Legal market overview in Guatemala

Guatemala has remained economically stable, and so although the World Bank predicts a decline in the country's GDP growth rate of -1.8% in 2020 as a result of the Covid-19 pandemic, it is expected to grow by 4.4% in 2021. The election of a new president, Alejandro Giammattei, who took office in January 2020, also led to an increase in corporate deals and foreign investments pre-pandemic as investors in the region gained in confidence following the uncertainty of the election year. The natural resources-rich country has seen projects in the mining industry stall as a result of objections by indigenous communities and environmental groups challenging the construction of projects that fail to follow the consultation procedure outlined by ILO Convention 169. Firms have seen a drop in project finance work in this area, although there has been a corresponding increase in litigation in the mining and energy sectors. Activity has also increased on road and infrastructure projects and the country has seen a boom in the real estate market, particularly in the construction of commercial and high-end residential developments in Guatemala City. In the financial sphere, firms have been increasingly involved in transactions involving private equity and investment firms from abroad, particularly the US, and have also been advising on new financing tools such as crowdfunding and fintech. Elsewhere, there has been an increase in tax litigation in recent years as the Superintendency of Tax Administration has taken an aggressive approach to pursuing actions against taxpayers (targeting wealthy multinational companies and banks in particular), and regularly imposing criminal rather than administrative sanctions. However, there are indications that the new administration may take a more cautious approach. In the dispute resolution arena more generally, firms have focused on growing their arbitration practices to offer clients an alternative to long-running litigation. There remain concerns about corruption within Guatemalan business and politics, something which was highlighted by the UN-backed anti-corruption commission CICIG in its final report, after it was expelled from the country by former president Jimmy Morales. For law firms, this has meant an increased focus on advice on compliance and the implementation of anti-money laundering and anti-corruption policies. The global outbreak of Covid-19 has, of course, temporarily halted many major financial and corporate transactions in Guatemala, and the country's law firms have instead focused on assisting clients with labour issues associated with the suspension of operations and with possible tax exemptions proposed by the government. In the legal market, full-service local practices, such as QIL+4 ABOGADOS, S.A., Legalsa and Carrillo & Asociados, and regional firms, including Arias, Consortium Legal, BLP and Mayora & Mayora, S.C., remain dominant. Guatemala also has a number of smaller, specialist firms, among them insurance and maritime-focused Palomo Abogados (which in 2019 formed an association with international insurance specialist Kennedys), employment boutique Valenzuela Herrera & Asociados, IP firms Viteri & Viteri and Palacios & Asociados/Sercomi, and customs and maritime law specialist Los Cinco Abogados. Several global firms have also expanded into Guatemala, including Dentons (which formed Dentons Muñoz through a merger with regional practice Muñoz Global in 2017), EY Law Central America and Deloitte Legal, and are continuing to grow their practices.