Legal Market Overview
Colombia has endured a torrid time over the course of the Duque administration. Persistent social unrest during the course of 2019 gave way to the onset of the Covid pandemic in 2020. The latter hit the country hard – both economically and in terms of mortality, with Colombia becoming the third worst affected country in the region. The President declared a State of Exception in the face of the health emergency, but the scenario rapidly evolved into a crisis with both social and economic aspects. By the end of the year, GDP had fallen 6.8%, unemployment was running at 14% and the country was enduring its worst economic performance in over half a century.
It was in this context that early 2021 saw two legislative bills introduced: the first was a tax reform presented as an attempt to raise further funds for Ingreso Solidario (a social programme introduced the previous year which sought to provide a universal basic-income to the poorest in the face of Covid-19); the other, Bill 010, was a somewhat ill-timed healthcare reform-bill that effectively sought to privatise the sector even as pandemic brought parts of it close to collapse.
Duque’s proposed tax increases -driven by the need to reduce a growing fiscal deficit that had seen the country’s credit-rating downgraded- encountered a society and economy ravaged by the impact of the pandemic, in which one-in-four under the age of 28 were unemployed and in which 42% of Colombians earned less than (US) $90pcm. Even the Ingreso Solidario programme had provided a far lower level of assistance than that offered elsewhere in the region, reaching only 3 million recipients. Combined with ill thought political presentation (bill 010 was presented via a special committee that did not require -or allow- congressional debate), the measures served to detonate the country’s latent social tensions once more.
Protests erupted on the 28th of April (ironically, one year to the day since the country’s entrance into the OECD), and only swelled in subsequent days as Cali, Bogotá, Pereira, Ibagué, and Medellín all experienced sizeable protests. Inevitably, violence broke out and reports of police heavy-handedness only caused the demonstrations to grow further, now accompanied by strikes across a range of sectors. Duque sought to stand firm, but May 1st saw a further escalation – both in terms of their size and the police presence – and with little room for manoeuvre, the President was forced to withdraw the tax bill on the 2nd of May. The health reform would also subsequently be shelved while the administration was further weakened with the resignation of Chancellor Claudia Blum, along with Minister of Finance Alberto Carrasquilla Barrera and his entire economic team. If Duque’s administration had already faltered, now it was little more than a lame duck presidency, and politically, all eyes have turned towards the elections scheduled for May 2022.
Despite the foregoing, the business sector has recuperated, somewhat, since the worst of the social disturbances; indeed, in the third quarter of 2021 the country registered a 5.70 growth in GDP – although as yet it remains difficult to judge how much of this activity was from pent-up demand, distressed M&A and other momentary factors, as opposed to reflecting a return to sustainable growth. Suffice to say, with elections little more than six months away, and no significant new policy proposals likely to reach the legislative books, the corporate sector is likely to take advantage of this ‘window’ of relative calm before the electoral season gets truly underway.
On the legislative front, it is worth noting that while Congress has remained largely passive over the last two years, Duque’s State of Exception allowed him to rule largely by decree, with the president promulgating 115 legislative decrees (by exercising extraordinary powers), and 74 ordinary decrees concerning public services, public finances, taxes, private markets, social assistance for vulnerable communities, the court system, and employment protection. These regulations established quarantines, lockdowns and mobility restrictions (among other matters), generating extensive constitutional-law debates. In this sphere, decision SU/146 of 2020 constitutes a landmark ruling as regards the relation between the Colombian constitution and the increasingly important body of international human rights law.
Clearly, in terms of post-Covid and post-conflict recuperation, the country still has a significant distance to travel. Additionally, the pressures caused by the enormous numbers of arrivals from neighbouring Venezuela remain an on-going -if now half-forgotten- issue of genuinely regional proportions.
It remains to be seen if the measures taken by the government in a bid to create jobs during the economic crisis and its launch of a concerted effort to attract $11.5 billion in non-energy related foreign investment by 2022 have made significant advances. FDI climbed back to $2703.07m in the first quarter of 2021 – a significant advance on mid-2020s collapse but still far behind peak figures of $4148.07m in mid-2019. Looking forward, transport infrastructure will necessarily remain a key pillar of the next administration’s attempts to reactivate the economy and generate employment. Work on the construction of Bogota’s first metro line (approximate cost $4bn) was due to begin in the second half of 2021 and last around seven years. On the road construction front, the fifth generation of road concessions (5G), remain in the structuring and bidding stages.
In terms of the legal market, the key development this year -above and beyond Covid driven digitalisation- was undoubtedly the opening by Spanish firm Cuatrecasas of its own Bogotá office in January 2021. The firm hired staff from many of the market’s leading firms, including Manuel Quinche (and members of his team) from Brigard Urrutia; Juan Felipe Vega, from Baker McKenzie S.A.S.; and Alessia Abello -formerly of Posse Herrera Ruiz– from Financiera de Desarrollo Nacional. These firms, in turn, have sought to recruit replacements, setting off a cascade of recruitment that has rippled down through the market, especially in relation to the finance and projects areas.
While this arrival has impacted the market strongly, it remains early in the process of the office’s establishment for it to have noticeably upset standings in terms of market share and positioning. Nevertheless, the impact of the pandemic and firms’ different responses to it, have seen the top of the market become a little more atomised. A clear cut top four firms is no longer quite as clearly discernible as it was five or so years ago. Instead, while Brigard Urrutia retains its’ market leadership (despite the loss of Quinche), the chasing pack is both larger and predominantly demonstrates some form of international tie up. This group includes the tri-national regional player Philippi Prietocarrizosa Ferrero DU & Uría; the local offices of major international firms constituted by Dentons Cardenas & Cardenas, DLA Piper Martinez Beltrán, and Baker McKenzie S.A.S.; local Affinitas-alliance member Gómez-Pinzón Abogados (GPA; and Posse Herrera Ruiz, which returned to fully independent status with the conclusion of its relation with Cuatrecasas in 2020.
Beyond this, the market is populated by a strong combination of firms with a broad service offering, both international -such as Garrigues, Holland & Knight and CMS Rodríguez-Azuero– and domestic -such as Muñoz Tamayo & Asociados, Lloreda Camacho & Co., Parra Rodríguez Abogados, Palacios Lleras and Goh (formerly Godoy Hoyos). However, this market segment is increasingly impacted by a growth in the number and relevance of boutiques, and a new wave of non-Bogotá founded players -particularly from Medellin- making in roads into the national market.
On the boutique-side, long standing specialist firms such as Suescún Abogados in dispute resolution; Zuleta Abogados Asociados S.A.S in arbitration and international public law; Ibarra Abogados and Esguerra Asesores Jurídicos in competition; and Durán & Osorio Abogados Asociados and Arrieta Mantilla & Asociados in construction, infrastructure and projects all retain significant market share in their primary areas of specialisation. Others include oil, gas and energy specialists Sanclemente Fernández Abogados S.A.; key international trade player, Araújo Ibarra Consultores Internacionales; and in the IP and life sciences segments, Cavelier, OlarteMoure and Castellanos & Co. However, of late this group has been augmented by the likes of Mendoza Abogados (banking and finance); Avante Abogados (competition / TMT); Serrano Martínez (competition / corporate law); Merizalde Abogados S.A.S (international arbitration); Angulo Martínez & Abogados (energy); and Márquez-Robledo (IP/ TMT).
While on the ‘regional front’, non-Bogotá headquartered firms led by the likes of UH Abogados, Ariza & Marin, Contexto Legal S.A., Correa Merino Agudelo Abogados and -in the tax segment- VM Legal, are all gaining prominence at a national level as firms such as Tamayo Jaramillo & Asociados (insurance) and Arrubla Devis Asociados (dispute resolution), have previously achieved. Although now based in Bogota, the originally Cali based Advocat, with its broad service offering, could also be considered part of this group.