Editor: Would you give our readers something of your background and
Mendez-Penate: I am originally from Cuba and came to the United States
in 1961. I went to the Phillips Exeter Academy and then to Yale College,
graduating in 1973. Three years later I graduated from Yale Law School and went
on to clerk for Judge Robert P. Anderson of the Second Circuit. From there I
went to Cravath, Swaine & Moore, where I began as a litigator and spent a
considerable amount of time on the IBM case. After a couple of years, however, I
recognized that my interests really lay in international law, and particularly
in Latin America. When an opportunity came up in 1981 to join Coudert Brothers,
I was quick to respond. Coudert has always had an interest in Latin America.
Thereafter, I did practice with Holland & Knight and Morgan, Lewis &
Bockius but came back to Coudert in 1997 to head the firm's Latin America
Editor: What is the history of the firm's involvement in Latin America?
Mendez-Penate: Coudert Brothers has a long and distinguished
involvement in the region, going back almost to the firm's beginnings 150 years
ago. The firm's presence has been continuous, and for that reason it is very
well known in the region.
Editor: Would you give us an overview of the firm's Latin America Practice
Group? What kinds of background do the group's members have?
Mendez-Penate: The Latin America Practice Group at Coudert is a
diverse group of practitioners who deal with the region from a base in New York
and in Washington. In New York, where I reside, there are two partners besides
myself and a number of associates dedicated to Latin American work. The work in
New York has to do primarily with mergers and acquisitions, corporate finance,
some project finance, tax planning for corporate transactions, and tax planning
for high net worth individuals from the region. In Washington we have two
partners, one of whom is a project finance specialist servicing multilateral
agencies such as the Inter-American Development Bank, and the other a telecom
specialist whose work concerns telecom providers both within and outside the
region. They in turn have a staff of bilingual attorneys, as we do in New York,
to fill out the practice. They have very varied backgrounds, but they are
inevitably bilingual and in some cases trilingual. Many are Latin American in
origin, either by parentage or in being from the region. I hasten to add that,
in addition to this core group, we work with many other attorneys from a variety
of disciplines and practice groups in the firm on an as-needed basis. In the tax
area, for example, we are fortunate to have the services of a Brazilian tax
specialist and a Mexican tax specialist. Our group utilizes their services,
which are invaluable, in specific transactions. As it happens, our group is
handling some very large clients operating in the region with a variety of
needs, so we call upon many of the specialties that the firm offers. In this
regard, Coudert Brothers has an abundance of resources.
Editor: So there is a variety of legal disciplines that the practice group
can offer its clients?
Mendez-Penate: Absolutely. We are rich in talent as a firm. We use
local counsel on a regular basis to meet the local needs of our clients, but
these days many transactions, if not most, are governed by New York law. It is
important to have an ability to straddle both the cultural and the legal
equations. Coudert Brothers is in a position to do this.
Editor: Is the group providing a specific set of services to the firm's
corporate clients, or does it have its own client base?
Mendez-Penate: Yes, to both questions. Our group has its own client
base, and many of these clients have been with us for a very long time. In
addition, we provide the rest of the firm with an ability to do corporate
transactions in the languages of the region, together with an ability to
understand and operate within the cultural dimensions of the region. For
example, when American companies are having difficulty in understanding and
dealing with, say, a labor issue, we are very often in a position to be helpful
and to resolve the matter.
Editor: Coudert does not have an office in Latin America at this point.
Are there any plans for such an office?
Mendez-Penate: In the past, Coudert has had offices in the region. At
the moment, we have an associated office in Mexico City with Rios Ferrer,
Guillen Llarena y Treviño, which is a very fine group of Mexican lawyers. The
affiliation is a good one, but it is informal. We continue to consider informal
arrangements like this. It is important to remember that Latin America is
functioning on the same time zones as the United States. We are able to do our
work in real time, which gives us a distinct operational advantage over, say,
East Asia. In order to do effective business there, it is almost essential to
have offices in places like Singapore, Tokyo, Hong Kong, Beijing and Shanghai,
and, predictably, Coudert has a presence in all of those cities. That is not the
case with Latin America. Of course, these things change with time, and it is
possible that we may consider one or more offices in the region.
Editor: The region has experienced both euphoria and a dramatic decline in
its economic fortunes during the past ten years. How has the business cycle
affected your work?
Mendez-Penate: The boom and bust cycle that is typical of emerging
markets does have an impact on our work. I have been involved in the region long
enough to recall the first Mexican default of 1982, the banking crisis in
Venezuela in 1994 and the Mexican devaluation of 1995. I have also seen periods
of real growth in the region's economy. What is important to remember is that a
downward slide in the economy serves to promote activity in certain legal
disciplines, and a rising economy brings activity to other disciplines. Either
way, a group such as ours tends to be very busy.
Editor: What has been your experience with the courts in the region on the
protection of investors' property rights? Or the enforceability of contracts?
Mendez-Penate: It is difficult to generalize over the entire region,
but - speaking very generally - the courts have been spotty and are now
improving. The main complaint is delay. A foreign investor cannot spend ten
years in a courtroom vindicating his property rights. The state of the courts
varies from country to country, and while there is plenty of room for
improvement, I am encouraged by the evolution I have seen over my career.
Editor: Have you had recourse to arbitration or mediation? Is that a
viable alternative in dealing with business disputes in the region?
Mendez-Penate: Definitely. In most Latin American transactions now you
find provisions that entail arbitration in New York or Miami as a neutral forum.
Brazil used to be a problem in this regard because the Brazilians did not
recognize foreign arbitration, but that has now changed. Arbitration pursuant to
one of the local chamber of commerce regimes is also an attractive
Editor: What about the corporate tax climate in the region? Does it tend
to welcome foreign investment?
Mendez-Penate: The corporate tax climate certainly does welcome
foreign investment. The region is moving away from territorial taxation, in
which the locals only are taxed on activities within the country, to worldwide
taxation. That has had a dramatic effect on the use of offshore tax-haven
companies. The use of such companies was standard operating procedure for those
who wished to avoid local taxes. The tax-haven jurisdictions are now on a kind
of black list, which, in turn, means that direct and indirect investments in
black list jurisdictions are subject to a more burdensome tax regime (i.e,
higher tax rates and disallowance of certain deductions). If the owner fails to
register his ownership, he has committed a criminal offense in most
jurisdictions in the region which have enacted a black list regime. Enforcement
has improved to a considerable degree, and the system is administered in a more
professional way. In addition, certain countries in the region have entered into
tax treaties with other countries, which serve to promote investment because
such treaties minimize double taxation, inject predictability into the system
and encourage confidence in the region. Bilateral investment treaties between
most countries in the region and the United States serve similar ends and, in
addition, allow for the international arbitration of disputes. All of these
developments translate into an increasingly attractive corporate tax climate for
Editor: And employment laws? I understand most jurisdictions in Latin
America are very protective of the labor force. Is that a problem for the
foreign enterprise which desires to operate in the region?
Mendez-Penate: This is still a problem. It is very difficult and very
expensive to fire an employee. There have been attempts to remedy this state of
affairs, but the issue is very political. In Mexico what seems to be working is
for companies to contract for their employment needs with services that provide
employees. As long as there is labor peace, this appears to be a manageable
Editor: What about the future? Do you have any thought about the Free
Trade Agreement of the Americas?
Mendez-Penate: I think the future looks positive. I have seen what
NAFTA has done for Mexico over the last number of years. Trade between the
United States and Mexico has quintupled, and the experience has been very
positive for both countries. Next on the agenda is CAFTA, and that is in the
process of making Central America a single economic region. It may lead to the
adoption of a single currency for all of Central America, which would be a very
positive step. Concerning the entire region, the big open question is Brazil. I
would hope that in time Brazil would join the Free Trade Area of the Americas
and make the Western Hemisphere a single free trade area. This would benefit
everyone. I must add that this may take a considerable time, if it happens at
all, in light of the issues that Brazil has with the United States, not all of
which are baseless.
Editor: Where would you like to see Coudert's Latin America Practice Group
in, say, five years?
Mendez-Penate: I would hope we continue to grow and that the region
continues to prosper. We might even have cause to reestablish our presence in
Brazil. I think our practice group will continue to grow in numbers. The work is
there, and, fortunately, so are the multilingual, multicultural lawyers we need
to attract if we are to continue to do it effectively. One of the things that
attracts people to our group - and which I personally find very rewarding in
this practice - is the opportunity to work on some very large projects that are
going to make a difference in the lives of a great many people, even entire
countries. Knowing that your work is going to result in a better life for people
is very satisfying.