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Legal market overview
If the approach of Presidential elections in 2013 had generally frozen the advance of both legislative proposals and major business projects, the recent impeachment of President Lugo has added an additional degree of uncertainty to the immediate political and economic outlook in Paraguay. Its regional neighbours have taken diverse positions regarding Lugo's ouster (seven states recalled their ambassadors for consultations) and it is unclear whether the country will remain suspended from Mercosur. Limited opposition from Brazil will probably, however, ensure minimum disruption, especially since the Paraguayan electoral authorities have confirmed that the April 2013 elections will proceed as originally planned.
Indeed, members of the legal profession have not only confirmed the legality of Lugo's removal but suggest that the interim administration of former vice-President Franco is likely to usher in a more business-friendly climate. They note that, perceptions of political insecurity aside, Paraguay's bilateral treaties will ensure investment protection regardless of the administration in power. Political vagaries are not the only relevant factor however. Despite continuing, albeit slowed, economic growth, Paraguay's dependence upon primary exports continues to leave it vulnerable to external shocks, be it a drop in commodity prices or, as has in fact been the case, from other factors: the effects of a severe drought (depressing soya crops by up to 60%) and an outbreak of foot and mouth disease, with a consequent suspension of imports by various key markets, have served to depress the key agro-export sector, dampening down transactional activity in general.
Arguably, the key issue in the Paraguayan legal market at present is less related to external factors (local or international, political or economic in nature) but rather the conjuncture of Paraguay's exceedingly rapid insertion into the global economy over the last five years, with a legal industry dominated by firms based upon family structure and culture. If the arrival of the Uruguayan firm Ferrere and the increasingly international orientation of Berkemeyer were early signals of the ending of Paraguay's relative isolation, today any number of firms are undertaking profound modernisation processes and seeking to institutionalise themselves along lines fit for the 21st century. Estudio Juridico Gross Brown and Peroni, Sosa, Tellechea Burt & Narvaja are, perhaps, the furthest advanced down this path, but the incorporation of a younger, generally foreign trained, generation is also making itself felt at Vouga & Olmedo, Palacios, Prono y Talavera Abogados and Mersán Abogados among others. The latter half of 2012 is likely to constitute a period of relative calm before a new political administration also brings increased legislative change, a renewed upswing in economic activity, and with it, a return to business as usual.