Three years into his six-year term, President Andrés Manuel López Obrador – otherwise known as AMLO – continues the less-than-smooth relationship he has with Mexico’s business community. His cancellation of the partially completed US$13 billion New International Airport of Mexico City (NAIM) hurt investor confidence, while his intention to roll back energy reforms has only caused further harm. AMLO has so far respected contracts that have already been awarded to private players but has otherwise demonstrated a firm commitment to public sector management of the oil and gas and power sectors. This has included generous spending on the indebted Pemex, giving the green light to the building of a multibillion-dollar oil refinery for the state-owned oil company in AMLO’s home state of Tabasco, and certain amendments to the country’s electricity law to give state-owned power company CFE priority over private power producers.
AMLO and his Morena party fell short of winning a two-thirds majority in the midterm elections in June 2021, which would have given the President the power to change the constitution and undertake sweeping reforms.
While the Mexican peso has returned to the value it held in pre-AMLO times, the IMF indicates that the Mexican economy contracted slightly in 2019, which did little to disprove business scepticism. With the covid-19 pandemic hitting the globe in 2020, the country’s economy contracted more than 8% in that year, according to IMF data, while the same institution estimates a 5% bounce back in 2021.
In light of that uncertainty, lawyers will be reassured by the fact that the United States–Mexico–Canada Agreement, or USMCA, did take effect in mid-2020. While there are winners and losers under the new arrangement, business communities in all three countries will be relieved to have clarity.
It is not all doom and gloom. Deal flow is likely to continue thanks to the relatively cheap peso, while funding is still needed to plug Mexico’s gaping infrastructure gap. Real estate is another thriving industry, especially since the end of the pandemic tunnel is in sight, meaning tourism can soon return to Mexico. Those investors and banks looking for opportunities in Mexico can count on a large pool of talented lawyers to assist on complex M&A and private equity deals and innovative finance transactions.
Among the leading full-service firms, deeper specialisation is now commonplace. Several of Mexico’s elite firms have taken great strides to broaden their service offerings beyond their transactional core in recent years. The fight against corruption remains a priority for the AMLO government (and there have been a few high-profile cases since he assumed office), creating opportunities for law firms capable of delivering compliance counsel.
The Mexican legal market has been shaped by the country’s more powerful neighbour in more ways than one. As well as a healthy number of US companies and financial institutions on law firms’ books, their lawyers have benefited from close relations with US law firms; many have worked in US offices as foreign associates and studied in top US law schools. As a result, Mexican law firms are well-stocked with talented, well-educated lawyers who understand international companies’ needs.
Many of the firms listed in this chapter are now part of US law firms, which began coming to the country when NAFTA was signed. US firms have entered Mexico in a variety of ways – absorbing well-established local names, poaching teams and making lateral hires. But no new US firms have entered Mexico in a number of years – possibly indicating how packed this market is already, or that the tempestuous and competitive local market poses challenges to new entrants. However, 2021 saw some consolidation of local offices, as the merger between Holland & Knight LLP and Thompson & Knight LLP created a sizeable team with a presence in two cities.
But foreign firms come from elsewhere in the world too. Spanish firms consider Mexico a core component of their regional expansion strategies, which have largely centred around the Pacific Alliance countries so far. Garrigues and Cuatrecasas both have offices in Mexico City.
Meanwhile, Mexican firms are exploring opportunities beyond the US. Greater focus is being placed on Asian clients, particularly those from Japan. To an extent, this has influenced their national expansion strategies. Some firms have offices in industrial hubs such as Querétaro, alongside the more traditional bases of Mexico City and Monterrey. A smaller number of firms also have a presence in Guadalajara, Juárez, Tijuana and Guanajuato. Baker McKenzie has the widest national presence in Mexico, with five offices. Beyond Mexico, Nader, Hayaux & Goebel is unique in having a name partner based in London, a means to reach the City’s law firms and financial institutions as well as targeting infrastructure work from companies in the UK and Spain. In addition, Goodrich, Riquelme y Asociados has an office in Paris. Intellectual property boutique Arochi & Lindner has an established presence in Spain: its Barcelona office opened in 2011, while its Madrid office opened in 2014.
The Mexican legal market is known for the frequency with which partners switch law firms, although this has died down in recent years among local firms and has been seen most in US firms fighting for local talent. The volatility has shaped the legal community, which is home to a variety of business models, including several full-service titans and a handful of leading transactional firms, with variations of the two in between. The institutionalised disruption over the years has also created a market in which size means less with regard to reputation than it does elsewhere in the region, and firms that continually land high-profile and complex deals can be firmly and happily mid-market in terms of size – a marked difference from other markets.
While hiring volatility may have died down in recent years, the pandemic had its impact in 2020, and the previously established line-up in this chapter has seen some members disappear. SOLCARGO (Solórzano, Carvajal, González y Pérez-Correa SC) split into three separate firms in December 2020, while the partners of Cervantes Sainz SC went separate ways, creating two different firms.