Legal market overview
Despite Guatemala remaining the largest economy in Central America and one that has been pointedly open to foreign investment, the country still lags behind other Central American jurisdictions, such as Costa Rica, El Salvador and Panama, in terms of attracting inbound finance. The socio-political environment deters investors, and this is particularly affecting areas such as mining, hydroelectricity and agribusiness, where the country should enjoy a competitive advantage. Nevertheless, the economy has done relatively well under President Otto Pérez, with GDP expected to grow at 3.6% in 2014, and he continues to actively promote Guatemala as an investment destination.
In the M&A sector, Guatemala continues to serve as a first stop for the region, with companies entering joint ventures with a view towards acquisition of control or gaining substantial shares in local companies. A large volume of transactions originate in the US, particularly mid-sized US companies expanding into Central America, secondly come European businesses, and thirdly, so-called multi-Latinas: there is a growing trend of Latin American corporations expanding in and beyond the entire region, acquiring companies locally. The increased presence of (predominantly) Canadian and European mining companies is notable, and there is also substantial activity coming from neighbouring Mexico, to the north, with companies eyeing the entire Central American region and using Guatemala as a point of first landing. Above and beyond this transactional activity and day-to-day corporate matters, corporate restructuring has kept many law firms busy, particularly given the tax reforms of early 2012.
The banking and finance market has remained largely stable with firms seeing, at best, a slight increase in the volume of work. After a considerable consolidation in the sector over the last decade, with over 30 banks reduced to eighteen, recent years have seen a number of local banks acquired by key foreign players, such as Bancolombia’s acquisition of a 40% interest in Guatemalan Banco Agromercantil in 2013. Firms also report more activity from financial institutions in second-tier financings. Project finance is heavily concentrated in infrastructure and renewable energy.
An emerging economy brings with it issues related to counterfeiting, and in the IP sector, anti-counterfeit efforts present one of the biggest challenges. The bulk of the work in intellectual property matters relates to trade marks, including registrations for domestic as well as international clients, portfolio management and litigation. Guatemala remains one of the countries operating a ‘first to file’ rather than a ‘first to use’ system. Only a handful of firms focus on patent matters and while such work remains restricted to the registration of patents, the market has boomed since the Patent Cooperation Treaty (PCT) came into force in 2006.
In Guatemala’s still relatively compact legal market, lawyers generally continue to cover multiple practice areas; and at the firm level, a considerable volume of work is constituted by domestic firms acting as local counsel for larger international players. The more traditional and longstanding domestic firms, such as Mayora & Mayora, S.C., Carrillo y Asociados, Arenales & Skinner-Klée and IP boutique Viteri & Viteri vie with established regional firms Arias & Muñoz, Consortium – Centro América Abogados, Aguilar Castillo Love and Lexincorp, as well as regional newcomers Pacheco Coto and García & Bodán. More specialised firms, such as dispute resolution-focused Comte & Font – Legalsa, have also successfully managed to make their mark on the legal landscape and smaller new firms, such as 4abogados, are gaining visibility.