Legal Market Overview
While the World Bank reports that Honduras has had the second highest economic growth rates in Central America over the past few years, the country continues to be affected by socio-economic problems, suffering from high levels of poverty and inequality.
In addition, Honduras has faced several political crises in recent years: the re-election of President Juan Orlando Hernández in December 2017, despite widespread allegations of fraud, sparking a series of violent protests; some time subsequently, in March 2020, the president was accused by US prosecutors of accepting drug money and enabling drug trafficking by his brother, former congressman Juan Antonio Hernández.
This instability has led to wariness on the part of foreign investors to invest in the country, and as a result law firms have seen fewer large M&A and financial transactions involving international companies. Furthermore, although many multinationals are continuing to expand into Central America, their headquarters are predominantly based in the larger markets in the region, such as Costa Rica and Guatemala, limiting the amount of foreign investment entering Honduras.
There has also been a slowdown in work on mining and other energy projects in the country in light of environmental and social challenges, the murder of indigenous environmental activist Berta Cáceres in 2016 having sparked outrage domestically and abroad. However, firms have seen increasing activity in the financing and development of infrastructure projects.
In the tax sphere, firms have also been highly active advising on the country’s special tax regimes, which offer exemptions to companies in free trade zones and the tourism, renewable energy, export manufacturing and international service sectors, among others. They have also seen an uptick in contentious tax matters challenging assessments carried out by the Honduran tax authority.
Following the outbreak of Covid-19, the key focus for Honduras’s law firms has been on advising affected companies on labour issues, including terminations, suspensions and salary cuts. Firms are also likely to see an increase in refinancing and corporate restructuring work as the economic impact of the pandemic is felt.
In the legal market, the key players include a large number of regional firms, among them Aguilar Castillo Love, Arias, Consortium Legal, BLP, CENTRAL LAW, García & Bodán and Latamlex / Matamoros Batson y Asociados. One Central American firm, Lexincorp, has expanded its team in Honduras extensively as it has seen its workload increase, bringing in five associates to bolster the tax, dispute resolution and corporate practices.
The market also includes several established Honduran firms, including Bufete Gutiérrez Falla & Asociados, López Rodezno & Asociados, Bufete Melara & Asociados and IP boutiques Bufete Mejía & Asociados and Bufete Durón.
Two major global firms have also recently entered the Honduran market through mergers with local practices. Dentons Muñoz, the Central American arm of Dentons, merged with Gustavo Zacapa y Asociados, Abogados & Notarios to form Dentons Muñoz Zacapa in September 2019, while Spanish firm ECIJA opened an office in Honduras in February 2018 following its merger with Casco-Fortín, Cruz & Asociados.