THE GENERALISTS - Sullivan & Cromwell

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The generalisTs
Rosie Cresswell
Friday, 1st June 2012
Ever since the creation of the Panama Canal, Sullivan & Cromwell has been present for some of the more pivotal
transactions in Latin America. Rosie Cresswell talks to the team about how responsibility at an early stage in their
careers helps them stay on top
Sullivan & Cromwell LLP’s Latin American team is used to fielding questions about when the firm is going to open
in Brazil. After all, it is one of the few New York firms with a leading position in the region that does not have a
presence in São Paulo. The team’s response to those who ask is that having lawyers on the ground to focus primarily
on one practice area, for example securities, does not fit in with the firm’s strategy.
Sullivan & Cromwell lawyers do not focus on one thing – they are generalists. The team argues that this lack of
specialisation affords it the nimbleness and broad experience with which to adapt to the challenges of a market
and win a place on the most complex deals.
“As generalists, while we may not know the answers to all the specialised questions on a securities rule, M&A point
or UNCITRAL rule, we have spent 20 to 30 years learning how to spot issues and questions and we know we can
get other lawyers on the phone for best advice,” says Robert Risoleo. “The same issues come up but you look at
them through a different prism,” says Sergio Galvis.
Andrew Soussloff says clients are at CEO level. “At that level, you are not looking at business narrowly – you’re
looking at the entire business, and as a lawyer you can add more value if you look at it in the same way,” he explains.
“It’s a very senior level relationship and broad-based work,” adds Galvis.
For example, take the LAN/TAM airline tie-up, which required multijurisdictional tender offers, public acquisitions
and family businesses. “That requires a team of experts that can look at a lot of different things,” says Galvis. The
Techint Group’s Tenaris and Ternium, two of Latin America’s biggest steel and seamless pipe producers, are other
major clients that rely on the firm for M&A work, project finance, securities and litigation advice.
Cultural awareness
From left to right: Sergio Galvis, Andrew Soussloff, Robert Risoleo, Joseph Neuhaus and Christopher Mann
Sullivan & Cromwell lawyers are a distinguished, cool-headed group, and the firm is known for being a meritocracy.
The generalist approach is achieved by a combination of collaboration between lawyers and on-the-job training.
First published on the Latin Lawyer website, 1st June 2012
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In addition, lawyers do not concentrate solely on Latin American work, which they argue differentiates them from
other firms operating in the region. Risoleo notes that the benefit of not practising exclusively in Latin America is
that they build a greater cultural awareness. “It’s very useful for someone in Latin America to have done work in
Europe and the US to make sense of what’s going on,” he explains.
Of course there is a core team of sorts; some 30 lawyers do significant work in the region alongside deals
elsewhere. For this interview, Latin Lawyer spoke to five of the more prominent partners: Galvis, Soussloff, Risoleo,
Christopher Mann and Joseph Neuhaus.
Galvis, whose family came over to the US from Colombia when he was 10, is by far the most visible face of the
team and practice head, a position he has occupied since he was just a six-year associate. He was called in by
John Merow, the chairman at the time, and told he was to run the firm’s Latin American practice. “I said: ‘Great, I
didn’t know we had one’,” recalls Galvis. “He said: ‘We do now and you’re in charge. Good luck’.”
Galvis recalls the last deal he did before making partner: “A senior associate across the table turned to me and
said: ‘You and I spot the issues at the same time, but you get the answers faster’.” His edge was down to him
picking up the phone to colleagues back in the office. “We open doors and consult in a very cooperative and
collegial way,” he explains.
“This firm has a very global, collaborationist approach to work,” says Mann, who puts this culture down to the firm’s
home-grown model. “It is striking to lawyers who joined in later years to see our collaboration among partners for
any client matter,” he says. Certainly the team has a long history of working together, with Galvis, Risoleo, Mann
and Soussloff having begun their careers at Sullivan & Cromwell. (Neuhaus joined as a mid-level associate.) Mann
is the newest partner of the five interviewed having joined the firm 22 years ago. The others have been there for
25-plus years, Soussloff for over 30. “We grew up together so we enjoy each other’s company,” says Galvis.
Galvis says his being appointed as practice head at such an early point in his career is a good example of the
culture at Sullivan & Cromwell, where young lawyers showing promise are given above average responsibility, be it
pitching for work or negotiating at the deal table. In the early days, Galvis and Soussloff would take themselves off
to Buenos Aires, Santiago or Caracas to capitalise on the opportunities of the time. “There were so many things
to do out there, so we went,” says Soussloff. “We didn’t have to ask for or get approval. The firm recognised the
opportunity.”
Galvis now has firm-wide responsibility as head of recruitment, so what advice would he give to a lawyer wanting
a job at Sullivan & Cromwell? It’s not easy; applicants must be highly intelligent and highly qualified. Recent
candidates and hires have LLMs from leading law schools and the more prominent partners have JDs. (Between
them, the partners in this article have JDs from Harvard, Yale, UPenn and Columbia.) Once in, lawyers receive
rigorous training and are developed as generalists from the start, rather than embarking on the more traditionally
used method of rotation. Not surprisingly, expectations are very high. This can mean some gruelling working days
(although the firm doesn’t report the number of hours associates do or set targets) and a steep learning curve,
but on the upside, greater responsibility at an early stage.
The firm also trains its lawyers on how to interact with the firms it works with around the world. “Latin American
firms have a great amount to add to clients and in delivering the service we provide jointly – we do it best if we do it
together,” says Galvis. “We teach that to our associates – to develop relations, and be responsive and respectful.”
Sullivan & Cromwell understood the benefits of building relationships with referral firms at an early stage and
claims to be the first in the US to have a visiting lawyers programme – the firm has taken on six to eight lawyers
First published on the Latin Lawyer website, 1st June 2012
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each year since the mid-1950s. The firm says it works with law firms in Latin America on a non-exclusive basis –
and the firms it works with in the region have similar freedom.
That the partners in Sullivan & Cromwell’s Latin American practice group have been together so long demonstrates
cohesiveness and stability. Aside from when capital markets partner Carlos Spinelli-Noseda controversially departed
from the firm in 2008, very little has happened to rock the boat. Loyalty and stability are desirable characteristics
in today’s biglaw, which is taking a moment to reflect after the rapid exodus from Dewey & LeBoeuf LLP. The demise
of Dewey has caused many to question yet again how well the dynamics of law firm remuneration work in today’s
world. Dewey is considered as an extreme case, but it comes amid a period of greater self-analysis for corporate
law firms post-financial crisis. A recent survey by consulting firm Altman Weil found that law firm leaders in the US
believe the symptoms of the downturn – from pricing pressures to the commoditisation of legal work – are here to
stay, to which a response is necessary.
Sullivan & Cromwell keeps its strategy simple: by providing the best quality of service, it is guaranteed a place on
the type of complex work for which clients are prepared to pay. When talking about the competition, Cleary Gottlieb
Steen & Hamilton LLP – a benchmark for any firm in Latin America and another that favours broad practices in its
lawyers – comes up the most, while when discussing culture and strategy, it is Wachtell, Lipton, Rosen & Katz LLP,
a very profitable, boutique powerhouse.
The focus on high-end transactions applies more than ever in Latin America today, thanks to the new players coming
into the region and the rise in sophistication of domestic law firms and companies. Of course, moving beyond
commoditised work is the strategy of many top-end firms keen to keep their membership of the elite club operating
in the region, whose members include Cleary, Skadden, Arps, Slate, Meagher & Flom LLP; Shearman & Sterling
LLP; Milbank Tweed Hadley & McCloy LLP; Clifford Chance LLP; Simpson Thacher & Bartlett LLP; and Davis Polk
& Wardwell LLP.
Deep roots
US law firms with a significant history in Latin America are always keen to point out how they have been there for
decades, at the forefront of its economic development. Sullivan & Cromwell can make this claim more than most
given the pivotal events in Latin America’s history that turn up on its own timeline, from the creation of the Panama
Canal, to the Brady bonds and Telmex’s privatisation.
William Nelson Cromwell founded Sullivan & Cromwell with Algernon Sydney Sullivan in 1879 and is remembered
for his instrumental role in the construction of the Panama Canal. Before the First World War, the firm acted for
European financers of railways in the Americas, including the Panama Railroad Company; the company that first
instigated the idea of building a sea level canal across Panama and was later reorganised as the New Panama Canal
Company. In 1904, Cromwell helped facilitate the US government’s purchase of the Panama Canal assets, which
set the course for the Canal’s completion in 1914. In the 1920s, the firm opened an office in Buenos Aires, and
continued to advise French clients on railway projects in Brazil and Central America. Fast forward a few decades to
the early 1990s, and Sullivan & Cromwell was working on the sovereign exchange offers that were made possible
by the Brady bonds introduced in the late 1980s. In 1990, Telmex went through one of the first privatisations in
the region, with Soussloff and Galvis participating.
Being present for these milestones guaranteed the firm future success: the Panama Canal Authority subsequently
became a client, the exchange offers resulting from the Brady bonds raised the firm’s profile with banks, which
earned it a position on sovereign financings – the first major international finance deals to come out of Latin America
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and an important part of Soussloff’s work today. Meanwhile, Telmex set the ball rolling for future privatisations
such as that of YPF in Argentina (which is now in the process of being reversed).
Today, the firm has no trouble securing a place on the most complex cross-border deals in the region across various
practices. Recent M&A work alongside the LAN/TAM tie-up includes the ING-Grupo Sura deal, which spanned
Colombia, Mexico, Chile, Uruguay and Peru (and won the M&A category of Latin Lawyer’s Deal of the Year). Sullivan
& Cromwell has a leading reputation for corporate finance work. Today it eschews routine 144A deals, mainly
because of price and because much of it has become commoditised, in favour of deals that have an extra layer of
work for clients for which risk management is important, such as Bancolombia’s landmark issuances in the US.
“How can we help them in the offering, mitigating risk, making sure disclosure is all as it should be? We apply
market knowledge of the SEC to lower the execution risk and get better terms from underwriters,” says Risoleo.
The team believes it really comes into its own in project finance work, which is known for its multidisciplinary nature.
“Training lawyers on these deals means they learn of all faces of deals – from shareholder agreements to bank
credits,” says Mann. Examples include this year’s US$1 billion loan for Sierra Gorda SCM for a mine in Chile and
a US$1.05 billion financing for Antofagasta’s Esperanza project, also in Chile, in the midst of the global financial
crisis and falling copper prices. Sullivan & Cromwell prefers advising the sponsor because it allows lawyers to get
stuck into the project from the start. The firm favours natural resources work for similar reasons. “The focus on
natural resources means bigger, more complex projects because of where resources are found, and the intrepid
nature of mining and oil companies,” says Mann.
Of course, complex deals of this kind can lead to disputes, which is where Neuhaus comes in. Neuhaus, the firmwide
head of arbitration, says the disputes team has the same approach. Litigators are generalists, although he
does more in Latin America than anyone else, and more of that than anything else. Clients turn to him for dispute
resolution clauses and, often working closely with Galvis, he works through any problem that might arise later.
The firm has done work against sovereigns and is called upon for a company’s biggest problems faced outside its
own country. Since 2006, he has been advising the Central Bank of Argentina in a landmark case on central bank
immunity under the Foreign Sovereign Immunities Act. “That is very interesting litigation because it brings into real
life how finance really works,” says Neuhaus.
A look at Sullivan & Cromwell’s deal list shows the firm’s presence across the region is evenly spread and by no
means centred on Brazil, the region’s largest economy. Whether for better or worse, this is notable when compared
with some rivals and in the context of the boom time the country is experiencing. It also brings us back to the
absence of a Brazilian office. Outside of the US, where most of its lawyers are in New York, Sullivan & Cromwell has
a presence in Beijing, Frankfurt, Hong Kong, London, Melbourne, Paris, Sydney and Tokyo. The firm’s geographical
reach is driven by its desire to be in the major capital centres of the world, but because the firm is not as large as
its rivals (there are approximately 800 lawyers in 12 offices compared to 1,200 across Cleary’s 14 offices) and
its partners work in many different areas, these centres have to offer up a sufficient variety of work for it to be in
the firm’s interest.
For now, Latin American cities do not, São Paulo included. “If we open an office, we view that as a real commitment;
people who are there are limited to what they can cover there,” says Galvis. “An office in Latin America would mean
making difficult choices as people in the team would be committed to that group.”
Cleary resisted opening in Brazil until late 2010 for similar reasons to Sullivan & Cromwell. Since the office opened
in August last year, its head, Juan Giraldez, seen on deals across Latin America, has been busier on Brazilian
matters.
First published on the Latin Lawyer website, 1st June 2012
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Some market onlookers are of the opinion that Sullivan & Cromwell might be missing a trick by sticking to its
guns, but the firm maintains that its Brazilian clients don’t require it to have an office there and that there are
Portuguese speakers in New York. Furthermore, putting lawyers on the ground in São Paulo would hinder their career
development; a lawyer doing only Brazilian securities work is not going to have the same wealth of experience as
a colleague working on a project finance deal in Chile one moment and a multijurisdictional M&A the next.
Galvis says the firm might not have an office in Brazil in the next 100 years. A lot happens in a century, and the
answer to what the geographical reach of any firm will be in 2112 is in the wind; but when pondering on the nearer
future of law firms, the footprint Sullivan & Cromwell has established in Latin America over the last century based
on a straightforward strategy of commitment to quality is worth paying attention to.
First published on the Latin Lawyer website, 1st June 2012
www.latinlawyer.com