The legal world in Chile, New York, and New Zealand

By Silvana Schenone, senior associate, Minter Ellison Rudd Watts

IF THE recently announced trade talks result in the USA joining the Trans-Pacific Strategic Economic Partnership Agreement (formerly called the P4), I will have the unusual distinction of having practised in three of the five member countries: Chile, USA (New York), and New Zealand.

I am a Chilean lawyer, but I have also worked at Sullivan & Cromwell in New York, after completing my LLM at Harvard, and a year ago I came to New Zealand with my Kiwi husband and joined Minter Ellison Rudd Watts in Auckland.

My friends here have been asking me, given I have been doing basically the same type of corporate finance transactions in each place, how legal practice compares in Auckland, New York, and Santiago.

The most obvious difference is that the deals in New York used to be (and I use the past tense here because of the current market conditions!) much bigger than either Auckland or Santiago; for example, I once had a partner apologising for leaving me to do a US$100 million deal on my own, saying we needed to do the deal for relationship reasons, but it was too small to command partner attention. I could not imagine that occurring in either Santiago or Auckland!

But having said that, the deals in New Zealand and Chile can be just as demanding as New York, sometimes more so, despite their smaller size. Clients are very concerned about cost and efficiency, whereas in New York, because the fee is a much smaller percentage of the total deal size, cost does not often seem to be a major issue.

A difference which also probably has its origin in the business cultures is that in New Zealand – and to a lesser extent, New York – there is much more flexibility in relation to documentation and transaction settlements, for example, the ease with which lawyers give and accept undertakings from each other, and the willingness to accept an exchange of signed documents by email. By contrast, in Chile, like other Latin American countries, there is a very heavy reliance on legal formalities, such as having an independent notary publicly witness the execution of documentation, and an unwillingness of parties to close before they each physically hold an original, fully executed document. Even though the Chilean legal system has been heavily influenced by US jurisprudence in recent years, it has inherited from its Spanish forebears, and retains, a lack of trust in informal arrangements. Put it this way: in Latin America, even the directors of a company need a specially written and formally granted power of attorney to act on behalf of the company they lead.

Another area where Chile is different to both Auckland and New York is that clients seldom choose lawyers based on a tender or beauty parade process. This also applies to business partners. Having a personal relationship is much more important in Chilean business, and that extends to lawyers where a client is most likely to choose based on a partner in a firm having been a classmate at university or perhaps being a relative. That does not mean that the client is any less demanding, but they are more comfortable working with people they know well and with whom they have a wider relationship. That is, I guess, a reflection of latin versus anglo culture. In the Latin world, the words “conflict of interest” have limited relevance.

But in the end, despite the fact that the New Zealand and US legal systems are common law systems, with ultimately an English heritage, compared to Chile’s ultimately Napoleonic code origins, I find New Zealand has more in common with Chile than one might expect, and the differences are sometimes overstated. This is in part because both are smaller trading nations whose commercial legal environments are heavily influenced by international, particularly US-oriented, transactions and law reform. North American statutes have been the model for both countries’ companies, securities, and competition laws, for example, and financing documentation in both places draws heavily on English and New York precedents and practice. 

The difference, which I miss, is that we Latin Americans have not yet taught the Anglos to be comfortable receiving a hug or kiss on the cheek at the end of a business meeting!

Silvana Schenone leads Minter Ellison Rudd Watts Latin American practice.

NZLawyer, issue 120, 4 September 2009