Spain: A changing legal landscape

Garrigues’ Fernando Vives on the after-effects of the crisis.

Let’s take, as a starting premise, that the Spanish economy’s situation remains challenging: despite the European Commission forecasts, a shining 2.6% and 2.7% GDP growth in 2016 and 2017, Spain has yet to deal with an unemployment rate of around 20%. Clearly, we still have room to improve.

But our economy, while not yet out of the doldrums, has also experienced a significant turnaround in recent years. This turnaround has come about in part thanks to reforms undertaken in response to the crisis. Structural reforms helped ease existing rigidities in the labour and product markets. Banking sector stabilisation has progressed well, strengthening the resilience of the economy. Additionally, several major legal reforms approved during the very last years have significantly improved and modernised our legal framework.

The resulting landscape is quite different in many aspects: the very productive bases of our economy have been overhauled in depth. With a fixed course set for rediscovery of the concept of creating value, we are bound for an economy based on the creation of real wealth, which, paradoxically, will be based far more on ideas and know-how and less, or almost negligibly, on bricks and mortar.

Change in the legal profession

This new course has had a highly-relevant impact on all stakeholders in the Spanish economy, who have had to adapt to the far-reaching changes implicit in the paradigm shift: adapt or die.

The legal profession is no exception. In any case, it would be simplistic, if not dangerous, to say that the cause of all the change lies in the past crisis, the roots of which have to be traced back to 2008. In reality, the crisis has been nothing more than the trigger for a series of factors that have turned change into something inevitable.

‘The boundaries that separated local transactions from international ones have become, in many cases, irrelevant.’
Fernando Vives,Garrigues

These factors are basically threefold and very closely interrelated: internationalisation, technological development and the intensification of competition in the legal market.

Internationalisation presents notable challenges for law firms: although laws are intrinsically local in nature, despite the existence of increasingly uniform practices in M&A deals and of supranational regulations, such as in the context of the EU – which has sought to harmonise different fields of law with varying degrees of success – our clients are increasingly international players.

Thus, the boundaries that separated domestic clients from foreign clients and local transactions from international ones have not only become increasingly blurred, but also, in many cases, an irrelevance.

Second, technological innovation is another of the factors characterising, in an increasingly decisive way, how we practice law: document management systems, search engines, jurisprudence e-books… It all sounds like technology is there only to make lawyers’ lives easier, but be aware: that is not a universal truth.

The same technologies that allow us to focus our efforts on the creation of value, making us more efficient and productive, can become a dangerous double-edged sword: by becoming an essential element, technical obsolescence or the implementation of the wrong technologies can kill a law firm in the long run.

Third, the intensification of competition has caused a degree of confusion in the legal market: in the face of the paradigm shift and economic difficulties, clients are becoming more and more demanding. However, if we carefully analyse it, this increased demand takes the specific form of a call for greater quality and greater rigorousness in the allocation of resources. The demand for quality basically translates into providing more value-add.

Staying ahead of the curve

One of the main challenges of the new ever-changing economic model is putting the adaptability of organisations to the test. As in other industries, in the legal market one has to be alert to identify change, to anticipate it and adapt to it. Staying ahead of the curve and anticipating the needs of the market, and the needs of our client, have never been as urgent or crucial.

In this respect, one can say the legal services industry was already largely a pioneer of the new paradigm for the Spanish economy, the creation of value, which is why, in comparison to other sectors, the needs for its adaptation may not be so radical. This privileged situation should not lead us to stand still, but quite the contrary, it must be considered a better starting point from which we can aspire to stay ahead of the curve.

One of the key points around which the success or failure of any law firm revolves is its relationships with clients and, in particular, the quality of service, which is one of the key characteristics that set some law firms apart from others. Understanding our patrons’ concerns, goals and weaknesses has never been so relevant. The need to focus on our clients may not be something new. What has certainly changed is the utmost importance of doing so.

The flexibility of our organisations, an open mind and the ability to implement changes in the shortest time possible are now more necessary than ever. It is equally vital to know how to preserve our essence and, accordingly, how to distinguish what we are from what we do: while what we are identifies us to the client, what we do sets us apart from other firms.