USA e-Report 2012

November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com

EU & CompEtition REpoRt

IBERIAN LAWYER

USA ANNUAL REPORT 2012Reaching into and beyond the US

An abstract from Iberian LawyerNovember / December 2012For further information please contact

[email protected]

• IBERIAN LAWYER • November / December 2012 www.iberianlawyer.com

It is no surprise that, in a downturn, a drop in transactional activity may be matched, or even exceeded, by a rise in disputes.

This requires new approaches to case management. With long delays and rising costs, courts are increasingly seen as inefficient, expensive and unpredictable.

In-House Counsel, therefore, require a strategic framework for managing a higher number and variety of disputes in the most effective, as well as efficient way.

For the larger cases, the challenge is in anticipating the resources required, risks and potential benefits involved. With lower value litigation, efficiency and cost reduction is key.

At the same time, while companies must be prepared to fight, they must also be open to talk. Deciding which approach to adopt, and at what time, is their biggest challenge.

Master Class

To fight or settle:Managing disputes more effectively?

Corte de Arbitraje de Madrid, January 25th, 2013

In association with:

A group of General Counsel and Heads of Legal will join dispute resolution experts from leading law firms to discuss new approaches to managing disputes more effectively.

Master Class key issues:

Techniques for dispute prevention; •

The risk and benefit analysis ─ when to fight or settle;•

Early case assessment;•

Arbitration and alternatives to using the courts; •

Effective case management for arbitrations.•

For more information please contact: [email protected]

November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com 51

SpECial FoCUS: US

The US has long been an attractive market for Iberian companies offering access to a single market of over 300 million people, with companies as diverse as Inditex, ACS and Santander all now well established.

But, as the economic downturn becomes more evident in Spain and Portugal, access to international markets has become a vital survival strategy. For many, the US has become even more attractive, not only for the domestic opportunities on offer but also as a conduit to Latin America.

Lawyers across the US caution, however, that despite recent good economic news, challenges still exist. Nonetheless, businesses can utilise a US-base not only to extend their reach across the country itself, but also across the wider region. The key issue therefore is where to locate.

“New York and Miami have grown to be major centres of commerce for Iberian companies as gateways to the US market, Latin America and, to a lesser degree, Africa,” says Luis Perez, Partner with Hogan Lovells in Miami. “Whether in the financial sector, hospitality, energy, or infrastructure development, Iberian companies are finding that Miami particularly is a relatively easy market to penetrate and to use as a springboard within and outside the US.”

Iberian companies, and most notably Spanish businesses, view south Florida as a very comfortable location, agrees Fernando Alonso, Partner with Hunton & Williams in Miami.

As a result of its large Spanish and Portuguese-speaking population, Miami

affords the opportunity to operate with relative ease as regards language capabilities when doing business in Latin America and the US. “In many cases,” explains Alonso, “this is coupled with the cultural advantages of a professional class that, in large part, has roots in Hispanic culture. As a result, companies may find extra comfort in relying on Miami-based professionals when operating in the US or across Latin America.”

Travelling around the city, most high profile are the financial institutions Banco Espírito Santo, Banco Santander, Sabadell, and Banco Popular while BBVA recently re-entered the market targeting wealthy individuals. But also present are all the leading Iberian telecoms, infrastructure, real estate and technology players.

Some now say that the city has emerged as the favoured US entry point for Iberian businesses, albeit New York also has specific attractions, emphasise lawyers there.

“The choice of New York is mostly driven by the proximity to the prominent local industries, such as banking, finance, media, advertising or legal,” says Xavier Ruiz, Partner with K&L Gates in New York. “In terms of New York as a headquarters for companies’ Latin American operations, it is probably only true for the financial and perhaps legal industries. It is not however usually chosen as a base for pan-US business due to its operational and tax cost.” He joined the US firm from the local office of Garrigues in 2011 to help develop business from Spanish entities and divides his time between Spain and Manhattan.

Domestic pressures are pushing Spanish and Portuguese companies to seek growth opportunities well beyond the Iberian Peninsula and, for many, the size, scale and stability of the US is a major draw; with businesses increasingly gravitating to Miami to take advantage also of its deep connections to Latin America

Reaching into and beyond the US

Los EEUU son un mercado atractivo desde

hace tiempo para muchas de las empresas ibéricas,

ofreciendo acceso a un mercado único con

más de 300 millones de personas. Pero con la

actual situación económica en España y Portugal,

el acceso a nuevos mercados internacionales

se ha convertido en una estratégica vital para

muchos negocios.


International benefits The benefits however of using the US as a regional base to enable companies to extend their reach into Central and Latin America are clear, agree lawyers across the country.

“A frequent comment is that Miami is the northernmost city in Latin America,” says Pedro A Freyre, Chair of the International Practice at Akerman Senterfitt, a leading M&A firm with a Latin American practice, “and this holds true not only in how well-connected the city is – the city’s airport is the regional hub – but also in the number of Latin American companies and the quality of professionals that have a base here.”

Alongside the large number of law firms that have focused their Latin American practices out of the city, a very large number of Fortune 500 companies utilise Miami in the same way, and where most now locate their regional General Counsel.

The feeling is obviously mutual. “The short cultural and geographic distances the city has with Latin America, and the increasingly strong relationships between businesses and attorneys in both regions, have steered it into a global hub for a company’s business and legal strategy,” adds Mariano Batalla, Founding Partner at Costa Rica’s Batalla Abogados, “especially when deals are negotiated or ruled by American regulations such as New York Law.”

Besides a common culture and language, and Miami’s perception as an attractive location for assets, it has also emerged as a convenient place for the transfer of ideas and regional knowledge. “For many businesses, the city has emerged as a point of centralised control for human resources activities such as recruiting,” says Philip Berkowitz, Partner with national labour and employment firm Littler Mendelson.

Nevertheless, he believes that New York, as the centre for international commerce in North America, remains the first choice for Iberian firms wishing to establish themselves in the Americas. From there, they may choose to expand into Miami or even Houston, which, he points out, is also an important market for Latin America.

In the eyes of many Iberian businesses, the city may therefore win out in terms of quality of life and the ease of attracting a Spanish and Portuguese-speaking labour force, and offers lower employment and tax costs, but New York remains the financial capital of the Americas.

“For certain industries, such as banking, finance and insurance, New York is the place to be. Manhattan has unbeatable brand recognition, which surely carries intangible benefits to companies choosing to locate their US or Latin American headquarters there,” insists Ruiz at K&L Gates.

With the US Presidential elections now decided, Barack Obama’s second term will in any event likely reinforce the opportunities presented to Spanish and Portuguese companies, say lawyers.

“There will be an ongoing focus towards making the

52

SpECial FoCUS: US

US energy independent and on rebuilding the country’s ageing infrastructure,” explains Perez at Hogan Lovells. “Iberian companies are uniquely positioned to take advantage of this continued focus as a result of their invaluable experience and knowledge in both areas.”

Nonetheless, given the ongoing challenges faced by many domestic businesses, there will not likely be any specific

incentives to attract foreign companies. “President Obama’s policies are not designed to benefit Iberian businesses, but certain incentives, especially for renewable energy and transportation projects will clearly play to their strengths, among them construction and energy companies and financial institutions,” says Ruiz at K&L Gates.

Regional interactionMore subtle changes may, however, prove positive. The Hispanic vote was a key factor in the Democratic win, and some suggest this may encourage a move towards immigration reform, which will allow a more ready exchange of executives both from and to the US and Latin America.

“This may prove attractive for Iberian companies and executives who expect to move their families to the US,” says Berkowitz at Littler Mendelson. “And, as a key state in the election and as a centre for immigration reform, Florida in general and Miami in particular are in a unique position to benefit from all of these political and economic reforms, adding to the city’s attractions.”

There is already an increasing flow of trade between Latin America and the US, the importance of which was emphasised by both sides during the Presidential campaign. And there is an increasing integration of regional economies and industries, as businesses seek new market opportunities.

“As well as the flow of investment out of and through the US, we also see an increased flow inwards of Latin American and Iberian capital,” says Marco Schnabl, Arbitration Partner with Skadden Arps Slate Meagher & Flom. “Many large Mexican companies now view the south west US as a natural extension of their operational sphere, targeting the established large Hispanic populations.”

Indeed, Schnable observes that Latin American interests have been behind the recent acquisitions of some of the most iconic US brands, including Burger King and Budweiser. “And this trend is likely to continue if domestic economic policies in the US continue to depress asset values in what foreigners may well regard as a huge and ultimately stable and profitable market”.

Meanwhile, US companies continue to look at Iberia, and with the establishment of Spain’s ‘banco malo’ there is a clear rise in interest in distressed investment opportunities, says Alfredo Anzola, Partner with Squire Sanders in Miami.

“We see a growing interest in the real estate market by funds and other investors, but we also see new investment models emerging across other sectors. US distributors are working with medium-sized and smaller companies to package and promote Spanish products to the US markets, and especially towards the Hispanic and Spanish-speaking communities.”

Every crisis brings a certain degree of opportunity and those companies, across Iberia and in the US, able to take a wider view will undoubtedly benefit in the long run.

“ As well as the flow of investment out of and through the US, we also see an increased flow inwards of Latin American and Iberian capital. Many large Mexican companies now view the south west US as a natural extension of their operational sphere, targeting the established large Hispanic populations

Marco Schnabl, Skadden Arps Slate Meagher & Flom”

November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com 53

SpECial FoCUS: US

Connecting national and local legal needsOne of the challenges facing foreign companies entering the US understanding the complex mix of national federal, state and local regulation

Los EEUU siguen siendo para muchas empresas

ibéricas un mercado atractivo, pero hay que

pensar más allá de lo que supone conducir un

negocio. Los retos actuales a los que las empresas

extranjeras se enfrentan conllevan un marco

normativo federal, estatal y local bastante complejo.

Yosbel Ibarra

New York remains a favoured destination for banking, insurance and finance companies heading to the US, the recent financial upheaval in Spain is being closely followed including a large number of leading Iberian institutions, says Xavier Ruiz, Partner with K&L Gates in the city.

Sabadell is among the latest arrivals in Manhattan, following a trend by banks including Santander and BBVA, which have both built strong investment banking operations, and with reports of further Iberian openings likely to include CaixaBank.

“The perception among the international finance community is that New York is a focal point for any serious player wanting to develop a credible US and even regional presence operation,” says Ruiz. “It is where the leading talent, know-how and corporate clients are all located.”

New York’s regulatory environment is also perceived as more finance institution-friendly than elsewhere in the US, says Ruiz, albeit the “Made in Spain” brand is not what it once was and Iberian

operators may now attract greater scrutiny by local banking authorities. The recent closure of Banesto’s local operation, for example, is recognised as a prelude to the bank’s absorption by Santander.

“We have seen the consolidation process experienced in Spain replicated in Manhattan and Miami with some local operations slimmed down, absorbed by other banks or closed; but for any operators the local banking regulators want to ensure solvency and that their capital and anti-money laundering protections are in place.”

A growing number of wealth management and corporate finance institutions are now entering the US, including the leading Andorran banks, but such a focus means that not all are placing a sole emphasis on New York.

“Most foreign entrants have the goal of building a domestic clientele, but a number of boutiques targeting wealthy Latin Americans see Miami as a major centre,” he says. So while New York remains the major draw for most major financial institutions, their private banking divisions may, however, be located in other centres.

Crisis fallout felt in New York

Nueva York es uno de los destinos favoritos de

la banca internacional, sector financiero y

asegurador que invierte en los EEUU, afirma

Xavier Ruiz at K&L Gate, incluyendo un número

elevado de empresas e instituciones ibéricas.

Xavier Ruiz

The US remains a very attractive market for many Iberian companies, says Yosbel Ibarra, Shareholder with Greenberg Traurig in Miami, particularly many large infrastructure companies, but there is more to doing business there than simply setting up shop.

“The reality may seem daunting to many,” he explains, “particularly those companies intending to operate across different states where they may have to manage often divergent regulatory requirements.”

Florida has seen a number of major infrastructure wins by Spanish construction companies and many are now using their success there as a springboard to tender for work across the US, he says. But while each project inevitably brings its own challenges, a key demand always is to deal with local regulatory requirements – each State has its own take on projects, financing and permitting.

“Public-private partnerships (P3) are a relatively new development across much of the US,” says Ibarra, “with companies often

having to overcome public, political as well as legal hurdles to ensure success”.

Florida, Virginia and Puerto Rico have been at the forefront of P3 developments, with model P3 legal regimes and, generally, strong political support. But even in these markets, political changes and perplexing local issues, together with continuing finance pressures on public purses, create challenges for new projects, says Ibarra.

The construction sector is perhaps only one of the most obvious examples of the complex web of legal and regulatory issues that can confront businesses in the US, he says. Those operating in the food or transport sectors, for example, need to address licensing requirement that are often as complicated as those faced by companies building the country’s roads, railways and bridges.

“It is vital for a company’s success that it connects with dedicated local expertise,” adds Ibarra, “including legal counsel who can help identify and address potential roadblocks to developing a successful business in the US.”


Portugal’s In-House Counsel are facing an uphill battle against what appears to be a constant wave of change. New laws and regulation are being seen on an almost daily basis.

In 2013, this will include radical changes to the tax system, which will have a huge impact upon business. But change brings opportunities as well as challenges, although not always in equal terms.

This Master Class will address the strategic opportunities (plus risks) of the tax reforms affecting corporate structures, salaries and benefits, as well as finance. In addition, it will address tax issues for businesses with international interests and how to manage tax litigation effectively.

Master Class

The year ahead: Tax tools and strategies for times of crisis

Lisbon, January 30th 2013

In association with:

General Counsel and Heads of Legal examine the strategic opportunities arising from the current Portuguese tax reforms and discuss the tools to aid in successful outcomes.

The moderators include: João Magalhães RamalhoHead of TaxPLMJ

Master Class key issues:

The changes themselves;•

Their impact on business and finances;•

The strategic consequences on company structures;•

Options for new approaches to remuneration and • benefits;

Tax issues when a business is internationalising;•

Managing tax litigation effectively.•

For more information please contact: [email protected]

November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com

IBERIAN LAWYER

An abstract from Iberian LawyerNovember / December 2012For further information please contact

[email protected]

Documents

USA e-Report 2012