The first edition of WWL: Central America provides a comprehensive analysis of the best individuals and law firms across 14 areas of business law in the region. Despite the close geographical and historical connections of the peninsula’s countries and the current influence of regional Free Trade Agreements, the markets of Belize, Costa, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama are diverse and multifaceted. As a means of contextualising our findings, we provide short introductions into each market below.
As the smallest state in Central America with a population of just under 350,000, only 0.8 per cent of the total population in the region, Belize has the smallest legal market among its neighbours. The country’s economy has been boosted in recent years with its discovery of oil in 2005 and its emerging tourist market. Its main economy sector continues to be agriculture, contributing around 54 per cent of its total GDP. In 2014 the country saw its GDP rise by 3.6 per cent, a figure that has remained steady in recent years and is expected to stay at similar levels in the near future.
In our research the country sees lawyers selected for their work in dispute resolution, intellectual property and private client work. The country’s legal system is modelled on the common law of England, a system also used in the US, parts of Canada and Australia. Having a similar legal system to the US is likely to make the country more attractive to foreign businesses, who will understand the local processes more. This coupled with the fact that it is the only country in the region with English as the official language foreign investors may view Belize as an easier place to do business with fewer communication barriers.
The “gateway to Central America”, Costa Rica is typically used by multinationals as a launchpad for further expansion across the region. In recent years the country has successfully attracted investments from leading companies include the likes of Amazon, Walmart, IBM and Procter & Gamble. The latter of which increased its 1,200 employee base at the end of 2015 with an additional 600 employees.
The country’s political stability and social peace will undoubtedly continue to attract foreign investment, despite some concerns over the current tax deficit and the government’s failed attempts with many of its concession schemes for public works projects.
Given Costa Rica’s strategic position in Central America there is a correspondingly high demand for legal services. As such, the legal market is home to a sophisticated group of law firms comprising of lawyers with international training and experience. While most law firms base their operations in the capital San José, some have opted to open a second office in Guanacaste, a coastal tourist hotspot.
Our research highlights the impressive size and quality of the bar in Costa Rica which comprises regional and independent law firms. With competition in the market fairly intense, the quality of service to be expected is of a high standard. Several of Central America’s regional firms have a sizeable presence in the jurisdiction – notably due to much work across the region being coordinated from Costa Rica. As such, there are lawyers with expertise in corporate, commercial and financial law matters, as well as those with more specialist expertise in tax, environment, litigation and labour law. In addition, Costa Rica has local practices providing stiff competition to the regional players, including Facio & Cañas and Zurcher Odio & Raven – both of which are home to a number of highly recommended lawyers.
The Dominican Republic (DR) is the largest economy in the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR) trade bloc. As a result of its prominent status in this free trade agreement, it is convenient to include the Caribbean country among its Central American neighbours.
The country has averaged around 5.4 GDP growth over the last two decades, above most of its regional peers, as it has sought to diversify its economy and reinvent its legal system in favour of the service sector, tourism and export manufacturing. The DR has opened its market to foreign investment and international competition, with foreign direct investment reaching $2.2 billion in 2014. The World Bank Group’s Doing Business report 2015 highlighted the DR’s continuous effort to improve competitiveness and reform the business environment – ranking 11th out of 32 nations in the Latin American and Caribbean region.
The legal market is largely dominated by national full service firms; the most prominent of which include Headrick Rizik Alvarez & Fernandez, OMG, and Pellerano & Herrera. It is distinct from its partners in the CAFTA-DR by the absence of a large Central American law firms. However, the market does cater to an international heavyweight in Squire Patton Boggs and the firm has notably increased its presence in the country over the last few years.
El Salvador’s GDP growth was a steady and somewhat unimpressive 2.4 per cent in 2015. This underperforming growth rate is attributed to the fragile domestic production base, along with the political and legal insecurity caused by rising tensions between the government and well-established organised crime networks. The cost of gang crime alone is estimated to cost the country as much as 16 per cent of its GDP, according to a study by the country’s central bank and the UN Development Programme. Burdensome commercial regulations, an unreliable judiciary and the perception of widespread corruption amongst government institutions have yet to be addressed by the far-left Farabundo Marti National Liberation Front (FMNL). As such, El Salvador is currently experiencing a weak investment climate both from potential domestic and international suitors that impedes the growth of the country’s legal market.
However, in the face of the country’s economic and political upheaval, the legal market remains relatively robust due to its connection to wider region. It is dominated by the multi-jurisdiction, Central American heavyweights Arias & Muñoz and Consortium Legal. Both have a considerable presence in San Salvador and have sought to extend their practices to offer an unbeatable and comprehensive service. That being said, there are a number of independent firms that stand out and more than hold their own in the market. The highly regarded Romero Pineda & Asociados is the largest independent full-service firm in the country and has invested significantly in its corporate tax and labour practices to offer services comparable to its flagship corporate and IP departments. Sáenz & Asociados has a distinguished pedigree in El Salvador and has recently gone regional expanding into Costa Rica and Guatemala, with potential to move into Nicaragua as well.
Guatemala is an important market in Central America as a logistical and service hub in the region, while it has also benefited from robust economic growth, averaging 4.2 per cent over the past two years. Despite this, political instability has been the centre of focus recently. In the last 12 months president Otto Pérez Molina stepped down amid a corruption scandal, leading to the election of Jimmy Morales. With the campaign slogan “Neither corrupt, nor a thief”, Morales has sought to emphasise that Guatemala is not synonymous with corruption and will look to appeal to international investors after a successful and peaceful election. Foreign direct investment into the country reached $1.4 billion in 2014; although this is some way below that of Panama and Costa Rica, the country has strong natural resources, infrastructure and tourism markets and will hope to grow its regional standing in the coming years.
Corporate and labour law are among the key legal markets in the country, followed by a prominent private client sector and a growing practice in intellectual property. National firms are strongly entrenched with Arenales & Skinner Klée leading the way. Its closest national competitors are QIL + 4 Abogados (which was established in 2015 after Quiñones Inarguen Luján & Mata SC merged with boutique outfit 4 Abogados) followed by Carrillo y Asociados and Mayora & Mayora SC. However, there has been a move towards regionally integrated offerings with Consortium Legal taking up a significant share of the market, followed by Arias & Muñoz and Aguilar Castillo Love.
Honduras is part of Central America’s “Northern Triangle” with Guatemala and El Salvador, and is thus ideally situated for companies looking to expand across this region. It is an attractive investment opportunity, being rich in natural resources, including minerals, coffee, tropical fruit, and sugar cane, as well as having a developing textiles industry.
Yet the country is one of Latin America's poorest nations, and significantly, the most dangerous. Beset with political and social conflict, the country suffers from widespread violence including the recent high-profile murder of Berta Cáceres, the human rights and environmental campaigner, as well as repeated gang-related massacres in the last two years. Such high levels of violence have particularly affected those providing legal services in the country, with the Day of the Endangered Lawyer Foundation focusing its 2016 awareness campaign specifically on Honduras. This organisation reports that more lawyers are murdered in Honduras than in any other country in the world.
However the government has taken important steps to tackle these problems. President Juan Orlando Hernández announced the creation of a new international anti-corruption body to tackle criminal networks across the political and judicial systems, and has introduced measures to improve economic, social and democratic conditions, particularly through US assistance. The US is Honduras' chief trading partner, with bilateral trade between the two nations valued at $9.8 billion in 2013. In addition, June 2014 saw the passage of a law for the Creation of Jobs, Fostering of Private Initiative, Formalization of Businesses and Protection of Investor Rights, giving greater protection to minority investors for businesses operating in the area.
The legal landscape is peppered with a mixture of regional heavyweights, local full-service firms and boutiques that are all able to find their place in the market, and provide clients with a wide range of choice. The majority of firms operate out of the country’s capital Tegucigalpa, but also the north western city of San Pedro Sula provides an attractive alternative location for boutique firms, like Bufete Mejia & Asociados which specialises in intellectual property law. Regional players include Arias & Muñoz and Consortium Legal who both have particular expertise across the areas of administrative, corporate, dispute resolution and tax law, as well as transport and finance law respectively. In addition firms like Garcia & Bodan excel in providing competition and financial legal services. Stiff competition is seen from local full-service firms, such as Bufete Melara & Asociados which is known for the strength of its practice across corporate, intellectual property and banking law.
Nicaragua has one of the fastest-growing economies in the region, with its 4.7 per cent GDP growth in 2014 bested only by Panama and the Dominican Republic. While the country appears to be on a steady upward tangent, political uncertainties have caused some concerns to companies and investors, according to those we spoke to. With elections due to take place in November of 2016, the years ahead are fairly uncertain for the country, as businesses wait to see who will be elected and what changes this may bring to its economy.
One of the biggest controversies in the market in the last few years has been the plans for a Nicaraguan canal. The proposed canal, linking the Pacific and Atlantic oceans would be in competition with the Panama Canal, which is also in the process of expanding. If completed the project is likely to bring huge amounts of new investment to the country. A $50 billion contract has been awarded to a Hong Kong based consortium and initial works have begun on building a port at the mouth of the River Brito on Nicaragua’s Pacific coast. However, while public opinion was initially high, this has since begun to wane, with environmental impact and the undue influence of the canal’s Chinese contractors in the country among the public’s primary concerns. It remains to be seen whether this project will achieve its enormous potential.
The country’s lawyers perform well across the board in our research, with the strongest showings in our corporate and finance research, reflecting the strong financial investment in the country has seen over the years. While some practitioners reported work beginning to slow down in the run up to November’s elections, most are confident that they can expect this to pick up again in 2017. Many of the largest firms in the country are international outfits, including Arias & Muñoz Consortium Legal and Central Law. This allows the country to benefit from legal advice with a strong regional backing, as well as its connections with other international firms and clients.
Panama’s economy is one of the most promising in the region, benefiting from diversification and pro-business policymaking. Already famous as a trade centre due to its eponymous Canal and its Colón Free Zone, the country has also pursued the development of a competitive offshore financial service sector, encouraged its tourism sector and framed itself as the desirable destination for international investors in the region. Panama places no major restrictions on foreign investors and government legislation has actively promoted its growth. The Panama Trade and Investment Agency (PROINVEX) allows investors to easily identify all the instruments that the country has available for foreign direct investment, which reached $5 billion in 2014. The successful negotiation of several FTAs, including the Panama–United States Trade Promotion Agreement, has also greatly contributed to the increase of foreign investment in Panama. Ultimately, the success of these measures has seen robust economic growth, around 6.2 per cent, over the last two years.
Panama’s prominent offshore status is supported by the exception of taxes for offshore companies incorporated in Panama and a wide array of financial services. The country also imposes strict confidentiality laws to protect corporate and individual financial privacy, as well as having no tax treaties with other jurisdictions and no exchange controls.
Panama’s position as a vital trading centre ensures that its shipping market takes centre-stage, which will be further boasted by the imminent completion of the $5.2 billion Panama Canal expansion that will more than double its capacity. The government has also invested in other important infrastructure projects in the country, including the building of its first and second Metro line; extensive road projects, totalling $1.1 billion; a $300 million airport expansion; and a plethora of energy generation projects – mainly in LNG, hydro and wind – estimated to cost over $1 billion. The real estate market is also experiencing a boom and private investment has recently accounted for 20 new hotel construction projects and the building of the Westland Mall.
As a result, corporate, finance, private client and shipping law are the biggest legal markets in the country, followed by growing practices in real estate and IP. These areas are mainly dominated by mid-sized domestic full-service firms, who have had an entrenched position in the country for decades and have relatively equal statuses among domestic and international clients (see graph below). The market is also serviced by a number of prominent, albeit smaller, boutique law firms; meanwhile, regional powerhouse Arias & Muñoz has made formative efforts to challenge the hold of Panama’s national law firms.
In Costa Rica and Honduras, civil and administrative matters are dealt with, in the first instance, by the administrative contentious court, and in Costa Rica cases can then be directed to Chamber I of the Supreme Court of Justice. Similarly, in El Salvador, it is the Administrative Chamber of the Supreme Court of Justice that handles such matters.
With 21 lawyers recognised in the field, competition remains one of the smaller practice areas in our research, yet demand for competition legal services is increasing across Central America.
As the Central American region begins to open up more and more to international investments, its corporate legal market must too expand to meet demand. With 103 lawyers recommended in the field, it is the largest single practice area in our research, highlighting the need, both my local and foreign clients, for high-quality legal counsel.
In total, 26 lawyers are highlighted in this practice area across 15 law firms. With seven countries boasting corporate tax experts, there is a thorough spread of high quality legal services available across the region in this field.
While firms in Central America often have a broad offering, dispute resolution has emerged in recent years as an area of heightened activity and as such a premium has been placed on these skills in the market.
In this chapter we identify 12 leading due diligence accountants from across Central America, who work alongside lawyers to complete corporate transactions. These specialists not only look at issues such as financial performance, cash flow, valuation of assets and tax compliance in order to build up a picture of a company’s health, they also assess the risks and opportunities of a proposed transaction offering advice on the relevant conditions, warranties and indemnities that should be included in an agreement.
Following the introduction of both the Dominican Republic-Central America FTA with the US and the region’s partnership agreement with the European Union, Central America has seen a marked influx of foreign investment. According to the World Bank, Panama received over $5 billion in investment from foreign sources in 2014, with Costa Rica gaining over $2 billion. It is therefore no surprise that these two countries are at the forefront of our research, garnering over 50 per cent of the total inclusions in the chapter between them. The financial service sector is particularly well developed in Panama, meeting international standards and employing strict banking laws. However, most countries in the region can lay claim to expanding financial markets, including the growing use of equity, loans and bonds.
Franchise is a popular business model in Central America. The most populous franchise systems are fast food, full-service restaurants and car rental companies. As well as home grown franchises, Central America sees many US brands and European concepts.
Following the CAFTA and the improved investment climate throughout the region, the franchising sector is expanding at a strong rate. The agreement has provided improved trademark protection and lowered the cost of importing equipment.
Alignment with international IP law in most Central American countries only began in the late 1990s. The US has pursued strong commitments to IP law with its trade partners and more stringent IP protection was afforded by the CAFTA-DR. Panama also established similar provisions within its Panama–US Trade Promotion Agreement. The CAFTA-DR has increased trade between its parties by over 70 per cent – $35 billion in 2005 to $60 billion in 2013 – divided almost equally between imports and exports.
Employers are fraught with challenges when entering the Central American market. Productive sectors loom large in the market and, as such, ensure that many of the region’s workforce are unionised. The relations between employers and the traditional trade unions in the region are becoming increasingly fractious as the economic situation worsens and employees are laid off. Another concern is the discrepancy between local labour codes and codes of conduct at larger multinational corporations, which has been seen as something that must be challenged if the region is to attract a greater share of foreign investment. Certain lawyers have called for multinationals to align their codes of conduct with the principles enshrined in national labour codes.
Since the beginning of private sector participation in the Central American energy markets in the 1990s, energy and mining has been a key source of regional investment. Although the first 15 years of the open market was overly reliant on the oil sector, this began to be rectified in the mid-2000s. Indeed, the renewable energy sector has expanded dramatically in the last 10 years and in 2014 renewables were the source of almost 64 per cent of electricity generation in the region.
With 28 lawyers from 11 different firms highlighted in our research, private client is a prominent practice area in Central America. Experts are located across five countries, reflecting the strong provision of private client legal services across the region.
Costa Rica has emerged in this year’s research as a hub for construction work, with new construction in the country growing by 14 per cent in 2015 as it attracts investors and developers from across the world. Activity was strongest in the commercial and residential housing sectors, with a particular boom in high rise constructions in greater metropolitan areas such as San José, Cartago, and Heredia.
Panama has the strongest transport market by some distance. Undoubtedly the largest project in the sector has been the $5.2 billion Panama Canal Expansion, which is set to create a new lane of traffic through the waterway and double the canal’s capacity. It is predicted that the expansion will shift international trade routes for larger vessels, and boost trade from the US East Coast and Gulf Coast through to Asia. Patton, Moreno & Asvat and Decastro & Robles boast “market-leading” maritime practices, while Arias Fábrega & Fábrega, one of Panama’s oldest and largest firms, retains a strong presence in the country.
The product of a prestigious merger between John Aguilar & Asociados and Bufete Castillo Love in 2006, Aguilar Castillo Love has become one of the premier firms Central America. The firm has a strong standing in business law and corporate law, boasting seven fully integrated offices in Central America, with a presence in the region’s major business hubs, including Panama City, Guatemala City and San José.
Alemán, Cordero, Galindo & Lee was established in 1985 and has quickly become one of Panama’s leading law firms. The firm’s offshore practice is supported by its offices and correspondents around the world. In its local practice, the banking department is one of the firm’s main areas of strength. It provides services to most of the large banks established in the country and represents several foreign banks that have recently applied for a banking licence and have started operations in Panama.
Arias emerges as the leading firm in our report on the Central American legal market, with a market-leading 62 listings across 12 practice areas. As the largest law firm in our research, it boasts eight integrated offices across the isthmus, standing out in the Costa Rican and Salvadorean markets with a particularly impressive showing in corporate and finance law and dispute resolution. It is widely endorsed by legal teams internationally and its prominent multinational clients include Citibank, Unilever, Swisher International, Mondelēz International, Statoil and Chevron.
With an impressive number of listings over nine practice areas, Arias Fábrega & Fábrega displays its status as one of Panama’s foremost law firms. It offers services to large Central American and multinational financial institutions and companies, including Banco Centroamericano de Integración Económica, Banco General and Bancolombia, as well as multinational investment banks JPMorgan Chase, Deutsche Bank and Citibank. The firm particularly stands out for its “market-leading” corporate, finance and transport practices, with peers and clients regularly commenting on the experience, knowledge and dedication of its lawyers.
BLP displays its continued strength in the region with a team of sought-after legal minds and engagements with a number of prominent multinational clients, including Bekaert, PepsiCo, Amazon, American Airlines and Baxter. It has also developed a strong reputation across a number of the region’s most important markets, with offices in Costa Rica, El Salvador, Nicaragua and Honduras.
Composed of five law firms that merged in 2005, Consortium Legal has expanded to over 160 professionals and 10 offices across Central America. The firm advises on some of the largest corporate and finance transactions in the region, and also boasts an impressive standing in disputes resolution, IP and corporate tax law. It is considered by a number of respondents to be the law firms of choice for a regionally integrated approach to corporate and commercial matters.
Consortium Legal is a firm committed to satisfy the need for legal services in the Central American region, displaying professional excellence, ethical values and efficiency. Consortium was born in 2005 with the goal of satisfying the needs of legal services to those who want to invest in Central America or outside the region.
Boasting a strong heritage and highly accomplished practitioners, Galindo Arias & López is a huge player in the region. It has a roster of high-end national and international clients across many of Panama’s key business sectors, including Copa Airlines, Covidien and Unión Eólica Panameña. The firm has advised on a number of significant deals in relation to the energy, telecommunications, banking and aviation industries, this includes advising Copa Airlines in the financing, leasing and registering of seven Boeing 737-800 aircraft worth $160 million. The firm also has a strong reputation in maritime law and litigation.
Founded in 1920, Icaza Gonzalez-Ruiz & Aleman is one of the most respected and well-established full service law firms in Panama. Over half the firm’s listings are in finance, a practice in which it has historically been reputable, however it is also well-regarded for its corporate, IP and private client practices.
Morgan & Morgan is one of the top law firms in Panama and Central America, with a reputably strong standing in corporate, shipping, finance and private client law. It is a member of the Morgan & Morgan Group (MMG), which provides services in 20 offices across three continents. Recent highlights include advising Balboa Bank & Trust Corp as arranger in the public offering of Stocks by Latin American Kraft Investment for $25 million. The firm is also at the centre of the most important public infrastructure project in Panama – advising Metro de Panama on the EPC contract for Line 2 of the Metro of Panama.
Morgan & Morgan is among the top law firms in Panama and Central America, with the most experienced attorneys and multidisciplinary practices. The firm is a member of the Morgan & Morgan Group, an extensive network of legal, fiduciary and financial services with operations in 20 cities across America, Asia and Europe, allowing us to give effective answers to the needs of our clients worldwide within the industry’s best international standards.
An international law firm with five offices in Central America and a further five locations internationally, Pacheco Coto is particularly well regarded for its “top-tier” corporate and tax law practices. It is headquartered in Costa Rica, where the majority of its listed lawyers are located; however it also boasts leading lawyers in Nicaragua, Guatemala and El Salvador.
It is not possible to buy entry into any Who's Who Legal publication
Nominees have been selected based upon comprehensive, independent survey work with both general counsel and private practice lawyers worldwide. Only specialists who have met independent international research criteria are listed.