BY PAULA VARGAS
In the 80s Jorge Carey (76) owned 40% of the law firm that he now claims to share, under practically equal conditions, with the other 32 partners it comprises. He firmly believes in the strength of the corporate governance they have created in the past two decades, which has led Carey to be acknowledged as an organization that goes beyond its own name. He is, as well, a
steadfast defender of the independence of the office and one would say he is almost irritated by those voices in the industry that doubt the model they have chosen to grow. In an interview with financial daily Diario Financiero, the leader of Carey lets us know he is ready fore retirement, but that the matter depends on the decision of his partners who this year -once again- shall be faced with the decision of whether or not to extend his time in the firm.
What is it like to continue to be an independent law firm amid the ever growing arrival of international offices?
If you are a mid-sized or smaller firm, one that does not focus on big business or international business -as we do- you have two options: to plunge into these chains or not. The advantages for these firms, in entering these chains, or amalgamating into them, is that you receive matters that you would otherwise not have access to, and you access a technology that is very costly in Chile for that firm, because it requires high invoicing and a hefty size for it to be achievable.
And the disadvantages?
The disadvantages, which are the ones that have made bigger Chilean firms such as ours not want to join another, international, firm, revolve around the fact that you stop receiving clients and new matters from all other international firms that compete with them; and we receive many clients from other international firms. Then, it is a much better business to be available for all others than for the few that have arrived or will arrive in Chile.
Another disadvantage is the loss of independence. For the firm to be managed from Chile, by Chileans, is paramount for us, as is maintaining the culture we have created over many a decade. We would not like to have some Spaniard or a gentleman from New York telling what to do in such a way as to affect that culture. Lastly, we do not want any of the conflicts of interests that often arise within these offices because they cater to a huge number of clients in many different jurisdictions.
Which are those conflicts you mention?
For instance, in Chile you cannot be the legal counsels of company 'X' if in London, or in any other city where the international firm is based, they are the legal counsels to competitors, and we have learnt here about cases in which local firms have had to leave important clients on account of this kind of conflicts. Regardless of how much more flexible the regulation on conflicts of interests get, multinational firms demand ever more stringent standards from their lawyers.
But this greater competition must have resulted in some sort of impact, have you endured a loss of clients?
I would say that it has been marginal, but what has indeed happened is that clients of these firms overseas continue to retain us as their lawyers in some fields in which we are particularly strong.
Have you not been, for example, affected by the similarity in the name of the firm founded by your brother Guillermo (nowadays CMS Carey & Allende)?
Indeed, the use of the Carey family name results in a mix-up, and that has heightened since Carey & Allende was incorporated into British firm CMS, because some international firms that used to frequently forward work to us, have stopped doing so, since they mistakenly believe we have become part of a firm that competes with them. Luckily, this is an issue that is about to be solved, as now that Guillermo has left Carey & Allende, that firm will be able to use the corporate name that reflects what it now is: CMS Chile.
If the firms that have arrived are not a threat, what is?
An actual threat for us will come about once the legal profession becomes truly global, and the most relevant American and European firms begin arriving in Chile, I mean those in the "Magic Circle". However, given the size of our economy, which does not stand the exceptionally high fees those firms charge, we believe that is still far from happening. We may assert that, once the firms in the "Magic Circle" do arrive, competition shall be utterly serious.
Just as when the Big Four arrived...
At the time, "St. Enron" saved us, legislation changed and that hit them. I always thought big auditing firms would become our greatest threat, but they did not land here as strongly as we expected; thanks to the regulatory whiplash of the Enron case. However, one should never minimize the logistics and competitiveness deployment of the auditing firms, as they have always wanted to expand into the legal industry market.
Another threat is for our corporate governance to fail without us knowing so, manage the one we have. In short, for the culture we have created -which is utterly professional- not to crumble.
Have you been tempted to join?
We have often been offered that, but we have chosen to disregard it, because we do not want to lose our identity and culture. We believe we boast a strength because of being an influential Chilean firm, with deep domestic ties, as opposed to being just another branch office of an international company
What are your thoughts on the growing number of specialty firms?
Successful boutique firms shall always be there, but they last the lifetime of their founder; our bet is altogether different, it consists in having very strong teams in different specialties, where None of the partners in charge repeat themselves. We have a sort of constellation of boutiques, but, in order for that to render results, you require a powerful corporate governance, with very clear rules, a meritocracy in which partners make reasonably the same; where the case is not for a few partners to shine and beneath then a vast number of specialists who go unnoticed.
However, the industry sees in you a pillar of the firm...
I postulate that our governance makes it possible for the firm to survive any one person. If I retire- and I have but a little time left-, nothing comes of it.
Although I have had a significant role in the firm’s governance, our culture can dispense with people. There are 32 of us (partners), and each has a vote; the essence is we are all equal.
You say time is running out for you at the firm. What do you mean by that?
According to our bylaws, us partners must retire at 70 years old. At some point I stated I would retire then, but my partners -via secret ballot voting and with a high quorum- have extended once and again my stay for 2-year periods each time...
They have renovated my stay twice and I don’t know if it will happen again this year.
I somehow sense you want to stay...
My staying hinges on the contribution partners believe I am. People are certain that I own this firm, that the voting is just untrue, but they are wrong. Besides, it is clear to us that I will be replaced by my brother Jaime, and we are sort of clear on who will be the ones who will come afterwards. Natural born leaders can be sensed from afar.
Why, you think, business expectations have deteriorated a year after the new government taking office?
We have all felt, for a year now, that the Nueva Mayoría [New majority] nightmare is over. After that, there was a moment of true hope after electing such a capable President as Sebastián Piñera, but expectations exceeded reality, as we forgot Chile es an open country and we cannot concoct miracles. And when expectations fall, anxiety escalates.
In your opinion, what is behind that anxiety?
For the same ones to come back, those who seek to redistribute at the expense of growth, and for the country to truly stall; lest 3 years from now we again encounter a government such as that of Bachelet’s II. This is a caricature, but that is the feeling behind that cautiousness.
Isn’t that conjecture a bit hasty?
Whenever someone is a director, or the owner, of a company, projections ought to be made long term. If an entrepreneur has the feeling a moderate kind of opposition -a Lagos, an Aylwin, or a Bachelet '1' - may come back, there would be much more investment, but it seems as though the former Nueva Mayoría has not learnt any lessons. They continue to oppose to a tax simplification and integration, and as the wealthy to pay more, whatever the consequences that may trigger for growth. Whenever such an idea, which is alright in communists or socialists, is raised by a Christian Democrat, or a Radical, one tends to think the country has not changed, and it is disheartening, because we know that 60s recipe just does not work.