“From a legal industry perspective, we think that Andorran legal market has strong potential but has to believe in its capabilities, invest in promotion, attract talent, shift to specialisation, and concentrate on creating bigger and stronger players.“
Andorra seems to be a place surrounded by legal legends and myths. Contrary to the outsider opinion, what are the main challenges of Andorra’s jurisdiction from a legal perspective?
Andorra, as a country to live in and a jurisdiction to do business, has experimented with incredibly positive and unprecedented changes in the past decade. The country has opened to foreign investment, transitioned from an offshore to a fully compliant onshore jurisdiction with a complete and moderate taxation system, adopted very stringent AML standards, implemented a substantial part of the financial services EU regulations, modernised its civil procedural law, adopted a new code of administration, enacted an arbitral law etc. The list is overwhelming, but the most relevant part is that it has done that with an extremely limited budget.
In our opinion, there are still many challenges needed from a legal perspective. Our main concerns from a need for legislation to adopt a standing view are (i) that the insolvency framework needs to be urgently reviewed, (ii) there is a strong need to create a capital markets legal framework, and (iii) certain financial activities need to be updated especially in the funds’ industry. A general holistic approach and upgrade are needed in the financial services industry and companies’ law. From a legal industry perspective, we think the Andorran legal market has strong potential but has to believe in its capabilities, invest in promotion, attract talent, shift to specialisation, and concentrate on creating bigger and stronger players.
But certainly, it is not a taboo territory for which only a few are prepared. Is it? Could you tell Legal Dealmaker’s readers about the idiosyncrasy of the Business Law issues, the main competitors and local actors, and how the interaction is with other international firms?
Andorra is a territory and economy that needs very profound knowledge of it if you want to achieve excellence. Its legal system is rich, complex and full of insights, some very tricky. International firms understand that, and when they have a matter with the Andorran component, they search for a local counsel that can deliver to their standards. As we are totally independent, working with them is a very important part of our work, and we are proud of it. However, certain actors in neighbouring jurisdictions, particularly Spain, tend to see Andorra -mainly for cultural reasons- as a potential pitching field. Some firms tend to actively work for several reasons – historical, client-driven- on a cross-border basis for local clients. These can be risky practices that, when comes to rendering Andorran-based law advice, can imply relevant regulatory and legal consequences that are inadequately assessed.
The local market has a large number of outstanding lawyers, especially in the litigation field. It is also a jurisdiction where we have to deal carefully with conflicts due to its small size and concentration of participants. Foreign investment, atomisation of the legal market and a rather old-fashioned vision of the profession have led to certain local services providers – basically accounting, corporate services and advisory firms that are not law firms but sometimes have a lawyer in their teams- to gain market share, usually in plain vanilla corporate, labour, and tax advice together with accounting and consulting. This is an important issue that needs to be addressed and is a threat to the quality of the legal works, which can lead to future litigation and the good reputation of the jurisdiction as it usually misleads the receiver of advice. The local law sector is in a need to pull its socks up.
With these particularities of Andorra’s market and the country’s transformation, would you say they are demanding new roles -specifically from your law firm- or from the legal market in general?
Our firm is demanding top-tier lawyers to accompany the transformation of the country. This transformation has extremely specific driving forces, but our vision always encompasses top-quality works aligned with the highest standards. In the short time, Corporate & M&A roles with a strong background in IT&IP will be demanded to cover new projects focused on technology. We believe the Financial Services industry will flourish around a refocused funds and digital asset industry. Litigation tends to be more international, with a special focus on asset recovery. Regarding tax, the growth of litigation and transactions will require solid and efficient teams with strong technical backgrounds and delivery.
Why did you set up C&L in Andorra? Tell us about the origins of the firm and its strategic growth path. What are its main added values or differentiation elements?
C&L was set up and flagged as Andorran and Spanish since its origins in 2013. That was in our very first business plan. I have carefully followed the Andorran economy and financial sector since the early 2000s and had participated in several of the most relevant transactions in that decade from my previous positions. When Andorra opened its economy, it became remarkably interesting, but the key factor happened in 2012: Andorra signed the monetary agreement with the EU and had to adopt the most substantial part of the EU financial services regulation repertory. At that time, the window for cross-border advice in financial services regulation for non-local firms closed. Local law advice in Financial Sector was imperative for all players, including foreign financial counterparties and local entities, to adapt. That was our main expertise, so we set up C&L in Andorra to fill that gap, and has been, with extremely challenging work, a great success. Nowadays, we are one of -if not the largest- main law firms in the jurisdiction. We travel- without a rest- around the world. We invest time and money talking about our jurisdiction’s advantages and work hard to reduce its disadvantages.
In 2020 your law firm integrated Manubens’ team, headed by Elena Redondo. Two years later, what is your assessment? Are there future operations of interest on the horizon?
The integration of the former Manubens’ team headed by Elena has been a great achievement and a key milestone for our firm. We are immensely proud of the synergies that we have created. Before the deal, we were a project, and transaction-oriented firm with advice and deals focused on Financial Services and some international corporate & M&A-driven work. Ancillary practices were subtracting more than adding value. Today we are multidisciplinary and more recurrent in matters, and we no longer have ancillary practices. Instead, we have a top-tier Tax and Public & Environmental law practice. We also have strong capabilities in labour law and litigation. But the most important part is that we think the same and share a common vision. We do not discard future transactions, but we are focused on organic growth and opening our shareholding structure to partners.
We have talked about the market, but what are the main recent transactions and matters in which you are involved?
We have recently been involved in the main trending Andorran transactions. We have advised Morabanc in the acquisition of the stake held by Banc Sabadell in BSA and its integration, JC Flowers in the sale of its stake in Vallbanc to Crèdit Andorrà, the Andorran Government in its global debt issuance programme and the issue of sustainable notes. We are also involved in interesting real estate projects where we advise some of the most relevant projects in the jurisdiction in Funds. We regularly act for the vast majority of international banks when dealing with the local financial system. We also have disruptive projects in crowdfunding, payment services and digital assets.
Finally, from your experience these years. What will be the future of the jurisdiction?
Andorra has a bright future as a jurisdiction if it can manage its competitive advantages with intelligence. Next year is the 10th anniversary of our firm, and we keep deeply committed to our flagship country.