Legal Market Overview
The Salvadoran market remains rattled by the country’s millennial president (and former publicist) Nayib Bukele, due to his ongoing authoritarian political manoeuvres and his continued promotion of Bitcoin. After blaming several days of violence and 87 killings on the gang known as MS-13, on 27 March 2022 Bukele’s government declared a state of emergency, suspending constitutional rights (foremost of which was the presumption of innocence). This led to the reportedly arbitrary arrests of 6,000 citizens accused of being gang members and the passing of a congressional measure authorising ten to 15-year prison sentences for members of the media who transmit to the public ‘messages or statements originating or presumably originating from said criminal groups, that could generate anxiety and panic in the population’ – an act which has led to allegations of a crackdown on freedom of the press. This is the latest in a series of authoritarian steps taken by Bukele (who, infamously, after addressing the UN assembly changed his Twitter bio to read ‘world’s coolest dictator’).
Another key development in the market was El Salvador’s adoption of Bitcoin as legal tender in an attempt to reduce dependency on foreign aid. It became the first country to do so in September 2021, following the passing of the Bitcoin Law by the Legislative Assembly that June. The gamble has so far failed to pay off: the rollout of the government’s digital wallet app, Chivo, which promised every member of the public $30 in Bitcoin, was plagued by glitches (with Bukele even providing technical support via Twitter), and on the same day the value of Bitcoin dropped from $52,000 to $42,000 a coin, leading to protests outside El Salvador’s Supreme Court. By January 2022, the value of Bitcoin had dropped by 23% to $37,000 – indicating a lacklustre return on an investment of (at the time) $85.5m – and by April 2022 the adoption rate of the Chivo app amongst Salvador adults stood only at 20%.
The tumultuous events of the past year have, unsurprisingly, affected El Salvador’s legal market. Firms have reported newfound interest in cryptocurrency exchanges, in addition to clients requesting assessments of NFTs, and have also predicted a rise in litigation relating to cryptocurrency and other technologies in the future, stemming from a lack of public comprehension. On the intellectual property front, firms are likely to see an increase in matters related to NFTs and the Metaverse, as well as an uptick in anti-counterfeiting cases. In addition, firms anticipated a need for the drafting of legislation to address the tax components of cryptocurrency transactions.
Events outside El Salvador have also had repercussions in the market, with many firms seeing a slowdown in corporate and M&A work stemming from the global turmoil caused by the war in Ukraine, as well as continuing tensions between the Salvadoran government and Washington. In the litigation arena, cases that were delayed by the pandemic have once again started to pick up. Other key areas of work include the financing of high-value renewable energy projects and advising tax clients on adapting to the more aggressive approach taken by the Bukele government over the past few years (including more audits and tax procedures).
Regional firms Arias, BLP and Consortium Legal continue to play a key role in the Salvadoran legal market (other Central American firms with a presence in El Salvador include LatinAlliance El Salvador, Lexincorp, Mayora & Mayora, S.C., Aguilar Castillo Love, Central Law El Salvador and García & Bodán). On the domestic front, Romero Pineda is a standout, with Sáenz & Asociados and Espino Nieto & Asociados also noted for their dispute resolution and intellectual property expertise, respectively.