NAFTA spurred local law firm’s growth

Web Posted: 11/21/2006 01:56 AM CST
Meena Thiruvengadam
Express-News Business Writer

Cacheaux, Cavazos & Newton is the law firm that NAFTA built.

It opened Jan. 24, 1994, about a month after the landmark North American Free Trade Agreement took effect. Business has been booming ever since.

“It’s the NAFTA effect,” said Rene Cacheaux, one of the firm’s founders. “That created a need for a niche firm like this.”

When it opened, Cacheaux, Cavazos & Newton had just six attorneys in three offices. But as the value of bilateral trade between the United States and Mexico nearly tripled from 1994 to 2005 — from $100.3 billion to $290.5 billion — the firm has expanded to include 37 lawyers in eight cities.

The majority of its lawyers are based and licensed to practice in Mexico, where the firm does much of its work.

“This is a very unusual structure for a law firm,” partner Joseph B. Newton said. “As the border gets blurred and as more people get used to being in the U.S. and in Mexico, I think the movement will be toward having more firms like this.”

When one of the country’s largest insurance companies wanted to enter the Mexican market, it came to Cacheaux, Cavazos & Newton. Mexican investors wanting to make money north of the border look to the firm for guidance. And U.S. companies interested in manufacturing in Mexico seek its advice.

Among Cacheaux, Cavazos and Newton’s clients are Frost Bank, Johnson Controls, Nokia and Fruit of the Loom.

“We’ve been working with Cacheaux, Cavazos & Newton very happily for a number of years now,” said Frank Martinez, executive vice president of Frost Bank’s international commercial lending division. About 99 percent of that division’s business is Mexico-related.

“We needed a lawyer who understood Mexican law but was also an American lawyer,” Martinez said.

“A lot of our success depends on the type of legal advice we receive. We need to know that if we do have a problem with our loans, that our documents and paperwork would hold up in Mexican courts,” he said.

It’s the need for that specialized knowledge that has put international business lawyers in high demand, said Luis Unikel, a foreign legal adviser with San Antonio-based Martin & Drought.

“It’s such a generous market,” he said. “It’s enough for me to keep busy eight hours a day, five or six days a week, and still be asked to come back the next year and do the same.”

Cacheaux, Cavazos & Newton focuses on business transactions involving the United States, Mexico, and to a lesser extent Canada. It’s the kind of work that founders Cacheaux, Newton and Daniel Cavazos were doing long before NAFTA.

Cacheaux followed in his father’s footsteps, becoming a lawyer in Mexico City before moving to South Texas for what was to be a one- or two-year break from big-city life. He met Newton while working in McAllen and San Antonio for Martin & Drought, then known as Martin, Drought & Torres Inc. The two paired up with Cavazos, a lawyer friend of Cacheaux’s who was working in McAllen, and their binational law firm was born.

At the time, manufacturing accounted for about 80 percent of the business. But as that industry has matured and faced increased competition from Asia, real estate transactions have begun commanding more of the firm’s time.

Now about 40 percent of the firm’s workload is related to manufacturing, 30 percent to real estate and 30 percent to taxes, customs and litigation.

More U.S. retirees and vacationers are now looking to put their dollars into Mexican property. “There’s not this fear anymore about ‘if I buy a condo in Mexico, is it going to get taken away?'” Newton said.

More large-scale real estate investors also are flocking to Mexico. Companies around the world are looking to develop the country’s coastlines. “All of these small, overlooked spots are booming now,” Cacheaux said.

More foreign companies are exploring south-of-the-border agricultural operations as well.

“Mexico has loosened its restrictions on the ownership and operation of agricultural land,” Newton said. “That’s making this a big growth area.”

And there are more Mexican investment dollars flowing north to cities like San Antonio.

“The mindset of the Mexicans has changed toward San Antonio,” Cacheaux said. “They used to see San Antonio as a place for shopping. Now it’s seen as a sophisticated place to do business.”

As NAFTA grows older, these attorneys expect business to continue booming — both in Mexico and San Antonio. “There are more and more of these projects every day,” Newton said. “And they need lawyers.”

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