The following column was written by Antonio Leal Holguin, Director of Latin America for Adam Smith, Esq.
Back in the early 2010s I was practicing at a family-owned law firm in Bogota, Colombia. As I became increasingly interested in law firm management, I began reading the work of authors like Richard Susskind and Bruce MacEwen, which opened my mind to new ways of thinking about the legal profession and the legal industry. Never would I have imagined that I would end up working with Bruce.
In the autumn of 2014, when I was studying at Columbia Law, Bruce gave a talk at the law firm finance and management course I was taking. More than a year later, I sent him an email sharing with him the exciting developments taking place in the Latin American legal market and asking him to have coffee with me. He accepted.
That was the start of an incredibly satisfying adventure. For the past three and a half years, I’ve had the privilege of working as director for Adam Smith, Esq., focusing on Latin America. During this time, we’ve worked as a team to deepen the company’s expertise on the dynamics of local legal markets in the region. In 2016, Bruce, Janet and I decided to study how local clients and law firms were perceiving the changes taking place and, particularly, the strong internationalization trend. The results were published in the Latin American Legal Market White Paper. Based on additional “shoe leather” research and analysis of market data, we published several pieces focusing on the effects on local markets of the increased interest of international firms in the region.
Part of the reason why I joined the team at Adam Smith, Esq. was my conviction that it was worth sharing the company’s distinctive message with Latin American audiences. Since its beginnings, Adam Smith, Esq. has advocated running law firms like the businesses they are, including adopting a strategy and having the discipline to stick to it. Moreover, Adam Smith, Esq. has always been about helping law firms think about their business and their place in the market. I believed this would be helpful for many local Latin American firms that were transitioning from family-based structures to more business-like ones.
As part of this effort, we published Mundos del mañana, the Spanish translation of Tomorrowland: scenarios for law firms beyond the horizon. We travelled the region, servicing clients and participating in industry and academic events in Mexico, Colombia, Peru, Chile, Brazil and Argentina.
It’s been a fascinating ride.
As Frost put it, way leads on to way. In the coming days, I will begin working as Consultant to Covington & Burling’s Latin America Practice. So, the time has come to say “hasta pronto” to my dear friends at Adam Smith, Esq. and to our terrific clients. It was thanks to the trust of so many law firm and thought leaders in the region that we were able to build a successful Latin America practice for the company in a short period of time. To all of them, ¡muchas gracias!
And I’d like to publicly thank Bruce and Janet for their commitment and enthusiasm for our Latin America project. I could not have asked for more generous, dedicated and supportive mentors. The depth, decency and joy with which they approach Adam Smith, Esq.’s work will stay with me forever.
I’m excited about the company’s current projects – including the Year of Law Land Segmentation – and, as a devoted reader of Adam Smith, Esq., I look forward to continue learning from its unique perspective on the legal industry.
Some parting thoughts on the future of the Latin American legal market.
Latin American legal markets have become increasingly competitive at the same time regional economic growth has decelerated. The rise in international firm interest in the region and the greater sophistication of local players, among other factors, have made the client and talent markets more competitive. But according to the United Nations Economic Commission for Latin America and the Caribbean, ECLAC, the 2014-2020 period will be the lowest growth one in seven decades for the region. The World Bank estimates that regional growth slowed down to 0.8% in 2019 and that it will rise to only 1.8% in 2020. Of course, Latin America is a big region and there are significant disparities in how robust individual economies are. Colombia (with 3.6% projected growth in 2020) and Venezuela (with -14%), for example, could not be more different.
An environment of greater competition and slower growth will put greater pressure on local firms and will demand not only that they run themselves in a more business-like fashion, but also that they be more creative to differentiate themselves from competitors. It will also put pressure on international firms operating in the region or eyeing it for expansion to differentiate themselves from their peers and from local firms with international networks.
Many family or founder-centric firms in the region are working towards building more business-like firms, modeled after the Cravath Model. While it’s critical that they adopt business practices to run their firms, I’m concerned that they’re migrating to a model that is already showing signs of obsolescence. As Bruce extensively discussed in Tomorrowland, the traditional law firm model is beginning to creak and may continue to work for only a handful of outstanding firms. So merely imitating the model of North American firms and calling it a day may not be enough going forward.
In contrast to markets like the US, many Latin American countries have few limitations on how law firms may organize themselves and who can own law firms. This allows for many creative business models. And, even without this regulatory flexibility, there’s no need and perhaps few compelling reasons to follow the North American model today.
For international firms, the challenge will be to differentiate themselves in an increasingly crowded market. That they’re a big brand somewhere else doesn’t mean people will know who they are in Latin America. From the local perspective, many international firms look alike. Therefore, they need to work hard to show the market why they’re different and why they deserve a seat at the Latin American table.
These are exciting times for Latin American legal markets. The future will likely reward creative firms that throw complacency out the window and commit to bold, disciplined experimentation.
And some final entries for your reading list:
- The Year of Law Land Segmentation
- Tomorrowland on Amazon
- Mundos del Manana on Amazon
- The Latin American Legal Market Whitepaper