Fifty Years of Legal Practice in Argentina

1. The Background

What has been the general background for legal practice in all these years?

During this half century Argentina has been a cyclical country: pro-market governments have been repeatedly replaced by anti-market governments, and vice-versa. With few exceptions, Argentines distrust the market: at best they tolerate it as a necessary evil, at worst they combat it. Most of the population consider that it is the duty of the Government to run the public utilities as well as to prevent price increases. Ever since the 1800’s, debtors have had more political power than creditors. Companies that lose money are better regarded than those that make big profits.

However, Argentina has also a very dynamic and innovative entrepreneurial sector. Small businesses proliferate at the side of the big ones. Political parties at the extreme left of the spectrum receive few votes. Many Argentines prefer what they consider a happy combination of mild socialism without a plan, and weak capitalism without discipline. Although changes in the economic situation may be sometimes drastic, things are never as bad, or as good, as the press would have you believe. These who invest in the upturn and divest at the first downturn are apt to lose money. But most businessmen who ride the cycles, both Argentine as well as foreign, on the average have made good profits. Argentina is not for the faint hearted.
 
2. Some Lessons from Experience

Experience shows that several general misconceptions exist with respect to legal practice in Argentina. I will highlight two of them:

Criticisms of alleged government's attempts to influence the courts have grown in recent years. Of course, we should all fight to preserve the independence of the judges. And yet, even here, there is a good deal of exaggeration. Laymen seldom appreciate the strength of a good case, well presented, and prefer to think, mistakenly, that cases are resolved due to government officers or important lawyers influencing the courts. This was one of my first, and happier, lessons: very early in my career I had to defend a case against one of the most famous lawyers in Argentina. One day, I saw him coming out of the judge's office accompanied by other prominent lawyers from his firm. I immediately asked to talk to the judge, who received me courteously. I did not say much more than what was already in our court briefs. I left feeling very sceptical of the outcome. And yet we won, not because I had convinced the judge with my short verbal pleading, but because our case was right.

Another lesson is the importance of facts. Many Argentine lawyers dislike facts, they prefer legal theories. But cases are more often won or lost on the facts than on legal theories. A good understanding of the facts and a good grasp of the ways in which they can be proved to the court, are essential. This is time consuming and very often clients do not like their lawyers to spend a lot of time on factual matters, preferring instead to read a long brief with plenty of rhetoric.  The opposite should be the right attitude.

3. Cultural Clashes

A practice focused on international clients forces the lawyer to be aware of the cultural differences that exist between the local legal environment and that of the client. For example, the influence of Philip II is still felt in Argentina: Only that which is written exists. Thus, local businessmen only write to express their grievances, never to acknowledge their own shortcomings.  A foreign manufacturer may send a letter saying “Although a few of our widgets may have been defective, you have not paid a single cent”. For Argentine law purposes the only relevant part is the admission of the defects. When the controversy reaches the courts you can be sure that the bulk of the written evidence supports the case of the local party.

And then comes another surprise for the foreign company: In Argentina a party may lie in its own case without committing perjury. In the United States the famous Fifth Amendment only allows a defendant in a criminal case to remain silent. Here we take the constitutional rule against self incrimination two steps further: it is applied in non criminal cases too and protects also false statements. A person can sue a manufacturer for the damages allegedly suffered from consuming its products without revealing a medical condition that made such consumption dangerous, and without being required to disclose his medical records. This forces defendants to search public records, which are scarce, uncentralized and not always complete, and which can withhold the information available on grounds of privacy. Perry Mason would not be able to discover much evidence in Argentina.

Another cultural clash appears when a foreign company discovers that it has violated Argentine law and wishes to “own up” thinking that, by spontaneously confessing the infringement, it will be able to negotiate a lower fine. Penalties are not “negotiable” and for our local culture confessing compounds the felony: it is almost as bragging, adding to the initial sin the one more serious of scandal.

4. Main Developments

These last years have seen several important developments. Protection of the environment has now become a priority, and both the people and the authorities are sensitized to this issue. The international fight against corruption has reached Argentina, and this does not only concern foreign companies but also their local agents and sub-contractors who are now often required to comply with the same strict standards applicable to their foreign principals as well as with the similar standards imposed by Argentine legislation.

Arbitration has now become the main means to solve conflicts among businessmen as the cost of litigating in Argentina, and the delays involved, are considerable. Litigation, more and more, pits big companies, as defendants, against individuals (employees, consumers) or the government. Lawsuits among big companies are more and more scarce.

Globalization also means that foreign legal practices, such as class actions and punitive damages, also appear in Argentina. Local industry must therefore support a growing cost of local litigation which they cannot shift to their foreign buyers, as it is sometimes possible in the more developed countries.

Being an important taxpayer does not always assure a reasonable relationship with the authorities. Any new structure with favorable tax effects is, more surely than not, going to be challenged. Only “plain vanilla” assures legal certainty. Foreign companies should not be misled by the apparently general relaxed enforcement of the laws: If investigated they will be held to high standards, sometimes higher than those of their own country. For them, strict compliance with all laws and regulation is essential. "It’s easier to hunt in the zoo" said a former minister of economy, the weapons most commonly used being the retroactive application of rules or of new legal constructions. It is high time for the protection of legitimate expectations, a basic tenet of European Community law, to appear in the agenda of legal reform in Argentina.

5. Conclusion

Both as a practitioner as well as a law professor, I have always considered that the fight for the rule of law is an exciting challenge. Has my half-century of legal practice seen an improvement or a deterioration of the rule of law in Argentina? The glass can be seen as either half empty or half full, but the part that is full is now the most important one: democracy is here to stay and all Argentines now agree that even the slow pace of a democracy is preferable to whatever promises of faster growth may be made by other systems.