Legal market overview
Politically, the country has endured a turbulent year: following Fernando Lugo’s controversial impeachment in June 2012, and the subsequent interim administration of Federico Franco; elections in April 2013 returned the Colorado party back to power and brought Horacio Cartes to the presidency. These events reverberated at a regional level with Paraguay’s (temporary) suspension from the Mercosur trading group, during which Venezuela was admitted to the bloc. The ensuing tensions remain to be resolved and in the interim, Paraguay has signalled its increasing interest in participating in the Alliance of the Pacific. A successful businessman Cartes has made pledges on both foreign and local investment and it is anticipated he will successfully bolster the country’s emerging economy. Legislation that was shelved with the constitutional impasse is also expected to move forward swiftly, not least a Private-Public Partnership law that would boost the financing of infrastructure. A final decision is also expected regarding the construction of an aluminium smelter by Rio Tinto, a project which stalled under Lugo, and which would constitute the largest investment in the country’s history.
Paraguay nevertheless remains a primarily agricultural economy, and as such continues to rely heavily on agro-exports as an economic driver; consequently the agribusiness sector remains a strong focus for many firms. The country is already the world’s fourth-largest soy exporter, and soybean-processing capacity continues to expand. The new ADM soy-crushing plant has been in operation since November 2012; the plant operated by Dreyfus-Bunge joint venture opened in April 2013; and Noble Group is planning on following suit. In addition, Monsanto is extending its operations in the country and considering the revival of commercial cotton production; and, after outbreaks of foot-and-mouth disease in 2011 and 2012, prospects for cattle ranching and beef exports, mainly to Russia and Brazil, are improving. Firms are also finding themselves providing increased counsel on mining-related matters, with mineral resources in the country relatively untapped until recently. The expansion in land, air, and (given the country’s geographical location) particularly river transportation, is also a significant source of work, given that the vast majority of agro-exports travel along the Parana River; here Palacios, Prono y Talavera Abogados has considerable expertise and experience. Another rapidly expanding practice area is environment law: social and environmental responsibility now has a legislative basis and major companies – especially those with international exposure – are ever more conscious of environmental regulations and licencing requirements. The relatively new branch of criminal environmental law has further added to the growing volume of work. Specialisation in the sector is such that the country’s first boutique in the sector, PGK Ambiente y Empresa is thriving. In the IP sector, where Berkemeyer continues to enjoy a predominant position, the persistent problem of falsified goods, in conjunction with enforcement deficiencies, is resulting in an ever-stronger emphasis on anti-piracy and anti-counterfeiting work.
With a legal industry long dominated by firms with a family structure, 2012-2013 has seen the continuing movement of larger corporate firms (such as Vouga & Olmedo and Peroni Sosa Tellechea Burt & Narvaja) towards greater institutionalisation. Such restructuring is a response to various factors: internally, the retention and promotion of talent and also the need for organisational flexibility so as to deal with a rapidly diversifying workload; and externally, to confront greater competition (notably in the form of Uruguayan firm Ferrere’s local office), and meet both the expectation of foreign clients and the increasingly stringent regulatory requirements (be they international, such as FACPA or the UK Bribery Act; or domestic, for example environmental laws).
The fact that investors have seemed relatively unperturbed by the recent political occurrences was reflected in one of the most noteworthy financial transactions of 2012: Paraguay’s $500m inaugural international debt issuance, which proved the most successful first-time bond issue for a state with such a credit rating. Leading banking firm Estudio Juridico Gross Brown advised Citibank and Bank of America/Merril Lynch as underwriters on the deal. Probably the most prominent corporate transaction of the year was Millicom’s $150m acquisition of Cablevisión Paraguay; certainly the largest telecoms deal in Paraguayan history, Millicom was advised by corporate heavyweight Moreno Ruffinelli & Asociados. Best known for working with the state or its representative entities, Parquet & Asociados was counsel to Paraguay in both matters and it is just one of a number of specialist boutiques in the market, for example, Estudio Riera Abogados for litigation, and Irún & Villamayor Asesores Laborales de Empresas on labour matters. Mid-sized firms too, continue to play an important role, most notably the increasingly present Fiorio, Cardozo & Alvarado, Attorneys-at-Law, and Mersán Abogados.