United States: The Expanding Role For U.S. Law Firms In The Mercosur

U.S. law firms, in order to properly serve their clients in the Mercosur, must be in a position to provide counsel on the legal, political, business, cultural, regulatory, and media components of every issue, both in the United States and in the Mercosur.

Today's legal issues in the United States are contested not only in conventional legal arenas, but also before federal agencies and departments, on Capitol Hill, and in the media. The same is true in the Mercosur. Providing proper counsel to a client in regard to the political sensitivity required in any international business transaction is probably more important than merely providing sound legal advice. Most U.S. law firms are quite capable of providing competent legal counsel. However, very few U.S. law firms have the ability to blend this valuable legal counsel with sound political advice, for both inbound and outbound transactions, with respect to Argentina, Brazil, Uruguay and Paraguay.

The most important factor to consider when attempting to penetrate international markets is culture. The Mercosur is not an exception to this rule. U.S. law firms, if they are to properly counsel their clients, must not assume culture is the same throughout the Mercosur. Furthermore, U.S. law firms should be aware that most Americans suffer from "self reference criteria" when attempting to sell in international markets and must remember that world markets do not have the same preferences as the U.S. In Brazil, for example, purple is the symbol for death and therefore not suitable for labeling and marketing. The U.S. law firm which allowed its client to market the Chevrolet "Nova" to Spanish-speaking countries is demonstrative of the height of ignorance which some U.S. law firms show in regard to the need to properly, and fully, counsel their clients. "No va", in Spanish, means "it does not go"!

U.S. law firms may establish a presence in the Mercosur by: (a) acquiring a Spanish/Portuguese-speaking law firm, probably in Miami, Florida, which may, or may not, have the necessary expertise in the Mercosur; (b) opening an office in Buenos Aires, Montevideo, Sao Paulo or Asuncion and hoping that clients will suddenly appear at the front door; or (c) entering into a reciprocal agreement with a well-established law firm in the Mercosur.

The most prudent and cost-effective way for a U.S. law firm to attempt to penetrate the Mercosur market would be by entering into a reciprocal agreement with a well-established law firm in either Buenos Aires, Montevideo, Sao Paulo or Asuncion. Unfortunately, this approach limits the U.S. law firm to the inbound business that can be generated by only the one local law firm with which it is associated in the Mercosur.

As international business has become increasingly complex, the role of lawyers in international business has become more pervasive. The services provided by U.S. law firms are no longer limited to documenting transactions planned and negotiated by business executives. Nor is it sufficient for the U.S. lawyer merely to enter at a far earlier stage and be part of the negotiating and planning of a client's international business. In order to be competitive in the international marketplace, and to maximize profits for both itself and its clients, a U.S. law firm must be willing to take on the more proactive role of a full service business consulting firm. Such a business consulting firm would not merely provide legal counsel to its clients but would also identify and generate business opportunities for its clients in the Mercosur. The multilingual and multicultural business consulting firm would advise U.S. and other non-Mercosur companies investing in the region and would represent Mercosur companies in trade with the U.S. It would advise clients in all types of financings - project financings, capital market transactions, corporate and structured financings, lease financings and securities offerings - as well as in international trade, mergers and acquisitions, privatizations, divestitures, joint ventures, real estate, intellectual property, taxes and transfer pricing, U.S. and Mercosur regulatory matters, and the negotiation, litigation and arbitration of business and sovereign claims and disputes.

Major U.S. accounting firms, such as Price Waterhouse, are already well-positioned as "business consulting firms" in the Mercosur. Price Waterhouse evolved from an accounting firm into a business consulting firm with an army of "in house" attorneys. There is no reason for U.S. law firms to standby idly on the sidelines while the "Big 5" accounting firms' "in house" attorneys are serving as both business advisors and legal counsel to U.S. and Mercosur companies.

U.S. law firms should forego the traditional approach of entering into reciprocal agreements with well-established local law firms in order to establish a presence in the Mercosur. By allowing itself to evolve into a business consulting entity, the U.S. law firm can penetrate the Mercosur market and have a greater chance of succeeding because it is not limiting itself to merely forming a close relationship with only one Mercosur law firm, as is the case with a reciprocal agreement arrangement. A business consulting/law firm can form close relationships with several different Mercosur law firms, thereby increasing its potential market share and allowing it to provide more complete counsel, legal, political, and cultural, to its clients.