As Spain’s law firms struggle with a wave of new government regulation, senior lawyers are trying to work out what impact this will have, if any, to life within the larger firms.

Some suggest that the current wave of new legislation is intended to better regulate the legal sector, within such diverse areas as legal education, qualification, employment relations and professional structures.

For others the issue is much wider. Spain’s law firms simply have to adjust to changes within the business environment in which they operate, and this requires modernising the way they are managed by adopting a more professional approach. Portuguese law firms face similar issues. Some, however, are confident enough to say that the changes will have little or no impact on their firm. It is simply that less professional firms need to catch up with the best practice of Spain’s largest law firms.

Access to the profession

Unlike other European countries, which insist on a period of practical training before law graduates may practise professionally; in Spain it is only necessary for a graduate to pay the appropriate Bar fees.

Managing partners say they have long been unhappy with the quality of young lawyers emerging from the universities, and their lack of practical orientation.

“Law students have traditionally finished their studies with a good theoretical background but no knowledge of practice,” says Maite Díez, Baker & McKenzie's managing partner for Spain.

This may change however, with the forthcoming law regulating entrance to the legal profession, which will insist that those among the 12,000 new law graduates each year that wish to practise must first undertake a postgraduate course and be tutored and formally examined in the practical aspects of the law.

One Portuguese partner commented: "There is a desperate need for a similar revolution here.”

Another, Claudia Santos Cruz, from Barrocas Sarmento Neves, who qualified then worked as a lawyer in the UK, agrees that the current Portuguese system has problems. “The main issue is not knowledge of the law or even understanding how things work in practice as we can teach them that. Students do not have the framework to understand and apply the skills required.” Cruz originally trained as a lawyer under the UK’s skills-based system where students cover topics like effective drafting, negotiating and client management.

Training

Yet many others see such developments as only a minor improvement in preparing an individual for a legal career. Many criticise the degree courses themselves, especially the quality of tuition, and suggest that the universities are not best placed to provide the new training course.

Faced with the challenge of having to give new entrants a background in the basics of working life as a lawyer, Spain’s largest law firms have already developed their own extensive training programmes – Garrigues even offering a tailored course alongside Harvard Law School.

The new regulation that law firms must offer recruits a formal training programme does, however, amuse another Madrid partner. “How can you function if you do not already provide training for your young lawyers?”

This is clearly not the approach within all firms. "People here learn by doing, which in my opinion is the best approach," says the partner at one well-known mid-size firm.

Others are aware of the need to change, and see the reforms as a positive step forward. "Of course I know we should be providing formal training for our lawyers as this is in our best interests, but I never manage to find time to get it organised."

"A law firm’s own internal training will always be more appropriate than that of the universities," believes one recruitment partner. "I fear that now we will be burdened with paying for the – less than perfect – new university course to attract the best students, while having to keep our own in-house programme."

For Stephen Fox who manages Ashurst’s Madrid office: "The reforms will have less impact on larger firms, and in my view have more to do with gaining consistency of training throughout the profession."

Recruitment

Although outside the scope of the reform, the adoption of effective recruitment processes – where firms can judge the true skills and potential of individuals – is another key issue. The largest firms say they have developed rigorous procedures to handle the large number of enquiries they receive, some even outsourcing the first stages to recruitment consultants.

Many mid-size firms explain however that their approach can be ad-hoc – often based on family and personal contacts. “We have no official timetable and, over and above reading CVs and speaking with candidates, no particular process for selecting candidates,” admits one managing partner. In contrast, candidates applying to the biggest firms undergo an intensive series of face-to-face and even written tests, while vacation placements are an increasingly popular way to see if potential recruits will fit in.

Retention

Despite difficulties with attracting young lawyers, it is currently less of an issue than keeping them. “Retention is a challenge for all law firms,” says Maite Díez.

While the high leverage and low pay business model of Spanish law firms has enabled them to remain amongst the most profitable in Europe, in some cases this has led to less than ideal working practices.

Young lawyers report that unrewarding work, poor employment conditions and low pay can be issues. As one young lawyer told Iberian Lawyer: “I pretend to work and they pretend to pay me.”

Up until recently, a managing partner would have been shocked if a relatively junior lawyer declared he or she was not prepared to work all hours to complete a deal. But times have changed and firms report that young lawyers are pressing harder for a reasonable work-life balance.

The past desire for promotion to partner is giving way to other ambitions. “We do not adopt a strict up-or-out mentality and are more flexible with career development,” says Díez. Some firms are already reviewing the options for different career paths within law, such as support lawyers (PSLs), legal managers and of-counsel.

Pay

The boom in Iberian law firm activity has also raised the expectation of financial reward amongst fee earners. Whilst management has kept a tight control on costs, some believe that partner remuneration is set to increase dramatically. But paying partners substantially more could reduce the partnership opportunities for deserving associates, leading to further retention problems. Managing partners may once again have to look at their partnership structures, with the prospect of more salaried partners and counsel.

One lead partner for Human Resources, questions whether, within the largest firms at least, pay is an issue. “In my experience, paying the right salary is less about money and more about justice: our young lawyers work exceptionally hard and deserve to be rewarded.”

José Luis Blanco, who recently moved from Cuatrecasas to open Latham & Watkins' practice in Spain, is less sure. “We are looking for the most exceptional young lawyers we want them to feel recognised as the best in a tangible way. That is why we pay more than anyone else.”

Gender balance

A parallel issue is the career path offered for female lawyers – very few of which make partner. Of the 21 new partners recently announced by Cuatrecasas only one is female. The four UK magic circle firms in Spain – Clifford Chance, Freshfields, Linklaters and Allen & Overy – have a total of 54 partners. While nearly half of their associates are female, only one is a partner – Silvia Paternain at Freshfields.

Maite Díez, at Baker McKenzie, is the only female managing partner of a sizeable firm in Iberia, but believes that change is inevitable. “It will come at some stage. I do not see it as an issue of discrimination - in Spain women often take prime responsibility for their children.”

Romana Sadurska, one of 9 female partners at Uría Menéndez agrees. “It is less about glass ceilings and more about women making career decisions based on their family situation." Her firm adopted more flexible career plans for working mothers over a decade ago.

Nonetheless, some say that a lack of role models for younger female associates is bound to impact on the way they see their career opportunities.

Managing Change

As one of the fathers of the modern Spanish legal profession, Antonio Garrigues, wrote recently that there is no option but to face change: “Changes point towards the modernisation of the legal profession, and from that perspective, can only be welcomed. Our profession cannot remain distant from the demand for change and the needs that today’s world generates and which we must face with realism, courage and foresight.”

Manuel Martín, managing partner at Gómez- Acebo y Pombo is the first to take up the challenge by reviewing his strategy and operations. He brought in management consultants Accenture, and as a result is expanding his management board and overhauling the career path for associates by giving them a chance to evaluate their own progress.

Salvador del Rey, a professor of law who leads labour law at Cuatrecasas, has been actively involved in the debate about reform. Although he remains broadly positive about the outcome he is less confident about the legislative process: “ We have started at the ceiling and then worked down towards the foundations. Right now we are in the middle of it, but in a few years’ time I am sure we will see it all as positive.”

Handing over the management of an Iberian law firm to a non-lawyer may be a step too far at this time. This, despite the logic of passing on the administrative and non remunerative aspects of running an office to a business professional and so freeing up partner earning power.

Even so, Allen & Overy is about to appoint a “ Director-General”, which will allow managing partner Íñigo Gómez-Jordana to concentrate more on his legal practice. Convenient timing as he now has Imperial Tobacco’s €14bn bid for Altadis on his time sheet.

Others are more sceptical about the impact of the reforms on the largest firms. Despite the size of Cuatrecasas, Salvador del Rey, believes the reforms are more of a challenge for the small and mid-size practices.

Steven Fox, agrees, inevitably he says the profession is already modernising.

“ The future is here already, we are just working out the exact shape it will take,” concludes Romana Sadurska.