of economic rebound moves nearer. Outbound investment from Latin America will also increase and UK firms should seek to cultivate new ties with banks and investors doing business in the region, emphasizing an emerging market expertise garnered for so long in Asia, Africa and Eastern Europe.
2. Make London a Judicial Center: The uncertainties of Latin American judicial systems and their vulnerability to political will lead many to choose foreign courts. Clients are appropriately fearful of the costliness and time-consuming nature of US-style discovery. UK firms could highlight this point and contrast US discovery with England’s disclosure obligations and “proportionality” principles. London, like New York, should assure that parties can access this judicial system, even if they lack sufficient contact under a conventional jurisdictional analysis. Also, some clients may prefer England’s “loser pays” system, as well as its stricter requirements for appealing adverse judgments.
3. Build Relationships: Many observers mention that UK firms will face a challenge competing on cost, but in my view, their greatest challenge in Latin America involves relationships. Many US law firms enjoy profound relationships with Latin American colleagues, often developed while earning degrees together at US law schools or working together in US or Latin American law firms. The UK firms need to work with UK universities to entice these individuals. A difficult job market and US policy discouraging work visas for those who want to stay on after completing an LL.M. offer an excellent opportunity to attract and retain talent.
Looking Ahead UK legal expansion in the region should follow FDI but need not be tied to UK-sourced FDI. Rather, the UK law firms should position themselves as an expert and more cost-efficient alternative to the US legal market. Representatives of the UK legal community, including academics, should build on a perceived image of the English as less pedantic and more culturally sensitive than their North American counterparts. Latin Americans rely on relationship networking. The UK legal community must minimize its cultural distance from its Latin American colleagues. The rewards will not be immediate but they will prove sustaining.
