Free trade agreements have benefited legal firms in the region
The trade agreements or treaties that Central America has signed as a region with the United States (CAFTA-DR) and with the European Union (AdA) have had a positive impact on the growth, strengthening, expansion and specialization of law firms in the Isthmus, Panama and in the Dominican Republic.
“Both the DR-CAFTA agreement and the ADA with Europe in 2012, increased interest in trade with the countries of the region and as such, have increased the need for firms to handle multi-jurisdictional issues on a daily basis, both outbound as inbound ”, pointed out Tim Girven, Editor of The Legal 500 Latin America edition, which evaluates each year the leading firms in this region of the world.
“In other words, many of those interested in doing business with or within the region (re) want to do it all at once, dealing with everything in the region through a point of contact. As this suggests, in a sense these treaties have been one of several impulses that have resulted in more law firms seeking to regionalize their operations ”, Girven added, citing among the most recent, the steps taken in that direction by the BLP law firms, Pacheco Coto and the LatamLex network.
The Editor of The Legal 500 Latin America noted that increased transactional activity has favored the region's largest economies - Guatemala, Costa Rica, Panama, and the Dominican Republic - and the last of these has seen foreign investment in the hospitality and hospitality sectors. tourism, banking / finance and retail. He also pointed out that the real estate market remains firm in the Caribbean country.
He also said that he found the growth in the flow of business and trade between Costa Rica and the Dominican Republic remarkable.
One of the emblematic law firms in Central America, a pioneer in the regionalization process, was Arias & Muñoz, which arose from the merger between the Arias (El Salvador) and Muñoz (Costa Rica) law firms. However, both announced a cordial separation last November, to become Arias and Muñoz Global, respectively. The latter established an alliance with Dentons, a global firm.
“Free trade agreements such as CAFTA-DR played a very important role in the expansion of the firm's services, as a result of these changes in the region's trade policy, it was becoming very common for our clients to establish commercial ties with other countries in the region, and therefore it was natural for them to demand legal services in that country, ”said Francisco Arias, Managing Partner of the Arias law firm.
Another law firm that expanded its operations is García & Bodán, founded in Nicaragua in 2000. Today, thanks to alliances with law firms, it has expanded to Guatemala, Honduras and El Salvador.
“There has been more investment by the members of the DR-CAFTA or AdA in the signatory countries, taking advantage of the advantages offered by said treaties, the tariff benefits and the strength that was given to certain key legal frameworks on the business issue, which implies more work for law firms, mainly in the structuring of companies or even in the acquisition of companies ”, stated Terencio García, Regional Managing Partner of García & Bodán.
According to the Economic Commission for Latin America and the Caribbean (ECLAC), foreign direct investment (FDI) has been increasing in both Central America and the Dominican Republic in the last decade.
Between 2005-2009, according to ECLAC data, Central America captured an average of US $ 5.867 million in FDI, a figure that increased to US $ 11.808 million in 2015. On the other hand, the Dominican Republic also grew from an average figure of US $ 2.222 million in the two periods mentioned above.
“Regional firms like ours must allocate human resources that specialize in the domain of CAFTA and AdA, in order to be able to provide comprehensive legal advice on the aspects that regulate said treaties, from the political, conceptual and philosophical framework to the eminently technicians, ”added García.
In the 2005-2009 period, the average FDI that Panama captured corresponded to US $ 1.792 million; However, in 2015 it increased to US $ 5.039 million, in sectors such as Infrastructure, Banking and Finance, Services, etc.
"Trade agreements solidify that position, promote the economic development of the country and increase its competitiveness, attracting as a result more foreign companies which, in turn, increase the amount of legal work for firms like ours", reflected Arturo Gerbaud , Partner lawyer and Managing Partner of the firm Alemán, Cordero, Galindo & Lee.
Excerpt from the article published by the magazine Strategy and Business, edition 204.
next edition: July 11, 2017.